What is the situation?We are all affected by high housing prices in some way. Housing prices across the country, particularly in metropolitan areas, are rising at a rapid rate. From 2000 to 2010, median rental prices in Melbourne have increased by 71 per cent compared to only a 58 per cent increase in average weekly earnings.1 However, low income earners2 are being particularly squeezed because their wages are not rising nearly as fast. Those living on government allowances saw their income grow by only 39 per cent this decade.

Currently, a weekly Newstart payment for a single adult with no children comes out to be just $35 a day. This is only 45 per cent of the national minimum wage3 and a mere 17 per cent of the median wage in Victoria.4 Such low income makes it difficult to cover basic living costs, particularly rent. Recent analysis by the Tenancy Union Victoria found that all house-holds receiving income support across Melbourne are experiencing housing stress, paying more than 30 per cent of their income in rent. In some cases, people are paying over 90 per cent of their income just to cover rent,5 leaving nothing for utilities or food.

Half (76,000) of all Newstart and Youth Allowance recip-ients in Victoria receive some level of Commonwealth Rental Assistance (CRA) in addition to their income support payment to help them cope with high costs of housing. However, CRA has not kept pace with rising housing costs either. In 2013, nearly half of the individuals who received CRA payments were still in rental stress and five out of every 40 recipients were in extreme rental stress, paying more than 50 per cent of their income on rent after receiving CRA payments.6

1 ABS CA No 4102.0 Australian Social Trends Data Cube – Housing. (11 December 2012) Table 2.2 Housing, Vic. Summary 1998-2012 & ABS (2011) TABLE 11B. Average Weekly Earnings, Victoria (Dollars) – Trend. Cat No 6302.0.

2 Defined as in the bottom 40% quintile of income earners by the ABS. 3 National minimum wage at the time of publication was set at $622.2 per week calculated on a 38 hour work week

or $16.37 per hour before tax. After tax ($60 a week) minimum wage is $562.20 a week in disposable income. 4 Percentage is calculated based on November 2013 minimum wage. ABS (2014) TABLE 11B. Average Weekly

Earnings, Victoria (Dollars) – Trend. Cat No 6302.05 Tenants Union of Victoria. (September 2013) Private Rental Affordability Bulletin, Melbourne.6 Report on Government Services 2015 Table GA.24 Number and proportion of income units receiving CRA paying

more than 30 per cent of income on rent, with and without CRA, by geographic location, 2009 to 2013 (per cent) and GA.34 Number and proportion of income units receiving CRA with more than 50 per cent of income spent on rent, with and without CRA, by special needs and geographic location, 2013 (per cent)

For low income earners who are unable to afford private rental, there are few alternative options. Wait lists for public housing can take years and commu-nity housing remains scarce. The lack of affordable accommodation options puts this group of vulnerable renters at risk of homelessness.

What are we doing?The Salvation Army’s calling to work with the most disadvantaged and vulnerable people in our commu-nity means we work with many people who have experienced homelessness and may have a long history of health, mental health and addiction issues. However, a large proportion of our clients are also low income earners living in private rental who are at risk of homelessness.

While The Salvation Army cannot resolve structural issues that put people at risk of homelessness like low government allowances and high housing prices, we are able to offer them a variety of other supports that may help people get back on their feet such as finan-cial counselling, private rental brokerage programs, and access to social housing through The Salvation Army’s Red Shield Housing.

HOUSING AFFORDABILITY

REFORMING SOCIETYThe Salvation Army’s agenda for change

Issue

3

Victoria Social Programme and Policy Unit - Australia Southern Territory - sarmy.org.au/vsppu

What do we think works? Increase Welfare Payments

Welfare payments have not kept up with rising costs of living and are now so low that people on these payments are living well below the poverty line.7 Such low payments do not encourage people to find work as is sometimes argued, but actually prevent people from finding work because they are too preoccupied trying to make ends meet, let alone go back to school or look for a job.8 Low payments just cause poverty and homelessness.

Newstart and CRA payments need to be increased to a level which reflects rising costs of living, allows people to live with dignity, and actually helps them improve their lives instead of trapping them in a cycle of poverty.

More Social Housing Social Housing (community and public) is the only housing alternative for low income households who can’t afford private rental. The Victorian Government has made a substantial investment into commu-nity housing in recent years; however, supply is still well below demand and access remains limited. Community housing delivers good outcomes for some people, particularly families. However, our experience is that many people with complex issues struggle to get into community housing because they are more expensive to house and threaten community housing agencies’ financial viability.9

Because of this, for many of the people we work with, public housing remains the only genuine option. However, there is an undersupply of housing and too much is out-dated and in need of repairs. The Government needs to continue investment in commu-nity and public housing for vulnerable, low income households.

7 A person is said to be in relative income poverty if their household equivalised income is less than 50 per cent of the median household equivalised income. (Mclachlan, R., Gilfillan, G., and Gordon, J. (2013) Australian Government Productivity Commission Deep and Persistent Disadvantage in Australia.)

8 Goodin, R., Headey, B., Muffels, R., and Dirven, H. (1999) The Real Worlds of Welfare Capitalism. 9 Flanagan, Kathleen. (2008) Anglicare Tasmania, Social Action and Research Centre. Going for Growth: The pros

and cons of using community housing associations to increase housing supply. See Rationale and Supporting Evidence: Housing Affordability for more details.

Encouraging Private Investment Schemes to encourage private investment into afford-able housing have been increasing and are useful in expanding affordable housing options. One of the largest schemes introduced is the National Rental Affordability Scheme (NRAS) which gave developers incentive payments in exchange for charging low income households only 80 per cent of the market rental price.

Analyses of the NRAS scheme have found that the model hasn’t always benefitted the poorest households and uptake has been low. However, the principles of the scheme are good and with some adjustments the program could be more effective in the future. Further research into how to make the NRAS more attractive to private sector investment and better suited to the needs of low income households needs to be done.

Theological ReflectionActs 4:32-35 gives a radical image of sharing in the early Christian community. In what ways might we apply this vision to problems like housing in our society?

For Further InformationWatch “A Crisis in Housing” https://www.youtube.com/watch?v=rJO7RoeVej4

The Salvation Army’s Rationale and Supporting Evidence for Housing Affordability

Victoria State Budget Submissions 2013-14 and 2014-15

The Salvation Army’s Submission to Pathways to a Fair and Sustainable Social Housing System consultation (2012)