Institute for Social Change News

Jacqueline De Vries, Data Analyst

The full effect of Covid-19 on the Tasmanian economy will not be known for some time to come, but it is likely to induce a recession with a range of impacts on the housing market. If the construction industry remains an essential service and continues to operate through an economic slowdown, building social housing could help. Fiscal stimulus through housing infrastructure is a recognised way to stimulate the economy, and retain and create jobs during or immediately after a downturn. If cost of construction, materials and land decrease, then investment will provide more bang for buck.

The Social Housing Initiative (SHI) was put in place as an economic stimulus package after the Global Financial Crisis (GFC) in 2009. The SHI’s objective was to stimulate economic activity by increasing the quantity and quality of social housing in Australia[1]. Commonwealth funding was provided to increase the supply of social housing, via construction of new social housing and the repair and maintenance of existing dwellings and hence stimulate the building and construction industry. The SHI represented the largest single commitment of funding to social housing in Australia’s history which helped boost social housing stock after years of government underinvestment.

Tasmania received $134.8m over three and a half years (2008-09 to 2011-12) with the State contributing an additional $6.4m of in-kind support. Of this funding, $125.48 million was used to construct 530 new social housing dwellings. Leveraging opportunities were facilitated by transferring (title and management) 87 per cent of the new dwellings to Community Housing Providers (CHP). Reportedly, one CHP was able to leverage funds from the National Rental Affordable Scheme (NRAS) for an additional 40 units, while another leveraged an additional 20 units through its own capital funding.

In addition, funding for repair, upgrade and maintenance work to be undertaken across the Tasmanian public housing portfolio was provided ($9.32 million), which enabled 534 properties to be repaired with 154 being able to be returned to rental stock.

Since 2016, while the economy has been booming, Tasmania has been in a housing affordability crisis with unaffordable rents, exponential house price increases and limited private and social housing rental stock to meet demand. While building approvals for new supply have increased, commencements have lagged and not kept pace with population growth.

Quantifying the number of additional housing stock which needs to be affordable for households on the lowest incomes is complex, however it has been clear that Tasmania has an underlying shortage which is unlikely to be resolved, although perhaps eased, with a housing market downturn.

The Productivity Commission’s Report on Government Services[2] reported that there were 13,473 social housing (public, community and state owned and managed Indigenous housing) properties as at 30 June 2019. Applications on the Housing Register as at September 2019[3] were 3,444, otherwise indicating expressed demand for social housing. This excludes latent demand where people do not register but would meet the eligibility criteria under their current housing circumstances.

Recent research by Lawson et. al. (2018)[4] advocating social housing as infrastructure as a way to attract investment into the sector suggested that Tasmania needs 14,200 social housing dwellings over the next 20 years to effectively meet housing need at the lower end of the market. Of these dwellings, 11,100 were deemed to be required to respond to current need for households in the bottom income quintile, the most likely to be eligible for social housing.

Analysis of the 2016 Census[5] undertaken by the University of Tasmania found that 17,484 of low income (in the bottom two income quintiles comprising $1–799 per week) households were in rental stress (paying more than 30 per cent of income on rent), and of these, 10,699 very low income (in the bottom income quintile range $1–499 per week) were in rental stress. A further 1,697 were homeless on census night and another 1,011 considered marginally housed. This analysis aligns with Lawson’s research but rental stress figures (using the standard 30/40 rule as per the definition of housing stress) indicate that the need for social or affordable rental accommodation could be higher.

While construction of new supply is not the only way to provide access to more affordable housing, the current COVID-19 environment could be an opportune time to renew investment in social housing while stimulating the economy, creating jobs and relieving housing-related financial stress.

[1] KPMG (2012) Social Housing Initiative Review, September 2012

[2] Productivity Commission (2020) https://www.pc.gov.au/research/ongoing/report-on-government-services)

[3] Tasmanian Government (2020) https://www.dhhs.tas.gov.au/humanservicesstats/human_services_dashboard

[4] Lawson, J., Pawson, H., Troy, L., van den Nouwelant, R. and Hamilton, C. (2018) Social housing as infrastructure: an investment pathway, AHURI Final Report 306, Australian Housing and Urban Research Institute Limited, Melbourne.

[5] 2016 Census TablebuilderPro