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Budget 2023: Government criticized for not tackling rent and housing shortages


The “biggest cost-of-living crisis” – where renters have been hit by huge increases and young people are unable to buy a home – was not addressed in the budget, and experts say “bold” measures are needed to solve the problem.

Treasurer Jim Chalmers pushed a $4.2 billion surplus into his budget on Tuesday, but there was little relief for Aussies struggling with housing affordability.

Everybody’s Home spokeswoman Maiy Azize said the federal government had provided a “mediocre budget for one of the biggest crises facing the country”.

“Finding a decent, affordable home has never been more difficult — yet too many people are forced into housing stress because they’re left out,” she said.

“The budget has no plan to end Australia’s massive social housing shortage. Instead of trading on the biggest cost of living faced by Australians, it tinkers at the edges.

Despite the budget projections, rents will rise as the rental market tightens during the year, with just 1.1 million households set to see their Commonwealth Rent Assistance increase by 15 percent.

Ms Azize said the changes to Commonwealth Rent Assistance will not make housing more affordable overall.

“Two out of three people on Jobseekers and nine out of ten people on Youth Benefit will miss out on housing benefit altogether, and those who do get a small increase will find it has been swallowed up by rising rents,” she said.

“The only way to help lower-income renters is to give a big boost to JobSeeker and other Centrelink payments, and reform rent assistance so that it reaches those in need and keeps pace with rent increases.

“Budgets are about choices. The government is forecasting a surplus this fiscal year and continuing with billions of dollars in tax cuts for people who don’t even want it. It has the means, but it doesn’t have the will.

“We need action that is truly appropriate to the scale of Australia’s housing crisis – that is what the community is expecting. Everybody’s Home will continue to push for 25,000 social housing units to be built each year, for landlords to end tax payments and for more support for struggling tenants.”

Julie Toth, chief economist at real estate research firm Pexa, said more needs to be done to address the country’s longstanding housing shortage.

She said while the measures announced in the budget would help individuals, the scale, complexity and longevity of Australia’s national housing crisis calls for a “bolder response”.

While the rent assistance was the largest increase in 30 years, it would not cover advertised rent increases that averaged 13 percent nationally for homes in capital cities and 22 percent for units in capital cities in the year to March 2023, she said.

“While the housing measures announced in this federal budget provide some relief, they are unlikely to keep pace with the scale of the problem facing vulnerable Australians,” she said.

“The budget estimates that population growth is expected to reach 2 percent in 2022-2023 and 1.7 percent in 2023-24 – up from 1.4 percent in last October’s budget, driven by net overseas migration, while further demand pressure comes from our underlying trend towards smaller households.

“On the supply side, the Treasury Department expects national housing investment spending to fall each year through 2024-25.

“This will increase the existing housing supply by another 106,400 homes by 2027.”

Ms Toth said that with a massive increase in population, the government’s target of one million new homes will be too small to close the gap, even if it can be built within the expected time frame.

“The size, duration and complexity of this national housing supply gap and our subsequent affordability challenge require a bold multifaceted response,” she said.

“As recognized by the government’s housing deal, all levels of government, industry and community groups will need to get involved in solving this problem.”

Despite a $40 biweekly increase for Social Security benefits, this would soon be swallowed up by rising costs, experts also warned.

Kate Colvin, CEO of Homelessness Australia, said the base rate increase from JobSeeker, Youth Allowance and Austudy was welcomed but will soon be eclipsed by further rent increases.

“The increase in income support payments means more much-needed dollars will end up in the hands of tenants struggling to make ends meet. Every dollar helps. But unfortunately many recipients will still tread water and more rent increases are expected. The truth is that the housing crisis and pressure on homelessness services will continue,” said Ms Colvin.

“An opportunity was missed to invest in a rapid relocation fund to acquire housing that could be made available to homeless families almost immediately.

“While the budget contains a financial surplus, it has left behind a social deficit of unresolved homelessness that will create hardship for families and financial costs for the community in years to come.”

Meanwhile, the budget also announced that first-time homebuyers can team up with siblings and friends to scrape together a down payment under government scheme changes, while Australians who have not owned property for at least 10 years, permanent residents and single legal guardians of children will have access to the scheme for the first time.
It means that up to 50,000 home buyers can now be supported annually by the First Home Buyers Guarantee program.

“While this broadens the diversity of participation and may improve the take-up rate, which has been relatively low in recent years, this program provides a guarantee rather than a grant,” Ms Toth said.

“It helps buyers with a low down payment by avoiding the added cost of mortgage insurance, but it doesn’t reduce their total loan obligation or their total purchase price.”

Tenant advocacy group Better Renting also welcomed the $300 million budget commitment to improve the energy efficiency of social housing, but said state governments should also take the opportunity to target private rental homes through mandatory minimum standards.

“With competition fiercer than ever, people are being forced to buy substandard properties, which means higher bills and a less secure environment for families,” said Joel Dignam, executive director of Better Renting.

“While working with the Commonwealth to retrofit social housing, state governments must also introduce minimum energy efficiency standards for rental housing to bring the private market up to par.”

Jocelyn Martin, deputy director of industry and policy at the Housing Industry Association (HIA), welcomed the investment in social housing, but agreed that it will do little to put downward pressure on rental costs and housing affordability in the wider region. market.

“Australian households’ affordability problems can only be addressed if housing supply can be matched to demand,” she said.

“HIA estimates Australia will need an additional 1.66 million homes by 2030 to keep up with the demand of population growth.

“Tackling the affordability of housing starts with making the supply of housing a priority nationally. By improving affordability, more households can buy their own home.”

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Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.