Paying the rent: policy or politics?

 

I do the wrong and first begin to brawl.

The secret mischiefs that I set abroach

I lay unto the grievous charge of others.

Richard III, Act 1, scene 3

 

Francis Markham and Michael Klerck’s recent CAEPR Topical Issues paper, Simplifying the system or deepening poverty? The new Remote Rent Framework in the Northern Territory (link here) analyses the Northern Territory Government’s proposal to change rent collection for all remote housing stock across the NT. This will involve a shift from a rental rebate scheme which caps rents for social housing across the NT (and most other jurisdictions) at 25 percent of the tenant’s income to a flat rate fee of $70 per bedroom.

 

I don’t propose to summarise Markham and Klerck’s excellent analysis in detail, and urge interested readers to read their admirably incisive paper. Rather my purpose is to raise some broader structural issues that I suspect underpin the motivation for these proposed changes in the NT and suggest a way forward.

 

Markham and Klerck note in their introduction that:

The new remote rent framework and the cessation of the rebated rent means that comparable urban tenancies will become cheaper than their remote counterparts. The cessation of remote rebated rent will disproportionately disadvantage Aboriginal people, as this policy spatially targets an almost exclusively Aboriginal population. As we briefly discuss in this paper, this raises the question of potential indirect racial discrimination.  

 

An important element of the proposed changes discussed in some detail in the CAEPR paper is the proposed shift to making a single ‘head tenant’ responsible for all rent obligations rather than the current arrangements that require the housing department to pursue arrangements to facilitate all tenants in receipt of social security making a contribution through automatic deductions from their payments.

 

Markham and Klerck make two other broad arguments: that the proposed changes will increase poverty in remote NT communities, and that the proposed arrangements may well be in breach of the Racial Discrimination Act. On both counts, these changes should be considered indefensible and thus bad policy.

 

There are two broad implications implicit in these changes that are not explored in any detail by Markham and Klerck.

 

First, the implications on the ground (as opposed to within the Housing Agency in Darwin) of shifting to a head tenant model are potentially socially destructive. It is unclear where the incidence of the proposed changes will fall (i.e. who will ultimately pay the rent), and nor is it clear whether the changes will create an incentive for head tenants to actively encourage additional residents within their house, thus increasing overcrowding. In effect, the NT Government is proposing to shift responsibility for a large element of tenancy management away from Government and onto the head tenants in particular and remote communities in general. This will inevitably add to the psychological stress of being the head tenant, and opens up potential for financial abuse of residents by head tenants. This responsibility shifting will save costs for the Housing Agency, but does so by imposing considerable and potentially excessive social and psychological costs on remote communities.

 

Second, Markham and Klerck describe in detail how the current rental framework is based on differential rents for dwellings of different quality. The shift to the new rental framework discards these differential arrangements. See Table 1 in the CAEPR paper. While the changes clearly impact more severely on the residents of older dwellings (a key driver of the poverty impacts identified by Markham and Klerck), they also have an adverse impact on administration of remote public housing. In particular, the new arrangements remove much of the incentive on the NT Government to improve the quality of sub-optimal housing in remote communities, and remove the implicit acknowledgment that resourcing of property and tenancy management (PTM) is suboptimal.

 

This research paper makes a powerful case against the implementation of the proposed new rent framework, and deserves to be read by all those interested in understanding remote Indigenous housing. However, the recommendation for a moratorium on implementation of the new framework, while worthwhile, is in my view too narrowly focussed on the details of the new proposals. In any case, the likelihood of the NT Government shifting course on this issue without serious external pressure is close to zero.

 

The issues the CAEPR research has identified are in most respects the results of the structural issues that pervade the remote housing sector. These include gross and longstanding underinvestment by governments in addressing overcrowding, and in ensuring that existing remote housing assets are adequately managed and maintained (link here). Additionally, recent research cited in earlier posts on this Blog (link here) point to extraordinary levels of power disconnections in remote housing and the likelihood of substantial increases in temperatures across northern Australia over coming decades. This research identifies major issues with managing access to power in remote communities particularly to ensure food security and access for medical purposes in circumstances where power disconnections are rampant.

 

In my view, the responsibility for addressing these issues falls primarily to the Commonwealth for three reasons. First, housing is central to much of the structural dysfunction that exists in remote Australia (link here), and involves complex interaction ion between functional responsibilities of all three levels of government. In particular, the social security system is central to the administration of social housing in remote Australia, as the Markham and Klerck paper demonstrates. Second, the Commonwealth is a major funder of social housing nationally and utilises its financial leverage to shape policy frameworks in the states and territories. Third, the states and Territory lack the political will to effectively address these issues, and in the NT’s case, they clearly lack the financial capability.

 

While there have been a number of reviews of the remote housing sector over the past decades, they have all been focussed on the administration of government programs, and none have been truly independent of government.

 

The case for greater financial investment in remote housing provision is indisputable, and a failure to do so would be short sighted. For a social democratic political party such as the ALP to fail to effectively address these issues when in Government would be indefensible as it would continue the effective economic, social and political exclusion of remote Indigenous communities. The political and economic reality however is that the new Labor Government is unlikely to commit the resources required given the fiscal challenges it currently faces on multiple fronts.

 

In these circumstances, and as a first step, it is beyond time for the Commonwealth to commission a comprehensive and truly independent national review of remote housing that encompasses the social, economic and environmental challenges facing residents (a bottom up perspective) as well as the (top down) administrative and financial challenges facing governments. Such a review needs to be constituted in such a way as to allow it to consider innovative approaches to the finance, design and administration of remote housing.