Australia could reap billions in benefits if we fix housing: report
17 August 2022 at 4:06 pm
A cost-benefit analysis has proven the worth of fixing the nation’s critical shortage of social and affordable housing.
Every dollar invested in social and affordable housing could deliver double the benefits to the Australian community, a new report into Australia’s housing crisis has found.
The Give Me Shelter report, released during Homelessness Week earlier this month, says this rate of return is “comparable to, or better than” major infrastructure projects across Australia.
And the cost of inaction on housing needs is staggering, according to the report which estimates it at $25 billion per year by 2051.
The Give Me Shelter report was written by SGS Economics and Planning, supported by Housing All Australians, with the purpose of setting out an evidence-based case for addressing the nation’s critical shortage in social and affordable housing.
It undertook a cost-benefit analysis of the future costs to the community of a failure to fix social and affordable housing.
It states that Australia’s stock of occupied social housing has shrunk by 2.5 per cent between 2001 and 2016, while the Australian population has grown by more than 25 per cent between.
If that pattern continues, “more than 2 million Australian households on low incomes in private rentals will be in housing stress by 2051”, the report states.
That housing stress will have flow on effects throughout the community, including in the health system as people’s physical and mental health suffers, and in businesses as employees are pushed out of commuting range of jobs.
But the benefits of increasing social and affordable housing include reduced government spending on health, a reduction in domestic violence, improvements in productivity and better education outcomes.
In fact, the report estimates that over 30 years, the Commonwealth and all state and territory governments except the ACT would see budget savings bigger than their outlay on social and affordable housing, with Victoria to save the most at $7.8 billion in today’s terms.
The ACT’s higher rents mean the government would have to outlay more money than the savings it could reap through action on housing, but the Give Me Shelter report states “public sector procurement of social and affordable housing, or facilitated private investment in social and affordable housing on government land, would likely produce a positive fiscal result” for the territory.
Fixing the housing gap
The Give Me Shelter report comes at an interesting time for Australia’s housing market.
The report notes the COVID pandemic caused “unprecedented shocks” to the market, with the Australian Institute of Health and Welfare (AIHW) finding that over 63 per cent of renters said their employment circumstances changed and 33 per cent experienced changes to their living circumstances like difficulty covering the rent.
And 17 per cent of renters found that their rent became unaffordable, according to the AIHW’s data.
In order to fix the social and affordable housing crisis “will require a significant capital investment”, the report says – but it recommends a variety of ways to achieve that investment.
Traditional public sector procurement, tax credit or grant schemes to encourage private sector investment, and supplementing low-income households are all strategies that could be deployed.
In its analysis, SGS applied its Housing Assistance Demand and Supply (HADS) model to the situation to project how much social and affordable housing would be needed in 2051 to fully eliminate homelessness and housing stress in low-income renters.
The model projected that with no change in current assistance policies, more than two million low-income renter households will be in serious housing stress in 30 years.
The cost of this to the community was estimated to reach $25 billion per year by 2051. The projected benefits however would be just over $100 billion.
“Meeting the need for social and affordable housing will result in a benefit-cost ratio… of 2:1, which represents a net positive economic and community outcome for Australia,” the report concludes.
Read the full report here.
