CHAIR —Thank you very much for assisting the committee with our timing this afternoon. We have a submission from National Shelter and we appreciate you providing that. We have heard from some of your constituent members in the processes of this inquiry. I would like to ask if you wish to make a brief opening statement and we will go to questions after that.

Mr Pisarski —It is lovely to be with you at least over the telephone. It would have been nice to have been there in person. I want to kick off by stressing the point that, even though it is looking into problems associated with first home ownership, the inquiry really needs to look at the entirety of the housing market and the interaction of each segment of that market with each other. Really, it is renters who are suffering the greatest level of housing stress at the moment. Even though many homeowners are experiencing mortgage stress and we are seeing an increase in foreclosures on mortgage properties et cetera, renters are the ones we really need to be concerned about.

The key thing about the interaction of the market that I want to point out is that, because we now have property prices at such high levels and so many frustrated potential homeowners who cannot get into that market, we have a very clogged-up rental system. There are a couple of consequences of that. Firstly, really vulnerable people—migrants, Indigenous Australians in general, young people, single parents et cetera—are now at risk of getting squeezed out of the whole system. The rental market is in such a critical state in many capital cities but also in regional centres that we cannot find enough housing for everybody within that system. Vacancy rates are at their lowest recorded levels, rents are rising more rapidly than anywhere. Partly this has come about because of the cost of home ownership and the inability of many households to actually obtain home ownership, and that is what I wanted to begin with today as an opening comment. We really need to look at the whole system rather than just focus on one segment of it.

CHAIR —Thank you very much for that. We will go to questions.

Senator HUTCHINS —Page 2 of your submission says that existing tax breaks exacerbate the inequities in our housing system, and you comment that renters are generally worse off than owners. Why then do you not seek to reduce the tax benefits available to owner-occupiers, which is what you say on page 4 of your submission?

Mr Pisarski —It is because we think that, rather than just nominating specific taxes to be looked at, what needs to happen is an overall review of the tax treatment of housing in Australia. We cannot necessarily pick on one part of that system and look at it in isolation from the others, so we think that the whole tax treatment of property in Australia needs to be looked at.

Senator HUTCHINS —We heard this afternoon about one proposal to apply negative gearing to only first home buyers with new houses. What is the shelter’s view on that, in light of the fact that we have been told on numerous occasions that, say, negative gearing allows a lot more investment and therefore allows for a lot more places to be made available for renting?

Mr Pisarski —Indeed. The reason for negative gearing being applied to housing is just that—to provide a level of support to investors to maintain a rental property market in Australia. If we were to switch negative gearing away from that purpose to another purpose, again, I would reiterate that that would need to be part of an overall examination and review of the tax treatment of housing, because you could not do one thing by itself without actually looking across the board at the whole continuum of taxes being applied. You would need to do that to make sure that you still had some kind of balanced system. We have never argued that negative gearing should be gotten rid of it. We have argued that it is iniquitous. It is not spread fairly and it really represents one of the starkest contrasts in the Australian taxation system. Looking at the government’s recently announced plan to put on the ground a national rental affordability scheme, I would point out that that will cost $1.2 billion of taxpayers’ funding over 10 years to attract investment to provide 100,000 units of housing over that same period.

Just in one year, in 2005-06, negative gearing accounted for $3.5 billion worth of taxation revenue on housing related investments. It is therefore a major draw on the tax system but it is also a major source of providing rental accommodation. We are not arguing that you get rid of it at that point but we want the whole system to be rebalanced overall. The principle that we apply to this is that if we are going to use taxpayers’ money there ought to be a social good that at the end comes out of the use of taxpayers’ funds. At the moment the only good that comes out of the use of negative gearing is the creation of rental property but, unfortunately, very little of it is at an affordable level. So we do not really get a public good out of it in that general sense of the term. What we would like to see is all of these taxes looked at to see how we get a public good out of it. For instance, the way you might do that with negative gearing is to taper it to ensure that you can only maximise the level of investment on it if you are building affordable housing. It might be something that you would want in future to connect to the National Rental Affordability Scheme that the government has announced so that we are making sure that not only are we spending taxpayers’ money but actually getting a public good at the end of that.

Senator SIEWERT —We have had a lot of positive evidence around community housing as a provider for social housing. Can you tell us a bit about how you think that is supported by both the federal and state governments? I notice that you are supportive of the South Australian model. Also, for my benefit because I was not able to make the South Australian hearing, what is so positive about South Australia’s approach versus some of the other states?

Mr Pisarski —To start with South Australia; the real benefit of the South Australian approach is that it has set up a system around its planning system to try and ensure that 15 per cent of all new developments have affordable housing on them and one third of that be social housing. South Australia traditionally has had the highest level of social housing in Australia. At one point it was 11 per cent and it is now down to seven or eight per cent. It is still higher than the national average of five per cent. Unfortunately, South Australia is in the process of having to sell off large amounts of its public housing or social housing stock to maintain the rest of it. We think that there are some really positive directions coming out of South Australia in terms of the planning system and they do have a supportive of approach to social housing.

To spread that out a bit, community housing is really a means of providing public housing at a lower cost than it would cost governments if they did it through public housing. This has got to be the bottom line for governments, otherwise they would not be doing it. One of the problems, though, that we have experienced with community housing is that when you set up community housing agencies there is sometimes a problem with people getting access to them. If they know about them, that is all well and good. Their waiting lists tend not to be as long as public housing waiting lists and if you are in the know and know about your community housing organisation, that is all well and good. But if you do not know about it, you are unable to access the entire social housing system, that is public housing and community housing, just by approaching a departmental office. That is the case in every state except for Queensland. Queensland has now pulled all of its social housing into one waiting list and one allocation system so that you only need to register for any form of social housing by attending a Department of Housing office in Queensland.

Community housing is going to be the way we grow housing in the future. Community housing, because it is better connected to its local community, can do things that a public housing authority cannot do in terms of both informal and formal levels of support that are able to be arranged by its connection to the community. It has an extremely good record in property and tenancy management, but so does public housing. Both of them are very good forms of housing, both rate extremely well with their tenants and they both seem to return on average about 82 per cent satisfaction rating whenever they are surveyed. So they are both very well thought-of systems.

But community housing really is going to be the future in terms of growth. If you look at how the National Rental Affordability Scheme is proposed to be structured, it will be by building on community housing. It will not be by building on state housing authorities. State housing authorities are a bit risk averse in the sense that if they were to build more public housing at the moment, the sort of people that they have to house do not have the levels of income that give them an income stream that enables them to maintain that public housing. It is one of the problems that we have with the public housing system. By overtargeting the public housing system, we have really cut off our nose to spite our face by restricting the income streams that come back to public housing authorities. They just simply do not make ends meet. State governments continually have to either find additional resources or cannibalise their own stock to maintain their own systems. That is partly what is happening in South Australia.

If we can set up a community housing system properly, it will have far greater flexibility than a public housing system. It can house a greater variety of people, and it can include a kind of cross subsidy into its system that is no longer available to public housing authorities. So they are the key differences between them. But we still do not have in place sufficient resources and sufficient systems to properly support either community housing or public housing.

Senator SIEWERT —What do you mean about the systems that support community housing that are not properly in place yet?

Mr Pisarski —Community housing is, by and large, housing the same client group—with some greater degree of flexibility—as public housing properties. All of those systems are restricted to charging a percentage of rent and in most states that is 25 per cent of income as rent. That level of income really does not give public or community housing agencies the ability to grow their systems. They can maintain at a static level what they currently do, but they cannot grow their systems.

In the UK, instead of Commonwealth rent assistance they have a thing called the Housing Benefit. The Housing Benefit actually meets about 98 per cent of all of the costs of housing for any social housing tenant. Compare that with Commonwealth rent assistance and you will find it meets, maybe, 20 to 30 per cent of the housing costs in Australia. So there is a big difference between where community housing is well established and well set up and Australia in terms of the support systems that surround them. We do not have a Housing Benefit like the UK. We do not have the levels of capital resourcing like they do in the UK. We do not have the legislative requirement for local authorities to house people like they do in the UK. Without those sorts of measures sitting around a community housing system, it can be stagnant. It will grow through things like the National Rental Affordability Scheme, but it will not be able to do the full job or be able to cope with the kinds of stock transfers away from public housing to community housing that we have seen in other countries.

Senator SIEWERT —Thanks.

CHAIR —In relation to the policy issues which the federal government is pursuing such as the National Rental Affordability Scheme, the Housing Supply Council and so on, do National Shelter have any engagement with the government in that policy development? Are you represented on any of the steering committees or the consultative bodies?

Mr Pisarski —We have had good access to government through the affordable housing summit group. We have had fairly regular meetings with both advisors and ministers in terms of their policy development process. I think it is fair to say that the National Shelter policy that we launched last April was reasonably influential in terms of assisting a range of policy development processes, including that of the ALP. Subsequently, many of the suggestions that they have picked up in their policy were elements of our own policy development thinking. We have had good access. I sit on a few committees. For example, I am sitting on a working group as part of the national framework looking at the regulatory system of community housing. I was just recently one of a number of confidential readers of the technical paper that underpins the National Rental Affordability Scheme. So we have reasonable access at that level.

CHAIR —Did you have to sign a confidentiality agreement to be one of the confidential readers of the textual paper?

Mr Pisarski —I did not sign a confidentiality agreement but I was happy to keep that information confidential.

CHAIR —I understand that. There has been some discussion about the use of confidentiality agreements in this policy area today.

Mr Pisarski —The other point that I would make around this is that National Shelter has not been funded as a peak body for the last 11 years. Our funding was withdrawn in 1996 and that makes it very difficult. We are dependent on the generosity of both state Shelters—so, in my case, Queensland Shelter and the management committee here—and the state governments who fund those state Shelters and tolerate us doing quite a bit of national work under that banner. National Shelter effectively has existed as a network of the state funded bodies for the last 11 years. It means we have maintained a relevance, but it is harder and harder, especially when government is asking for more and more information as they are at the moment, to maintain our level of activity without any funding. So we can see a problem arising. We have had a chat to the government about the possibility of getting some funding and we are just awaiting an outcome from that process.

CHAIR —Perhaps next Tuesday, Mr Pisarski?

Mr Pisarski —Yes, perhaps. I am not feeling too hopeful in terms of this budget, given the emphasis on fiscal rectitude, but one can always hope.

CHAIR —Mr Pisarski, thank you for your time today and for National Shelter’s submission. As I indicated, we do appreciate your assistance to our inquiry.

Mr Pisarski —Thank you, Senator Payne, and thank you to all the other senators for their time as well.

CHAIR —That concludes today’s public hearing of the Senate Select Committee on Housing Affordability in Australia and, notwithstanding unforeseen events, concludes our series of public hearings in this particular inquiry. I would like to thank my colleagues, the secretariat and the support staff from Hansard and Broadcasting who have assisted in, I think, over 14 hearings in recent weeks, including those in a number of regional parts of Australia. It is very good to travel the nation, but it is also good to be in Canberra when all the systems work and everything is planned for our efforts as a committee.