Monday, 23 April 2018

Too little too late: Commonwealth funding announced for NT remote housing

The Treasurer and Minister for Indigenous Affairs have announced that the Commonwealth will provide $110m per annum for five years to the NT partially matching the NT Government’s commitment to spend $1.1bn over the next 10 years. The Government’s media release is here. Here is the ABC news report (link here).

The Government also announced a package of other measures, including unspecified additional funding to funding of public hospitals, just under $100m over five years to extend the National Housing and Homelessness Agreement for five years, and a one off top up of GST revenues to the NT of $259.6m. While the Commonwealth has indicated that the purpose of the one off grant is
To help the Northern Territory Government deliver essential services, including to remote communities, the Turnbull Government will provide financial assistance of $259.6 million
it is not yet clear whether the funding agreement will specify where these funds will be spent, and what proportion will go to remote communities. Of course, because they are topping up the NT share of GST revenues which are entirely fungible, there is no effective mechanism by which the Commonwealth can quarantine these funds to particular purposes.

In relation to the remote housing funding the Commonwealth Ministers stated:

The Turnbull Government and Gunner Government have also reached agreement on remote housing and public hospital funding, providing certainty for essential services in the Territory.
To help address the housing needs of Aboriginal and Torres Strait Islander people in remote communities, the Turnbull Government has committed $550 million for five years to support remote housing in the Territory. This funding will commence in 2018-19 and will be matched by Northern Territory Government contributions, with the Northern Territory Government retaining responsibility for sub-leasing arrangements in these remote communities for the five-year period.
Minister for Indigenous Affairs Nigel Scullion said this new investment will help address severe overcrowding in remote communities.
"This $550 million funding commitment comes on top of the $1.7 billion investment into remote housing in the Territory since 2008.''
"Our focus will be ensuring Aboriginal community control is at the heart of our investment, from decision-making to employment and business procurement to ensure we deliver long term sustainable change in remote communities.''

So what does this mean for remote communities in the NT?

On the positive side of the ledger, the decision will maintain substantial spending on remote housing construction and management, which is unequivocally a good outcome. The Commonwealth investment effectively locks in the NT Government commitment of $110m per year, at least for five years. While it represents a net reduction of $50m per year in Commonwealth funding for remote housing in the NT (which has averaged $170m per year for the last ten years), the combined spend represents a net increase of around $50m in combined NT/Commonwealth expenditure.

On the negative side of the ledger, the arrangements announced today reduce the period of guaranteed funding commitments by half, down for the ten years agreed by COAG in 2008 to five years now. This is short-sighted.

Second, the funding committed by the Commonwealth may not reflect ‘new monies’ because it effectively allows the Commonwealth to avoid having to take over a large (but unspecified) number of housing assets which are on leases which would otherwise revert to the Commonwealth over coming years, and thus represent Commonwealth liabilities. This potential legal liability appears to be a primary driver of this selective investment by the Commonwealth.

Third, the funding announced is for the NT only, which represents roughly half the outstanding remote housing need across the nation. While addressing half is better than none, the situation of remote residents in SA, WA and Qld will only worsen without ongoing investment in remote community housing assets.

Fourth, there are clear indications (link here) that the outstanding need in the NT is both large and growing, and while the new investment will probably prevent the remote housing situation substantively worsening in the NT over the next few years, it will not guarantee any substantive improvements in overcrowding levels and the ongoing state of the housing asset base. This investment thill thus not do much to ‘close the gap’ in overall disadvantage between Indigenous and non-Indigenous Australians.

Finally the five year time frame, and as yet largely unspecified management and decision making arrangements for the Commonwealth funding are potentially problematic. In particular, while the Government asserts its objective is to ‘deliver long term sustainable change in remote communities’, the delay in delivering certainty regarding ongoing funding, the limited five year investment horizon, and the uncertainty over the management arrangements will significantly increase the risk of program failure and/or sub-optimal outcomes going forward.  For example, if future housing allocations are essentially ad hoc and one-off, there will be limited incentives for relevant businesses and community organisations to invest in training apprentices over a sustained period. The Government’s rhetoric is fine, but implementation capability will be crucial to maximising benefits for Indigenous communities and people, and at present there is little information to hand on how the program will be managed to minimise these risks.

If we get up in the grandstand, this funding announcement needs to be welcomed as it provides tangible assurance for NT remote residents that housing conditions will not substantially worsen overall. But it is inadequate to significantly reduce housing disadvantage in the NT, and implicitly provides political cover for the Commonwealth to walk away from remote housing funding in the three states which have substantial remote Indigenous populations.

In my view, the management of the potential renewal of the remote housing strategy has been both disastrous and appalling.  The Government has effectively dismantled a program which was making a huge difference to people’s lives in remote Australia. The announcements today go some small way to backtracking on those mistakes, but will not address the structural challenges which if left unaddressed will lead to major negative consequences for both governments and remote indigenous residents over the coming decade.

I have previously estimated (link here) the funding requirement in this area as approaching $9bn over ten years. Today’s announcement, dealing with a jurisdiction which represents around half the outstanding need, commits just over $1bn in combined NT and Commonwealth funding over five years, or less than 15 percent of this estimated outstanding need over the coming decade.

In these circumstances, the Senate should look to establish a Parliamentary Inquiry into the housing needs of remote Australia over the coming decade.