Housing subsidies do not discourage employment, says PC – November 2015

Filed under: Australian Politics, Housing,

A research project carried out by the Productivity Commission shows that the type of housing assistance provided to the least well-off Australians has little to do with their employment prospects.

“The significant factor or factors that drive employment relate to the characteristics of the individuals themselves,” Commission Chairman Peter Harris told the National Housing Conference in Perth.

Mr Harris said a growing share of Australians receive housing assistance, in 2014 about 14 per cent of the population.

“While dedicated public housing units are generally slowly reducing in number, Commonwealth Rental Assistance (CRA - paid to community housing clients as well as those in private housing) covers an increasing share of the population.

“The cost of assistance is rising consequently. For the Commonwealth, the cost of CRA was about $3.9 billion per annum in 2013-14. And transfers to the States for other housing assistance were about a third of that again.

“The States and Territories, too, spend heavily on housing assistance, about $3.9 billion on social housing, the bulk of which is recurrent spending.

“While Commonwealth assistance is substantially directed towards using private housing stock, public housing is still very important to the most disadvantaged in our society. About 250 000 working age income support recipients and their children are housed in it; and many retired Australians as well.

“And there are notable differences between the employment rates for each type of income support of people in public housing, versus those with the same type of support payment not receiving any housing assistance.

“In rough terms, about 10 per cent of public housing tenants of working age and receiving income support are also in employment; whereas about twice that proportion are employed among those who receive housing assistance via CRA.”

Mr Harris said that the data available made it possible to say that the outcome “peer-reviewed for its technique and critiqued by the agencies which participated in the project, is that the type of housing assistance makes very little difference to the employment outcome.

“It is individuals’ characteristics that matter to employment, not housing assistance.

“The significance of this finding is that policies that simply seek to alter the housing mix or housing subsidy structure of public housing tenants, with the expectation of altering their employment outcomes, are likely to fail.

“Policies that address the factors that are inherent in the individual are much more likely to be effective.

“This is a singularly important conclusion. It doesn't tell you what might work, but it does tell you what won't and where to look for what might.

“The case for lifting employment amongst public housing tenants does not rest on some moral judgment about reliance on welfare.”

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