THE CASE FOR SUBSIDISED HOUSING FOR LOU-INCOME FAMILIES This report has been prepared and published to direct attention to the need for providing adequate housing for low-income and large families at rents within their financial means. It is argued that rent rebates are essential; that the size of a family should be taken into account as well as family income when assessing rebates, and that the Commonwealth Government should share in the responsibility for financing rent rebates. This report should be read in conjunction with A SURVEY OF A LARGE FAMILY, LOW-INCOME GROUP IN HOUSING COMMISSION HOMES" which was the finding of an independent investigator who analysed the incomes and expenditure of a group of large and low-income families in Housing Commission homes. Brotherhood of St. Laurence, 67 Brunswick Street, FITZROY. VICTORIA January. 1956.
'i In working with low income; and in many cases, large families to assist them to achieve better living standards end become eligible for Housing Commission homes, the Brotherhood of St. Laurence is concerned that in some cases social workers are assisting families to maintain living standards, which because of the higher rents and living costs in Commission estates, will be beyond their financial resources. Social workers who have seen great improvements in child welfare, budgetting, housekeeping and general living standards have no doubt that these new standards can be maintained by the great majority of families provided no great additional financial burdens are placed on them. Camp Pell and condemned homes in inner suburbs, or homes shared with other families, are generally speaking, low cost environments. On the other hand Housing Commission estates are usually high cost areas and the difference in living costs can be too big a financial burden for many families to carry. In Camp Pell the rent of hits is 25/-a. week and in many condemned homes in Fitzroy, Carlton and other inner areas rents still range from 15/-to 30/-a week. In recently built Housing Commission estates, rents range up to 3.18.0 and rents of homes built under the new Housing Agreement will probably be over 4.10.0. In addition, food, transport, clothing and amusement costs are generally higher in the new outer suburbs. The Brotherhood's report "A Survey of a Large Family, Low-Income Group in Housing Commission Homes" gives a clear and objective picture of the financial difficulties faced by a group of families who were, on the whole, good managers. In most cases, although their life was by general standards colourless and austere, they were in debt or under a continual financial and consequent pyschological strain. To quote the report of the independent investigator who carried out the survey -"although only a. limited number of families was studied, in every case difficulty was experienced in trying to make both ends meet. It was only through child endowment,taxation rebates or loans, that bills could be met and articles not needed regularly, bought. Most families were constantly in debt to a food supplier, the Housing Commission, clothing merchant, Gas Corporation or Doctor, All felt their activities were severely restricted because of their financial position "
Six of the ten families were spending less than the amount estimated in "the Minimum Cost Dietary Chart as being necessary to feed family adequately according to minimum nutritional requirements and based on the cheapest available foods. The whole survey should be studied carefully and read in conjunction with this argument on rent rebates. The survey shows that if large and low income families are to share the benefits of good housing and healthy environments, which as a community we agree they should, then we must face up to the fact that their housing must be regarded as a social service and subsidised by the community. It is infinitely cheaper to do this than to pay for the consequences which result from permitting families to live in overcrowded and sub-standard housing. There are two ways of providing adequate housing for those families who cannot afford to pay full economic rents.. The first is to develop a house which costs less to build and can be let at a lower rental. While this approach is always theoretically possible, in the past ten years neither private enterprise nor Governments have been able to build such a house and it seems unlikely that they will do so in the near future. The prototype which was designed and built some years ago was of a considerably lower standard than the normal Commission homes and the rent was not substantially lower. While there must be continual research into mass production and more economical design and building methods, we must avoid building dwelling which are of temporary construction or involve too great reduction in space and basic amenities. "Temporary housing has an unfortunate habit of becoming permanent and is, in the long run, more costly. At the present time low cost homes offer no practical solution to the problem of housing low income families which must be met now. Subsidising Low Income Housing The only practical solution is the subsidising of rents for low income and large families. This can be done in several ways. In the United Kingdom the construction of Council houses has been subsidised and there are no differential rents in houses in the one estate. However, in addition to the flat rate building subsidy, pensioners and large, low-income families can receive grants from the
National Assistance Board if they can show that rent is absorbing an unduly high proportion of their income. To introduce such a system here would involve a complete revision of the present methods of financing and administering Commonwealth-financed, State housing programmes and is therefore impractical. In Sweden, another method is adopted. Low income families with more than three children are granted a rent reduction of 10% for each child in excess of the first three. Sweden considers that a family with thirteen children has earned rent-free accommodation. In Australia, under the Commonwealth-States Housing Agreement which will expire shortly, there is a rent rebate provision to ensure that rents do not exceed one-fifth of the family income. Under the Agreement the family income comprises the whole of the highest weekly income of the tenant, the wife of the tenant or any other resident related to the tenant; two-thirds of the weekly income of the person earning the second highest income and one-third of the income of every other person mentioned above. Proportions of the income of other persons resident in the house and not relatives of the tenant are also included as part of the family income for the purposes of assessing the rebate. If the normal economic rent, which is the rent calculated on the total costs of construction, exceeds one-fifth of the funnily income then the tenant can apply for a rebate which will reduce the rent to one-fifth of his income. One-fifth was selected in 1946 as being a fair proportion of income to be paid in rent as rents throughout Australia at that time approximated one-fifth of family income and also the rent component in the "C" Series Index was one-fifth of the total of items in the Index. An' added reason was that one-fifth or one-sixth was accepted in some overseas countries as the equitable proportion of income to be paid in rent. In the past ten years the rebate system has made it financially possible for many families to enjoy the benefits of Housing Commission homes. The weakness of the schemes that the number of children in the family is not taken into account under the above formula by which rebates are granted. For example, the maximum rent payable under the rebate system for a family with two children and an income of 14.10.0 a week is 3.5.6 a week. This leaves 11.4.4 a week for food, clothing, gas, electricity, fares and other expenses. The family with a similar income of 14.10.0 and seven
children must pay the same rent of 3.5.6 under the rebate scheme and have
4 the same amount of 11.4.4 remaining from their income to feed, clothe and pay all the other expenses for the nine members of the family. It is often argued that large families receive child endowment which offsets any disadvantage they may suffer under the rebate scheme. However, child endowment does not go far towards meeting the additional costs incurred with a large family. Taking the Commonwealth Department of Health Dietary Table as a guide, the additional cost of feeding a child + ranges roughly from 13/- for a 9-12 months child to 27/-for a boy over 13. Many costs other than food are also incurred. If a rent rebate system is to be effective in ensuring that low-income and large families enjoy good housing without having to pay an undue proportion of their income in rent at the expense of other necessities, then the number of children must be taken into account when assessing the rebate for which a family is entitled. The table of rents from the Milwaukee Housing Authority of U.S.A. shows a method of assessing fair rents which is based on income and the number of minors in the family. It can be seen that the proportion of rent to income decreases as the number of minors in the family increases. Income No. of Minors Annual Rent Percentage of Income $ 2000 2 6 $ 384 288 19.4 14.8 2500 2 6 504 408 20.2 16.3 3000 2 6 624 528 20.8 17.6 It is not suggested that the same formula be applied here as there can be no comparison between the wage and rent structure in the two countries, but the table does serve as an example of a sliding scale of rebates which would effectively remove the anonomalies in our present rent rebate system.
+ See "Large Family, Low-Income Group in Commission Homes",p.24.
The cost of liberalising the rebate scheme in such a way should not be great. In 1953-54 the existing rebate system cost 60,000 in Victoria while in the same year the total amount charged for rents for Commission homes was 2,800,000. If rents of new houses are higher and wage levels remain static, the present rebate scheme would of course cost more to operate as more families would become eligible for rebates. However the additional amount involved in liberalising the scheme to take into account the number of children in the family would not be great. Commonwealth s Responsibility At the present time it is not sufficient to argue that the rent rebate scheme should be rationalized in the way which has been suggested for the scheme is in danger of being abolished or severely curtailed if Commonwealth s proposals for a new Housing Agreement are forced upon the States. In October, 1955 the Commonwealth announced that, in addition to raising the interest charges to the States to.3 3/4%, it would not share with the States in losses which might be incurred under the rent rebate system. In describing the Commonwealth's proposals the only reason given by Senator Spooner, Minister for National Development, was "the Commonwealth does not wish to share these losses". + At the same time as it is raising the interest rates, which will mean higher rents and make more families eligible for rebates, the Commonwealth is refusing to share any of the financial burden of subsidizing homes for low income families. Whether the States will be able to finance rebates on their own remains to be seen, but there is no valid reason why the Commonwealth should not continue to make a financial contribution towards housing those sections of the community who cannot adequately house themselves. Now that new avenues of finance for home ownership are being opened through the sale of Commission homes on easy terms, the Commonwealth's diversion of a portion of housing loan monies to housing co-operatives and the Victorian State Government's decision to make more State Savings Bank funds available to home builders, there is greater need than ever before for State housing financed by the Commonwealth to be concentrated on the lower income and large families. + Melbourne "Age II October, 1955.
This is not to say that 0.11 Commission tenants should be subsidised. Those who can pay economic rents should pay them. Those who can t have a right to expect some assistance and it is not difficult to establish who needs assistance. The only body with the financial resources to subsidise housing for those who need it is the Comrnonwealth Government. Housing for this section of the community must be regarded as a social service and social services are the responsibility of the Commonwealth. In many respects it can be argued that low rent housing is a more positive form of social service than child endowment, maternity allowances and health services. In any case the purpose of these social service benefits can be defeated if large, low income families are denied the opportunity of adequate housing at rent they can afford. The Commonwealth has no right to evade its shore of the responsibility for providing homes for low-income families and it has not given one sound reason why it should seek to adopt a policy which will deprive low-income families of the benefits of good housing at rents they can afford. Conclusions 1 Most families on low income and particularly those with more than three children, need some form of assistance if they are to be adequately housed. 2 The most practical and economical method of subsidizing housing for these families is through a rent rebate system. 3. The rebate system must take into consideration the number of children in the family as well as the family's income. 4. The Government must accept rent rebates as a social service and share the costs that may be incurred.