2023

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

                                                                                           

National Housing Finance and Investment Corporation Amendment (Unlocking Regional Housing) Bill 2023

 

 

 

EXPLANATORY MEMORANDUM

and

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

 

 

 

 

 

 

Circulated by authority of

Dr Helen Haines MP Memberfor Indi

National Housing Finance and Investment Corporation Amendment (Unlocking Regional Housing) Bill 2023

 

GLOSSARY

 

The following abbreviations and acronyms are used throughout this explanatory memorandum.

 

Abbreviation	Definition
Bill	National Housing Finance and Investment Corporation Amendment (Unlocking Regional Housing) Bill 2023
Board	Board of the National Housing Finance and Investment Corporation
CHP	Registered community housing provider
Investment Mandate	National Housing Finance and Investment Corporation Investment Mandate Direction 2018
Minister	Treasurer
NHFIC	National Housing Finance and Investment Corporation
NHFIC Act	National Housing Finance and Investment Corporation Act 2018
NHIF	National Housing Infrastructure Facility

 

 

OUTLINE

 

The National Housing Finance and Investment Corporation Amendment (Unlocking Regional Housing) Bill 2023 (the Bill) amends the National Housing Finance and Investment Corporation Act 2018 (the NHFIC Act) to ensure the National Housing Finance and Investment Corporation (the NHFIC) can specifically and equitably distribute the National Housing Infrastructure Facility (the NHIF) to regional, rural and remote Australia. It also ensures the NHFIC provides greater assistance for local governments to access NHFIC funds for housing-enabling infrastructure, which is critical to unlocking housing supply in regional Australia.

 

The NHFIC is a corporate Commonwealth Government entity which was formed in 2018 to improve housing outcomes for Australia.  It is governed by an independent, skills-based Board that is responsible for decision-making to ensure effective performance of the NHFIC’s functions. Some of the NHFIC’s functions are set out in the National Housing Finance and Investment Corporation Investment Mandate Direction 2018 (the Investment Mandate), issued by the Minister. It may include strategies and policies which the Board must observe, decision-making criteria, and risk and return on investments.

 

One of the NHFIC’s key functions is to make loans and investments and issue grants through the administration of the NHIF to improve housing supply, which includes funding new or upgraded house-enabling infrastructure like sewerage, water, electricity, transportation and roads.

 

Since its inception in 2018, the NHFIC has fallen short of achieving its aims of improving housing supply in Australia, and especially in regional, rural and remote areas.

 

A 2021 Statutory Review into the Act consistently heard that ‘the NHIF has been difficult to access, and was poorly understood. Stakeholders pointed to a range of reasons for this, ranging from: a general lack of understanding as to what projects and proponents qualify for NHIF financing; eligibility criteria that set a very high bar for approval… and a complicated and lengthy application process’.

 

The NHIF also appears to have failed to deliver an equitable distribution of funding of regional Australia. Despite a lack of transparency as to the aggregate share of NHFIC funding going to regional Australia, NHFIC’s most recent Annual Report does indicate that most projects funded in 2021 ‐ 2022 were in metropolitan areas.

 

In regional Australia, local governments are one of the key providers for enabling infrastructure like sewerage and drainage. But with small rate payer bases, they don’t have the funds to build the infrastructure that attracts private investments. State or Territory government-owned utility providers, like water corporations, also struggle to fund these projects.

 

This Bill amends the NHFIC Act to ensure some of its functions are directed towards addressing housing supply in regional, rural and remote Australia. It does so by:

 

1.     Adding an object of NHFIC to ‘provide finance, grants or investments that support the provision of housing-enabling infrastructure in regional, rural and remote Australia’.   

2.     Requiring the Minister to scrutinise what action needs to be taken so that the NHIF distributes at least 30% [1] of its funds each year to projects in rural, regional and remote Australia. The Minister would also have to outline in reports how it has complied with this requirement.  

3.     Clarifying that local governments and utility providers can receive NHFIC funding . The 2021 Statutory Review found that there is no precedent of local governments directly accessing NHIF funding, even though they are eligible.

4.     Requiring the NHFIC to be more proactive in identifying housing projects to support and accompany project proponents through the application process, notably for smaller actors such as Community Housing Providers (CHPs) and local governments.

5.     Ensuring at least one NHFIC Board Member has expertise, appropriate qualifications, skills or experience in housing needs in regional, rural and remote Australia.  

6.     Requiring NHFIC annual reports to address whether the eligibility criteria in the Investment Mandate are appropriate or restrictive for delivering on NHFIC’s functions. For example,  under the current Investment Mandate the NHIF cannot fund projects that would provide community infrastructure such as parks, day-care centres or libraries. If the Minister is to impose such restrictions on the NHIF, it is important to understand the impact of this on delivering housing outcomes.

RATIONALE

Australia is experiencing a housing supply and affordability crisis, and regional, rural and remote areas are not immune. Most essential workers in these areas are experiencing housing stress, meaning they spend more than 30% of their income on housing (rent or mortgage repayments). Homelessness rates have drastically increased between the 2016 and 2021 Census, including by 67% in the regional town of Wangaratta. According to experts, to address this crisis rural Victoria will need approximately 87,400 new dwellings over the next 15 years. It is clear the problem in regional, rural and remote Australia is one of housing supply, not just affordability.

 

Regional areas struggle to attract capital investment from developers. Local governments and utility providers are struggling to fund on their own the critical infrastructure, like sewerage and drainage, that is required to enable increased housing supply.

 

FINANCIAL IMPACT

 

The bill will have no financial impact.

 

NOTES ON CLAUSES

 

Clause 1 - Short Title

 

1.     This clause specifiesthat the Act may, once enacted, be cited as the National Housing Finance and Investment Corporation Amendment (Unlocking Regional Housing) Act 2023 .

 

Clause 2 - Commencement

 

2.     This clause providesfor the commencement of Schedule 1 of the Act on the day the Act receives Royal Assent.

 

3.     This clause provides for the commencement of Schedule 2 of the Act on the later of (a) immediately after the commencement of Schedule 1 of the Act; and (b) immediately after the commencement of Part 1 of Schedule 2 of the Treasury Laws Amendment (Housing Measures No. 1) Act 2023. However if this does not occur, then the provisions in Schedule 2 do not commence at all.

 

Clause 3 - Schedules

 

4.     This clause specifies that this Act involves amendments to existing legislation. This Act includes Schedule 1 which makes amendments to the National Housing Finance and Investment Corporation Act 2018, and Schedule 2 which makes amendments to the Housing Australia Act 2018.

 

Schedule 1 - Main Amendments

 

Item 1 and 2 - Objects of the Act

 

5.     Subsection 3(c) of the Act states that an object of the Act is to establish the NHFIC to improve housing outcomes for Australians by providing finance, grants or investments that complement, leverage or support Commonwealth, State or Territory activities in relation to housing.

 

6.     Item 1 adds that an object of the Act is for the NHFIC to improve housing outcomes for Australians by providing finance, grants or investments that complement, leverage or support activities of local governing bodies relating to housing, in addition to Commonwealth, State or Territory activities.

 

7.     This adds local government as a level of government whose activities should be complemented, leveraged or supported by the NHFIC.

 

8.     This item also adds government-owned utility providers as entities whose activities should be complemented, leveraged or supported by NHFIC.

 

9.     A government-owned utility provider includes, for example, statutory corporations that provide water and sewage services to towns, and are often overseen by State or Territory Government Departments.

 

10. Item 2 adds that an additional object of the Act is for the NHFIC to improve housing outcomes for Australians by providing finance, grants or investments that support the provision of house-enabling infrastructure, including for regional, rural or remote Australia.

 

11. This item legislates the direction under subparagraph 23(a)(i) of the Investment Mandate , to ensure that the NHFIC clear scope and responsibility to improve housing outcomes for Australia by funding housing-enabling infrastructure for housing in regional, rural and remote Australia.

 

Item 3 - Definitions

 

12. Section 5 of the Act defines a number of terms used through the Act.

13. This item defines government-owned utility provider as a utility provider that is owned by a State or Territory, and, if owned by a State - either forms part of the State or is a corporation to which paragraph 51(xx) of the Constitution applies.

 

14. This item also inserts a definition for ‘housing-enabling infrastructure’.

 

15. The definition is:

 

                     (a)  critical infrastructure to support new housing (particularly new social or affordable housing), including new or upgraded infrastructure for services such as:

                              (i)  water or sewerage; or

                             (ii)  electricity or telecommunications; or

                            (iii)  transportation (for example, gutters, kerbs, footpaths and roads); or

(b) site remediation works relating to new housing (particularly new social or affordable housing), including the removal of hazardous waste or contamination.

 

16. This definition is consistent with subsection 21A(2) of the Investment Mandate.

17. It clarifies that transportation can include assets such as gutters, kerbs, footpaths and roads.

 

18. This item also inserts a definition of local governing body, which has the same meaning as in the Local Government (Financial Assistance) Act 1995.

 

19. This item also inserts a definition of regional, rural or remote Australia. The definition means either inner regional Australia, outer regional Australia, remote Australia or very remote Australia, as defined in the document titled “Australian Statistical Geography Standard (ASGS): Volume 5—Remoteness Structure, July 2016”, published by the Australian Statistician, as amended from time to time.

Item 4 - Functions of the NHFIC

20.  Item 4 inserts two new functions of NHFIC, listed under section 8 of the Act.

21. The first new function is to proactively promote NHFIC’s functions, identify projects that could benefit from loans, investments or grants, and assist project proponents to apply for loans, investments or grants.

22. The second new NHFIC function is to give the Minister quarterly updates on the provision of loans, investments or grants, and projects for which applications for such loans, investments or grants are pending.

23. This requires NHFIC to take a more proactive stance in identifying potential projects suitable for NHFIC funding, and accompanying projects proponents through the application process, most notably for smaller actors such as CHPs and local governing bodies.

24. This item implements recommendation 8 of the Statutory Review of the Operation of the National Housing Finance and Investment Corporation Act 2018 - Final Report (August 2021):

The Review recommends that the Government direct NHFIC to proactively seek out projects that could benefit from financing and grants under the NHIF. This should be a priority task for NHFIC and should include quarterly reporting to the Minister.

Item 5 - Functions of the NHFIC

25. This item adds a note at the end of subsection 8(1), which lists NHFIC’s functions, to clarify that the Minister must table each quarterly report received by NHFIC in each House of Parliament (see section 56A, which requires NHFIC to provide more detailed annual reports to the Minister).

26. By requiring the report to be tabled in Parliament, this allows reports to be publicly available, which increases transparency and allows the Parliament and public to assess the impact of the NHFIC.

Item 6 - Functions of the NHFIC

27. This item inserts a requirement that the Minister must scrutinise the action that needs to be taken to ensure that, in each financial year, regional, rural and remote Australia receives at least 30% of the totally value of the support the NHFIC provides under the Act in that financial year.

28. This item operates as a safeguard to ensure NHFIC provides equitable and ongoing support to regional, rural and remote Australia.

29. The 30% figure is based on the distribution of Australia’s population, with 27.8% of the population living in regional, rural and remote areas as per ABS data: Estimated resident population, Remoteness Areas, Australia.

30. The Minister must report on this (see new section 56B (item 17)).

31. In determining what ‘actions’ the Minister identifies, this clause defines ‘action’ to include amending the Act, an instrument under the Act or any other law.

32. In determining what ‘support’ the NHFIC provides, this clause defines ‘support’ to include loans, investments, grants and guarantees; financial assistance to States and Territories; financial assistance to local governing bodies through grants of financial assistance to States and Territories; and financial assistance to government-owned utility providers through grants of financial assistance to States and Territories.

Item 7 - Matters covered by Investment Mandate

33. Section 13 of the Act sets out the directions that may be included in the Investment Mandate, including the decision-making criteria for a number of NHFIC’s functions.

34.  Item 7 adds that the Minister may include in the Investment Mandate’s directions, decision-making criteria for granting financial assistance to local governing bodies through granting financial assistance to States and Territories.

35. This item legislates the direction under paragraph 22(1)(b) of the Investment Mandate, to clarify that the Minister can direct NHFIC to grant financial assistance to local governing bodies, via the States and Territories, for housing-enabling infrastructure projects.

36. This item also adds that the Minister may include in the Investment Mandate’s directions, decision-making criteria for granting financial assistance to a State or Territory government-owned utility provider.

 

37. This item sets out paragraphs 22(1)(d)-(e) of the Investment Mandate, which provides that State or Territory owned government-owned utility providers are eligible project proponents for housing-enabling infrastructure.

Items 8 and 9 - Matters covered by Investment Mandate

38. Items 8 and 9 insert a provision that the Investment Mandate may include a direction granting financial assistance to local governing bodies or government-owned utility providers, through granting financial assistance to States and Territories.

39. This is so support can be given to local government or government-owned utility providers by referring to grants to States and Territories that are given on condition that the grants be on-paid to local governments or government-owned utility providers, as allowed under section 96 of the Constitution.

40. This item also inserts a note that clarifies that a term or condition for a grant of financial assistance to a State or Territory may be that the State or Territory must give financial assistance to local governing bodies or government-owned utility providers.

Item 10 - Limits on Investment Mandate

41. This item inserts a numbering provision to allow for item 11.

Item 11 - Limits on Investment Mandate

42. Section 14 of the Act places limits on the Minister when making directions under the Investment Mandate.

43.  Item 11 inserts a new subsection which requires the Minister to prepare and publish a report, within 90 days after the subsection commences, that explains why paragraph 21A(1)(c) of the Investment Mandate is necessary. This paragraph of the Investment Mandate provides that housing-enabling infrastructure projects cannot provide for community infrastructure, such as parks, day-care centres or libraries. This item also adds a note explaining what this paragraph is.

44. This item also requires the Minister to explain in the report how that paragraph of the Investment Mandate is consistent with the objects of the Act. The Minister must cause a copy of the report to be tabled in each House of the Parliament on or before the first sitting day of that House.

45. This new subsection requires the Minister to justify a provision of the Investment Mandate which limits how the NHFIC can provide funds for housing-enabling infrastructure.

Item 12 - Appointment of Board members

46. Subsection 18(2) specifies the requirements for appointment as a Board member. To ensure that Board members have relevant expertise, a person cannot be appointed as a Board member unless the Minister is satisfied that the person has appropriate qualifications, skills or experience in:

·                 banking and finance;

·                 law;

·                 housing, including social or affordable housing;

·                 infrastructure planning and financing;

·                 local government;

·                 public policy; or

·                 expertise prescribed by the rules made by the Minister under the rule-making       power in Clause 58 of this Bill.

47.  Item 12 adds that the Minister can appoint a Board member who has appropriate qualifications, skills or experience in housing needs in regional, rural or remote Australia.

Item 13 - Appointment of Board members

48. Subsection 18(3) requires the Minister to ensure Board members collectively have an appropriate balance of qualifications and skills in the fields mentioned in subsection 18(2), with at least one Board member having appropriate qualifications, skills or experience in social or affordable housing.

49.  Item 13 inserts an additional requirement that the Minister must ensure that at least one Board member has appropriate qualifications, skills or experience in housing needs in regional, rural or remote Australia.

50. The NHIF and NHFIC is more likely to deliver for regional Australia if members on the Board understand the unique housing circumstances in regional, rural and remote Australia.

Item 14 - Matters to be included in annual reports

51. Section 56 requires the preparation of an annual report by the Board to be given to the Minister, in accordance with section 46 of the Public Governance, Performance and Accountability Act 2013, which must include several matters.

52. Item 14 inserts an additional requirement for the Board to include in the annual reports how each kind of financial support provided was distributed, including setting out the portion of that amount distributed to each State and Territory, to each local governing body, and to each area of regional, rural and remote Australia.

53. This improves the transparency of NHFIC’s operations, including how much of the funding it distributes to regional, rural and remote Australia.

 

Item 15 - Matters to be included in annual reports

 

54.  Item 15 inserts additional requirements for the Board to include in the annual reports to the Minister:

·          A summary of how the functions conferred by paragraph 8(1)(da) (see item 4 above) have been performed during the period. This requires the Board to demonstrate that it has been proactively engaging stakeholders to identify needs and potential projects for funding.

·          An explanation of any risks that the content of the Investment Mandate poses to the successful performance of the functions set out in subsection 8(1) of the Act. This is to ensure that any consequences of the directions or limitations set out in the Investment Mandate are identified and communicated to the Minister, who issues the Investment Mandate.  

·          A summary that set outs:

o    The number of applications received by the NHFIC during the period that included seeking financial support for community infrastructure such as parks, day-care centres or libraries; and

o    Whether the NHFIC refused to provide any of that financial support because of paragraph 21A(1)(c) of the Investment Mandate ; and

o    The impact of those refusals on the operations of the NHFIC.

·          This ensures the Minister knows if any directions or limitations in the Investment Mandate are appropriate, or restrictive, in delivering NHFIC’s functions as defined in the Act.

 

Item 16 - Matters to be included in annual reports

 

55.  Item 16 removes the note and substitutes it with three notes to clarify items 14 and 15 above.

 

Item 17 - Quarterly updates given to the Minister and reports about action to ensure that regional, rural and remote Australia receives appropriation ongoing support

 

56.  Item 17 inserts new section 56A, that the Minister must cause a copy of each update described in paragraph 8(1)(db) to be tabled in each House of Parliament within 15 sitting days of that House after the update is given to the Minister.

 

57. New paragraph 8(1)(db) requires the Board to give the Minister quarterly updates on the provision of loans, investments or grants covered by that section, and projects for which applications are pending.

 

58. This item also inserts new section 56B which requires the Minister to prepare a report on:

·          what they have done, or plan to do, to ensure the result mentioned in subsection 8(4) (see item 6 - that the Minister must scrutinise the action that needs to be taken to ensure that, in each financial year, regional, rural and remote Australia receives at least 30% of the total value of the support the NHFIC provides under the Act in that financial year); and

·          if the Minister has not done, and does not plan to do, anything to fulfil subsection 8(4) - the Minister’s reasons for this.

 

59. This item requires the Minister to cause a copy of the report to be tabled in each House of Parliament on or before the first sitting day of that House after the end of those 90 days.

 

60. These new sections 56A and 56B increase the frequency of the Board’s reports to the Minister, and requires the Minister to table them in Parliament, to improve transparency and allow the Parliament and public to regularly assess the impact of the NHFIC.

 

61. It also improves provides accountability and transparency for the Minister’s actions under new subsection 8(4).

 

Item 18 - Review of financing function

 

62.  Item 18 inserts new section 57AA of the Act which requires a review of the NHIF’s financing function.

 

63. Under this item the Minister must cause a review of the NHIF to be commenced within 3 months after 12 months have passed from the day the section commences, and each subsequent 12 month period. The Minister must cause of copy of the report to be tabled in each House of the Parliament within 15 sitting days of that House after the report is given to the Minister.

 

64. This item requires external reviews of NHFIC’s financing function to improve transparency and accountability of how NHFIC performs this function. It is consistent with the insertion regarding annual reviews of the NHIF at section 2, item 16, section 57B of the proposed Treasury Laws Amendment (Housing Measures No. 1) Bill 2023.

 

Schedule 2 - Contingent Amendments

 

65. This schedule makes technical amendments to the Treasury Laws Amendment (Housing Measures No. 1) Act 2023, if passed by Parliament.

 

 

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

National Housing Finance and Investment Corporation Amendment (Unlocking Regional Housing) Bill 2023

 

This bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the bill

 

This Bill amends the National Housing Finance and Investment Corporation Act (the NHFIC Act) to ensure that the NHFIC can specifically and equitably distribute the National Housing Infrastructure Facility (the NHFIC) to regional, rural and remote Australia. By doing so, it aims to increase housing supply in regional, rural and remote areas of Australia.

 

Human rights implications

 

This Bill engages the right to an adequate standard of living, including adequate food, clothing and housing, and to the continuous improvement of living conditions, recognised in Article 11 of the International Covenant on Economic, Social and Cultural Rights (ICESC) .

 

The right to an adequate standard of living is also contained in:

·          Article 5(e)(iii) of the Convention on the Elimination of All Forms of Racial Discrimination (CERD), which states the right to housing without distinction as to race, colour, or national or ethnic original, to equality before the law;

·          Article 14(2)(h) of the Convention on the Elimination of All Forms of Discrimination Against Women, which states the right of women in rural areas to enjoy adequate living conditions, particularly in relation to housing, sanitation, electricity and water supply, and transport and communications;

·          Articles 27 of the Convention on the Rights of the Child, which recognises the right of every child to a standard of living adequate for the child’s physical, mental, spiritual, moral and social development. The Article also states that State Parties should take appropriate measures to assist parents and others responsible for the child to implement this right and shall in case of need provide material assistance and support programmes, particularly with regard to nutrition, clothing and housing; and

·          Article 28 of the Convention on the Rights of Persons with Disabilities, which recognises the right of persons with disabilities to an adequate standard of living for themselves and their families, including adequate food, clothing and housing, and to the continuous improvement of living conditions. This Article states that States Parties should promote the realisation of this right by ensuring access to persons with disabilities to public housing programmes.

 

The United Nations Committee on Economic, Social and Cultural Rights (the Committee) has stated that the ‘right to adequate housing, which is thus derived from the right to an adequate standard of living, is of central importance for the enjoyment of all economic, social and cultural rights.’ The Committee has highlighted the importance of housing affordability, and supply, as part of this right: ‘Personal or household financial costs associated with housing should be at such a level that the attainment and satisfaction of other basic needs are not threatened or compromised … States parties should establish housing subsidies for those unable to obtain affordable housing, as well as forms and levels of housing finance which adequately reflect housing needs.’

 

As such, this Bill positively engages the right to an adequate standard of living by ensuring the NHFIC distributes the NHIF in way that increases and accelerates the supply of housing in regional, rural and remote Australia.

 

 

Conclusion

 

This bill is compatible with human rights because it promotes the protection of human rights through positively engaging the right to an adequate standard of living.

 

 

Dr Helen Haines MP Member for Indi