For taxpayers in Western Australia, recent media reports that tenants of some public housing tenants had allegedly used their premises to operate illegal brothels and to conduct other unlawful activities such as firearm offenses, receipt of stolen property and the manufacturing of narcotics called into question the nature of what was going on at facilities which they fund.

Yet isolated examples of such behaviour mask what a growing number feel is a far more important issue in terms of deep seated structural problems in public housing which see a system which is financially unsustainable and failing to deliver services which are appropriate to meet the needs of modern public housing tenants.

In a recent report, Infrastructure Partnerships Australia (IPA) described the system as being in a state of ‘terminal decline’, amid a combination of changing and growing tenant need, declining revenue and funding levels and low quality housing stock.

In its report, IPA points out that more than 250,000 Australian households are currently sitting on public housing waiting lists, with more than half of the highest priority households being forced to wait more than two years for placement.

It says the system is suffering from a number of factors.

First, whereas public housing in the 1950s was heavily geared toward ex-servicemen and their families, the nature of clientele has evolved over recent decades as a narrowing of who can qualify has seen lone singles and single parents now make up more than seven in ten tenants and those with special needs account for two-thirds of the client base. Since rents charged to tenants are capped at 30 percent of their household income, the lower earning power associated with these tenants compared with their ex-service personnel counterparts of earlier decades has precipitated an erosion of rental income at the same time as the needs of these tenants has become more complex. At the same time, the average cost to provide a standard public housing dwelling has risen from just over $26,000 in 2004/05 to almost $32,000 ($31,986) in 2013-14. After accounting for average annual rent received of $6,739, this leaves a $25,247 per dwelling gap which needs to be made up through public subsidy.

At the same time, government investment in public housing is on the decline. Because of this, IPA reckons, Australia will have a public housing shortfall of almost 250,000 dwellings by 2028 – up from a deficit which has already grown from zero two decades ago to around 100,000 now.

IPA chief executive officer Brendan Lyon describes the current system as ‘financially broken’

Part of the problem, Lyon said, is that Australia’s approach toward public housing management had failed to adapt to the changing need and role which public housing serves. Whereas the system of yesteryear catered largely for returning servicemen, that which is in place now needs to respond to a clientele base whose needs extend beyond housing to other areas of human services such as healthcare or mental health as well as an expanding cohort of older women who were unable to afford rent within the private market.

“It (public housing) is now much more an extension of the public health system and should be more of a platform for providing integrated services to largely single person households with high needs,” Lyon said.

“That’s cast against a legacy housing stock in terrible condition with an average age of more than forty years and a predominance of three-bedroom stock. So you have got largely single people households who largely have very high intensity of human service needs and you have got that cast against a housing system where the stock was built for … returning servicemen with growing families on the outskirts of cities or in concentrated inner city type public housing blocks.”

“We are not meeting the basic needs of the people within the system because we continue to think of public housing not as a publicly funded and regulated service but as a particular type of housing and we are forcing people to meet the configuration of the real-estate rather than approaching the real-estate as a platform to deliver a service.”

Wendy Hayhurst, chief executive officer of the NSW Federation of Housing Associations, agrees. Speaking of the situation particularly in NSW, Hayhurst says many houses were built a long time ago and had fallen into decline and that much of the large family housing being offered out in the west of Sydney and in regional NSW did not accord with the type of properties that were needed.

Hayhurst also agrees that the system needs repair from a financial perspective.

“It’s been unsustainable for a long time,” she said. “It can’t go on like this.”

Speaking again about New South Wales, Hayhurst applauds a Future Directions strategy currently being pursued in that state, arguing that it represents a genuine attempt to transform public housing for its tenants.

But she says the policy does not adequately address the increasing gap between the number of properties needed and the number of properties available nor provide the new mix of properties that are needed such as smaller houses and houses which are accessible for an ageing population.

Beyond that, she says public housing has become stigmatised as the tenant mix has narrowed in a way that has unduly impacted the way in which tenants both perceive themselves and are perceived by others. More broadly, she says Australia lacks an overall plan to deliver enough affordable housing for a growing population.

Going forward, she says the government needs to look at the whole system and the wider picture of long-term affordability for all Australians. More could be done on areas such as the National Rental Affordability Scheme which help to bridge the gap for those who are on the margins of being able to afford their own dwelling, she says. Tax settings – in particular negative gearing and capital gains tax concessions – could be looked at in order to better target benefits of the system toward those on lower incomes, she added.

Beyond that, Hayhurst would like to see small scale examples of action. One possibility is to look at ways in which low cost housing can be encouraged through the planning system such as through affordable housing targets. In NSW, she would like to see the expansion of the Social and Affordable Housing Fund through which the state government is investing around $1 billion on innovate approaches to delivering social and affordable housing. Inclusionary zoning should also be considered whilst in NSW the government could forego some of its return on major land holdings slated for disposal and instead mandate ambitious targets for affordable housing on these sites.

Lyon, meanwhile, would like to see the focus of public housing shifted way from being seen as merely a portfolio of buildings and toward one in which it is viewed as part of the broader human service system.

He would like to see the government extracted from direct interface with public housing tenants and see this instead allocated to community housing providers according to contracts in which compensation levels vary according to the complexity of the human service needs of the tenants in question.

In its paper, IPA has proposed a twenty-year strategy which would see a new agency who would be tasked with selling public housing stock as it becomes vacant, investing the proceeds and putting returns from these investments back into capacity purchasing for new housing provision.

Further (separate) government agencies would also be created to deal with social policy, housing provider contracts and holding providers to account whilst a new Ombudsman would ensure that tenant rights are upheld.

Lyon says Australia should not tolerate public housing failure, and that we can move forward not by spending more but by making better use of resources which are already available.

“If you are in the ninth or tenth richest country in the world like Australia, (and) if you’ve got tens of billions of dollars of invested capital that already sits within the public housing system, it’s quite clearly within the ability of current policy makers, current housing markets, charitable and welfare organisations and others to be able to make this system financially sustainable and self-funding just by using what we’ve got better,” he said.