Affordable housing: what role for local government?

Tiley, Ian ; Hil, Richard

1. INTRODUCTION

This article develops a local government practitioner perspective on the issue of affordable housing as it relates to the Northern Rivers region of New South Wales. It seeks to develop a definition of affordable housing, provide some national context and a Northern Rivers affordable housing perspective. It further comments on Local Environmental Plans as possibly mandating affordable housing as a development consent condition, providing a local perspective on the Clarence Valley Affordable Housing Strategy and the priority areas under the Clarence Valley Strategy and some of the challenges the strategy presents.

It is statistically evident that affordable housing is an area of critical need in Australia whether it is rental accommodation or purchase of property and that without an adequate ongoing supply of affordable housing there is the stark prospect of greater poverty and homelessness. Some local government entities have committed to playing a part in helping to secure a greater stock of social housing for the benefit of those in need. It is clear from Clarence Valley Council NSW experience that effective public and stakeholder partnerships may become the preferred provision mechanism. This article makes the case for greater involvement of local government in assisting to provide affordable housing for needy Australians.

It is important to understand what is meant when the term affordable housing is used. The National Housing Strategy has defined affordable housing "conveying the notion of reasonable housing costs in relation to income: that is, housing costs that leave households with sufficient income to meet other basic needs such as food, clothing, transport, medical care and education. The ratio of housing costs to income is the common measure to determine affordability".

2. THE NATIONAL SCENE

In June 2007 the United Nations (UN) Human Rights Council Geneva report stated that Australia was in the grip of a "serious national housing crisis characterised by reductions in public housing stock, soaring private rental rates, an acknowledged housing affordability crisis and no real reduction in the number of homeless" (Kothari, 2007, p. 2) (Mission Australia, 2007).

The UN report stated that 1.5 million Australians were living in housing stress i.e. spending at least 30 percent of income on housing costs. Across Australia there are 30,000 fewer houses in the public housing stock than in 1996 and about 100,000 Australians are homeless on any one night. Nine percent of all indigenous people are homeless (Kothari, 2007, pp. 9-10; Planning Institute of Australia NSW Division, 2007, p.2). The telling United Nations report urged a national housing strategy with priority for affordable rental housing, home ownership and private enterprise involvement (Mission Australia, 2007).

Over the past 40 years there has been a steady decline in public housing stock across Australia even though over the years there have been major Commonwealth government initiatives relating to affordable housing including the Commonwealth-State Housing Agreement that is mainly concerned with public housing for low income people. Other initiatives have included Commonwealth Rent Assistance, Australian Government Residential Aged Care Program, the Private Rental Support Program, Independent Living Units and Assistance with Care and Housing for the Aged (Cartwright, 2006, pp. 26-28). Another reason for declining affordable housing stock has been a deliberate Commonwealth policy to encourage older people to 'age in place', designed to allow older people to stay in one aged care facility and not to have to move to another facility as their care needs increased. In reality this has come to mean ageing in the community, in the person' s own home or in the home of a family carer (Cartwright, 2006, p. 28).

Previous State government policies included assisting tenants and residents to purchase the properties they were renting and while this assisted people on low incomes to become home owners the net result has been to diminish the number of public housing stock properties. Given that recent policies have not meant more housing stock and that there has been increasing demand the available stock is inadequate (Cartwright, 2006, p. 21).

The New South Wales Department of Urban Affairs and Planning attested in 2000 that households that were spending more than 30 percent of their income on housing and living in housing stress may lack the purchasing power for obtaining other basic essentials of life (Cartwright, 2006, p. 5).

More than one quarter of a million Australian families pay more than 30 percent of their income in rent. This number they expect to rise by 2010 to more than 400,000 households. Statistics released by the Australian Bureau of Statistics early in March 2008 indicate that people in NSW are spending 39.9 percent of income on housing (Vu, 2007, pp. 6-7). As mortgage payments and rent devour greater proportions of income, life has become much more stressful for low to middle income earners.

The average monthly repayment for first home buyers is $2300. First home buyers are reducing as a proportion of the market, down from 21.8 percent in 1996 to 17.5 percent in February 2007. Housing repossessions are soaring with more than 5000 in Sydney recently yet the Commonwealth still collects an average $3100 GST on new homes. The average house now costs 7 times the average annual income which is up from 4 times the average annual income eleven years ago. The Housing Industry Association warns that continued decline in housing affordability "may see an escalation in number of homeless Australians".

The Planning Institute of Australia argues for a co-ordinated effort from governments at all levels, working collectively to address and respond adequately to housing affordability and highlights the need to improve coordination between levels of government and the development of an overall policy position towards housing. The Institute suggests that Affordable Housing through planning mechanisms alone is limited without broader policy support (Planning Institute of Australia, NSW Division, 2007, p. 6).

It is praiseworthy that the Rudd Labor government appointed a Housing Minister and promised to negotiate a National Affordable Housing Agreement with the three tiers of government. This government's four part promise to examine shared equity models, to involve Federal government, to protect consumers from predatory lenders and to find ways to leverage private investment in low-income housing also has considerable merit.

An example of a model being promoted is that of long term (20 to 30 years) residential leasehold title which has been operating in London for several decades (Coombs, 2008). The lessee has the right for example to decorate, undertake renovations, sell the remainder of the lease, and realise a capital gain. This model has exciting possibilities and could be particularly beneficial to citizens facing mortgage-driven foreclosure of their homes as they could sell the freehold to an investor and retain the leasehold and occupancy for a negotiated proportion of the outlay of purchasing. For those without the financial capacity to purchase a lease it would be possible for the government to create an Affordable Housing Bond scheme, purchase a long term 50 year lease and provide 25 year sub-leases (Coombs, 2008). Such a model would require a change of policy direction by governments and citizens about housing tenure and a new culture of acceptance of leasehold as a legitimate and viable method of 'owning' a home (Coombs, 2008).

3. NORTHERN RIVERS OF NEW SOUTH WALES

The Northern Rivers Social Development Council undertakes important tasks in seeking to alleviate social disadvantage in the region and provides peak representation to the community and social welfare sector. It delivers high quality services and partner programs with government to develop coordinated responses to social need.

In relation to the regional housing affordability need the Social Development Council's Scoping Report, released in March 2007, demonstrated that the Northern Rivers of New South Wales faces sizeable and increasing housing affordability problems, primarily because of high population growth, increased property prices, and relatively low incomes (Milligan & Phibbs, 2007).

The nine recommendations contained in the Executive Summary of the Scoping Report present options as to how the goal of expanded affordable housing could be achieved in the region (Milligan & Phibbs, 2007). The recommendations are about building impetus for an extended program of affordable housing and are deserving of united support by all tiers of Australian government.

A key recommendation was to establish formal partnerships or joint ventures to build local capacity in the not-for-profit sector to develop an affordable housing business model. Another recommendation was to develop a housing proposal that would integrate private housing and affordable housing in one development to be dedicated for long term renting to target groups and managed by a community housing organisation. Of importance to local government was the recommendation to develop a consistent set of affordable housing policies with the sector to provide a platform for affordable housing development (Milligan & Phibbs 2007, pp. 7-8).

The primary role of another regional Northern Rivers entity, the Northern Rivers Regional Development Board, is to facilitate sustainable economic development and act as a catalyst for new investment and industry development in the Northern Rivers region through creative partnerships with key stakeholders. This Board has had a strategic focus on aged care and in some respects that issue has housing implications. Whilst the Board's current Strategic Plan is silent on the specific issue of regional housing affordability the Board recognises that affordable housing contributes to economic growth in the region by assisting the supply and mobility of workers, containing upwards pressure on wages and helping to attract young entrepreneurs and skilled workers.

The Development Board recognises also that there are obvious and substantial social benefits from providing appropriately located affordable housing including; promoting family stability, assisting health and wellbeing of household members, educational attainment of children, encouraging workforce participation, reducing travel time and costs, alleviating patterns of spatial disconnection and addressing exclusion affecting lower income and disadvantaged households.

It was a logical and natural alignment that in October 2007 the Social Development Council signed an Affordable Housing Position Statement with the Northern Rivers Regional Development Board (Northern Rivers Regional Development Board, 2007). The position statement acknowledges firstly that adequate housing is a fundamental human right in accordance with the United Nations Declaration of Human Rights.

Secondly the Northern Rivers is identified as one of the highest areas of housing need in NSW and thirdly regional housing affordability has deteriorated alarmingly due to high regional growth which has been driving up house prices and rents. The Development Board has agreed to support the Social Development Council in building regional affordable housing capacity by developing an appropriate management entity and investment model and to partner with the Social Development Council to assist with leadership, capacity building and networking (Northern Rivers Regional Development Board, 2007). It is now almost two years since the position statement between the two entities was executed but to this time there is little evidence that real affordable housing projects will emerge as a result. Ongoing commitment will be essential but with the disbanding of the Regional Development Board at end of June 2009 it is a matter of concern as to whether the present cooperation to secure affordable housing will continue. Without doubt the strong support and partnership of all levels of Australian government and the Northern Rivers region will be essential to achieving the goals.

4. LOCAL ENVIRONMENTAL PLANS (LEP'S) AND AFFORDABLE

HOUSING

All NSW local government councils have been required by the State government to prepare new LEP's under a State determined template which will afford inter alia, commonality of definition of land zones and planning terminology and a considerable standardisation of this mandatory planning instrument across New South Wales councils to accord with the State government and Department of Planning policy agenda. It is understood that in relation to Clarence Valley Council there are no direct impediments to establishing capacity for affordable housing under the Council's new LEP. However there may in reality be indirect impediments through requirements such as retaining local character or amenity, or excessive prescription regarding permissible density of development.

An issue that Clarence Valley Council has been addressing was what LEP provisions could be inserted that would be based upon what is proven to work in terms of affordable housing provision. Council has adopted a strategic approach to the issue and there is no outcome prescribing targets that may not be practical. However future new land release areas may well provide opportunities with perhaps more flexible zones.

In the final analysis the Council needs to work within the market place and usual dictates of supply and demand. If there cannot be established some significant discount from market price of housing then those requiring housing will remain unable to afford to enter the housing market. Similarly the private sector will continue to require adequate profit in return for market risk of provision of affordable housing. Not all home seekers require the traditional three or four bedroom mainstream home which continues to predominate in terms of available housing stock. The various players in the housing market need a new mindset of providing more adaptable and appropriate housing, for example for single person households, as distinct from the so termed affordable housing.

In addition to Federal and State policy and involvement in affordable housing a greater degree of localism and local initiative will play an important role in securing affordable and appropriate housing solutions. An essential aspect of a long term solution to affordable housing provision will be cooperative partnership between all levels of government, industry and community.

4.1 Clarence Valley Council's Affordable Housing Strategy: a Local Perspective

New South Wales Councils are required under section 8 of the Local government Act 1993 to adhere to a prescribed Charter which in several locations gives local government the legal capacity to engage in affordable housing ("NSW Local Government Act," 1993). It states the obvious that local government leadership also has a compelling moral obligation to engage in provision of community needs.

In acknowledging the foregoing National and Regional context Clarence Valley Council's experience highlights local council initiative and commitment and what can be achieved at the local level with leadership and commitment.

Early in the life of the 2004 forcibly amalgamated Clarence Valley Council it determined to establish an Affordable Housing Project, premised upon a strategic goal to address an increasing demand for housing options and the emerging need to support the most vulnerable community members. Council committed, with encouragement and significant support in the form of a subsidy from the Department of Community Services through the Area Assistance Scheme, to employ a Community Development Officer for three years to lead the affordable housing strategy process.

There were six core objectives for the position of Community Development Officer (CDO). They were to research housing needs and supply, including the different types of housing and the degree of unmet housing need through affordability or appropriateness, to develop Council housing policies and an Affordable Housing Strategy, to develop and convene an Affordable Housing Reference Group and Advisory Committee, to consult and work with the Clarence Valley Housing and Support Interagency, to research affordable housing funding opportunities and finally to develop partnerships with government, business, private and community sectors in the planning and development of affordable housing projects. The great majority of these objectives have been achieved providing solid evidence that the appointment and role of the CDO has been beneficial.

Some of the former Clarence councils prior to the amalgamations had a history of different levels of involvement in affordable housing. Grafton City LEP 1988 included affordable housing as an objective in the living area zone. Ulmarra and Pristine Waters had direct involvement in a community housing project at Wooli and Nymboida Shire, in a partnership with a project home company and a building society, had provided ten houses as a first home buyer's scheme at the village of Coutts Crossing.

Initial research identified target groups in Clarence Valley that would probably be common to many council areas. Those in need of housing encompassed; young people including those leaving juvenile justice centres, low income single people, low income families, people with a disability, women and children leaving domestic violence, adults leaving a correctional centre, aboriginal people and older people (Clarence Valley Council, 2007, p. 5).

Clarence Valley data indicated that 83.4 percent of all dwellings were separate houses, 4.7 percent were semi-detached or terrace or town houses, 6.7 percent were flats, units or apartments whilst other dwellings comprised 5.2 percent, which gave a clear indication of the need for more choice in the housing market. 44.6 percent of dwellings were owned, 25.9 percent were being purchased and 23.8 percent or almost one quarter rented (Clarence Valley Council, 2007, pp. 6, 14).

The statistics also identified that there needed to be more medium density housing in some localities and that there was a trend to smaller household size. Clarence Valley public housing stock stood at only 10.1 percent or well below the state average of 15.6 percent. Public housing stock was only available in Grafton at 5.7 percent of all dwellings and in Maclean at 0.7 percent of all dwellings. The housing growth areas in recent years have been in the coastal zone where there has been virtually no public housing stock (Clarence Valley Council, 2007, p. 6).

Clarence Valley has a higher than average Aboriginal population comprising 4.1 percent of community compared to 1.9 percent in NSW, 3.8 percent in Mid North Coast and 3.1 percent in Northern Rivers. There are seven Clarence Valley Aboriginal housing providers and the Aboriginal Housing Office manages 169 properties. This equates to a low 0.8 percent of all dwellings in the Valley and there have been continually growing waiting lists (Clarence Valley Council, 2007, p. 6).

The community housing sector in Clarence Valley has two registered housing providers and several unregistered providers managing 174 properties or 0.8 percent of all housing stock with some housing currently under construction. The Department of Housing has been planning and constructing a number of new housing projects, primarily in Grafton (Clarence Valley Council, 2007, pp. 15, 16).

In November 2007 Clarence Valley Council adopted its Affordable Housing Strategy (Clarence Valley Council, 2007). The Clarence Valley Affordable Housing Committee was established by Council to develop and implement the strategy. This Committee comprised sixteen dedicated people from a broad cross section of the Clarence community whilst other stakeholders, including landlords and real estate agents. Public meetings workshops and consultations provided valuable support, information and input to the Committee process.

Seven key guiding principles (Clarence Valley Council, 2007, p. 22) underpin the Clarence Valley Affordable Housing Strategy:

1. A commitment to providing access to housing that is appropriate and affordable so that all Clarence Valley residents should be able to access housing.

2. Openness and transparency whereby all interest groups could be engaged in open debate about how housing problems were to be defined, what issues were to be addressed and prioritised, what solutions considered, and the recommendations to be made and what opportunities implemented.

3. Fairness and equity with costs and benefits of policy outcomes fairly distributed among all residents and interest groups with an emphasis on ensuring that the least well-off or those most disadvantaged receive appropriate priority.

4. Efficiency and effectiveness should dictate that public resources are applied in such a way as to maximise beneficial outputs and outcomes for dollars expended.

5. Simplicity and ease of administration so that policy recommendations should be easy to implement and administer and the costs of administration contained.

6. Sustainability or triple bottom line of social, economic and environmental responsibility to ensure that housing is provided in a way that contributes to the development of inclusive and sustainable communities and is compatible with the goal of environmental sustainability.

7. Partnership which is a critical collaborative approach by community, private sector and all levels of government to addressing the housing needs across Clarence Valley.

4.2 Clarence Valley Affordable Housing Strategic Action Plan

There are four priority action areas under the Clarence Valley Council adopted strategy and a total of thirteen key actions (Clarence Valley Council, 2007, pp. 19-27). The four priority action areas are:

* Increasing access to affordable housing in the Clarence Valley by collaboratively expanding social housing;

* Developing planning mechanisms that provide opportunities for affordable housing;

* Changing perceptions of landlords and investors; and

* Promoting advantages of the relative cost of developments in the Clarence Valley.

Completion of a Housing Needs Analysis has crystallised Clarence Valley affordable housing needs and placed Council in a solid position to develop partnerships, and to advocate and lobby higher tiers of government concerning the need to increase the supply of social housing in the region.

As a direct consequence of the Housing Needs Analysis, Housing New South Wales developed a Local Area Assets Management plan and commenced addressing Clarence Valley future housing development and redevelopment needs. Work was also been undertaken in educating the community and stakeholders about social housing issues. A planning meeting in 2008 brought together local community housing providers, aboriginal housing providers and support services, for the purpose of working together more collaboratively to develop local housing responses.

Formation and maintenance of effective partnerships was identified as a high priority issue. In 2007 two Memoranda of Understanding between housing providers and support services were developed in the Clarence Valley and emphasis given to developing additional partnerships. This approach is the direction that all levels of government have been taking to ensure a more holistic approach is developed to address the housing needs of those most vulnerable in community. It is evident that higher level government funding opportunities are more likely when development of strong partnerships can be demonstrated. Announcements of Federal funding (referred to later) to the partnership comprising Council, State government and the private sector company Community Housing Limited is clear evidence of the success of the partnership approach.

Council's Affordable Housing officer investigated the feasibility of developing an Affordable Housing Trust as a framework to attraction of Affordable Housing funding. Council and other interested community organisations would become community shareholders and the Housing Trust could have responsibility for housing development, procurement, asset management, policy development and transparent accountability. The Trust would be a not for profit charitable entity working to meet the identified need for increased social housing in the Clarence Valley. A rental model would provide a range of options for very low to moderate income earners. A rental rate of 25 percent of income may apply to the very low income earners with a discounted market rental rate being available to moderate income earners.

Housing New South Wales established an Affordable Housing Innovations Fund which supports partnerships between registered community housing providers and councils by means of a public/private partnership program. Government contributes 60 percent of funding and private partnership 40 percent, of which half is equity and half borrowings (Housing NSW, 2008). This fund may well provide a suitable model to support a future Clarence Valley Affordable Housing Trust entity.

In May 2008 Clarence Valley Council agreed to participate in a partnering agreement with a regional housing provider to deliver affordable housing under the National Rental Affordability Scheme. At that time Council also nominated land that would be its initial contribution to affordable housing in the Clarence Valley. Unfortunately because of subsequent changed circumstances the regional provider was unable to proceed with the agreement. However in December 2008 a new partnering agreement was agreed with a national provider, Community Housing Limited (Beaver, 2008, p. 57).

A likely first outcome in the Clarence Valley will be rental housing for very low, low and moderate income earners in Grafton city on Housing NSW land with perhaps a Seniors Living project given the proximity to base hospital and transport. The economic assessment indicates that such projects would make a significant contribution to the community through efficient resource use, positive economic gains by attracting and maintaining key workers in the locality, would reduce housing needs stress and also support social development values (Beaver, 2008, p. 59). Future housing projects in the Clarence Valley will commit Clarence Valley Council to some land contribution but the council retains the land asset which will continue to be identified in council's accounts but not be saleable given that they will contain housing improvements thereon. It may be possible in future affordable housing developments that council provides discounts on developer (Section 94) head works contributions or other planning incentives to private developers perhaps under Voluntary Planning Agreements (Beaver, 2008, p. 61)

5. CONCLUSION

It should always be acknowledged and at the forefront of affordable housing policy development that the United Nations Declaration of Human Rights which recognises that "all people have a Right to housing which is secure, hygienic, affordable and of a standard consistent with human dignity" also requires that it is the responsibility of government to provide shelter for its citizens (Cartwright, 2006, p. viii).

Lack of ability to purchase or rent housing has obvious social adverse impacts primarily for the poor and disadvantaged. Therefore housing needs to be more central to the welfare debate. There needs to occur much more public and private development of affordable housing. It is questionable whether increase in the first home buyers grant is a real solution. Realistic solutions need to include building of public housing on surplus local, state and commonwealth land and possibly paying rent assistance direct to landlords in return for discount in rents for people on prescribed welfare benefits.

Affordable housing is all about families, children and young people. It is about ensuring that low and middle income earners have a solid base to their lives and placing people in a stronger position to have choices and make their own decisions for their futures such as health needs, education options, employment and planning for their futures.

Affordable housing is an area of critical need whether it is rental accommodation or purchase of property. Without affordable housing there is the stark prospect of poverty and homelessness for those caught in the web of rising prices and decreasing housing stock. Strong communities need citizens who are in a sound position to make positive choices for their futures and available, affordable and appropriate housing is pivotal for this to be possible.

In late 2008 Clarence Valley Council applied for an affordable housing project with partnership support of Community Housing Limited through the Australian Government Department of Housing's "Funding under the Housing Affordable Fund" and was notified in January 2009 of being shortlisted for (Plibersek, 2009) funding in the sum of $880,500 for an initial affordable housing project. In April 2009 the funding to Clarence Valley Council was confirmed with the council being one of only two New South Wales local councils to receive funding under the initial allocation from the Rudd government.

Clarence Valley Council is committed to playing a lead role in helping to secure a greater stock of social housing for the benefit of those in need in the Clarence community. It is clear from Clarence Valley Council experience that effective public and stakeholder partnerships will probably become the preferred provision mechanism. Whatever projects occur will be within the framework of the market place and will need to demonstrate long term financial sustainability. Council will continue to play a key role in planning the provision of more appropriate housing for those most in need across in the Clarence Valley region.

REFERENCES

Beaver, N. (2008) Development of a Memorandum of Understanding between Community Housing Limited and Clarence Valley Council (No. 08.225/08). Grafton NSW: Clarence Valley Council.

Cartwright C (2006) Investigating Models of Affordable Housing for Older People and People with Disabilities in the Mid North Coast Region of NSW.

Coffs Harbour NSW: NSW Department of Housing and Enterprise and Training Company of Coffs Harbour Limited.

Clarence Valley Council (2007) Clarence Valley Affordable Housing Strategy. From http://www.clarence.nsw.gov.au.

Coombs B (2008) Affordable Housing Through Leasehold Title? Retrieved 31st July, from http://cpd.org.au/article/affordable-housing-through-leasehold title.

Housing NSW (2008) Affordable Housing Innovations Fund. Accessible at http://www.housing.nsw.gov.au/About%2BUs/News%2Band%2BNewsletter s/News%2BArticles/Previous%2BNews%2BArticles/News%2B2007/Afford able%2BHousing%2BInnovations%2BFund%2B20078%2BAnnounced.htm.

Milligan, V. and Phibbs P. (2007) Growing Affordable Housing in the Northern Rivers: Scoping Report. Lismore NSW: Northern Rivers Social Development Council.

Miloon Kothari (2007) Report of the Special Rapporteur on adequate housing as a component of the right to an adequate standard of Living: Mission to Australia--31 July to 15 August 2006. Geneva: United Nations General Assembly.

Mission Australia (2007) UN report on Australian housing crisis rings true. Retrieved 10th February 2009, from http://www.missionaustralia.com.au/news/media-releases/182-un-report onaustralian-housing.

Northern Rivers Regional Development Board (2007) Affordable Housing Position Statement. Lismore NSW.

NSW Local Government Act 8 (1993). Planning Institute of Australia NSW Division (2007) Affordable Housing: PIA Position. Retrieved 16th August 2007, from http://www.planning.org.au

Plibersek T (2009).Housing Affordability Fund first round shortlist announced. http://www.tanyaplibersek.fahcsia.gov.au/Internet/tanyaplibersek.nsf/content/ housing_shortlist_14jan09.htm.

Quoc Ngu Vu (2007) The Effect of Rent Increases on Housing Stress in Australia. Paper presented at the Online Conference Paper CP117. from http://www.canberra.edu.au/centres/natsem/publications?sq_content_src=%2 BdXJsPWh0dHAlM0ElMkYlMkZhbmltYWwuY2FuYmVycmEuZWR1Lm F1JTNBNTgwJTJGbmF0c2VtJTJGaW5kZXgucGhwJTNGbW9kZSUzRHB 1YmxpY2F0aW9uJTI2cHVibGljYXRpb24lM0QxMDgxJmFsbD0x

Ian Tiley

Centre for Local Government, University of New England, Armidale NSW 2351

Richard Hil

Visiting Scholar, Centre for Peace and Conflict Studies, University of Sydney NSW 2006