11:55, 09 Apr 10
All this talk of social housings inefficiencies got me curious, so I went and took a look at the latest annual report from Housing NSW (Housing ACT is integrated with Community Services).
I’m no finance major, but if I am reading correctly, the department has:
$688 million in rental income
$1,396 million in expenses
$28,830 million in assets
Thus, each tenant is paying an average of about $100 per week in rent. Each property costs the department approximately $200 per week to maintain (of which half is paid for by rental income and half from government grants).
Lets say the government decided to sell all of its public housing assets, and place the proceeds into an endowment fund at, say, 7% interest per year. This would generate revenues of $2,017 million per year (or about $300 per property per week).
Doesn’t this mean then that each public housing property is actually costing about $500 per week? Made up of $100 in private contributions and $400 in public contributions ($100 in government grants, and $300 in foregone interest)
Given the problems mentioned with the current housing system (long wait times, difficulty moving to more suitable locations, incorrectly sized housing), why not remove public housing and have Centrelink provide a separate state-funded rent assistance to those who would otherwise be eligible for public housing.
The tenant would then enter the private rental market with their $100 in rent, ~$60 in federal rent assistance (since they are now meeting the rent thresholds to be eligible), and a portion of the previous $400 public contribution.
If you gave each tenant say $200 in state funding, then the state could fund twice as many tenants, with each one having $360 per week to spend on housing. Alternatively, the state could support the same number of tenants and grow their endowment fund at slightly above the CPI.
I must have made a mistake somewhere, because at first glance like a much better solution all round.