COMMUNITY DEVELOPMENT AND JUSTICE STANDING COMMITTEE A FADING DREAM – AFFORDABLE HOUSING IN WESTERN AUSTRALIA Report No. 8 in the 38th Parliament 2011 Published by the Legislative Assembly, Parliament of Western Australia, Perth, November 2011. Printed by the Government Printer, State Law Publisher, Western Australia. Community Development and Justice Standing Committee A Fading Dream – Affordable Housing in Western Australia ISBN: 978-1-921865-18-3 (Series: Western Australia. Parliament. Legislative Assembly. Committees. Community Development and Justice Standing Committee. Report 8) 328.365 99-0 Copies available from: State Law Publisher 10 William Street PERTH WA 6000 Telephone: (08) 9426 0000 Facsimile: (08) 9321 7536 Email: [email protected] Copies available on-line: www.parliament.wa.gov.au/cdjsc COMMUNITY DEVELOPMENT AND JUSTICE STANDING COMMITTEE A FADING DREAM – AFFORDABLE HOUSING IN WESTERN AUSTRALIA Report No. 8 Presented by: Mr A.P. O’Gorman, MLA Laid on the Table of the Legislative Assembly on 3 November 2011 COMMUNITY DEVELOPMENT AND JUSTICE STANDING COMMITTEE COMMITTEE MEMBERS Chair Mr A.P. O’Gorman, MLA Member for Joondalup Deputy Chair Mr A.P. Jacob, MLA Member for Ocean Reef Members Mr I.M. Britza, MLA Member for Morley Hon Ms M.M. Quirk, MLA Member for Girrawheen Hon Mr T.G. Stephens, MLA Member for Pilbara COMMITTEE STAFF Principal Research Officer Dr Brian Gordon, EMBA (until 24 June 2011) Dr David Worth, MBA, PhD (from 24 June 2011) Research Officer Ms Jovita Hogan, BA (Hons) COMMITTEE ADDRESS Community Development and Justice Standing Committee Legislative Assembly Tel: (08) 9222 7469 Parliament House Fax: (08) 9222 7804 Harvest Terrace Email: [email protected] PERTH WA 6000 Website: www.parliament.wa.gov.au/cdjsc - i - COMMUNITY DEVELOPMENT AND JUSTICE STANDING COMMITTEE TABLE OF CONTENTS COMMITTEE MEMBERS ................................................................................................................................ i COMMITTEE STAFF........................................................................................................................................ i COMMITTEE ADDRESS ................................................................................................................................. i COMMITTEE’S FUNCTIONS AND POWERS............................................................................................ vii INQUIRY TERMS OF REFERENCE ............................................................................................................. ix CHAIR’S FOREWORD AND EXECUTIVE SUMMARY............................................................................ xi FINDINGS..................................................................................................................................................... xvii RECOMMENDATIONS.............................................................................................................................. xxix MINISTERIAL RESPONSE..................................................................................................................... xxxvii CHAPTER 1 THE AFFORDABLE HOUSING DREAM ................................................................................. 1 1.1 BACKGROUND TO PUBLIC HOUSING IN AUSTRALIA ............................................................... 1 (a) Early history of government assistance................................................................................. 1 (b) Drop in Federal funding until 2008....................................................................................... 1 1.2 A RAPIDLY DEVELOPING PROBLEM IN WESTERN AUSTRALIA............................................. 4 (a) Waiting list data .................................................................................................................... 4 (b) Affordable housing and ‘housing stress’............................................................................. 10 (c) The State’s Affordable Housing Strategy 2010-2020.......................................................... 13 (d) Recent changes in affordability........................................................................................... 16 1.3 CONDUCT OF THIS INQUIRY .........................................................................................................17 1.4 DEFINING AFFORDABILITY........................................................................................................... 17 (a) Determinants of affordability.............................................................................................. 17 (b) International measures of affordability ............................................................................... 18 1.5 SOME FACTORS IMPACTING AFFORDABILITY......................................................................... 18 (a) Median house prices............................................................................................................ 19 (b) Resource development and population increase.................................................................. 20 (c) Lack of affordable private rental properties ........................................................................ 21 (d) Demographics of private renters ......................................................................................... 23 (e) Impact on Indigenous tenants.............................................................................................. 25 (f) Demand for new houses...................................................................................................... 27 (g) Profitability of the State’s housing sector ........................................................................... 29 (h) The ‘residualisation’ of public housing............................................................................... 30 (i) Increased energy and fuel costs........................................................................................... 30 1.6 GOVERNMENT ACTIONS................................................................................................................ 32 (a) Federal Government changes.............................................................................................. 32 (b) State Government actions.................................................................................................... 32 1.7 SOME AFFORDABLE HOUSING OPTIONS ................................................................................... 34 (a) Affordable housing quotas .................................................................................................. 34 (b) Land rent scheme ................................................................................................................37 (c) Shared equity schemes ........................................................................................................ 39 (d) Smaller block sizes.............................................................................................................. 41 CHAPTER 2 THE STATE’S SOCIAL HOUSING SECTOR ........................................................................ 43 2.1 SOCIAL HOUSING STAKEHOLDERS............................................................................................. 43 2.2 FEDERAL POLICY CHANGES ......................................................................................................... 43 2.3 SOCIAL HOUSING AS PART OF A CONTINUUM ........................................................................ 46 (a) Housing continuum as a concept......................................................................................... 46 (b) A UK community housing continuum ................................................................................ 47 (c) Problems with a housing continuum ................................................................................... 48 (d) The Department of Housing’s affordable housing continuum ............................................ 49 CHAPTER 3 THE STATE’S COMMUNITY HOUSING SECTOR ............................................................. 51 3.1 INTRODUCTION................................................................................................................................ 51 3.2 THE CURRENT STATUS OF COMMUNITY HOUSING PROVIDERS......................................... 52 - iii - COMMUNITY DEVELOPMENT AND JUSTICE STANDING COMMITTEE (a) Background..........................................................................................................................52 (b) Fragmentation of the community housing sector.................................................................55 (c) Tax and other benefits accruing to the community sector....................................................55 3.3 THE NEED FOR FURTHER REGULATION .....................................................................................57 (a) Purpose of the regulation of the community housing sector ................................................58 (b) Complex existing regulation framework..............................................................................59 3.4 FINANCING A LARGER COMMUNITY HOUSING SECTOR .......................................................60 3.5 AUSTRALIAN AND OVERSEAS TRENDS......................................................................................61 3.6 BORROWING AND CREDIT ISSUES ...............................................................................................63