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Social Services Legislation Amendment (Housing Affordability) Bill 2017



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ISSN 1328-8091

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BILLS DIGEST NO. 63, 2017-18 10 JANUARY 2018

Social Services Legislation Amendment (Housing Affordability) Bill 2017 Matthew Thomas Social Policy Section

Contents

Purpose of the Bill ............................................................... 3

Structure of the Bill ............................................................. 3

Background ......................................................................... 3

The Government’s Automatic Rent Deduction Scheme (ARDS) proposal ....................................................................... 3

The Rudd-Gillard Government’s proposed rent deduction scheme ................................................................... 3

National Rental Affordability Scheme changes ....................... 4

Committee consideration .................................................... 4

Senate Standing Committee for the Scrutiny of Bills .............. 5

Policy position of non-government parties/independents ..... 5

The ALP .................................................................................... 5

The Greens............................................................................... 5

Independents ........................................................................... 5

Position of major interest groups ......................................... 5

Financial implications .......................................................... 6

Statement of Compatibility with Human Rights .................... 6

Parliamentary Joint Committee on Human Rights .................. 7

Key issues and provisions..................................................... 7

Automatic Rent Deduction Scheme ........................................ 7

Income management ............................................................ 7

Income management as a form of paternalism .................... 8

Voluntary rental deduction arrangements.......................... 10

Objects of the ARDS ............................................................ 11

Who may request a deduction under the ARDS? ................ 12

Date introduced: 14 September 2017

House: House of Representatives

Portfolio: Social Services

Commencement: Schedules 1 and 2, the later of the day after Royal Assent and 1 March 2018; Schedule 3 items 1, 2, 4, and 6, 1 May 2018; Schedule 3 items 3 and 5, the day after Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at

January 2018.

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When may a social housing lessor request a deduction? ... 12

Content of the request ........................................................ 14

Making the deduction ......................................................... 15

Schedule 3—Amendments to the National Rental Affordability Scheme Act ....................................................... 16

Concluding comments ....................................................... 17

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Purpose of the Bill The purpose of the Social Services Legislation Amendment (Housing Affordability) Bill 2017 (the Bill) is to:

• amend the Social Security (Administration) Act 1999, the Social Security Act 1991 and the A New Tax System (Family Assistance)(Administration) Act 1999 to establish an Automatic Rent Deduction Scheme (ARDS) that would enable tenancy charges and other housing costs to be deducted from the income support and Family Tax Benefit payments of all social housing tenants and

• amend the National Rental Affordability Scheme Act 2008 to require each rental payment made under the National Rental Affordability Scheme (NRAS) to be at least 20 per cent less than the market value rent for the dwelling; permit greater flexibility with regard to the prescribing of maximum vacancy periods of NRAS dwellings; allow for the variation of conditions of NRAS allocations after they have been made; and allow for NRAS allocations to be transferred from one dwelling to another.

Structure of the Bill The Bill is made up of three schedules.

• Schedule 1 amends the Social Security (Administration) Act and the Social Security Act to enable the operation of the ARDS with regard to income support payments made under social security law.

• Schedule 2 amends the A New Tax System (Family Assistance)(Administration) Act to enable the operation of the ARDS in relation to payments of family tax benefit.

• Schedule 3 amends the National Rental Affordability Scheme Act to clarify and correct various provisions of this Act and introduce greater flexibility to the NRAS, as outlined above.

The Bills Digest Key issues and provisions section focuses mainly on Schedule 1.

Background The Government’s Automatic Rent Deduction Scheme (ARDS) proposal The Government indicated its intention to establish a Compulsory Rent Deduction (CRD) Scheme as a part of its 2016-17 Budget measures.1 The CRD was the same in its essentials as the proposed ARDS.

According to the Department of Human Services website, the CRD was to commence on 1 July 2017 and be ongoing. 2 It may be the case that the proposed new scheme was delayed as a result of negotiations with the states and territories.

The Rudd-Gillard Government’s proposed rent deduction scheme In 2013 the Rudd-Gillard Government attempted to introduce a Housing Payment Deduction Scheme (HPDS) that would have allowed for deductions to be made from the income support payments of public housing tenants for the payment of rental arrears, and/or outstanding household utilities payments where these were included under a tenant’s lease.3 The main stated reason for the HPDS was the Government’s desire to reduce the risk of public housing tenants being evicted for the non-payment of rent and becoming homeless.

In the 2008 White Paper on reducing homelessness—the Road Home—the Rudd-Gillard Government committed to ‘work with the states and territories to introduce compulsory rent payments from Centrelink benefits for tenants in public housing to eliminate the risk of eviction due to non-payment of rent’.4 Similarly, the National Affordable Housing Agreement (NAHA), which was established in 2009, commits Australian governments to ‘providing compulsory rent deductions and improved information exchange between the Commonwealth and the states and territories to improve the operational efficiency of public housing and to reduce evictions from public housing’. 5

1. Australian Government, Budget measures: budget paper no. 2: 2016-17, p. 140. 2. Department of Human Services (DHS), ‘Compulsory Rent Deduction Scheme—establishment—budget 2016-17’, DHS website. 3. For further details see M Thomas, Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013, Bills digest, 139, 2012- 13, Parliamentary Library, Canberra, 13 June 2013.

4. Australian Government, The road home: a national approach to reducing homelessness, Commonwealth of Australia, Canberra, 2008, p. 36. 5. Council of Australian Governments (COAG), National affordable housing agreement, COAG, p. 7.

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At the March 2013 Council of Australian Governments (COAG) Select Council on Housing and Homelessness meeting ‘Ministers confirmed their in-principle commitment to pursuing the Housing Payment Deduction Scheme which assists in the prevention of evictions and possible homelessness of public housing tenants due to unpaid rent. It will also improve efficiency by reducing the cost of managing arrears for public housing authorities’.6 Following the in-principle agreement of the states and territories, the Rudd-Gillard Government released an Exposure Draft of the Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013 for public comment by 23 April 2013. The Bill was to enable the HPDS described above.

In response to issues raised by stakeholders in the consultation process the Rudd-Gillard Government made substantial changes to the Exposure Draft version of the Bill.7 The Bill ultimately lapsed at the end of the 43rd Parliament and the HPDS was not implemented.8

National Rental Affordability Scheme changes The NRAS has been subject to two Australian National Audit Office (ANAO) performance audits in recent years. The report of the first audit was released in 2015 and the second in 2016.

The first of the audits found that the administration of the application and assessment process and management of reserved allocations for the NRAS had not been effective.9 The second found that the effectiveness of the Department of Social Services’ administration of NRAS allocations and incentive claims had been mixed. Among other things, the ANAO identified as a problem the complex regulatory framework that had developed as a result of continual amendment to address issues with the scheme as they had arisen. The ANAO suggested that the Regulations ‘could be reviewed with the aim of simplifying and clarifying aspects of their operation’.10

Following a consultation process with NRAS stakeholders, submissions for which closed in December 2016,11 and a Departmental review of the scheme,12 the Government developed the amendments in the Bill, which seek to clarify ‘ambiguous provisions in the NRAS Act and lay the foundation to strengthen and simplify the future operation and administration of the scheme’.13

Committee consideration The Bill was referred to the Senate Community Affairs Legislation Committee for inquiry and report by 27 November 2017. On 27 November 2017 the Senate granted an extension of time for reporting until 6 December 2017.14

The Committee report noted that social housing rent collection rates are high and that evictions resulting from rental arrears uncommon. It also noted the concerns of many submitters to the inquiry that the ARDS may not be effective in reducing homelessness and rental costs for low and moderate income households. 15

However, ultimately the Committee supported the proposed ARDS on the grounds that it could lead to a more efficient social housing system and a reduction in the risk of homelessness due to tenant evictions on the basis of rental arrears.16

Nevertheless, the Committee did recommend that the Government consider various possible changes to the ARDS, including imposing a cap on the maximum deduction that could be made from a tenant’s income support

6. See M Thomas, Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013, op. cit., pp. 4-5. 7. Ibid., for further information. 8. Parliament of Australia, ‘Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013 homepage’, Australian Parliament website.

9. Australian National Audit Office (ANAO), Administration of the National Rental Affordability Scheme, Audit report, 8, 2015-16, ANAO, Barton, ACT, 2015, p. 12. 10. Australian National Audit Office (ANAO), National Rental Affordability Scheme—Administration of allocations and incentives, Audit report, 23, 2016-17, ANAO, Barton, ACT, 2016, p. 8. 11. Department of Social Services (DSS), ‘Improving the National Rental Affordability Scheme’, DSS website, 24 November 2016. 12. C Porter, ‘Second reading speech: Social Security Legislation Amendment (Housing Affordability) Bill 2017’, House of Representatives,

Debates, 14 September 2017, p. 10420. 13. Ibid.

14. The terms of reference, submissions and the final report are available on the inquiry homepage. 15. Senate Community Affairs Legislation Committee, Report, Inquiry into the Social Security Legislation Amendment (Housing Affordability) Bill 2017 [provisions], The Senate, Canberra, 2017, p. 19. 16. Ibid.

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payment; clarifying how the scheme would interact with other forms of income management and Commonwealth deductions; providing for tenants to be notified about various aspects of requests for automatic deductions from their payments; and providing a means for tenants to request a review of a decision made by the Secretary.17

The Committee supported the proposed changes to the NRAS in Schedule 3 of the Bill. 18

Senate Standing Committee for the Scrutiny of Bills The Senate Standing Committee had no comment on the Bill.19

Policy position of non-government parties/independents The Australian Labor Party (ALP) and the Australian Greens (the Greens) positions with regard to the Bill are outlined in their dissenting reports which are a part of the Senate Community Affairs Legislation Committee report on the Bill.

The ALP ALP Senators on the Committee support the introduction of automatic rent deductions for social housing tenants in principle, on the grounds that they can help to prevent homelessness. This support is in keeping with the ALP’s own attempt to introduce a Housing Payment Deduction Scheme in 2013.

However, ALP Senators on the Committee were concerned that the ARDS scheme proposed in the Bill ‘goes too far, is too broad and could be detrimental if applied as written in the Bill’.20 They welcomed each of the recommendations of the majority report, but advocated that the Government impose a cap on deductions and clarify how the ARDS would interact with other forms of income management by means of amendments to the Bill.

ALP Senators on the Committee also recommended that the Bill be amended to only allow an amount to cover rent and utilities to be deducted; ensure that where tenants have their income support payments managed, deductions are taken from the quarantined portion of the payment and not the unrestricted portion; not allow an amount for rental arrears as a result of the suspension of a payment to be deducted in a single fortnightly payment; and require the lessor to inform the tenant of a change in the amount of payment to be deducted.21

The Greens The Greens are opposed to the proposed ARDS, arguing that it is ‘another example of the Government imposing harsh and unfair measures on individuals receiving income support, demonising them for their need for Commonwealth assistance’.22 They insist, along with many of the submitters and witnesses to the inquiry into the Bill, that the amendments in Schedules 1 and 2 ‘will not help to reduce homelessness for social housing tenants’.23 The Greens expressed concerns about a number of aspects of the ARDS, including the scheme’s all-encompassing scope, the lack of a cap on deductions, and the perceived absence of procedural fairness.

Independents The independents do not appear to have publicly expressed a position with regard to the Bill.

Position of major interest groups It has been reported that the NSW Government strongly supports and has been advocating for the introduction of an automatic rent deduction scheme. Former NSW Minister for Family and Community Services and Minister for Social Housing, Mr Brad Hazzard, is said to have argued that the automatic deduction of rent from income support recipients’ payments for social housing is necessary to reduce rent arrears and homelessness, and to increase the monies available to the government that could be used for the construction of new social housing:

17. Ibid., pp. 19-20. 18. Ibid., p. 27. 19. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 12, 2017, The Senate, 18 October 2017, p. 48. 20. Senate Community Affairs Legislation Committee, Report, op. cit., p. 30. 21. Ibid., p. 33. 22. Ibid., p. 39. 23. Ibid.

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There should be a compulsory deduction of rent for those people who receive Centrelink payments. We could then reduce if not eradicate the need to do any evictions, which cause massive social upheaval… Across Australia there is $30 million in rent arrears in social housing, so the first issue is we could build another 1,000 social houses a year if we didn’t have that arrears in rent. Secondly, it also means families who end up being evicted may well end up being homeless and that’s just a horrible scenario, so if we can avoid that by getting a compulsory payment of rent that’s a good outcome.

24

While the Commonwealth has in place voluntary mechanisms through which social housing tenants may pay their rent, Mr Hazzard argues that these schemes are not working:

In NSW, 80 per cent of evicted tenants in 2013-14 had previously participated in a voluntary scheme, but had then withdrawn and fallen into significant rent arrears… If we can head that off by simply saying, alright we recognise that’s an issue, deduct the rent first, I think that’s a positive social outcome. 25

According to another source, all of the jurisdictions with the exception of Victoria and the ACT support, in-principle, the introduction of an automatic rent deduction scheme.26 In the case of the ACT, ACT Women and Housing Minister, Yvette Berry is reported as having stated that the ACT Government does not support the scheme on the grounds that it is likely to be incompatible with ACT human rights laws.27

It was reported that as at 7 August 2017, all of the states and territories other than Victoria, the ACT and Tasmania had signed up to the ARDS.28

Based on submissions to the Senate Community Affairs Legislation Committee inquiry on the Bill, Australia’s welfare sector is strongly opposed to the proposed ARDS and the measures contained in schedules one and two.

Most welfare organisations have recommended that the proposed scheme be rejected in its entirety. The details of the sector’s problems with the Bill are considered in the ‘Key issues and provisions’ section below, but the main concerns may be broadly summarised as follows:

• given the high rates of rent collection for social housing the proposed ARDS is disproportionate to the problem of social housing rental arrears and debt

• the proposed ARDS amounts to a further extension of income management which erodes the inalienability of social security entitlements

• the proposed ARDS undermines peoples’ dignity and autonomy and their ability to manage their own finances and

• the proposed ARDS is lacking in procedural fairness.

Financial implications The Explanatory Memorandum states that the financial impact of the ARDS is not for publication. 29 This is undoubtedly because, as is noted in the 2016-17 Budget papers, ‘the arrangement is subject to negotiation with the States and Territories’.30

The amendments to the NRAS contained in Schedule 3 will not have any financial impact.31

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.32

24. L McNally, ‘Social housing rent deducted from Centrelink pay will prevent homelessness, NSW says’, ABC News, 31 March 2016. 25. Ibid.

26. A Wood, ‘Support for scheme to pay rent from welfare’, The Daily Telegraph, 1 April 2016, p. 10. 27. T McIlroy, ‘Funding progress for homelessness’, The Canberra Times, 2 April 2016, p. 4. 28. A Tudge (Minister for Human Services), Interview with Chris Smith, 2GB Sydney, transcript, 7 August 2017, p. 3. 29. Explanatory Memorandum, Social Services Legislation Amendment (Housing Affordability) Bill 2017, p. 3. 30. Australian Government, Budget measures: budget paper no. 2: 2016-17, p. 140. 31. Explanatory Memorandum, Social Services Legislation Amendment (Housing Affordability) Bill 2017, p. 3.

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Parliamentary Joint Committee on Human Rights The Parliamentary Joint Committee on Human Rights (Human Rights Committee) has released its comments on the Bill and the Statement of Compatibility.33

The Human Rights Committee raised a number of questions regarding the compatibility of the proposed ARDS with the rights to social security, an adequate standard of living, privacy, protection of the family, and equality and non-discrimination. Among other things, the Committee noted that ARDS appears to have a disproportionate negative impact on women, persons with a disability and Indigenous people, calling into question the compatibility of the scheme with the right to equality and non-discrimination.

The Committee argued that a number of questions have not been addressed in the Statement of Compatibility and has, accordingly, sought the Minister’s advice on these matters.

Key issues and provisions Automatic Rent Deduction Scheme Given that the amendments to the Social Security (Administration) Act in Schedule 1 of the Bill are essentially the same as the amendments to the A New Tax System (Family Assistance)(Administration) Act contained in Schedule 2, this section of the Bills Digest deals only with the amendments in Schedule 1 of the Bill. The comments made can be read as applying equally to the amendments made to the A New Tax System (Family Assistance)(Administration) Act by Schedule 2.

Income management In principle, income support payments made under the Social Security Act and the A New Tax System (Family Assistance) Act 1999 are inalienable. This means that, so long as a person is eligible for a payment, that payment must be made to them and may not be withheld or paid to another person.34 In recent years, exceptions have increasingly been made to this rule.

In 2007, the Howard Government introduced the Northern Territory Emergency Response (NTER) following claims of widespread child sexual abuse and neglect in Northern Territory Indigenous communities.35 A scheme of income management was introduced as a part of the intervention, under which the Government quarantines a specified amount of a person’s welfare payments for the priority needs of that person, their partner and their children. Priority needs include food, housing, clothing, education and health care.36 Payments quarantined under income management may not be spent on alcohol, tobacco, pornography or gambling.37

In 2009, the Rudd-Gillard Government replaced the income management scheme for prescribed Northern Territory Indigenous communities with a broader scheme targeted at ‘vulnerable regions’ and ‘individuals at

32. The Statement of Compatibility with Human Rights can be found at page 22 of the Explanatory Memorandum to the Bill. 33. Parliamentary Joint Committee on Human Rights, Twelfth report of the 45th Parliament, 28 November 2017, pp. 43-52. 34. Section 60 of the Social Security (Administration) Act 1999 states that social security payments ‘are absolutely inalienable’. This means that, subject to express legislative exemptions, ‘they cannot be sold, transferred to a third party, legally charged or be subject to bankruptcy

proceedings. This gives legal force to the intention that payments are designed to provide income support. A recipient's right to receive a payment or benefit CANNOT be transferred to another person either by a voluntary act or by the operation of the law’. See Department of Social Services (DSS), ‘8.4.3 protection of payment’, Guide to Social Security Law, 5 March 2007. See also section 66 of the A New Tax System (Family Assistance)(Administration) Act 1999. 35. K Magarey et al, Northern Territory National Emergency Response Bill 2007, Bills Digest, 28, 2007-08, Parliamentary Library, Canberra, 2007. 36. Subsection 123TH(1) of the Social Security (Administration) Act contains a complete list of priority needs. ‘Household utilities’ are currently

included in this list at paragraph 123TH(1)(h), which provides that this term includes electricity, gas, water, sewerage, garbage collection and fixed-line telephone. At present, the term ‘household utilities’ is only used in the part of the Social Security (Administration) Act that deals with the income management regime (Part 3B). However, as the term is also used in proposed Part 3E of the Act (at Schedule 1 to the Bill), it is to be defined in the Dictionary at Schedule 1 to the Social Security (Administration) Act. Accordingly, item 4 of Schedule 1 to the Bill repeals and replaces paragraph 123TH(1)(h) so that it refers simply to ‘household utilities’, with no included examples and item 15 of Schedule 1 to the Bill inserts a definition of ‘household utilities’ into subclause 1(1) of Schedule 1 to the Social Security (Administration) Act. This definition reproduces the definition at current paragraph 123TH(1)(h). No substantive change is made to section 123TH. 37. For an overview of income management in Australia, up to 2012, see L Buckmaster, C Ey and M Klapdor, Income management: an overview,

Background note, Parliamentary Library, Canberra, 21 June 2012.

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risk’.38 More recently, the Government has introduced a cashless debit card in Ceduna and the East Kimberley as a means to restrict income support recipients’ access to cash, alcohol and gambling services.39

Subsection 60(1) of the Social Security (Administration) Act puts beyond doubt that a social security payment is absolutely inalienable, whether by way of, or in consequence of, sale, assignment, charge, execution, bankruptcy or otherwise. Subsection 60(2) of the Act provides exceptions to this general rule. Item 1 of Schedule 1 to the Bill amends subsection 60(2) of the Social Security (Administration) Act with the effect that the inalienability of social security payments is subject to the additional exception in new Part 3E.40 That is, it provides for automatic deductions of rent and other housing costs to be made from the income support payments of social housing tenants.

Where income support recipients are subject to the income management regime under Part 3B of the Act, part of their payment is quarantined in order to meet their priority needs. The part of the payment that is subject to income management is that which is left over after all compulsory deductions are made (including Centrelink overpayment recovery amounts, child support liabilities and tax deductions)—this is the net amount.41 Items 2 and 3 of Schedule 1 amend the definition of net amount to include as deductions the automatic deductions of rent or other household payments from income support and family tax benefit payments provided for under proposed sections 124QG of the Social Security (Administration) Act (at item 8 of Schedule 1) and 67E of the A New Tax System (Family Assistance)(Administration) Act (at item 5 of Schedule 2).

Cashless welfare card trial participants are to be treated differently under the Bill. Item 7 of Schedule 1 of the Bill amends section 124PM of the Social Security (Administration) Act to remove the ability of a cashless welfare card trial participant to use the unrestricted portion of their payment at their discretion. This allows for

deductions (including automatic rent deductions) to be made from the unrestricted portion of the person’s payment, if necessary. In theory, at least, this means that a cashless welfare trial participant’s entire payment could end up being restricted. In its submission to the Senate Community Affairs Legislation Committee inquiry into the Bill, the National Social Security Rights Network has stated:

We are very concerned with this amendment. The unrestricted portion of a Cashless Debit Card holder’s social security payment is the only portion able to be accessed in cash form. For most Cashless Debit Card holders, this unrestricted portion equals 20% of their social security benefit. In the case of a single Newstart Allowance recipient, this is approximately $50 per week. The proposed amendment indicates that some people, forced to use the Cashless Debit Card, will have even less access to money following any automatic deduction.

42

While no limits have been placed on the discretionary amount paid to an income support recipient who is subject to income management, this amount will be smaller if they are subject to automatic rent deductions.

As noted above, the Senate Community Affairs Legislation Committee has recommended that the Government should consider clarifying how the ARDS would interact with other forms of income management and Commonwealth deductions.

Income management as a form of paternalism Compulsory income management, such as the proposed ARDS allows for, is highly controversial. This is largely because it is a paternalist form of policy.

In relation to public policy, paternalism may be described as the interference of a government or state with a person without their consent and defended or motivated by a claim the person interfered with will be better off or protected from harm. Paternalist policies seek to advance people’s (perceived) interests and welfare at some

38. Ibid.

39. DSS, ‘Cashless debit card’, DSS website, last updated 14 December 2017. 40. New Part 3E is inserted by item 8 of Schedule 1 to the Bill and discussed below at pages 11 to 16. 41. See Department of Social Services (DSS), ‘11.1.3.30 income management calculation’, Guide to Social Security Law, 1 July 2015. 42. National Social Security Rights Network, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Social Services

Legislation Amendment (Housing Affordability) Bill 2017, 10 November 2017, p. 5.

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cost to their liberty and freedom of action.43 As such, paternalist policies appear to offend a fundamental tenet of liberal societies; that is, that the individual is best placed to know what is in his or her best interests.44

The idea that individuals should generally be treated as the best judges of their own welfare is premised on two main grounds. The first is that because the individual best knows his or her own interests and how to achieve them, the ideal way to maximise individual satisfaction is to not interfere with how people’s choices are made. The second ground insists that allowing people the freedom to exercise choice is not only the best way to maximise utility, but it also helps people to cultivate and exercise moral autonomy. A further, related argument against state paternalism is that there is no guarantee that it will improve people’s welfare and, indeed, it may make it worse.45

While paternalist policies are controversial they are ubiquitous. This suggests that the main issue is not whether paternalism itself is justifiable, but rather the particular conditions under which specific paternalist policies may be said to be justifiable.46 For an analysis of the conditions under which specific paternalist policies might be said to be justifiable, see this Parliamentary Library research paper titled Paternalism in Social Policy-when is it justifiable?.47

Most welfare organisations are opposed in principle to any policies or initiatives that compulsorily withhold income support recipients’ payments or a part of their payments. They argue that such policies and schemes not only offend against the dignity of income support recipients, but are also self-defeating in that they take away these people’s autonomy and ability to manage their own affairs.48

As John Falzon stated in the St Vincent de Paul submission on the Rudd-Gillard Government’s proposed HPDS:

Autonomy and liberty are core elements of participation in a liberal democracy. We believe that forcibly reducing people’s autonomy, by restricting how they spend their income, will only decrease self-determination and resilience, and increase social exclusion. Compulsory quarantining of income is vastly different to voluntary repayment schemes, such as the Rent Deduction Scheme, or Centrepay, which support individual decision-making and empowerment.

49

Following similar lines, the Equality Rights Alliance goes on to emphasise that reducing people’s ability to manage their own finances can have negative practical consequences:

We are concerned that the Social Services Legislation Amendment (Housing Affordability) Bill is a departure from the fundamental inalienability of social security incomes. The proposal to allow lessors of social housing to compulsorily deduct payments of rent and certain other costs from tenant’s income support payments infringe individual’s capacity to direct and manage their own finances. Upholding the rights of all tenants across all tenures to access and manage their own finances is fundamental to people’s dignity and autonomy. In addition there are very real and practical implications of third parties diverting people’s incomes, particularly where unexpected and emergency costs arise. One such example pertinent for women is the need to have control over finances to create and execute a plan to leave a violent relationship.

50

A number of welfare organisations have argued that, based on their experience in working with tenants, the automatic deduction of rent could leave these people unable to respond to unforeseen life circumstances and going without food, medicine and other essentials:

43. M Thomas and L Buckmaster, Paternalism in social policy—when is it justifiable?, Research paper, 8, 2010-11, Parliamentary Library, Canberra, 2010, p. 3. 44. Ibid., p. 7. 45. Ibid.

46. Ibid., p. 1. 47. Thomas and Buckmaster, Paternalism in social policy—when is it justifiable?, op. cit. 48. For a brief summary of the main arguments for and against income management, see L Buckmaster et al, Social Security and Other Legislation Amendment (Welfare Reform and Reinstatement of Racial Discrimination Act) Bill 2009, Bills digest, 94, 2009-10, Parliamentary Library,

Canberra, 2010, pp. 20-34. 49. St Vincent de Paul Society, Submission on the Housing Payment Deduction Scheme, p. 3. 50. Equality Rights Alliance, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation

Amendment (Housing Affordability) Bill 2017, 14 November 2017, p. 1.

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The importance of the ability of tenants living in social housing to make decisions about how they manage their income can’t be underestimated. Most social housing tenants are reliant on Government payments and for many the daily reality of managing a household budget is a precarious juggling act. The income they receive is often a subsistence-level income, barely enough to cover the cost of essentials such as food, housing, utilities, daily transport costs, education and health costs. And when unexpected costs arise, low income households are often forced to make a choice between going without or going into debt. Social housing tenants have told us that at these times, they need the ability to control their finances to pay what needs to be paid first depending on the needs of their family on that particular day or week… To remove the ability of tenants to manage their cash-flow, to enable them to respond to the needs of their household and family, will only impose more financial hardship for many social housing tenants who are already very vulnerable.

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The Australian Council of Social Service (ACOSS) has argued that removing tenants’ ability to control their finances could, ironically, end up placing them in debt.52

While they do not generally support income management and the automatic deduction of rent, some of Australia’s welfare organisations concede that such interventions may be acceptable; however, this is only when there is a real risk of eviction and homelessness, and, for some, when a range of other voluntary measures have been exhausted. As such, they accept that paternalist policies may be justifiable where they are specifically targeted at those people whose welfare is seriously threatened.

Hence, in its submission to the inquiry, the Equality Rights Alliance states:

Compulsory automatic rent deductions should be viewed as an available tool in situations where it is deemed appropriate in light of the decision-making capacity of a tenant and the risk of eviction and homelessness. Such a process would require an independent and expert decision-making mechanism. A suite of responses, tailored and responsive to the diversity of circumstances is required to meet the overriding objective of reducing evictions into homelessness. Where it’s deemed necessary and appropriate, compulsory rent deduction is one tool which should be applied on a case by case basis, reflecting the scale of the problem and in balance with other responses.

53

Similarly, ACOSS maintains that:

A fairer alternative proposal would be to restrict automatic rent deductions to tenants who are at immediate risk of eviction because of arrears as a measure of last resort. This decision would only be made by a state tenancy tribunal. 54

The above argument is effectively one in favour of what is referred to as pure paternalism—that is, an intervention that is specifically directed, with the group being protected (tenants at immediate risk of being evicted due to rental arrears) being the group that is being interfered with (by having deductions automatically made from their payments). Pure paternalism may be contrasted with impure paternalism, in which the group of people being interfered with is larger than the group being protected.55

Under the Rudd-Gillard Government’s proposed HPDS compulsory deductions would only have been made from the income support payments of public housing tenants with current rent owing and not tenants who were subject to income management. By contrast, the ARDS is to apply to all social housing tenants in receipt of income support, including social housing tenants subject to income management, where the social housing lessor requests that a deduction be made.

Voluntary rental deduction arrangements As noted above, social housing tenants in receipt of income support currently have access to a voluntary Rent Deduction Scheme.56 Tenants in other rental arrangements, such as private rental, who receive Centrelink

51. Shelter NSW, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation Amendment (Housing Affordability) Bill 2017, 10 November 2017, p. 2. 52. Australian Council of Social Service (ACOSS), Submission to Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation Amendment (Housing Affordability) Bill 2017, 10 November 2017, p. 1. 53. Equality Rights Alliance, Submission to Senate Community Affairs Legislation Committee, op. cit., p. 3. 54. ACOSS, Submission to Senate Community Affairs Legislation Committee, op. cit., p. 2. 55. See Thomas and Buckmaster, Paternalism in social policy—when is it justifiable?, op. cit., p. 5. 56. DHS, ‘Rent Deduction Scheme’, DHS website, last updated 21 December 2017.

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payments, can choose to use the Department of Human Services Centrepay system to automatically deduct their rent from their payments.57 Recipient-requested deductions are deducted from payments after any compulsory deductions (debts to the Commonwealth) have been made.58 Australia’s welfare sector is strongly supportive of voluntary rental deduction schemes, which are held to support individual decision-making and empowerment.

The Government has argued in support of the proposed ARDS that in 2013-14 some 80,000 households in the social housing system stopped their voluntary deductions at some stage during the year,59 and, in the same year, more than 8,900 social housing tenants, including families with children, were in serious rental arrears, with more than 2,300 people evicted by local housing authorities due to rent defaults.60 The Government suggests that this indicates the need for compulsory, rather than simply voluntary, rental deduction arrangements to ensure that social tenants do not end up homeless.

However, in their submissions to the inquiry a majority of welfare organisations have insisted that, given high national rent collection rates for social housing and the relatively low number of evictions due to rental arrears, the proposed response is unnecessary and unjustified. Over the five years from 2011-12 to 2015-16 national

rent collection rates have averaged 99.4 per cent for public housing, 99.2 per cent for community housing and 99.2 per cent for state owned and managed Indigenous housing. 61 As at 30 June 2016 there were 394,289 households in all social housing programs and 845,408 tenants. 62 Based on these figures, and the number of evictions quoted by the Government above, less than three in every 1,000 social housing tenants are evicted in any one year.

The Equality Rights Alliance has suggested that in view of the relatively small scale of the problem, what is required is ‘a targeted solution responsive to the complex, underlying factors that contribute to rental arrears and vulnerability to eviction’.63 Following similar lines, the Salvation Army has argued that it ‘supports voluntary, ‘opt-in’ streams of income management such as Centrepay, particularly where these measures are supported by case management (intensive counselling and support including financial counselling and supported by locally coordinated services)’.64

Objects of the ARDS Item 8 of Schedule 1 to the Bill is a key amendment. It inserts proposed Part 3E—Automatic deductions of rent or other household payments into the Social Security (Administration) Act. The stated object of this Part is to provide for automatic deductions from certain welfare payments (divertible welfare payments65) for rent or household utilities, or loss or damage to property arising as a result of occupancy of premises, so as to:

a) reduce homelessness; and

b) ensure financial effectiveness and sustainability of the social housing system; and

c) support greater investment in social housing.

Elaborating on the purpose of the ARDS, Minister for Human Services, Alan Tudge, has stated:

…The ARDS will drive greater efficiencies in Australia’s social housing system by generating a steady income stream that may be reinvested in social housing stock. The state and territory social housing system is losing more than

57. DHS, ‘Goods and services for Centrepay deductions’, DHS website, last updated 27 August 2017. 58. DSS, ‘8.4.1.40 deductions from payments’, Guide to Social Security Law, 8 May 2017. 59. A Tudge, Automatic Rent Deduction Scheme benefits public housing tenants and encourages investment, media release, 7 August 2017. 60. C Porter (Minister for Social Services) and A Tudge (Minister for Human Services), Social housing rent reform to support vulnerable families,

joint media release, 14 September 2017; C Porter, ‘Second reading speech: Social Security Legislation Amendment (Housing Affordability) Bill 2017, op. cit., p. 2. 61. Steering Committee for the Review of Government Service Provision, Report on Government Services 2017: volume G: housing and homelessness, Productivity Commission, Canberra, 2017. See Tables 18A.48-51. 62. Australian Institute of Health and Welfare (AIHW), Housing Assistance in Australia 2017: Supplementary tables: social housing tenants, AIHW

website, July 2017. Tenants.6: Number of tenants in social housing, by state and territory, at 30 June 2016. 63. Equality Rights Alliance, Submission to Senate Community Affairs Legislation Committee, op. cit., p. 2. 64. The Salvation Army, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation Amendment

(Housing Affordability) Bill 2017, 9 November 2017, p. 2. 65. Divertible welfare payments are defined under proposed section 124QB of the Social Security (Administration) Act.

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$30 million a year from unpaid rent and related administrative costs. This not only results in people and families losing a roof over their head, but also discourages private investment in social housing. 66

The proposed scheme could indeed encourage increased private investment in social housing by boosting would-be investors’ confidence in realising a return. However, there is no guarantee that state and territory governments would choose to invest the increased rental revenue in social housing rather than allocating it towards some other purpose. State and territory governments could be urged to do so through the Australian Government making it a condition of Commonwealth funding under the new National Housing and Homelessness Agreement (NHHA), which is being negotiated with the states and territories.67

In the context of consultations on the Exposure Draft of the Bill that would have enabled the Rudd-Gillard Government’s proposed HPDS, stakeholders were critical of the focus on the recovery of public housing lessor debts at the expense of a focus on preventing evictions and reducing homelessness.68

Who may request a deduction under the ARDS? Proposed section 124QC of the Social Security (Administration) Act specifies who is a social housing lessor for the purposes of the ARDS. Essentially, this includes any state or territory housing authority or body authorised to provide social housing in a state or territory that has a written agreement with the Department of Human Services relating to the authority or body’s ability to request ARDS deductions.

Under the Rudd-Gillard Government’s proposed HPDS the ability to have deductions made was confined to public housing lessors (that is, to state or territory housing authorities). Under the ARDS coverage is expanded to include lessors of community housing, state owned and managed Indigenous housing, mainstream and Indigenous community housing, and housing provided under the Crisis Accommodation Program.

Arguably, this expansion to other forms of social housing makes sense, given that it is government policy to transfer a substantial proportion of public housing to community housing providers.69 In keeping with this policy approach, community housing has grown as a percentage of the overall social housing stock over the past decade or so. From 2007 to 2016 the number of community housing dwellings in Australia more than doubled, growing from 34,672 to 80,225. At the same time, public housing fell from 339,771 to 320,041 dwellings.70

Under proposed subsection 124QC(2) the Minister may, by written instrument, determine that a specified authority or body may not be a social housing lessor. However, it is not clear on what basis this decision is to be made. Under the Rudd-Gillard Government’s proposed HPDS the default position was that the Minister could specify, by legislative instrument, that a state or territory, authority of the state or territory, or a person was a public housing lessor. Before doing so the Minister was to have ensured that the public housing lessor had in place appropriate processes for reviewing decisions made with regard to rent owed and for dealing with lessees in matters relating to their leases.71 Because the ARDS is to apply to all social housing tenants—see below—such a requirement is not necessary.

When may a social housing lessor request a deduction? Proposed section 124QF specifies various conditions under which a social housing lessor may request that a deduction be made. These include if:

66. A Tudge, Automatic Rent Deduction Scheme benefits public housing tenants and encourages investment, op. cit. 67. On 25 October 2017, the Government introduced to the Parliament the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 which would, if passed, enable the replacement of the NAHA with the NHHA. The NHHA would introduce primary, supplementary and designated housing agreements.

68. Thomas, Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013, op. cit., pp. 9-10. 69. The rationale behind this approach is that community housing tenants are eligible for Commonwealth Rent Assistance (CRA) whereas public housing tenants are not, and this enables community housing providers to charge higher rents without reducing tenant net incomes. Where they have a sufficiently sized asset base, community housing providers are able to use this to leverage financing and further expand their

housing stock. At the 2009 Housing Ministers Conference, a target was set to increase community housing stock to make up 35 per cent of the social housing sector by 2014. See H Pawson, C Martin, K Flanagan and R Phillips, ‘Recent housing transfer experience in Australia: implications for affordable housing industry developments’, AHURI Final report, 273, Australian Housing and Urban Research Institute, Melbourne, 2016, p. 2. 70. See Steering Committee for the Review of Government Service Provision, Report on Government Services 2017: volume G: housing and

homelessness, Table 18A.3 Descriptive data—number of social housing dwellings, at 30 June, PC, 2016. 71. Item 9, Schedule 1 to the Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013 would have inserted clause 3, proposed Schedule 6 into the Social Security (Administration) Act.

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• the tenant has an ongoing or outstanding obligation to pay an amount for rent or household utilities

• the tenant is to pay to the lessor an amount for loss of or damage to property as a result of their occupancy of premises so as to comply with an order of a court, tribunal or other body and there is either no appeal or the appeal is unsuccessful or

• the tenant agrees in writing to pay the lessor an amount for loss of or damage to property as a result of their occupancy.

However, the catch-all condition that the tenant has an ongoing obligation to pay an amount for rent, household utilities, or both, effectively means that all social housing tenants will be subject to the ARDS, so long as their lessor has a written agreement with the Department of Human Services and requests that deductions be made.

Welfare organisations have been highly critical of the all-encompassing nature of the ARDS. For example, the National Association of Tenants’ Organisations has argued that the effect of the ‘ongoing or outstanding obligation’ criteria

would be to capture any historical amounts for rent or household utilities owed by the tenant, even if the amounts are arbitrary or are no longer being pursued by the lessor. Provided the amount is ‘outstanding’, it would theoretically be recoverable under the ARDS, regardless of when it accrued. 72

As the National Association of Tenants’ Organisations sees it, the scheme should be limited to cases in which payments have been outstanding for a defined period of time, and should not apply retrospectively.73 This would ensure that tenants are given a grace period in which to satisfy an outstanding obligation, rather than penalising them for incurring nominal or isolated debts that they are capable of paying in a following rental payment period.

A number of welfare organisations have criticised the extension of payment obligations beyond rental arrears to include things such as household utilities, arguing that this goes too far in terms of a tenancy agreement. For example, the National Association of Tenants’ Organisations has stated that:

By allowing such a broad range of payments to be recovered under the ARDS, the Bill goes beyond what is necessary to reduce the accumulation of rental arrears, and may place tenants under increased financial strain due to their inability to assert their rights against lessors or to apply their welfare income towards more pressing financial liabilities.

74

The Association goes on to insist that ‘deductions pursuant to the ARDS should only be permitted in respect of outstanding rental payments where the payment default amounts to a serious breach of the terms of the tenancy agreement and causes significant detriment to the lessor’.75

Under the Rudd-Gillard Government’s proposed HPDS the public housing lessor was required to have undertaken reasonable steps to recover debts before making a request under the scheme.76 These steps included: providing the tenant with written notice demanding payment of some or all of the amount within a specified period that was reasonable, and that period having passed without the demand being met; taking reasonable action to inform the person of financial counselling and other services relating to the lease available to the person; informing the person of their right to review of the decisions made in relation to amounts due; taking reasonable action to inform the person of the intention to request that a deduction be made from their payment because of the debt; and giving the person a reasonable opportunity to make representations about the proposal to have a deduction made from their payment.77

72. National Association of Tenants’ Organisations, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation Amendment (Housing Affordability) Bill 2017, 10 November 2017, p. 3. 73. Ibid.

74. Ibid., p. 3. 75. Ibid.

76. This requirement was introduced in response to stakeholder comments on the Exposure Draft of the Bill that would have enabled the Rudd-Gillard Government’s proposed HPDS. See subclause 6(3) of proposed Schedule 6 of the Social Security (Administration) Act at item 9 of Schedule 1 to the Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013. 77. Subclause 6(4) of proposed Schedule 6 of the Social Security (Administration) Act at item 9 of Schedule 1 to the Social Security Legislation

Amendment (Public Housing Tenants’ Support) Bill 2013.

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There is no similar requirement under the proposed ARDS. As a number of welfare organisations see it this amounts to a lack of procedural fairness. The National Association of Tenants’ Organisations has argued that, in addition to the above requirements, the Bill should compel the lessor to

provide a written demand that payment be made within a reasonable period of the date on which the obligation became overdue, and afford the tenant the opportunity to remedy the payment default, before having recourse to the ARDS. 78

Content of the request Under proposed subsection 124QF(3) the social housing lessor’s request must specify the amount to be deducted from the tenant’s divertible welfare payment. The amount is not to be more than the amount owed by the tenant for rent, household utilities, loss of or damage to property as determined by an order of a court, tribunal or other relevant body, or agreed to in writing by the tenant.

Under the Rudd-Gillard Government’s proposed HPDS housing costs that could be deducted were limited to rent, rent arrears and household utilities. Maintenance debt incurred as a result of property damage was not included. This was in response to stakeholder concerns that these forms of debt are often contentious and may unduly impact on domestic violence victims.79

Under the proposed ARDS amounts deducted for damage to property are to be as determined by an order of a court, tribunal or relevant body and in these instances it is to be assumed that the deductions will not fall on domestic violence victims and other tenants who are not responsible for damage caused. However, in the case of deductions made under proposed subsection 124QF(1)(c)—that is, by written agreement of the tenant— victims of domestic violence and innocent parties may end up paying for damage caused by someone else. The NSW Federation of Housing Associations has recommended that victims of domestic and family violence should be specifically excluded from the requirement to repay damage to property.80

The National Social Security Rights Network has expressed the concern that vulnerable tenants may feel obliged to sign written agreements for compensation amounts that have not been proven or amounts in cases where the cause of the damage has not been determined—‘there may be instances where a fear of eviction causes a vulnerable tenant to agree to compensate’.81

Proposed subsection 124QF(4) allows the social housing lessor to amend the request to specify a different amount to be deducted from the divertible welfare payment. Under the Rudd-Gillard Government’s proposed HPDS the lessor was able to change the deduction amount in accordance with changes in rent and utility amounts, so long as the lessor took reasonable action to inform the tenant of the amendment and gave them an opportunity to make representations to the lessor about the proposed change.82 The proposed ARDS does not require that the lessor inform the tenant of such changes, or require that they receive representations from the tenant. As such, the tenant may only become aware that the deduction has been granted, and of the size of the deduction, when the amount has already been withdrawn from their income support payment.83

As noted above, the Senate Community Affairs Legislation Committee has recommended that the Government consider the arguments for including a provision in the ARDS guidelines that would provide for tenants to be notified of the details of requests. It has also recommended that the Government consider the merit of providing for tenants to request a review of decisions made under the ARDS.84

78. National Association of Tenants’ Organisations, Submission to Senate Community Affairs Legislation Committee, op. cit., p. 4. 79. Explanatory Memorandum, Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013, p. 3. 80. NSW Federation of Housing Associations, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation Amendment (Housing Affordability) Bill 2017, November 2017, p. 5.

81. National Social Security Rights Network, Submission to Senate Community Affairs Legislation Committee, op. cit., pp. 4-5. 82. Item 9, Schedule 1 to the Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013 would have inserted subclause 5(4) of proposed Schedule 6 into the Social Security (Administration) Act. 83. Glebe HAPN, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation Amendment (Housing

Affordability) Bill 2017, 10 November 2017. 84. Senate Community Affairs Legislation Committee, Report, op. cit., p. 20.

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Making the deduction Proposed section 124QG specifies the circumstances under which a deduction may and may not be made from a social housing tenant’s divertible welfare payment under the ARDS. Proposed section 124QH stipulates, in general terms, the amount of a deduction, which must not exceed the amount requested by the social housing lessor or the amount of the divertible welfare payment that is left to the tenant after all other compulsory deductions have been made. As such, there is no specified upper limit to the amount that may be requested by the social housing lessor. This is of considerable concern to welfare organisations for the reasons outlined in this representative comment by the National Association of Tenants’ Organisations:

There is nothing on the face of the Bill that would prevent the Secretary from ordering that a deduction be made which would exhaust the entire residual amount of a tenant’s social security entitlement.

In circumstances where a tenant receives only one social security payment, the deduction could constitute the entirety of a tenant’s income. In that event, a tenant who is already experiencing financial hardship would have one of two options: to go without other basic needs, such as food or household items; or to secure a loan for these basic needs, which may give rise to increased financial hardship (through the tenant’s inability to meet his or her payment obligations under the loan agreement).

The SSA Act protects ‘priority needs’, which are defined to include food, clothing, footwear, basic personal hygiene items and basic household items. The Explanatory Memorandum to the Bill states that the ARDS recognises that social welfare payments should be directed towards a person and their family’s basic needs. However, by failing to cap the amount of deduction, the Bill appears to elevate the need for housing above the other basic needs.

85

Under the Rudd-Gillard Government’s proposed HPDS an effective cap was set on the maximum deduction amount relative to the tenant’s actual payment. This was 35 per cent of what the tenant’s payment would have been apart from any reductions or deductions made under Commonwealth legislation. The Minister would also have been able to specify components of income support payments that could have been excluded from the calculation of the 35 per cent cap. This would have allowed the amount the 35 per cent was calculated against to be reduced, allowing the tenant to retain more of their payment for living expenses.

Most of the submissions on the Exposure Draft of the Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013 were highly critical of the level of the cap, arguing that it was set too high and that this would leave public housing tenants with relatively few resources to spend on their other, non-housing related living expenses. This, it was argued, could result in the counterproductive situation of some households being unable to meet their living expenses and less likely to sustain their housing over the longer term.86

In riposte the Rudd-Gillard Government argued that the 35 per cent cap represented a balance between stakeholder opinions that the amount was either too high and therefore could cause hardship in individual cases; or too low to cover both rent and arrears, resulting in tenants falling deeper into debt.87 It pointed out that, given that most public housing tenants were paying up to 25 per cent in rent already, the 35 per cent cap could not only cover their rent but also contribute up to 10 per cent to paying off rental arrears.88

In their submissions to the inquiry on the current Bill, welfare organisations have recommended that a cap be placed on the amount that the Secretary may deduct from a tenant’s income support payment ‘to ensure that a minimum residual amount is available to meet the tenant’s other needs’.89 The Salvation Army has suggested that the cap could be set at 30 per cent of household income.90 There are a number of different definitions and indicators of housing stress. However, most of these definitions have it that where households are spending more than 30 per cent of their gross income on housing costs, they are in housing stress.

85. National Association of Tenants’ Organisations, Submission to Senate Community Affairs Legislation Committee, op. cit., p. 4. 86. See Thomas, Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013, op. cit., pp. 13-14 and subclause 9(1) of proposed Schedule 6 of the Social Security (Administration) Act at item 9 of Schedule 1 to the Social Security Legislation Amendment (Public Housing Tenants’ Support) Bill 2013.

87. Ibid., p. 13. 88. Ibid.

89. National Association of Tenants’ Organisations, Submission to Senate Community Affairs Legislation Committee, op. cit., p. 5. 90. The Salvation Army, Submission to Senate Community Affairs Legislation Committee, op. cit., p. 3.

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The Senate Community Affairs Legislation Committee has recommended that the Government consider whether there is merit in imposing a cap on the maximum deduction that may be made under the ARDS.91

Proposed section 124QI sets out the notifications that are required of social housing lessors. These required notifications do not extend to tenants. There is no requirement that tenants be consulted or informed about the content of requests—or, as noted above, amounts to be deducted from their payments—either by the lessor or the Secretary. This is a source of much concern for welfare organisations, who argue that the proposed ARDS is lacking in procedural fairness.

The National Association of Tenants’ Organisations has recommended that the Bill be amended to require that the Secretary notify a tenant upon receiving a request from the lessor for deductions to be made under the ARDS. The Secretary should then be required to notify the tenant of his or her decision whether to grant or

reject the request. If the request is granted, the Secretary should be required to advise the tenant in advance of: the amount to be deducted; the period during which deductions are to be made and the amount to be deducted during each payment period; and any rights of review the tenant has in respect of the Secretary’s decision.92 If the procedural fairness of the ARDS is not increased along these lines, then the National Association of Tenants’ Organisations and other welfare groups have argued that tenants are likely to suffer financial instability and hardship.

As noted above, the Senate Community Affairs Legislation Committee has recommended that the Government consider the arguments for including in the ARDS guidelines a requirement that tenants be provided with notifications as proposed by the National Association of Tenants’ Organisations.93

Proposed Division 3 in new Part 3E sets out how the deductions made by the Secretary under the ARDS are to be treated. Proposed Division 4 provides for an amount paid in excess of the deduction to the public housing lessor to be repaid to the Commonwealth. It also spells out the way in which the excess amount is to be paid to the tenant. Proposed Division 5 stipulates that the Secretary may, on behalf of the Commonwealth, charge a social housing lessor fees for services provided under the ARDS. In its submission to the inquiry into the Bill the Community Housing Council of SA has expressed some concerns regarding the lack of detail on fees:

There is no information in the Bill about the scale of fees that would apply to [community housing providers]; it would be helpful if an indication of the fees was provided. All costs passed onto [community housing providers] will place further financial pressure upon them and limit their ability to support tenants. 94

Schedule 3—Amendments to the National Rental Affordability Scheme Act Judging by submissions to the inquiry into the Bill from housing organisations, the national rental affordability scheme amendments in Schedule 3 are generally supported. These organisations have, however, expressed some reservations with regard to proposed new subsection 7(5). This new subsection:

clarifies that a condition provided for by the [National Rental Affordability Scheme] may be imposed on an allocation after it is made. A condition prescribed by the Scheme includes new or varied conditions of allocation. New conditions of allocation may be imposed to deal with emerging issues and circumstances.

The ability to implement new and varied conditions of allocations are important to further the objects of the Scheme, and to protect eligible tenants and ensure the safety and viability of dwellings. For example, new conditions of allocation may be imposed to deal with certain safety issues, such as a requirement to use non-flammable materials, or replace existing dangerous materials.

95

The NSW Federation of Housing Associations has argued that this amendment:

Would give [the Department of Social Services] wide ranging power to significantly change the conditions of the [National Rental Affordability Scheme] allocation and to enact those changes at any time. There are no guidelines or

91. Senate Community Affairs Legislation Committee, Report, op. cit., p. 19. 92. National Association of Tenants’ Organisations, Submission to Senate Community Affairs Legislation Committee, op. cit., p. 5. 93. Senate Community Affairs Legislation Committee, Report, op. cit., p. 20. 94. Community Housing Council of SA, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation

Amendment (Housing Affordability) Bill 2017, 10 November 2017, p. 3.. 95. Explanatory Memorandum, Social Services Legislation Amendment (Housing Affordability) Bill 2017, p. 20.

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parameters on what types of conditions might be imposed. Nor is there any indication that Approved Participants and investors would be consulted or their consent required before conditions would be altered. Compliance with the proposed new conditions of allocation could result in unanticipated costs for providers and possibly a partial loss of the incentive if it proves too difficult to comply with in a timely manner.

96

The Federation has recommended that the provision be amended:

To limit the scope of [Department of Social Services] authority to varying conditions in order to mitigate risk and it should be made clearer that this power relates to conditions being imposed to deal with emerging issues and circumstances.

The Federation recommends that some parameters be included in the Legislation that indicate when it is appropriate to significantly vary the conditions of the allocation, and that there be established procedures for negotiation on any variations with Approved Participants and investors. 97

Concluding comments The proposed ARDS that the Bill would enable is strongly opposed by key organisations in Australia’s welfare sector. These organisations’ concerns stem in large part from the sector’s general aversion to paternalist policies, and especially impure paternalist policies.

The sector’s argument has generally been that most income support recipients are quite capable of managing their limited finances without outside help and intervention. Where income management is imposed on a one-size-fits-all basis, it is argued that this can have unintended negative consequences for these people, including undermining their responsibility for managing their finances and their ability to do so. In short, it is argued that the ARDS that the Bill would enable is punitive and likely to do more damage than good.

Were the Government to make changes to the Bill along the lines suggested by the Senate Community Affairs Legislation Committee and many submitters to the inquiry, then this could improve both the acceptability of the ARDS and its prospects of success.

96. NSW Federation of Housing Associations, Submission to Senate Community Affairs Legislation Committee, op. cit., p. 10. 97. Ibid.

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