Friday, 29 July 2016

Remote Housing Policy Challenges in the NT

Remote Housing Policy Challenges in the NT

If to do were as easy as to know what were good to do, chapels had been churches and poor men’s cottages princes’ palaces.
The Merchant of Venice Act 1, Scene 2

The Northern Territory election is scheduled for 27 August, so we have been seeing a spate of announcements from all sides of NT politics recently. The Giles CLP Government has been putting considerable effort into retaining the support from remote Indigenous communities which shifted to it at the last election. Labor too, led by Michael Gunner, is making a strong effort to win support in the bush. It has announced a number of pro-bush policies, including in relation to increased support for the highly successful Indigenous rangers program, education and health.

A key issue for decades has been the poor state of housing in the bush, linked to a complex set of structural forces which appear to have placed solutions beyond the capacity of governments to find or develop.

In no particular order, there are at least four structural forces at play which make management of the remote housing asset base challenging.

The environment in northern Australia places extraordinary demands on physical infrastructure, which inevitably leads to shorter asset lifespans.

The demographic explosion amongst remote Indigenous community residents has placed enormous pressure on housing and community stability generally. A substantial proportion of remote community residents are under 25 years of age. The resultant chronic overcrowding has placed enormous pressure on asset lifespans, as have short sighted policy responses from successive governments in terms of investing in regular maintenance, generally referred to as Property and Tenancy Management (PTM).

The limited financial capacity of the NT Government, and the structural limitations of Australia’s fiscal equalisation processes (which limit the assessment of revenue sharing to recurrent funding requirements) has meant that there has been chronic underinvestment over many years in remote community housing by the NT. As a result of those financial constraints, the Territory has under-invested in remote housing from its own resources over many years. Consequently, the Commonwealth was required to step into the breach and has been the major source of capital investment in remote Indigenous housing for at least the last two decades. The current Commonwealth budget ‘crisis’ and the bipartisan focus on achieving balanced budgets suggests a major Commonwealth investment in remote housing will be unlikely in the next decade.

Finally, land tenure arrangements have not been well aligned with the requirements for optimal management of the social housing asset portfolio in the NT, and have not encouraged private sector investment in remote communities by residents nor Indigenous owned businesses. The ongoing scepticism from Aboriginal interests regarding the motivations behind tenure reform efforts by government suggests that the likelihood of tenure changes within communities over the coming decade is quite low, and will be largely incremental in nature. Having said that, the ability of Aboriginal traditional owners to grant leases under the current legislation means that private sector investment is not entirely ruled out.

The current state of play in the remote housing sector remains dire. In the half decade to 2006, the NT Government was investing less than $5m a year of its own resources into remote housing, and the Commonwealth was investing around $20m (from a $100m national program for Indigenous social housing). At the time, the NTG estimated that its share of the Commonwealth program based on need should have been at least $40m per annum.

In 2007, the Howard Government established the Strategic Indigenous Housing Infrastructure Program (SIHIP), which allocated around $527m over three years to the NT subsequently lifted to $672 million, to construct 750 new houses, rebuild 230 houses and refurbish 2500 houses by December 2013. In 2008, the Rudd Government established the National Partnership Agreement on Remote Indigenous Housing (NPARIH) with a $5.5bn national allocation over ten years, of which $1.7bn was allocated to the NT. The NT Government allocated $200m over the ten years, bringing the total allocation close to $2bn. NPARIH incorporated the resources previously allocated to SIHIP.

The NPARIH targets for the NT were 1456 new houses of which 821 had been completed by March 2013; and 2915 rebuilds and refurbishments of which 2693 had been completed by March 2013. I understand that NPARIH remains on track to meet or exceed these targets.

As an aside, access to comprehensive and up to date reporting on progress against the targets set at the beginning of the program by COAG appears non-existent, at least on the PMC website, and similarly on the NT Housing website. What we get instead are random statistics about numbers of new houses or refurbishments which provide minimal information and allow no meaningful assessments of progress by the relevant agencies. In 2016, Australian citizens, and indigenous interests in particular, deserve more than smoke and mirrors.

The NPARIH program was extremely contentious, because it required communities to provide state and territory governments with long term leases or other forms of secure tenure to ensure that state government housing authorities would have legal rights and responsibilities in relation to the assets built and the tenancies involved. It also bore the brunt of sustained criticism because of what appeared to be a slow start with high administration costs, when this was in fact the necessary implication of implementing a major construction project, involving immense logistical and technical challenges. NPARIH did have failings, including well publicised problems with the operations of one of the three major consortiums utilised to deliver NPARIH in the NT operating on Groote Eylandt. That consortium was ultimately replaced. With the benefit of hindsight, and notwithstanding teething issues and concerted criticism from both ends of the political spectrum, it seems clear that NPARIH has been a substantial success, funding a major boost in infrastructure provision in some of the largest remote communities in Australia (Wadeye, Maningrida, and Nguiu to name just three) and making substantial inroads into the significant outstanding housing needs in remote communities.

Nevertheless, it was always recognised that the funds allocated to NPARIH would only meet about one half of the outstanding social housing need in remote Australia (though governments have unsurprisingly not articulated this reality). Moreover, while NPARIH incorporated strengthened Property and Tenancy Management (PTM) requirements, these were always vulnerable to financial cuts at both state and federal levels, and indeed this has been what has largely occurred with substantial cuts from NPARIH PTM made to expand funding for the Governments new Community Development Program. The importance of PTM for remote housing stock is that it is a very cost effective means of extending the lifespan of the existing housing asset base, albeit one which does not have any tangible visibility in a political sense.

Turning to more recent developments, it has been apparent for some time that since taking responsibility for bush housing, the NT Housing Department has effectively failed to meet its statutory responsibilities as landlord, failed to provide and maintain safe and decent housing, and failed to respond in a timely way to tenant requests and complaints for improved services in a number of communities. It recently emerged that the NT Housing Department apparently failed to provide adequate alternative housing when undertaking repairs and maintenance to housing stock. Link here.

There are now strong grounds for concluding that the NT Housing Department is systemically incapable of delivering effective social housing services across the span of its responsibilities. (The echoes with the recent revelations of systemic problems in the youth detention system are striking!) As a consequence, there has been a spate of adverse publicity (one media story link is here) and a number of legal actions by tenants facilitated by a relatively new organisation, Australian Lawyers for Remote Aboriginal Rights. Link to their website and relevant media stories here.

As an aside, the Commonwealth, which after all is funding virtually all capital investment in the remote housing sector in the NT, appears to have done nothing to hold the NT Government and its Housing Department to account for what has been an appalling performance. It will inevitably be the Commonwealth (and Australian taxpayers generally) who will fund the cost of rectifying the NT Government’s poor performance in this area. While the Federal Indigenous Affairs Minister’s close links to the CLP Government in the NT may make it harder for him to hold them to account, he would be helped in fulfilling his duties if the Labor Opposition in Canberra did their job and put him under some pressure, not least because between them, the current NT and Commonwealth Governments appear to be undoing the good work achieved under the NPARIH program to date.

The media, to its credit, has to a limited extent filled the gap. The ABC PM program ran an item on 8 July 2016 on the continuing need for housing in remote regions. Here is the link.

In the face of this chronic underperformance, and the underlying shortfall in social housing across remote NT communities, both parties have promised action.

Labor moved first, promising in December 2015 to commit a further $1.1bn over ten years starting in 2017-18. The Labor commitments were to:
Provide five focused programs to construct new houses, build more living space and repair and maintain existing housing in the bush;
Allow local recruits working for the Government to access Government Employee Housing;
Devolve to shires, regional authorities or to housing organisations, decision making about what to build, where to build, how to build and who will build;
Devolve the tenancy management for remote communities away from Territory Housing; and
Work with homeland residents to address new housing and repairs and maintenance in new and innovative ways.

The CLP Government has responded in two tranches. In mid-May, the NT Chief Minister outlined a proposal to establish a Remote Housing Development Authority to effectively give control of Remote Housing to Indigenous interests. He announced that during the first 12 months of a re-elected Government, there would be detailed consultation over the form and role of the proposed authority, which would be supported by eight to ten regional housing boards which would manage remote housing in each region. Here is the link to the ABC article reporting those proposals. The response from Indigenous interests was sceptical.

In July, Chief Minister Giles announced a $2bn plan for remote housing, comprising an additional $1.645bn over eight years in addition to the remaining $350m in NPARIH. The program, to be named the Better Remote Homes program would commence from 2018-19 and be delivered by the proposed Remote Housing Development Authority to be established from 1 July 2017.

The Chief Minister stated that the program would include associated planning, road construction and essential services such as water, electricity and sewerage, and that the annual spend for the eight-year program was expected to be more than $200 million which would come from the Federal and Northern Territory governments as well as the private and philanthropic sector.

The ABC reported additional comments from the Chief Minister in relation to the source of the funding for the proposed program:
The Chief Minister said he had already received interest from private investors, which would expect to recoup some money through rent.
"We've had a number of proposals put to us which are currently being considered, that see both private sector corporation money, philanthropic money and social impact investment bond money seeking to be a partnership with investing in housing development, building and management in the Northern Territory," he said.

In relation to the ownership of the remote housing asset base, the ABC reported in the story mentioned above that the Chief Minister was proposing to eventually hand back control of all remote Indigenous housing to Aboriginal organisations.
"We believe in self-determination. We believe that Aboriginal people should continue to have the opportunity to provide the governance over their own affairs," he said.

So what are we to make of the current state of play? I will limit myself to a number of high level and necessarily provisional observations.

The first observation is to note that in the face of systemic underperformance by the NT Housing Department, there appears to have been no ministerial accountability for the failures of administration which are all too clearly on display. This is not an issue related just to housing or the NT, but goes much deeper to the state of our current democracy, the capacity of our parliamentary and oversight institutions to cope with the implementation of complex policy, the shortcomings of an extremely short media cycle which in its incessant search for new material provides ‘space’ for only a miniscule number of high profile issues to receive sustained attention, thus allowing governments off the political hook once they weather the initial storm of media focus and attention. It does suggest, however, that we need to seek alternative mechanisms to ensure effective accountability for policy outcomes.

Second, the respective commitments of Labor and the CLP to greater investment in social housing provision in the bush are to be commended. It is clear that at the level of vote allocation, the democratic system is working in the NT, insofar as both parties have acknowledged in the clearest way possible that remote community residents expect better housing provision and will reward those who can persuade them that they will deliver.

Nevertheless, both parties commitments represent a considerable increase in budget commitments and this will need to be funded either through reallocation of existing outlays, increased taxes, use of revenues from asset sales, or government borrowings.

The ALP commitment appears to be rock solid as there are no caveats. The CLP commitment appears much less so, based as it is on unspecified access to Commonwealth, private sector and philanthropic funding. Philanthropists are unlikely to fund governments, but prefer community organisations. The private sector requires secure tenure, a generous expected return on capital, and stable and low risk operating environments. Uncertainties exist in relation to each of these requirements. The Commonwealth is operating under the most serious political budget constraint in decades. All three potential funding sources for the CLP ‘commitment’ (I think we can add the inverted commas at this point!) are problematic. The CLP ‘commitment’ is also scheduled to start a year later than Labor’s planned program.

The third observation is that while each party has their own implementation model, they both share a common attribute, namely they are each seriously flawed.

A key reason for this is that both parties have failed to understand the leap made by the transition to NPARIH, that is, from a micro-program delivering a total of thirty or forty new houses each year in ten or fifteen different locations using ten or fifteen contractors to a major project, with a billion dollar price tag, delivering hundreds of new houses in a limited number of locations over multi year periods. This is the equivalent of building a major dam or a major port, but disguised by the fact that we are accustomed to thinking about the components rather than the whole. While the reality has shifted, the mindsets of the media and politicians – and consequently many stakeholders too – has failed to shift.

The result was (and remains) a focus on numbers of houses and numbers of upgrades, whereas NPARIH’s progress and achievements is in reality based on an overall reduction in overcrowding across the remote social housing sector, delivered largely through tailored investment in around twenty locations which included the construction of a series of new, serviced and turn-key ready subdivisions, investment in asset upgrades where cost effective, and new houses where necessary. In other words, this was a systemically driven investment program, not a component based or rhetoric driven micro-program.

As a consequence, very few stakeholders understood that NPARIH represented a major step change in housing infrastructure provision in remote Australia, and needed to be project managed as a major infrastructure project, with all the associated planning, logistics, and project management strategies one would expect in a major infrastructure project.

It appears however that both parties while being prepared to pocket the gains delivered by NPARIH (for example the substantial step up in Indigenous employment outcomes over previous models derived from the scale and multiyear nature of the investment) have failed to realise that they must manage the next phase as a major infrastructure project. Given the scale of the outstanding housing need, and the outcomes both parties are promising, it is clear that the next phase cannot be managed as a micro-program and deliver the outcomes sought.

Labor’s model of devolving overall responsibility for managing the program to shire councils (or similar bodies) may satisfy the grass roots demand for greater say in program delivery, but virtually guarantees a return to spreading new house builds thinly to the maximum number of locations, without a whole of system overview of comparative needs. The Shires (or any equivalent regional organisations) are in a much weaker negotiating positon with local contractors, and indeed may often have a degree of conflict of interest. The pressure will be both to share the new house build around each local government area, and to share the contracting work around to a range of small contractors of varying capacity and experience. As a consequence, economies of scale in the current program will disappear. My firm prediction is that in a decade’s time, dollar for dollar, Labor’s program if left unchanged will have delivered fewer new houses than NPARIH has.

The CLP model of establishing a new Remote Housing Development Authority to effectively transfer control of the program into a statutory corporation controlled by an Indigenous Board along with more localised advisory committees is marginally better than Labor’s model given that it appears to retain the capacity for a Territory wide approach to resource allocation. The point of difference is not so much about Indigenous control when one notes that the shires are effectively controlled by Indigenous councillors elected by an Indigenous electorate.

The fundamental issue with the CLP proposal relates to why is there a need for a separate remote housing entity at all. The Territory is a socially and politically small place. Despite its vast geographic size, all key decision makers in politics, business and the bureaucracy know each other; the populations involved are small; and consequently there is no good reason why Territory Housing should not operate efficiently and effectively and be made to do so. IF there is an argument for establishing a statutory corporation then it should include social housing provision and management in the towns and cities.

The creation of a new organisation or set of organisations solely for the bush would merely create duplication and add to the likelihood that one or more of the housing authorities will fail administratively for want of resources, expertise, capacity, governance or scale. Moreover, reverting to a system which existed only 15 years ago when the housing system was bifurcated, with one for the towns and one for the bush (or one for the white population and one for the black population) will inevitably lead to pressure to allocate more of the available resources to the towns (as was the case then). While a separate Remote Housing Development Authority is a seductively appealing proposal to bush voters, it would also be a retrograde and potentially discriminatory proposal.

I am tempted to conclude that the Chief Minister’s comments regarding self-determination are effectively an admission of defeat, and that he recognises that the challenge of making the social housing system in the NT work effectively is beyond his Government’s capacity to achieve. His proposal effectively amounts to what in rugby is termed a ‘hospital pass’, leaving Indigenous interests to face the oncoming point of reckoning and shoulder the challenge of providing adequate social housing without the resources and the administrative structures necessary to achieve the objective.

Finally, if Indigenous interests wish to take greater control of social housing provision in the NT, they should concentrate on establishing their own community housing organisations to own, manage and rent social housing assets. The required capital could be raised from a number of sources: mining royalties, the Aboriginal Benefits Account, private sector borrowings, even philanthropists. Mainstream community housing organisations in other states would be prepared to assist, and even partner with them.

But whether or not Indigenous interests pursue such a course should not absolve government of its responsibility to provide a viable and effective social housing sector for remote communities. It is a tragedy that the current NT Government in 2016 appears to be preparing to walk away from what is in fact a core responsibility of Government.

Whichever party wins the forthcoming Territory election (it seems likely it will be Labor) they will need to initiate a major revamp of the administration of Territory Housing, and ensure that it is resourced adequately from day one, and has the capacity to implement its remit effectively. They need to ensure that the key Territory housing agency has the capacity ‘to do’.

The incoming Government should also revisit the mindset which currently underpins their thinking on housing provision; the task ahead is equivalent to a major infrastructure project with a large number of moving parts. It will need overarching management, coordination and resourcing to deliver the outcomes that are required on the ground. In other words, the incoming Territory Government must also ensure that they know ‘what were good to do’.

A failure to address both these issues will quickly escalate into a deeper crisis in the NT housing sector as raised expectations in the bush turn to disenchantment. This in turn will have political implications for the NT Government.

In the event that Labor wins Government, the current Commonwealth Government is much less likely to turn a blind eye to poor housing performance in the bush.

Given the structural importance of adequate and non-crowded housing to addressing Indigenous disadvantage, there is a strengthening case not just for increased investment, but for systemic reform of the oversight arrangements which ensure that key investment programs such as NPARIH stay on course.

It is increasingly clear that existing oversight mechanisms - parliaments, audit offices, ombudsman offices, and the media - are not fit for purpose in monitoring complex and major government programs in the Indigenous policy domain, remote housing being just one case in point. The identification of problems often emerges, but sustained analytic proactive attention to effective program delivery and implementation is non-existent, and that gap is one that no-one, least of all our latter day princes, seem keen to close.

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