An opinion piece by Andrew McAnulty, CEO of Link Wentworth, from Link Wentworth’s 2022-23 Annual Report
What a difference a year makes. This time last year, the Federal Government’s $10 billion Housing Australia Future Fund (HAFF) was one of the signature policy platforms of the newly elected Albanese Labor government. As I write this today, this legislation has been passed through the Senate. Following the protracted negotiations with the Greens we are seeing an even greater investment in social housing, the largest ever from government.
At a state level, we now have a newly elected Labor government with a strong and public commitment to growing social and affordable housing, spearheaded by a new dynamic Minister for Housing, The Hon. Rose Jackson MLC. This time last year Mike Allen, Link Wentworth Chair, Margaret Maljkovic, Chief Customer Officer and I were on a study tour of London housing associations with the then opposition spokesperson for housing, Rose Jackson. A lot has changed in one year!
Politically, the stars have aligned, and we have a once-in-a-generation opportunity to invest in social and affordable housing for now and the future. A key to the future growth of social and affordable housing is ensuring that the community housing provider (CHP) sector is set up now for the future. During our study tour in London, we got a glimpse of what that future could look like in Australia. The Australian CHP sector is where the UK sector was about 15 – 20 years ago. After decades of investment in the growth of housing associations in the UK, there are now major organisations like our tour hosts, London & Quadrant and Peabody, that develop and build over 8,000 properties per year—nearly a quarter of the total target of the HAFF over 5 years! So how did they get there?
In the UK, land and assets have been transferred over time to housing associations, usually at a significant discount to market value, grants have been provided, and private finance has been leveraged in. This has enabled housing associations to grow over time, to the point where they are now strong and sophisticated businesses that can develop market sale housing and joint ventures, which increases the volume of cross subsidy to pay for social and affordable housing.
In the UK, we saw how all levels of government worked together to make affordable, accessible housing a priority. In Australia, we are now at crossroads, and we have the foundations to make a big difference and build more homes for those most in need.
The CHP sector must play a critical role in maximising outcomes of the HAFF.
The HAFF provides a critical opportunity to not only build housing in the short to medium term but set up the structures for the future to ensure that there is continued growth of social and affordable housing. A strong and robust CHP sector that reinvests surplus back into building more social and affordable housing is a proven formula to grow subsidised housing. Unlike the private sector, who have a direct responsibility to their shareholders to maximise financial returns, the mission of CHPs is to deliver more social and affordable housing.
The UK experience clearly shows the benefits of growing CHPs. It makes sense for the Australian government to be growing the sector, to thereby grow more social and affordable housing than the private sector or government can provide on their own. CHPs are charities, GST exempt and reinvest surplus back into social and affordable housing.
CHPs operate in a highly regulated environment with a national regulatory framework and state-based jurisdictions. Investment in the sector by government is low risk and the social returns are high. Due to our charity and tax status, CHPs can deliver more than government can. A report by the Australian Housing and Urban Research Institute found that for every dollar invested into the CHP sector by government, there is a $1.30 return. CHPs don’t just provide buildings, we provide much more in terms of wrap around support for vulnerable people and building communities.
Now that the HAFF has been legislated, the design of the rollout is critical. As organisations with a mission to provide housing for those most in need, our priority is to ensure that funding released through HAFF enables social and affordable housing to be provided in perpetuity. It would be a lost opportunity if funding was only invested for a financial return cycle of 15-25 years. This would just push the problem down the line, to the next generation to our children and their children.
We have an opportunity now to affect generational change and provide an ongoing legacy—this is the time to get it right!
How CHPs can deliver more social and affordable housing
So, let’s use a potential scenario of a development in a middle-ring suburb of Sydney.
Like government, our values are aligned in wanting to provide a range of social and affordable housing, especially for those in most need. The overall shared outcome is to optimise the delivery of more social and affordable housing as signalled by the NSW Minister for Housing.
Link Wentworth is keen to continue to work with Land and Housing Corporation and the Department of Communities and Justice to meet this need. We are taking a proactive approach to identify underutilised assets that are at the end of their lifecycle and replace them with new, appropriate housing to address current housing need. Often these assets are old 1950’s detached houses that no longer meet the tenants’ needs and weren’t designed for ageing in place. In these instances, we would seek to retire these assets and replace them with new purpose built homes.
A case study demonstrates that we could retire seven detached 1950’s dwellings and replace them with 48 new dwellings that are suitable for people to age in place. These middle-ring suburbs are the result of 1950-1960’s planning and development, and provide a great opportunity to renew underutilised assets owned by government — allowing people to remain in their community and age in place in new appropriate housing.
There are many places throughout Sydney where these opportunities can be replicated. With the intentional partnership with the State government and direct access to Commonwealth and State government funding, the CHP sector is well placed to deliver more social and affordable housing.