Second Reading Speech: Social Services Legislation Amendment (Housing Affordability) Bill 2017

I am pleased to sum up this debate. The Social Services Legislation Amendment (Housing Affordability) Bill 2017 introduces the framework for the Automatic Rent Deduction Scheme or ARDS, which enables rent and utilities to be deducted from income support payments and family tax benefit for occupants living in social housing. The bill also makes amendments to the National Rental Affordability Scheme Act 2008, to streamline and simplify the administration of the National Rental Affordability Scheme, known as NRAS, until it ceases operation in 2026-27.

This bill introductions ARDS, a scheme to enable the automatic deduction of rent and utilities from public and community housing tenants' social security or family tax benefit payments. The primary objective of ARDS is to reduce the risk of homelessness for social housing tenants, particularly those in serious rental arrears who could face eviction or housing abandonment. It will support existing tenancy management processes in states and territories.

Households living in social housing with severe rental arrears, including families with children, can face eviction. Social housing is generally the most affordable housing option available for these families. If they are evicted, they can end up in specialist homelessness services, staying with family or friends or sleeping rough. This is a terrible circumstance for the individuals and families involved, and can lead to long-term homelessness. It also contributes to additional costs for governments and puts extra pressure on community service providers. States and territories estimate that, nationally, their liability for the social housing system from unpaid social housing and related administrative costs exceeds $30 million each year.

This bill takes a significant step to ensure stable rental income streams for social housing providers. This will lead to a more efficient social housing system. ARDS will also address the nonpayment of rent, which can lead to evictions and homelessness among Australia's social housing tenants, by providing a means to pay their rent regularly. ARDS builds on the current voluntary rent deduction scheme by ensuring that social housing providers receive rent from tenants and other household members on time, in particular from those who consistently fail to pay. ARDS will work alongside other available supports to ensure that tenants and other household members continue to be housed safely and affordably while they get the help they need to sustain their tenancies.

The government committed to implement a compulsory rent deduction scheme for social housing welfare recipients in the 2016-17 budget, following a request from state and territory governments. ARDS was scheduled to be available from the first half of 2018, pending passage of the bill that was introduced in the House of Representatives on 14 September 2017, by the former minister, now the Attorney-General. On 19 October 2017, the Senate referred the bill to the Community Affairs Legislation Committee for inquiry and report. The committee made a number of recommendations, which the government has considered in consultation with participating states and territories. The government has amended the bill to take account of the issues raised by the committee. ARDS will begin on 1 January 2019, if legislation passes the parliament.

The bill provides additional protection for tenants. As a precondition for participation for the scheme, the minister responsible for housing in the relevant state or territory must write to the Commonwealth minister for families and social services and set out the social housing policies of the state or territory. This will include information on how their policies apply limits to the amount that tenants can be charged and how tenants are protected from financial hardship. These letters may be published to ensure transparency.

ARDS deductions are limited to amounts for rent and household utilities only. Further, any arrears incurred due to suspension of an income support payment cannot be deducted from a single payment under ARDS when the payment recommences. Social housing tenants who are on income management, or the cashless debit card, will only have deductions for ARDS made from the income managed or restricted portion of their payments. These features reduce the likelihood of placing tenants in financial hardship.

The National Rental Affordability Scheme is established by the National Rental Affordability Scheme Regulations 2008. In 2016, the Australian National Audit Office reported that the NRAS legislative framework is complex and unclear. The report noted that the 'regulations could be reviewed with the aim of simplifying and clarifying aspects of their operation'. NRAS stakeholders are of the same view. In December 2016, the Department of Social Services consulted with NRAS stakeholders to identify ways to improve the administration of NRAS and reduce the regulatory burden on approved participants. Over 30 submissions were received, with suggestions on how the regulations could be streamlined to support the efficient and effective administration of NRAS going forward.

In its submission to the NRAS consultation paper in December 2016, the Commonwealth Ombudsman noted the need to improve transparency for investors in NRAS. The Ombudsman's submission also made recommendations on measures to strengthen the integrity and compliance of NRAS.

In January 2017, the Department of Social Services commenced a review of NRAS to address the concerns raised by the ANAO, the Ombudsman and NRAS stakeholders. On 15 July 2017, minor regulatory amendments came into effect to address areas of NRAS that imposed disproportionate penalties for noncompliance which led to outcomes that were inconsistent with the objects of NRAS. Further regulatory amendments were made on 18 November 2017 and 21 December 2017 to permit NRAS investors to request the transfer of an allocation in certain circumstances and to provide other protections to investors. The amendments introduced in this bill clarify ambiguous provisions in the NRAS Act relating to the power to make regulations and lay the foundation to strengthen and simplify the further operation and administration of NRAS.

The NRAS Act requires the NRAS regulations to prescribe that the rent charge for an approved rental dwelling must be at least 20 per cent less than the market rent 'at all times during the year'. The term 'at all times during the year' has been subject to conflicting interpretations. The first amendment supports the correct interpretation of this provision, which is that each time rent is charged it is to be at least 20 per cent less than the market rent. Some people interpreted it to mean the total rent charged across the year rather than each time rent is charged.

The NRAS Act requires the NRAS regulations to prescribe maximum vacancy periods for approved rental dwellings. The prescriptive nature of the current vacancy provisions has been amended to allow greater flexibility for the NRAS regulations to prescribe permitted vacancy periods. This flexibility will assist the future administration of NRAS should changes be required on how the maximum vacancy periods are to operate.

Two new provisions will be added to the NRAS Act to provide express legislative authority for the NRAS regulations to vary conditions of allocation and put it beyond doubt that conditions may be varied or imposed after an allocation has been made. These provisions will reduce the risk to the Commonwealth when varying or imposing new conditions on allocations.

The final amendment provides express legislative authority to transfer an allocation from one approved rental dwelling to another. The ability to substitute dwellings is crucial to achieving the object of NRAS, to increase the supply of affordable rental dwellings. If an investor decides to leave NRAS, the ability to substitute a like-for-like dwelling ensures the level of NRAS housing stock is maintained.

The government is also making amendments to schedule 3 of the bill. The amendments put beyond doubt that NRAS can include protections for investors, including by requiring approved participants to pass on state and territory incentives to investors in certain circumstances. The amendments also confirm that NRAS can provide protections for NRAS investors and allow for the adjustment of incentives where an allocation has been transferred for cause at an investor's request.

NRAS relies on a number of the Commonwealth's legislative powers, and the amendments set out in these powers give the NRAS Act separate operation within the scope of each of these powers. The evidence given to the Senate inquiry suggested that there may be circumstances where, through inadvertence or oversight, a particular charge for rent may exceed the maximum rent that can be charged, which is 80 per cent of the market rent. The government's amendments permit NRAS to include a power for the Secretary of the Department of Social Services to grant an approved participant dispensation from an inadvertent breach of the 80 per cent rule in certain circumstances where the tenant has been fully compensated for the mistake.

While most approved participants in NRAS behave appropriately towards investors, a small number of approved participants do not do the right thing, and make life difficult for investors by not passing on incentives promptly and engaging in other undesirable conduct. The government's amendments will permit the Secretary of the Department of Social Services to accept an enforceable undertaking from an approved participant. Enforceable undertakings are a useful compliance tool currently used by a number of Australian government agencies. The inclusion of this tool as part of the NRAS Act will assist the Department of Social Services to take appropriate action to protect investors where necessary.

The government is committed to putting in place measures to reduce the risk of homelessness for social housing tenants and to reduce rental costs for low- and moderate-income households. This bill will assist people living in social housing to maintain their tenancies, and lays the foundation for improving the NRAS legislative framework to support the efficient administration of the NRAS until it ceases operation in 2026. I commend the bill to the House.