Jody Betzien, Melbourne
On December 31, Victorian housing minister Candy Broad released a consultation document on the government's Strategy for growth in housing for low-income Victorians. While Broad claims the strategy, which involves the establishment of four housing associations, will "expand housing options", a closer examination shows that it will begin the privatisation of public housing.
The Victorian government has allocated $70 million dollars to establish the housing associations, which will acquire housing stock through initial government grants, collection of rents and private sector finance. They may also "act in consortium" with property developers.
"Moderate" transfers of public housing stock to housing associations are proposed. Importantly, the associations will not get ongoing government subsidies to cover management and maintenance costs. They are required to be financially viable businesses. The associations will be required to "show willingness and capacity to leverage private sector borrowings".
In trying to justify the move, Broad cites a $100 million decline in Commonwealth funding over the last decade.
The scheme could be a massive windfall for the private sector. Businesses could invest against the equity of stock purchased through initial government grants and public housing stock transfers. Ultimately, tenants' rents are intended to repay the private sector loans.
The plan is also designed to enable housing associations to access the funds provided by Commonwealth-provided rent assistance. At present, public housing tenants are not eligible for rent assistance.
The state government has been careful to avoid any comparisons with the housing association model introduced in Britain in the late 1970s. In The Case For Public Housing, a pamphlet published by the British group Defend Council Housing, Labour Party MP Gerald Kaufman commented, "In 1974, I was the minister who put through the legislation that provided housing associations with their powers and their finance.
"Housing associations, then, were providers of ancillary public sector housing for the aged, the disabled, and other special groups. No one envisaged that the Tory government of 1979-97 would pretty well wipe out building of new council houses, and that housing associations would become almost the sole providers of new-build housing for the public rented sector".
The Victorian government has given similar assurances that housing association are not intended to replace public housing.
The government also uses the social problems in some high-density public housing as an excuse, blaming the concentration of disadvantaged tenants for these problems.
Because public housing has not increased significantly in the last decade, 70% of all allocations of public housing in Victoria are to applicants who have been assessed as eligible for "early housing". To qualify, tenants must suffer social, financial and/or medical disadvantage. This leads to a concentration of highly disadvantaged people that would not exist if there was enough housing for the 40,000 low-income earners currently on waiting lists.
While the housing associations will be ostensibly not-for-profit organisations, they will be forced to submit to the forces of the market, including interest rate fluctuations. They will not be eligible for the low interest rate loans that government can access. A range of other factors including real estate values and tenant employment rates will effect the financial capacity of the associations.
A need to be "financially viable" will impact on the ability of housing associations to provide affordable rents. The consultation document states that housing associations can have more "flexible and innovative" rent policies. This, the document continues, could include being responsive to the cost of the service, and market signals about location.
This could create a multi-tiered housing system, whereby those with the capacity to pay are afforded higher quality housing. It also has potential to increase concentrations of disadvantaged tenants.
Financial pressure will encourage the associations to house a greater proportion of tenants on higher incomes, able to pay higher rents. The associations will have a significant financial disincentive to house tenants who require significant support.
The government has sought to allay these concerns, giving assurances that associations will be required to submit to strict regulation.
But despite similar assurances in Britain, 47% of housing associations breached government rent guidelines during 2001-02. British housing association rents rose 41%, compared to 34% for council-owned housing. The housing associations have higher eviction rates and worse building maintenance. Commenting on this, British Labour MP Jeremy Corbyn observed "Business pressures lead to conflicts with government policy".
Despite government assurances that housing associations will coexist with the public housing system, "moderate" transfers of public housing stock to housing associations may prove to be the thin edge of the wedge.
The British experience serves as a warning of the social consequences of placing low-cost housing in the hands of the market and removing direct responsibility from governments. The British experience also demonstrates that the juggernaut of privatisation is resistible.
Tenants have defeated around one-third of all formal transfers of publicly owned housing, seriously denting New Labour's aim to achieve the end of publicly owned housing by 2015.
[For the full consultation document, visit From Green Left Weekly, March 17, 2004.
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