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Social housing fell out of favour in Australia in the 1980s and 1990s, due to the perception it was high-cost, fostered poor economic and social outcomes for residents, and there were better ways to assist the vulnerable, particularly rent assistance. But the current housing affordability crisis is so severe, that policy advisers are reassessing their attitudes toward social housing. There is a lot of ground to make up, however. The Grattan Institute’s Brendan Coates has observed: “Australia’s stock of social housing – currently about 430,000 dwellings – has barely grown in 20 years, during which time the population has increased by 33%.”¹

Like much of the rest of Australia, Adept Economics’ home state of Queensland is going through a housing affordability crisis, partly due to strong population growth fueled by international and interstate migration. Rapidly rising rents in the private market are pushing up the demand for social housing. This is reflected in the high number of vulnerable households assessed as having high or very high needs (25,220 households in 2022-23) and the long average time spent on the waiting list for public housing (around 27.9 months in 2022-23).² This is alarming, as some of these households are prone to becoming homeless, causing other social problems such as substance abuse and crime, among others.

According to the Australian Housing and Urban Research Institute (AHURI),³ social housing is a government program that offers subsidised short and long-term rental housing whose target population is people on very low incomes and who have experienced homelessness, family abuse or other complex needs. In social housing, rents are typically capped at 30% of the household’s income.⁴ Social housing comprises public housing managed by State and Territories Governments and community housing managed by not-for-profit organisations in Australia. Advocates for social housing see it as a necessary supplement to the private rental housing market due to vulnerable households finding it difficult to secure affordable rental accommodation for various reasons.

According to the Australian Institute of Health and Welfare (AIHW) data on social housing in Queensland (see Figure 1):⁵

• At the end of 30 June 2022, Queensland registered 71,481 households living in social housing, 72% in public housing, 15% in community housing, 9% in Indigenous community housing, and 4% in State-owned and managed Indigenous housing.   
• The total number of households on the waiting list has increased by almost 29% since the beginning of the Covid-19 pandemic in 2019-20 over 2021-22.
• The proportion of social housing households in total households has declined in Queensland (from 3.8% in 2013-14 to 3.5% in 2021-22) and Australia (4.8% in 2013-14 to 4.1% in 2021-22)-i.e. social housing provision has not kept up with population growth.
• Between 2005-06 and 2021-22, Queensland had the second-highest growth rate (1.4%) of social housing units on average, behind the Northern Territory (5.8%). However, since 2015-16, the first full financial year of the current Queensland Government, Queensland has registered a lower average growth rate of 0.8%, similar to Tasmania, and behind the Northern Territory with 9.6%.
• Regarding the average growth rate of the number of households on the waiting list between 2015-16 and 2021-22, Queensland, with 7.9%, performed worse than New South Wales (-1.0%), Victoria (7.1%), Western Australia (-1.6%), South Australia (-2.9%), and the ACT (5.0%).

Figure 1. QLD total social housing, total households on the waiting list and social housing share as of 30 June of each year 

Source: AIHW. Prepared by Adept Economics.

Notes: Social housing households is a count of public housing, State owned and managed Indigenous housing (SOMIH), community housing and Indigenous community housing households in the reference year.

The current housing crisis requires a comprehensive government intervention to address the increasing risk of homelessness, as well as other negative social outcomes, particularly for those households waiting longer periods to get access to a suitable home for their needs. Recently, the Queensland Government has announced new initiatives to create more social housing, aiming to add 53,000 social homes at a cost of $1.2 billion of extra funding over the next 20 years.⁶ This may be an unattainable goal given the inherent complexities in the housing market, such as the lack of skilled workers and a scarcity of available land for development, among others. Moreover, if we consider the current average annual increase in the social housing stock, there would only be an additional 13,000 social housing dwellings in twenty years in Queensland.⁷ 

The justification for government intervention is based on expected positive benefits (pros) such as security of tenure, reduction in discrimination by private landlords, health cost savings, improved quality of life, reduced crime costs, increased human capital, and avoided property deterioration. Some of these considerations can have genuine spillover benefits to others and hence can be justified on economic efficiency grounds, while others can be justified on equity grounds.

Economic researchers David Prentice and Rosanna Scutella,⁸ have found that social housing in Australia plays an important role as a safety net for vulnerable people. Moreover, the authors found that people living in social housing had similar outcomes in terms of employment, education, physical and mental health, and incarceration to other similar people not living in social housing. This result contradicts a common view that social housing adversely affects work incentives, as found in the US, and breeds social problems.⁹ This could be because Australian public servants have been aware of issues that can occur if social housing is not properly integrated into the wider community–that is, large tower blocks full of social housing have not been built. 

Table 1 lists examples of cities and countries with different approaches to providing social housing.¹⁰ The Queensland Government and the private sector could draw some lessons from these places to improve their supply of social housing and related economic and social benefits. Some of these approaches are more feasible in Queensland than others. These approaches all involve different levels of government involvement and expenditures or balance sheet impacts, and these would need to be considered in any policy assessment. The highly interventionist Singapore approach would come at a high cost and is arguably unnecessary in Queensland, given the policy imperative is different. Singapore needed to rapidly improve the living conditions of many of its people and judged heavy government involvement in housing was the best way to do that, while Queensland and the rest of Australia require a more targeted response. 

Table 1. Approaches to social housing in selected other cities and countries

Source: Various. Prepared by Adept Economics.

Helsinki’s approach appears most worthy of further investigation. It has achieved a large reduction in homelessness, with the number of Finnish homeless families falling to around one-third of the number in the late 1980s. The key to the approach is ensuring enough social housing is constructed in the first place, with the government financing the construction of new social housing dwellings. This may have been easier because of Helsinki’s high rate of public ownership of land, and it remains to be seen whether the approach can be replicated in Australia.  

In conclusion, social housing provision may bring positive economic and social outcomes, such as improving the quality of life of residents, reducing crime and its costs to the community, and improving educational outcomes, but further research should be conducted to confirm these positive benefits in Queensland. Furthermore, after a comprehensive analysis of international policies, the Queensland Government could draw ideas from other places to boost the social housing stock and positive outcomes in a cost-effective way. All social housing involves a public subsidy, and the Government needs to ensure any spending generates benefits that exceed its costs. Policymakers need to continue to study and evaluate the outcomes of social housing programs to make informed decisions and ensure that the needs of vulnerable households are being met. The magnitude of potential benefits needs to be compared with the expected costs of the selected social housing policy approach to maximise net benefits for the community. 

Published on 19 March 2024. This article was prepared by Adept Economics Researcher Arturo Espinoza and Director Gene Tunny. For further information please get in touch with us via contact@adepteconomics.com.au or by calling us on 07 3085 7417.  

Endnotes

1. 1. 1. 1. https://grattan.edu.au/news/super-funds-wont-build-the-social-housing-we-need/
         2. https://www.qcoss.org.au/data/queensland-social-housing-register/
         3. https://www.ahuri.edu.au/analysis/brief/what-difference-between-social-housing-and-affordable-housing-and-why-do-they-matter
         4. https://grattan.edu.au/news/super-funds-wont-build-the-social-housing-we-need/
         5. https://www.aihw.gov.au/reports/housing-assistance/housing-assistance-in-australia/contents/households-and-waiting-lists
         6. https://statements.qld.gov.au/statements/99650
         7. This is based on the average increase over 2015-16 to 2021-22.
         8. David Prentice & Rosanna Scutella (2020) What are the impacts of living in social housing? New evidence from Australia, Housing Studies, 35:4, 612-647, DOI:10.1080/02673037.2019.1621995
         9. Jacob, B.A. & Ludwig, J. (2012) The effects of housing assistance on labor supply: Evidence
            from a voucher lottery, American Economic Review, 102(1), pp. 272–304, and Olsen, E. O., Tyler, C.A., King, J.W. & Carrillo, P. (2005) The effects of different types of housing assistance on earnings and employment, Cityscape, 8(2), pp. 163–187.
         10. https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_011314.html 5