Introduction Yarra Community Housing welcomes the opportunity to comment on Victoria s Draft 30 Year Infrastructure Strategy (the Draft Strategy). We applaud Infrastructure Victoria s recognition of affordable housing as essential infrastructure for the future liveability of the State. Housing is in and of itself essential infrastructure within our cities and towns. The interaction of housing with transport, health and medical facilities and educational institutions affects the efficiency of these other infrastructure services and is an essential part of the urban ecosystem. We strongly support the Draft Strategy s definition of affordable housing, and the recognition of the urgent housing needs of people on low incomes and experiencing disadvantage. As noted by Infrastructure Victoria, the suite of recommendations in the Draft Strategy are complimentary strategies to increase the supply of affordable housing. An overarching Affordable Housing Plan for the state is essential to ensure that the combination of initiatives achieves the greatest impact in improving the lives of those in housing stress. The Affordable Housing Plan must be combined with the funding mechanisms and structures to put social housing on a sustainable footing. This includes both capital and ongoing operating requirements. As the Draft Strategy states there is no point providing new infrastructure if asset management and ongoing maintenance are not done properly p.5 As demonstrated during the Global Financial Crisis, Community Housing has the capability to develop new affordable housing, quickly, efficiently and at scale. In delivering the Social Housing Initiative under the National Building Stimulus Package, Community Housing providers were able to attract private finance and Yarra Community Housing expanded our suite of housing offerings to include both social housing, and affordable rental housing. With the right funding and policy settings the community housing sector could build on this expertise and fill a gap in the current housing market, by delivering longer term tenure for tenants in affordable and market rate housing as well as dedicated social housing. This mix of tenants and housing types allows Community Housing providers to manage social housing stock, without the structural deficits that public housing currently faces. Yarra Community Housing strongly supports the suite of recommendations in the Draft Strategy and this submission addresses areas that could be strengthened to deliver affordable housing more efficiently and effectively. About Yarra Community Housing Established in 1996, Yarra Community Housing Ltd (YCH) an independent, non-profit organisation that develops and manages affordable rental housing options for people on low incomes. YCH has a particular focus on providing support to people who have been homeless and experience high levels of disadvantage. Version Date: 31 October 2016 Page 1
In November 2015, YCH merged with Urban Communities Limited (UCL). Until 2017, the two organisations will continue to operate as separate entities under the control of YCH. Incorporating the activities of UCL, YCH has a team over 130 staff, manages approximately 2,500 tenancies, has an annual operating revenue of over $25 million, owns $300 million in affordable housing properties and has a loan portfolio of $40 million. YCH also support over 3,000 people each year that are homeless or at risk of homelessness. YCH provides housing services across Victoria as well as in Adelaide. These services include: Initial Planning & Assessment, Crisis Housing, Transitional Housing, Long term Affordable Housing and Specialist housing models including Supportive Housing and Youth Foyers. Comments on Need 7: Provide Better Access to Housing for the most Vulnerable Victorians 7.1 Support Low income Households to access and remain in the Private Rental market 7.1.1 Housing Rental Assistance The majority of low income households in Victoria are accommodated in the private rental market, and efforts to reduce housing stress amongst this group are essential. Beyond affordability concerns, low income tenants in the private rental market face multiple barriers to housing stability including insecure tenure, regular rent increases, discrimination in housing allocation and limited control over their housing circumstances. Expansion of private rental programs offer a useful short term intervention, but they do not address the structural issues in the private rental market. As the Draft Options Book Version Two (Draft Options Book), also notes, in isolation this initiative may have an inflationary impact on the private rental market if adopted at scale. This recommendation should not be implemented in the absence of a long term Affordable Housing Plan. 7.2 Better use and allocate the existing stock of public housing 7.2.1 Public Housing refurbishment /rationalisation (approximate cost $5-10 billion) In essence, this recommendation ensures that the state government maximises the benefits of existing public housing resources. In order to do this, the detailed recommendation in Infrastructure Victoria s Draft Options Book, includes the need for an Asset Management Plan for the entire public housing portfolio. This plan would help to identify housing stock that is unsuitable or in areas of low demand for disposal, as well as stock that can be redeveloped to create new housing that is fit for purpose. Version Date: 31 October 2016 Page 2
This recommendation echoes the call by the Victorian Auditor General in 2012 for more active asset management to prevent the deterioration of public housing stock (VAGO 2012). It is essential to renew ageing housing stock and reconfigure the portfolio to meet contemporary needs. Proposed changes We suggest that the name of this recommendation be changed to Public housing asset management and refurbishment. This change would reflect the objective of the recommendation which is it to maintain the current number of social housing dwellings while replacing ageing, obsolete and poor quality housing stock with housing that is more fit for purpose. It would also emphasise the importance of good asset management in this process. 7.3 Reform planning provisions to support the development of well located affordable housing 7.3.1 Affordable housing fast track approvals During the Global Financial Crisis, Yarra Community Housing developed seven properties in inner Melbourne and Geelong under the temporary planning provisions put in place under the Nation Building Stimulus Package. These planning provisions allowed us to commence and complete construction on a number of projects more quickly than was otherwise possible. In some cases we were able to deliver buildings from land purchase to completed construction within 18 months. Under current planning arrangements we would anticipate that similar projects would take two to three years. Fast track planning approvals, within an appropriate local planning framework, would not only increase the supply of affordable housing more quickly, but also reduce the cost of development to Community Housing Providers. YCH strongly supports this recommendation. 7.3.2 Affordable Housing Planning Mechanisms Including affordable housing requirements in planning provisions would ensure that affordable housing stock grows alongside overall housing supply. In particular this would support the development of affordable housing in areas that are well served by transport and social infrastructure. The Draft options book details two mechanisms to support affordable housing, mandatory inclusionary zoning requirements (AHR) and affordable housing incentive mechanisms (SAH). Of these two mechanisms, Infrastructure Victoria has estimated that the contribution of mandatory requirements to the Draft Strategy s goals would be significant, while voluntary incentives would have moderate impact. Version Date: 31 October 2016 Page 3
YCH supports the introduction of mandatory inclusionary zoning requirements and suggests that these be applied beyond Government owned land as suggested in the Draft Strategy. In particular Inclusionary Zoning requirements should be included where government intervention will result in windfall gains to land owners such as rezoning or significant new transport infrastructure. Mandatory requirements should be supported by a suite of planning incentives. Internationally, Inclusionary Zoning is used as one of a suite of mechanisms to provide affordable housing and is often supported by financing arrangements (See for example Monk et al 2005, and Gurran et.al. 2008 ). While Inclusionary zoning provisions and planning incentives have the potential to make a significant contribution to new affordable housing supply, this will only be realised if designed in concert with other initiatives and funding streams. 7.4 Increase access to affordable housing for vulnerable households 7.4.1 Affordable Housing Plan Yarra Community Housing strongly supports the recommendation to develop a state-wide affordable housing plan that includes targets for different affordable housing types, desired locations and associated funding streams. This plan would ensure that the combination of funding and incentives is used most effectively. An overarching plan would also help to inform investment and development decisions by community housing providers, maximising the impact of Government investment decisions. 7.4.2 Crisis and Transitional Accommodation (CHP $100-250m, TSA $100-$250m) For some time, homelessness services have resorted to purchasing emergency accommodation in backpacker hostels, rooming houses and motels for individuals and families who are homeless, due to a lack of crisis accommodation. There is clearly a need for an improved crisis response for these households. While the number of people seeking assistance from homelessness services in Victoria is growing, the greatest unmet need encountered by homelessness services is the need for long term affordable housing. Sixty seven per cent of people seeking assistance from homelessness services who need long term housing do not have that need met (AIHW 2015). While investment in crisis accommodation is essential, it is not an adequate response to the larger affordable housing issues contributing to homelessness in Victoria. Homelessness service interventions should aim to make the experience of homelessness rare, brief and one off. An immediate investment in crisis accommodation is required, however over the life of the strategy, the investment focus should be on creating as new long term affordable housing products, in order to reduce demand for crisis responses, and ensure that crisis stays are as a short as possible. Version Date: 31 October 2016 Page 4
No matter how effective our housing system, there will always be a need for a crisis response to homelessness. In contrast, the need for temporary or transitional housing responses is less clear. Transitional housing responses to homelessness often prolong the uncertainly and instability of homelessness. Across the world, Housing First models that provide immediate access to long term affordable housing have proven to be more effective in addressing homelessness than staged or transitional models (Johnson, Parkinson and Parsell 2012, p.8). While there are some households who are genuinely in transition, for example young people or women and children escaping family violence, for many households the most appropriate response to homelessness is long term housing, not temporary assistance. Infrastructure Victoria s detailed recommendation for investment in transitional housing (TSA in the Draft Options Book) outlines proposals for: Two supported accommodation facilities with a total of 140 units Rooming house units for 160 people (in approximately 20 facilities), and Eight Youth Foyers for up to 40 young people each. Of these proposals, only Youth Foyers are an appropriate transitional housing option. Households with a need for supported accommodation often need this assistance long term. In fact successful supportive housing models are explicitly designed to provide that service for as long as it is needed. YCH also manages 176 rooming house units across our housing portfolio. The majority of the tenants in this accommodation are exiting homelessness and share bathroom and kitchen facilities with other residents. This style of housing doesn t allow for privacy or control over your own living space and is no longer an accepted form of long term housing in the community. In recent tenant consultations our rooming house residents raised problems with safety and security, access to their properties by non tenants, and the impact of neighbour s behaviour on their wellbeing. It is our view that rooming houses do not provide an appropriate housing response, either as a temporary or long term solution. Proposed changes We suggest that this recommendation be renamed Crisis accommodation and supportive housing responses to homelessness. This would include investment in new crisis accommodation facilities, permanent supportive housing, and Youth Foyer models. Version Date: 31 October 2016 Page 5
7.4.3 Affordable Rental Housing Provision Of all the recommendations in the Draft Strategy, increasing the provision of affordable rental housing will have the greatest impact on people s lives. YCH strongly supports these recommendations and the Draft Strategy s call for decisive action to increase affordable housing supply with an estimated target of 30,000 new affordable dwellings needed over the next ten years. We also note that the 30,000 estimated dwellings are required to meet the current shortfall of affordable housing, and that additional investment will be required over the life of the draft strategy to meet the needs of future populations. Infrastructure Victoria s Draft Strategy suggests two mechanisms for increasing the provision of affordable rental housing: social housing stock expansion directly funded by government (SHE), and Affordable Private Rental Stock provision, supported by private financing mechanisms (ARH) and government subsidies. Social Housing Stock Expansion As noted by Infrastructure Victoria, direct Government spending is a relatively straightforward way to increase housing supply and will necessarily make the greatest contribution to this goal in the initial phase of the strategy. To make the most of this investment, it is essential that Government funding accounts for the ongoing management and operation of these dwellings. In 2012 the Victorian Auditor General noted that the current operating model and asset management approach (of the Department of Housing and Community Building) places the long-term provision of this vital public service at risk (VAGO 2012, p.vii). In the intervening years the Department of Health and Humans Services has undertaken some work on asset management, however the foundational operating model for public housing has not changed. It is this operating model, that relies on income related rents from very low income households, that has contributed to the decline of the current public housing stock. Infrastructure Partners Australia estimates that the current gap between the operating and capital cost of public housing and income from tenant rents is approximately $25,000 per dwelling per year(ipa 2016, p.24). New investment that does not address the structural deficit issue does not make for good stewardship of this important infrastructure. A new funding model is needed for the construction, operation and maintenance of social housing. Infrastructure Partners Australia has recently released a discussion paper which outlines a new funding model for social housing (IPA, 2016). This model operates on a subsidy per tenancy, which can be used to leverage private investment in social housing construction, as well as adequately cover operating costs. The subsidy for this model is generated through a ring fenced Social Housing Future Fund similar to the Future Fund. The fund would be capitalised through the progressive sale of social housing assets over a 20 year period. Version Date: 31 October 2016 Page 6
The 30 year Infrastructure Strategy could trial a similar model. By seeding a Social Housing Future Fund with direct government investment, to provide proof of concept and build the capacity of the Community Housing Sector to deliver housing under this model at scale. If successful, this model could support asset management, refurbishment and disposal plans. Affordable Private Rental Stock (ARH) Over the long term, mechanisms that encourage private and institutional investment in the provision of affordable housing will be critical to meet the state s growing needs. The Affordable Private Rental Stock option included in the Draft Strategy suggests that housing constructed under this initiative with private finance would be permanently provided as affordable housing, but remain privately owned, with the community housing sector acting as manager and operator. Encouraging private investment in affordable housing is critical, however it is not necessary to define the form that asset ownership should take. The draft options paper highlights the National Rental Affordability Scheme (NRAS) as a model designed to attract private investment in affordable housing. While this was an important initiative, the majority of NRAS incentives in Victoria were used by Community Housing providers and educational institutions, not private investors. This scheme may have been more successful in attracting private investors if it had been retained and developed, however the early uptake by community housing suggests that these kinds of products can also be used by the community housing sector to deliver a broader suite of housing options to low income households. The emphasis of this recommendation should be on assembling the suite of incentives and regulatory mechanisms are needed to bridge the gap between the rate of return required by private investors, and that able to be delivered by affordable rental housing. Proposed changes to the recommendation We strongly support the recommendation to increase the supply of affordable rental housing To do this most effectively the detailed initiatives should focus on creating new funding mechanisms to increase the social housing supply in a way that is sustainable over the long term. This includes a model that adequately provisions for ongoing operation and maintenance of the housing assets. Initiatives to encourage the provision of affordable private rental stock should be recast to include the need to develop subsidy and regulatory systems that support private investment in affordable housing products. Version Date: 31 October 2016 Page 7
Conclusion Yarra Community Housing welcomes the Draft 30-year Infrastructure Strategy and applaud Infrastructure Victoria s approach to developing this comprehensive document. We are pleased to see affordable housing recognised as critical infrastructure and strongly support the recommendations contained in the Draft Strategy. The suggested changes in this submission are intended to strengthen implementation, or clarify objectives. We look forward to working with the Victoria Government to take decisive action on increasing the supply of affordable housing in Victoria over the next 30 years. References AIHW (Australian Institute of Health and Welfare), 2015. Specialist homelessness services: 2014 2015, Vic Supplementary Tables, 27, Australian Institute of Health and Welfare, Canberra. VAGO (Victorian Auditor General) 2012, Access to Public Housing, State Government of Victoria, Melbourne Monk, S., Crook, T., Lister, D., Rowley, S., Short, C. & Whitehead, C., 2005, Land and finance for affordable housing: The complementary roles of social housing grant and the provision of affordable housing through the planning system, York: Joseph Rowntree Foundation. Johnson, G, Parkinson, S and Parsell, C, 2012, Policy shift or program drift? Implementing housing first in Australia, Australian Housing and Urban Research Institute, Melbourne IPA (Infrastructure Partners Australia) 2016, From Housing Assets to Housing People: Fixing Australia s Social Housing System, Infrastructure Partnership Australia, Sydney. Gurran N, Milligan V, Baker D, Bugg LB, & Christensen S,,2008, New directions in planning for affordable housing: Australian and international evidence and implications AHURI Final Report No. 120, Australian Housing and Urban Research Institute Sydney Research Centre, Sydney Version Date: 31 October 2016 Page 8
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