The number of low-income Australians aged over 55 who are able to access fortnightly rental assistance payments would be slashed under a proposal to shift funding towards younger workers.
The Australian Housing and Urban Research Institute (AHURI) has just published new research, which it says is designed to find ways to improve housing outcomes for low income renters.
At present, people who receive social security payments - such as aged pensioners - are eligible to claim Commonwealth Rental Assistance (CRA) of up to $131 a fortnight for couples and $139 a fortnight for singles.
The AHURI report says the problem is that many people are receiving this rental assistance even though they are not in ‘housing stress’ - defined as paying more than 30 per cent of available income on rent.
On the flipside, there are people who are paying high levels of rent - particularly young inner-city workers - who are not eligible for CRA because they are not social security recipients.
AHURI has recommended changing the CRA criteria, so that it is no longer automatically available to social security recipients and is linked to a ‘housing stress’ test.
This reform would generate annual cost savings of around $1.2 billion, while low-income private renters in Melbourne and Sydney would be the main winners.
“Beneficiaries of changing the CRA eligibility rules to reflect housing need are typically young singles with no children who are low-income workers”, the report says.
“Singles with no children make up 80 per cent of winners from the reform, while those aged under 35 years make up 72 per cent of winners.”
“On the other hand, middle-aged families with children make up the majority of losers under the reform.”
Rachel ViforJ, one of the report’s authors and a Professor of Economics at Curtin University, said the changes would see the number of Australian low-income over 55s households getting rent assistance fall from 280,000 to 240,000.
The report however notes there could be significant regulatory barriers to implementing the above reform. Under the Australian Constitution, the Australian Government is only able to make direct CRA payments because these payments are made to social security recipients.
This would mean that implementing the above change - involving payments to people other than social security recipients - would require the politically-uncertain approach of channelling CRA money through the States, who would then distribute it to recipients.
Comment
The AHURI changes - in the unlikely event they are implemented - would be most likely to impact low income over 55s who are enjoying cheaper rents, such as in regional areas.
The changes would also have the potential to disrupt the business model of many residential land lease community operators, rental villages and low-cost or rental retirement villages, who factor in CRA payments as part of their business model.
FIND OUT MORE:
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AHURI report (Demand-side assistance in Australia’s rental housing market: exploring reform options)
