Inquiry into Affordable Housing Senate Standing Committee on Economics

Submission by PowerHousing Australia

Signature:

Name: Phone Number: Postal Address: Organisation: Signatory Position: Level of Authorisation:

Julie Quaass 03 5441 8879 PO Box 122, BENDIGO Vic 3552 PowerHousing Australia Ltd Executive Officer Scott Langford, Chair, PowerHousing Australia

Executive Summary
The Australian housing system is broken. Affordability is stretched and there is an increasing supply gap. Home ownership rates are declining, private rental is increasingly unable to offer suitable housing for key workers and public housing is financially unsustainable and shrinking in size as demand rises. Too few houses are built, and many are unaffordable to workers in industries driving economic growth. PowerHousing Australia represents large, professionally managed community housing providers. We offer solutions to Government as ready and willing partners in addressing the challenges of the housing system. Our proposals are not based on aspirational thinking, but a track record of delivering around a thousand new social and affordable homes each year, optimising government investment. This submission is based on four inter-related themes. PowerHousing members can help address a broken social housing system by increasing efficiencies, better utilisation of funding available in the social housing system, transfers from public housing and entrepreneurial drive. A sustainable system will allow new homes to be built, helping address the housing shortfall. Development and renewal of properties by PowerHousing members creates sustainable, vibrant communities. Together we can strengthen the economy, get more people into work and allow industry to generate wealth.

PowerHousing Australia |Senate inquiry into affordable housing

What can be done? Our detailed recommendations include: Encouraging the States to increase the scale of public housing transfers, including targeted asset transfer, to sophisticated community housing providers with a track record of efficiency and growth. Creating a contestable growth fund for community housing providers as part of the National Affordable Housing Agreement (NAHA) to drive innovation and system efficiencies. Promoting greater use of cross-sector partnerships to deliver social and economically sustainable developments, with major input from not-for-profit organisations. Supporting the growth of new institutional investment in affordable housing by providing targeted support for housing bonds. Making the National Rental Affordability Scheme (NRAS) permanent, but more streamlined and consistent in delivery, targeted to need and with fewer loopholes. all needed to attract investors. Coordinating the roll-out of the National Disability Insurance Scheme, with providers such as the members of PowerHousing playing a key role in meeting the need for appropriate, affordable housing. Encouraging a greater use of intermediate housing options such as shared ownership to help moderate income households move towards home ownership.

Our vision Our vision is to build a sustainable system capable of meeting affordable housing need. The 28 member organisations of PowerHousing Australia house 80,000 residents in properties valued at over $7 billion. We have leveraged $355 million to increase housing supply. We have a proven track record delivering new housing and quality tenancy management. After a decade building capacity and professionalising, our model has been confirmed as sustainable and effective in independent evaluations by KPMG, Ernst & Young and AHURI. This success now needs to be replicated at greater scale. PowerHousing members are trusted stewards of scarce public investment. We are transparent in all that we do. Funding contestability means we bid competitively for new opportunities such as capital growth funds, property transfers and NRAS incentives. This encourages system-wide efficiencies, and widespread innovation using best practice social enterprise approaches. We understand the Commonwealths drive to increase housing system efficiencies at the same time as public housing is financially unsustainable under current policy settings. This is why we have submitted exciting positive proposals showing what PowerHousing members can do for - and with the Commonwealth and States.

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PowerHousing Australia |Senate inquiry into affordable housing

Table of Contents

Executive Summary .................................................................................................. i Table of Contents .................................................................................................... iii 1 PowerHousing: Social Enterprise in Action ................................................... 1
1.1 1.2 1.3 1.4 Contemporary community housing ...................................................................... 1 Professionalising and growing the sector ............................................................. 2 PowerHousing Australia....................................................................................... 2 The International Housing Partnership ................................................................. 3

Building a Sustainable Social Housing System ............................................. 5

2.1 2.2 2.3 2.4 The challenge ...................................................................................................... 5 Our member organisations role ........................................................................... 5 A modern approach to public housing stock transfer............................................ 7 Our recommendations to Government ................................................................. 7

Building and Managing Quality Homes ........................................................ 10

3.1 3.2 3.3 3.4 The challenge .................................................................................................... 10 Our member organisations role ......................................................................... 10 Leveraging benefits from NRAS......................................................................... 12 Our recommendations to Government ............................................................... 12

Building Vibrant Communities ...................................................................... 15

4.1 4.2 4.3 4.4 4.5 The challenge .................................................................................................... 15 Our member organisations role ......................................................................... 15 Empowering our tenants .................................................................................... 16 Socially sustainable mixed communities ............................................................ 17 Our recommendations to Government ............................................................... 17

Building a Strong Economy ........................................................................... 19

5.1 5.2 5.3 5.4 The challenge .................................................................................................... 19 Our member organisations role ......................................................................... 20 Engaging tenants in work and training ............................................................... 20 Our recommendations to Government ............................................................... 21

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PowerHousing Australia |Senate inquiry into affordable housing

PowerHousing: Social Enterprise in Action

PowerHousing Australia brings together Australias leading not-for-profit housing providers who collectively manage over 38,000 social housing dwellings worth over $7 billion. PowerHousing members have raised $355 million in debt to increase housing supply. We deliver high quality services to tenants, help build cohesive communities and use contemporary financial approaches to increase the stock of social and affordable housing

1.1

Contemporary community housing

Housing for all
Unity Housings Northern Region Affordable Rental Initiative is a strategic partnership targeting new build key worker housing. This will support expanding industries and foster economic development for regional South Australia. The initiative incorporates housing for older South Australians and people living with disabilities. The project offers each of the 80 Unity homes a 1.5kW photovoltaic solar generation system to reduce tenant electricity bills by up to 50%. The project is an innovative partnership driven by Unity between the Commonwealth and State Governments, three regional councils, the corporate sector and three Regional Development Australia offices. Due for completion by mid-2014, the $20.7 million project involves building a total of 102 properties, 22 of which will be sold to the market, 60 will be rented to key workers and 20 to older South Australians and people living with a disability.

Community housing is affordable rental housing provided by not for profit organisations at below market rent for low and moderate income tenants. It forms an integral part of Australias housing system by providing housing options which are affordable, secure and responsive to the needs of the neighbourhood. The members of PowerHousing understand that successful outcomes for tenants depend on building strong and resilient communities, not just houses. They work closely with local service agencies to build social cohesion in what were often areas of social and economic disadvantage. As exemplars in the community housing sector, PowerHousing Members are locally grounded in and accountable to their communities. They acknowledge that secure and affordable housing is a major factor in stabilising the lives of

PowerHousing Australia |Senate inquiry into affordable housing

tenants and this leads to better health, employment opportunities and improved financial stability. Community housing brings local, effective, flexible customised and innovative management to communities.

1.2

Professionalising and growing the sector

Community housing has undergone a period of rapid change in recent years, best demonstrated by the significant growth of PowerHousing members. The sector has grown, diversified and professionalised and the broader industry network has expanded and strengthened. Rapid growth has occurred with the transfer of dwellings from state and territory governments as well as developing new housing supported by Nation Building funds and through the National Rental Affordability Scheme (NRAS). Both the transfer of assets from government and the upsurge in development have built the capacity of the larger organisations, enabling them to raise private finance to further grow supply. There has also been a marked change in the role of community housing organisations - from a tenancy management model to a sophisticated model of tenant engagement and management, community development, asset management and property development. They now form alliances, joint ventures and special purpose vehicles. They work in partnership with government, the private sector and philanthropic organisations. PowerHousing members are modern and efficient with sustainable business models. They operate within government imposed regulatory systems and are subject to the same governance and regulatory rigour as major private companies. They employ professional staff and have highly skilled boards of directors. Greater capacity and professionalism positions these contemporary organisations to participate at much greater scale in the provision of affordable housing.

1.3

PowerHousing Australia
PowerHousing at a glance

PowerHousing Australia is the national network of leading growth community housing providers who develop and manage social and affordable housing. Our members deliver a range of dwellings that meet the needs of a diverse range of tenants whilst focusing on building strong and sustainable communities, stimulating local economies and providing jobs.

80,000 housing residents

28 member organisations

$355 million debt raised PowerHousing began in 2005 Assets managed $7.2 bn with recognition amongst a group of Chief Executives of the scale of the emerging housing crisis and the enhanced capacity of organisations to provide solutions if they collaborated to share knowledge and resources. It 2

PowerHousing Australia |Senate inquiry into affordable housing

has developed into a unique forum for peer to peer exchange and collaboration amongst housing professionals who are committed to improving lives through the provision of affordable housing. We have a diversity of members ranging from organisations whose main activity is housing provision to multi service agencies which have a housing division. The common element is the commitment to address housing need through growth of supply, best practice in housing and community development, and excellence in tenancy and asset management. Throughout the year we hold forums for groups including Chief Executive Officers, Chief Financial Officers, Asset and Development Managers and Operations Managers who come together to network and share knowledge and expertise. An Exchange is held annually and provides opportunities for other staff and Board Directors. In addition PowerHousing advocates on behalf of members and provides financial benefits through aggregated purchasing of advice and services, research and benchmarking of services.

A hand-up for the homeless

Western Australian based Foundation Housing has just finished building the first purpose built Foyer in Australia as part of a consortium with Anglicare and the Central Institute of Technology. The Foyer provides secure affordable accommodation and support for 98 young homeless people, including 20 young mothers. Housing is provided on the basis they must be actively engaged in education, training or employment. Foyer is a very successful model for youth housing which has only recently been established in Australia. Funding for the project came from a variety of sources. $20 million capital build from Commonwealth funds, leased crown land from State Government, $3 million from Lotterywest for partner office space and fit out, $10m from BHP for support programmes with $10 million matching State funds. We also were successful in being awarded 98 NRAS incentives for this project. Ground floor commercial space will also help with the overall financial viability of the project. The first tenants moved in February 2014. We are now working toward the development of a Foyer in Broome with the same consortium. We have secured land and are now beginning to talk to a number of potential corporate sponsors. The Broome Foyer will have an indigenous focus working with children from remote communities.

1.4

The International Housing Partnership

PowerHousing is the Australian member of the International Housing Partnership, a collaboration between more than 175 leading not-for-profit housing and community development organisations in Australia, Canada, the United Kingdom and the United States. Collectively the International Housing Partnership manages more than one million properties which provide affordable homes for some 2,500,000 people.

PowerHousing Australia |Senate inquiry into affordable housing

The International Housing Partnership is a dynamic forum for peer to peer exchange amongst housing leaders in the four countries. Each year it holds an international Exchange, attended by executives from all four countries. Leading up to this event, the partnership organises international workgroups which research practice in defined areas in each country to inform the Exchange. The 2013 Exchange was held for the first time in Australia and attracted over twenty Chief Executives from the US, UK and Canada, the largest group of senior housing executives ever to visit Australia, to share knowledge and learning with PowerHousing members. In addition to the Exchange a number of chief executives were hosted by PowerHousing members as Thinkers in Residence to spend time within the host organisation and offer a critique of their practice. The international exchange is being held in London in 2014. The overarching theme will be the New Generation of Housing reflecting the considerable change and transition in the housing sector in all four countries. The two bodies of work being developed by the international workgroups are capital raising and leadership. As in 2013 we will survey members across the four countries on succession planning and the leadership skills needed to move to a new generation of housing organisations.

PowerHousing Australia |Senate inquiry into affordable housing

Building a Sustainable Social Housing System

Long term structural problems with the public housing system have led to economic inefficiencies in terms of value for money, and social inefficiencies in the failure to meet demand for affordable housing. By contrast, PowerHousing members have shown their model is financially sustainable, and can allow for growth in property numbers

2.1

The challenge

The Australian public housing system is unsustainable. For example, the NSW Auditor Generals 2013 report Making the best use of public housing found public housing stock is ageing and increasingly not fit for purpose, there is not enough funding available for necessary maintenance and as a result houses are being sold to meet funding shortfalls. Reports in 2012 by the Victorian Auditor General, and by KPMG in South Australia, found the same. The social housing portfolio faces simultaneous problems of under-occupancy in some locations, and over-crowding in others. Growing numbers of tenants are single people, people with disabilities and elderly tenants. In contrast much social housing built from the 1940s to 1980s is larger family homes, away from support services or jobs. The model of dominant or monopoly State Housing Authorities providing social housing is not considered by many, including the Auditors General, to be viable any longer. A shift to a multi-provider system with strong community housing providers such as the members of PowerHousing is a necessary paradigm shift to build a sustainable system.

2.2

Our member organisations role

Community housing organisations now manage around one fifth of social housing in Australia - double the proportion of a decade ago. Most growth has been of PowerHousing member organisations, often through the transfer of tenanted properties from the public to community housing sector. Part of the reason for the growth has been driven by the need for funding. Community housing tenants, unlike their equivalents in public housing, can often claim Commonwealth Rent Assistance (CRA). This is a key demand-side subsidy that is efficient and effective, targeting support to where it is needed most. Coupled with efficient management, PowerHousing members can run a social housing portfolio at sustainable levels whereas in the public housing sector losses would be incurred. For the last decade our members have raised private bank finance. This provides additional funds to clear maintenance backlogs and build new social and affordable rental housing. The

PowerHousing Australia |Senate inquiry into affordable housing

borrowing does not appear on Governments balance sheet, nor impact on public sector credit ratings, and can be sustainably repaid from future rental income. PowerHousing members have raised hundreds of millions of dollars of loans that bring addition capital to the social housing sector, at a time when public spending is being rationed. PowerHousing members run their organisations as effective social enterprises that are accountable to the community, to governments and to their tenants for the effectiveness of the service provided.

Transfer and renewal of public housing

Hume Community Housing, a PowerHousing member with over 1,700 properties in NSW, successfully bid for the first stage of a major renwal project at Telopea in Western Sydney. Located in an area with a high concentration of public housing, Hume received management and title transfer of 152 newly development units, across three blocks. Hume used NRAS funding for the project, creating a mix of community and affordable housing. Hume is actively partnering with the State Housing Authority, tenants and local service providers to establish a community consultation program and engagement strategy. This will help create long term sustainable community programs targeting youth, disadvantaged tenants and create safer communities. It will also supply local infrastructure such as a community centre through a capital works program. Through a carefully considered and planned approach, Hume now acts as a community anchor in Telopea in a way that would not have been possible if the housing had remained in the public sector. There are now close links with the local council and some neighbouring residents - both groups had initially opposed the redevelopent project.

Furthermore, with the move to the National Regulatory System for Community Housing in 2014, providers will be subject to strong oversight by regulators acting at arms length to State Governments. Government can therefore be satisfied that public investment is protected, and the highest business and ethical standards are followed. As independent social enterprises, each with their own set of accounts published to ASIC standards, it is easy to compare the cost base and efficiency of PowerHousing members. Successive administrations in the Commonwealth Government have been frustrated with a perceived lack of accountability for funds handed to the States for social housing. There are few comparable metrics published on inputs and outputs, and no reliable data on outcomes for tenants and neighbourhoods. PowerHousing members offer a more transparent and accountable option as recipients of public investment. Where our member organisations own their own properties, they can strategically manage their asset portfolios. This involves becoming involved in re-development and renewal

PowerHousing Australia |Senate inquiry into affordable housing

schemes, increasing residential densities and delivering new supply configured to meet the demands of a changing population.. PowerHousing members are well placed to take a lead in cross-sectoral partnerships. Member organisations frequently work with different levels of Government, with Government agencies and with the private sector. This is in part due to the commercial acumen and entrepreneurial approach of community housing managers and their ability to enter into more genuine partnerships with commercial developers than would be possible for public housing authorities. PowerHousing members partner with the private sector to enable new development and ensure increasing supply of good quality, affordable housing.

2.3

A modern approach to public housing stock transfer

Transfers of tenanted social housing dwellings to community housing providers are not new. A 2013 AHURI report estimated there has been over 21,000 homes transferred to mid-2012. Around half of these involved the transfer of both asset title and management, and half were just management outsourcing. Although both transfer types increase the scale and efficiency of the recipient community housing provider, without asset transfer there are limits to how much private finance can be raised and how strategically the asset portfolio can be run. Over the last two years several State Governments have embarked on ambitious programs of outsourcing management of large public housing portfolios to the community housing sector. These programs are generally on a large scale, of 500 or more properties in each portfolio, and structured as complex transactions with a series of community stabilisation and affordable property development obligations. In 2012 Tasmania began the trend with a public tender to outsource management of 500 homes to a not-for-profit organisation, followed by a further three portfolios of 1,200 homes in 2013. PowerHousing members have been active in these transactions, building on their ability to establish cross-sector consortia to professionally manage projects. On an even larger scale, Queensland Government is currently reviewing bids to transfer 4,850 homes in the Logan region. They also announced in July 2013 that 90% of their entire public housing would be managed by non-government housing groups by 2020. In 2013 South Australia followed Tasmania and Queensland, tendering the outsourcing of two public housing portfolios of around 500 dwellings. Other States are likely to follow suit in the future. These are appropriate approaches to reforming the social housing sector. PowerHousing members fully support the principle behind these initiatives; the creation of a larger scale multi provider system.

2.4

Our recommendations to Government

The social housing system will become more sustainable as a greater proportion is run by sophisticated community housing providers such as the members of PowerHousing. However, for the full benefits to be realised there needs to be leadership from the Commonwealth and coordination across States.

PowerHousing Australia |Senate inquiry into affordable housing

Community housing transfers Continuing transfer of public housing properties to community housing is essential to the growth and development of the sector as it will enable at scale PowerHousing members to achieve greater impact. Professional organisations operating at a larger scale are in a good position to raise significant private finance and therefore build the social and affordable homes that are urgently needed to address the national housing shortage. We recommend Housing Ministers set a target for the transfer of public housing stock to community housing providers, with additional funding being released to States that deliver and exceed the specified targets. This might be the figure of 35% agreed to by Ministers in 2009, but which has only been implemented in part to date.

Creating a living community

PowerHousing member SGCH is a large and highly awarded community housing provider working across western, southern and central Sydney. They are involved in the Bonnyrigg Living Communities social housing transfer and estate redevelopment, and are responsible for the rehousing and tenancy management of 800 homes, and helping to build a strong, stable community. Before the redevelopment of Bonnyrigg, the estate was known for its high levels of crime and anti-social behaviour, while the local school was threatened with closure due to poor results and a lack of registrations from new pupils. The redevelopment of the estate and the projects focus on placemaking has encouraged residents to take pride in their homes, and are increasingly looking out for their neighbours and others in the local community. As a result, crime levels have dropped, the local school is now so popular that it has become selective, and tenants are reporting extremely high levels of satisfaction (83% in the 2013 independent survey run by Sweeney Research). The first three stages of the project have been completed, creating 363 new homes and a mixed tenure community in which private and social tenants live side by side. The properties have been designed to look almost identical on the outside, so that it is impossible to differentiate between the private and social housing, which has helped contribute to the successful integration of the estate.

CRA plays a critical role in funding community housing, and as the sector continues to grow it is important this benefit continues - including being available for transfers of public housing. The Commonwealth needs to coordinate policy settings between the National Affordable Housing Agreement (NAHA), and CRA so that system efficiency increases - for example by giving community housing providers a bigger role.

PowerHousing Australia |Senate inquiry into affordable housing

Asset ownership PowerHousing recommends that a greater proportion of future property transfers include the passing of title to community housing providers. Management outsourcing provides cashflows to housing providers, though without assets many banks have proven unwilling to lend. Without bank finance, less money is available in the social housing system. A 2013 independent review by Sphere Company used financial modelling to demonstrate that asset ownership of 26% of a portfolio of 500 transferred properties would allow the delivery of a further 130 new homes. This can only be achieved by growth community housing providers such as PowerHousing members receiving title to some if not all properties transferred. Transferring title allows larger community housing providers to become more strategic asset managers, tailoring social housing portfolios to social need. It also provides opportunities for leverage to attract new capital into a resource constrained market. We recommend that the Commonwealth offer incentives for states that transfer a percentage of properties with title to community housing providers. Funding contestability Reforms of NAHA should increase the proportion of funding for the social housing system that is contestable by community housing providers. Contestability will encourage greater system-wide efficiencies, and encourage innovation such as that demonstrated by PowerHousing members. Better use needs to be made of current funding, waste eliminated, systems streamlined and transparency increased. These are the core approaches of PowerHousing members. We recommend Commonwealth funding for the community housing sector is specifically allocated to the sector and not captured by state housing authorities.

PowerHousing Australia |Senate inquiry into affordable housing

Building and Managing Quality Homes

Professionally managed at-scale community housing providers are well placed to develop new social and affordable housing to address market failure. PowerHousing members have considerable experience harnessing a variety of different types of finance, including NRAS incentives which have been used to sustainably deliver long term affordable rental housing

3.1

The challenge

With the exception of a burst of social housing construction as part of the Nation Building Economic Stimulus, the public sector has retreated from large scale investment into social and affordable housing. There is a gap in the delivery of well-planned and well located affordable housing and with targeted support, PowerHousing Australias members are well positioned to respond.

3.2

Our member organisations role

PowerHousing members fill the affordability gap in the market, producing the types of housing most in demand for very low to moderate income households. As professionally run social businesses, we have the skills needed to deliver development projects. Many of our senior managers, and board members, have private sector experience - including in the property development industry. Unlike the majority of small scale community housing providers, we both build and manage quality social and affordable housing. Development skills Most PowerHousing members have undertaken property development for at least a decade, so have the in-house skills and systems in place. We also link closely to professional firms such as surveyors, lawyers, consultants and financiers so we are well advised. The regulatory systems in Victoria and NSW, and now the National Regulatory System (NRS) across much of Australia, ensure our risk and financial controls are robust. We differ from private sector development companies because we are not-for-profit organisations with clear social missions. No dividends are paid to shareholders, and our staff and management are paid fairly but responsibly. Surpluses generated on development projects are re-cycled to achieve community commitments. Therefore when public funds are provided to a community housing organisation we provide a mechanism for enduring stewardship of public investment.

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PowerHousing Australia |Senate inquiry into affordable housing

Finance benefits Our core community housing business - renting housing to lower income Australians - is steady and consistent. This provides a predictable cashflow to fund new developments, assuming the assets are owned rather than just tenancies outsourced on short term contracts. By raising private finance, we increase funding available to the social housing system. Private finance is only granted to strong, well run social enterprises such as PowerHousing members. Through compliance requirements, bank lending ensures a separate oversight of our activities and an independent review of project viability. Banks will only lend if a project is well considered, well located and financially sustainable.

Developing a mixed community

In 2009 Port Phillip Housing Association (PPHA) was the successful tenderer for the Victorian Governments Ashwood Chadstone Gateway project. This involved redeveloping six vacant sites for 210 community and 72 private homes. By leveraging the assets and including profits from the sale of private housing as well as NRAS incentives, PPHA could deliver additional community housing as part of the project.

The high quality homes have been built so there is no visible difference between private and community housing. A mixed community approach was key to integrating tenures and avoiding income, social and educational divides between residents, and to providing opportunities for different residents to interact. PPHA achieved a mix of household types including differing income, age and family structures to contribute to sustainable outcomes. PPHA has implemented a local approach, managing the community housing from a permanent office in the new development, with on-site tenancy managers, a facilities manager and a community development manager. A community engagement program was developed with input from the local community, as well as a social enterprise providing education, training and jobs for young people.

PowerHousing member organisations are able to combine different forms of finance to make a project happen. We can use our own capital, bank loans, philanthropic funds and land donations, State grants and Commonwealth funding on particular projects.

Mixed communities We can help broaden the range of housing tenures and products available beyond the limited choice of high-needs social housing and unaffordable private homes. Members of PowerHousing have been at the forefront of providing new forms of affordable housing for

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PowerHousing Australia |Senate inquiry into affordable housing

both sale and rental. These products are aimed at moderate income households, freeing up traditional social housing for people in high need. New development schemes are located where they are most needed, not where the highest investment return is achieved. We regularly deliver projects promoted by State or Local Government, often as part of urban renewal or reconfiguring social housing estates. Some of these areas have become concentrations of social and economic disadvantage, and expensive for State Governments to sustain in their present form. PowerHousing members projects are often mixed tenure and contain social rental housing, affordable rental housing, private rentals and owner occupation. They may also include commercial facilities, shops and community facilities. Mixed neighbourhoods provide greater social interaction, and avoid the segregation that is becoming a feature of many cities. Lower income households can live close to where family members work, allowing key workers to drive economic growth - especially in capital cities and resource boom areas. Mixed tenure developments delivered by community housing organisations can also be delivered at lower cost for Government. PowerHousing members may sell a number of units to market purchasers, and use development profits towards funding long term social and affordable accommodation.

3.3

Leveraging benefits from NRAS

The National Rental Affordability Scheme is a jointly funded Commonwealth and State scheme to promote the development of new affordable rental housing. A modest grant is provided each year for ten years, and in exchange rents are kept below market levels. PowerHousing members have been extremely active using NRAS incentives and have the strongest record of delivery. In contrast to many schemes, our members have demonstrated a far higher success rate in turning allocations into finished homes. Furthermore, a larger proportion of properties will remain affordable for the long term.

3.4

Our recommendations to Government

Given the proven track record of larger community housing providers in delivering cost effective social and affordable housing, PowerHousing calls on Government to continue and further develop a variety of policy settings and funding options to facilitate future growth. Future NRAS The principles behind NRAS are strong and it is one of only two schemes internationally that successfully brings in equity investment to fund affordable housing. Although there have been some recent criticisms, nearly 20,000 affordable homes have been produced at modest cost to taxpayers. Most homes developed by community housing providers will remain affordable indefinitely, making the investment of public funding even more cost effective.

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PowerHousing Australia |Senate inquiry into affordable housing

NRAS needs to be better targeted to areas where it is needed most. In future we recommend the value of incentives is varied so they deliver deepest subsidy in areas where affordable housing is most needed. Despite needing minor changes, PowerHousing considers the principles behind NRAS to be worthy of further support. It should be optimised through streamlining the scheme and making it a regular annual or twice-yearly bidding process. There would be less administrative burden if NRAS was run by either the Commonwealth, or the States - but not both (even if the scheme remains co-funded).

NRAS supporting regional communities

In 2013 Southern Cross Community Housing (SCCH) injected $7.2 million into the Eurobodalla economy on the south coast of NSW with the construction of 20 homes using NRAS funding. The profile of people housed includes young working families, single working parents with children, working grandparents, adults and children with a disability and their carers, Indigenous families and the frail aged. The ability to secure stable, affordable housing allows a diverse range of people to engage in employment, educational and other endeavours that attract and keep them in regional areas and allow them to contribute to community life and the local economy. The NRAS scheme not only provides affordable housing, but contributes to the sustainability and future of local communities.

We also recommend future NRAS rounds have a requirement that tenancy management is undertaken by community housing providers with demonstrated compliance track record such as PowerHousing Members. This will ensure eligibility requirements are Each year in Eurobodalla, through its social and affordable met, and proper controls in place. housing initiatives, SCCH engages around 15 local It will also ensure steady business contracting businesses contributing to the indirect opportunities for community employment of 45 tradespeople, and spending $115,000 directly on repairs and maintenance annually. housing providers, even if the development has been undertaken by, and financed by, the private sector.

New funding The Commonwealth needs to exercise greater leadership on developing further funding sources for social and affordable housing. Although there has been research on housing bonds by a research institute (AHURI), and a pilot project in NSW on Social Benefit Bonds, Australia has fallen behind international best practice in financial innovation that helps leverage private sector investment.

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PowerHousing Australia |Senate inquiry into affordable housing

To move forward introducing housing bonds, PowerHousing is working with Community Sector Banking to develop a new product that could be used at scale by our members to increase the supply of affordable housing. This project, and other initiatives, would benefit from Commonwealth leadership to ensure a uniform and consistent system is created, which is necessary as capital markets require volume. We need a consistent legal and regulatory framework established and clear accountability to deliver effective housing bond rollouts. These are low risk, low cost mechanisms for government to support new supply of affordable housing. PowerHousing would make an ideal partner to work with Government in further developing housing bonds. In Britain a trade association similar to ourselves delivers billions of dollars worth of bonds through a Special Purpose Vehicle. Our members have shovel ready development schemes where housing bonds could be carefully piloted and evaluated.

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PowerHousing Australia |Senate inquiry into affordable housing

Building Vibrant Communities

PowerHousing Members have developed considerable expertise in creating vibrant and sustainable communities which respond to the local context and provide opportunities for tenants and the broader community. We act as community anchors in the neighbourhoods in which we operate, helping build individual and social capital.

4.1

The challenge

Targeting concentrated areas of public housing to the most disadvantaged has led to concentrations of social disadvantage, and poor outcomes for tenants and communities. Pockets of disadvantage have led to intergenerational problems of unemployment, drug and alcohol abuse, dependency, anti-social behaviour and mental health issues. There is also growing recognition of the need to develop new ways to integrate social and affordable housing into our newly built communities. This prevents exclusive neighbourhoods, where key workers who underpin the economy cannot afford to live close to where they work.

Working with our tenants

In 2012 Compass Housing set aside $200,000 funding for their People, Place, Performance approach. This aims to integrate tenant and property management to enhance the relationship they have with their tenants. Funding encourages tenants to develop concepts that give a positive impact for the participants and for the wider community. This program is part of Compass wider strategy which includes the GROW sustainability initiative. Compass received 19 applications, and the Dangar Park Rose Garden was successful. This involved bringing together Compass tenants, Compass staff, students and staff from the local school, local community groups and members of the wider community. It consisted of a new covered picnic table, featuring an Aberdeen themed mosaic, designed and created by local St Josephs School as well as the addition of a rainwater tank installed at the park.

4.2

Our member organisations role

PowerHousing members have developed considerable expertise in responding to these challenges and are now involved in all aspects of building stable and vibrant communities. They are increasingly involved in partnerships with government, notfor-profit support services and the private sector in neighbourhood regeneration projects and are bringing this expertise in place making and community development to their own developments.

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PowerHousing Australia |Senate inquiry into affordable housing

PowerHousing members are trusted within their communities. They are high capacity organisations that have a long term connection to local communities that serves to anchor them into partnerships and alliances with public, private and not for profit organisations within a neighbourhood to help address entrenched social issues. They have the capacity and commitment to build diverse, inclusive and sustainable communities by providing a range of housing types and tenures which reflect the makeup of the broader community. We understand the need for good planning for developments which takes into account activating the public realm as well as the need for well-designed safe homes and facilities that create and maintain liveable communities.

4.3

Empowering our tenants

Winning over the community
A windswept car park in earshot of a busy highway in Victoria might not seem a likely site to raise the protective instincts of the local community, but that is exactly what happened when PowerHousing member Womens Housing proposed using the site for a 49-apartment to house women fleeing domestic violence or at risk of becoming homeless. The proposal ran into stiff opposition from local residents who raised a whole series of concerns. Almost 200 people attended a volatile public meeting in 2009 to discuss the proposed development, and fears were aired about the types of tenants who were to be housed. The once barren car park has now been transformed into a striking 6-star rated building that is now home to a mix of young single mothers, older couples and elderly single women, all of whom are provided with long-term tenure at a discounted market rent. Tenant turnover has been minimal, with residents enjoying their new homes and the convenience of being close to transport, schools, medical facilities, shops and cafes. Some have even found employment locally. It is a remarkable transformation of a once barren site. Even more remarkable, given the developments rocky start, is the acceptance it has rapidly gained from the community that fought so hard to stop it going ahead.

Tenant participation and engagement has become a cornerstone of the practice of PowerHousing members who have embedded processes to empower tenants throughout their operations. Feedback from tenants and the opportunity to put forward their ideas are critical in the management of contemporary community housing organisations. Our members have built robust strategies to capture this feedback and use it to inform decision making. Strategies range from formal reference groups and surveys, focus groups, use of social media and involvement in social events. PowerHousing members also recognise the importance of providing opportunities for social inclusion and participation for tenants. This helps them build their life skills and develop community networks. Innovative programs help tenants successfully sustain their tenancies, and build capacity to obtain employment and achieve financial stability.

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4.4

Socially sustainable mixed communities

Housing people with a disability
PowerHousing member Evolve Housing, in partnership with support partners Northcott and RASAID, secured $6 million dollars grant funding through the Commonwealth Governments Supported Accommodation Initiativ e Fund (SAIF) to deliver homes for 20 persons living with disability, who are receiving life time funding through NDIS. Evolve Housing with the support partners worked collaboratively with prospective tenants to develop person centred support housing for people with varying levels of disability. This has been achieved through a combination of adaptable infrastructure, community based space and support programs that deliver independence, community engagement and social inclusion. Both the housing projects at North Parramatta and Ryde were awarded Platinum Performance Level compliance with Grandview the first to achieve this under SAIF. Grandview has also been recognised by the NSW Disability Industry Innovation Awards for its innovative design and support system inclusions

Increasingly our members are developing mixed communities that are socially sustainable. Delivery models include a range of housing including social and affordable rental, affordable home sales and market rate sales and rental. These models may also include more specialist housing such as housing for people with disabilities or seniors housing. These developments reflect the makeup of the broader community and are a powerful way to break down social barriers, eliminate the concentration of disadvantage and create long term sustainability. Planning and place making is critical in mixed developments to ensure that pockets of concentration of social and affordable housing are avoided and that all members of the community have access to shared and community spaces and facilities.

4.5

Our recommendations to Government

The creation of community vibrancy, capacity and resilience is critical to the long term sustainability of social and affordable housing. This needs to be recognised and resourced in regeneration and renewal projects, management outsourcing and asset transfer programs. Partnerships for success We recommend Governments make more use of cross-sectoral partnerships for delivering major new greenfield housing developments, and brownfield regeneration schemes. Bringing together private sector skills in developing project homes, with community housings passion for sustainable communities, is a powerful combination. PowerHousing members operate at a scale, and have the skills to be full consortium members on such projects. 17

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Through the use of the planning system, State and Local Government can push for development schemes to include a portion of affordable and social housing. Several states, most notably South Australia, have used the planning system as a way of encouraging affordable housing delivery. We recommend this approach is followed nationwide, and encouraged through the use of planning bonuses. Estate renewal PowerHousing members are ideally placed to lead the redevelopment of concentrated public housing estates. We can work closely with State Governments, Councils, tenants and local residents - as well as partnering with private sector builders for housing delivery. As noted in the next section, transferring assets to community housing providers is the key to unlocking redevelopment potential. Any development profits from such schemes are re-cycled by community housing providers, and re-invested in neighbourhood facilities. Through moving away from highly concentrated social housing estates, to more mixed communities, the net cost to Government will decrease significantly. There will be lower ongoing expenditure on policing, health, and repairing neighbourhood damage. Given the long term financial benefits to Government, we recommend special up-front grants are provided to larger community housing providers to accelerate the pace of estate renewal. These could be offered competitively to organisations such as PowerHousing members who have the necessary and proven skills in project development and community building. Partnering for housing people with a disability The National Disability Insurance Scheme (NDIS) is set to revolutionise the delivery of support for people with a disability. However, an estimated 190,000 of the 410,000 predicted recipients are on a low income, and of these up to 120,000 have been estimated by the NDIA to have an unmet need for affordable housing. PowerHousing members already have considerable experience in providing accessible housing, and many existing tenants have a disability or are ageing in place. We have the experience and resources to help deliver new affordable housing for people with a disability and their carers. We recommend the Commonwealth carefully coordinates between NDIA and PowerHousing Members over funding approaches for additional housing. Options include user cost of capital subsidies, targeted grant funding, targeted housing bonds, or a special NRAS incentive round. PowerHousing members can leverage other sources of funding on such projects, minimising the cost to Government of program delivery.

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Building a Strong Economy

Community housing is not just about delivering good social outcomes. PowerHousing members are major contributors to local and regional economies, and through social procurement can help get people into training and work. We provide much needed affordable housing where it is needed, housing key workers who drive the economys engine.

5.1

The challenge

Our economic performance is closely linked to how well the housing system works. Currently there is a lack of appropriate and affordable accommodation in many areas where the new jobs are being created that power our economy. This is as true in remote regions, as it is in our capital cities which increasingly rely on the knowledge economy. Under supply of appropriate, affordable housing is a handbrake on economic growth. Australia was one of the first countries to have high levels of home ownership, providing security for low, moderate and high income households. Overall ownership rates are now falling, and the decline is steepest among people in their 20s and 30s. The housing continuum, shown below, does not work well. It is hard for people to transition not just into home ownership, but from social housing into private rental.

More people are becoming trapped in crisis accommodation and social housing. The current tax and social benefits system makes it unattractive for some residents to take up job offers as their income will barely rise and they may be forced out of their homes. Private rental has become very expensive, with prices escalating as moderate income families are forced to rent as they cannot afford home ownership. Not enough new homes are being built, and fewer people are transitioning into home ownership.

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5.2

Our member organisations role

PowerHousing members cover a broad range of the housing continuum. We provide shelters for rough sleepers, community housing for people with often high and complex needs, as well as affordable rental homes for key workers. Some PowerHousing members provide lower-priced housing aimed at first time buyers, others are exploring innovative supported home ownership products such as shared ownership and shared equity. Because larger community housing providers understand from first-hand experience different forms of housing tenure, we are more able to identify options for our residents. We may be able to help tenants move from one of our crisis units into longer term social rental housing, or from social to affordable rental. Transitions along the housing continuum are easier if there are a range of products available. Innovative approaches PowerHousing members have innovated through offering a range of rent settings to provide more flexibility to households. Residents with lower household incomes receive a larger discount to market rent, thereby targeting subsidies to where they are needed most. In Victoria, Haven, Home, Safe has a program making renting a home within the reach of people on low to moderate incomes through offering a 10%, 20% or 30% discount to market rents. This affordable rental housing is offered to people who live in the local community. Our members in NSW, SA and WA are looking to expand shared ownership schemes. These allow moderate income households to secure a stake in a property, then staircase their way towards full homeownership. Shared ownership can also allow options for social housing tenants to buy a share of their current rented property, or buy a share in another property which will free their social housing unit for a family on the waiting list. Powering the economy Private sector developers tend to build new homes of a style and in locations that maximise profit. This is often on the fringe of capital cities, distant from transport, services and employment opportunities. Community housing providers, by contrast, are driven by social missions. Their new housing incorporates the latest thinking on Transit Orientated Development, and is close to jobs. There are good examples in both WA and Queensland where community housing has been delivered to house the resource sector workforce.

5.3

Engaging tenants in work and training

PowerHousing members have a direct economic impact through our employment of staff, and by contracting tradespeople for new building projects and maintenance on existing housing. This can have a big impact, especially in regional and remote areas where community housing providers are among the biggest employers and local investors. Through their social procurement practices, community housing providers can generate broad benefits and impacts for the wider community. This can include creating training and

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employment opportunities through procurement processes, and inserting special workforce clauses and specifications in contracts. Many examples exist where our tenants, people who were formerly homeless, Caretaker Diploma Program or people from an Aboriginal and Torres BHC in Queensland recognised the value of on-site caretakers at a number of larger community housing complexes. As no Straight Island background specific training was available to accommodate the unique have gained skills and needs of caretakers, who combine the responsibility for employment. managing a significant asset along with being a point of contact Social procurement is a way of addressing complex local challenges, such as inter-generational unemployment, crime, vandalism and economic decline in local communities or among disengaged groups. It promotes fair and ethical trade, setting an example for others to follow in the neighbourhood. There is also increased social inclusion, particularly for vulnerable groups who have an opportunity to participate in the community and the economy.
and assistance to tenants, BHC embarked on working with a registered training provider, Sarina Russo, to establish a custom designed training program. A Diploma of Management program was established which all BHC caretakers have successfully completed. BHC received an Australasian Housing Institute Award for this initiative.

Many PowerHousing members have schemes to support tenants to re-enter the workforce, or gain education, training and tertiary qualifications. This may be in the form of competitively applied for grants that support tenants or their families to broaden their horizons. Often quite modest sums can leverage stunning outcomes. By publicising success stories through newsletters and word of mouth, other tenants are encouraged to follow suit.

5.4

Our recommendations to Government

PowerHousing members can stretch public investment further and attract resources that government cannot such as private finance and philanthropic contributions. This facilitates a greater role in developing a range of housing options that can be targeted to deliver gaps in the market. These include smaller properties, more affordably designed, well located to jobs and accessible to people with differing levels of mobility.

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Intermediate housing options To make the housing continuum function better, we need a wider range of products that enable people to step from rental housing towards owner occupation. Shared ownership/equity and rent-to-buy schemes have become major growth areas overseas, broadening the choices and pathways open to working families. Shared ownership is an example of how moderate income households can purchase an initial stake in a property, then staircase towards full ownership by buying-out the share of the property that is not yet owned. By contrast in Australia, we have a small number of schemes in Western Australia, South Australia, Queensland and Tasmania, which are fully controlled by State Governments We recommend the Commonwealth provide strategic leadership to promote intermediate housing products. This should be through establishing legislation and protocols such that an atscale sector can emerge. Unlike current approaches, relying on State Governments to provide administrative support and often direct lending through a public finance agency, we recommend the scheme be run by the not-for-profit sector.

Social enterprise
A key initiative of the Bonnyrigg project, a major estate renewal in western Sydney in which SGCH is involved, is the Green Wings jobs training and employment program. Green Wings is committed to building a skilled local workforce and is focused on the physical, social and economic renewal of Bonnyrigg. The team works hard to make Bonnyrigg the best it can be, whilst further developing the participants skills each day. Originally funded by the Commonwealth, it now operates as a sustainable social enterprise for the local community. Green Wings: Increases place-based training for job seekers Provides opportunities for casual and part-time work for people in the local community Increases opportunities for school based traineeships and work placements Contributes to environmental sustainability Helps build local businesses

PowerHousing members are ideally placed to develop affordable properties, identify suitable applicants from among our own tenant base, and manage administration. Capital liberated through shared ownership could be recycled by community housing providers to fund the development of much needed additional social and affordable housing.

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