Development, Economics and finance, Government and governance | Australia

5 June 2020

The Territory government is right to stimulate the economy during the downturn, but its housing subsidy should be redirected to public housing, Liam Grealy and Kirsty Howey write.

The Northern Territory Home Improvement Scheme (HIS) is underway, with applications submitted, assessments in process, vouchers awarded, and job lists compiled.

Established to ease the economic burden of the coronavirus pandemic, and with a Northern Territory (NT) election scheduled for August, the HIS aims to support the construction industry by subsidising residential housing upgrades. By using the HIS, the public are “helping save a Territorian’s job,” Treasurer Nicole Manison said.

Under the scheme, a homeowner can spend $1000 to receive a $4000 voucher for physical improvements to land and/or buildings, and repairs and maintenance services, or $2000 to receive a $6000 voucher of the same kind.

This subsidy has proven hugely popular. An initial government commitment of $30 million was doubled to meet demand, while an October application closing date was brought forward to 17 April with just two days’ notice. At its close, the scheme had received 19,551 applications, representing about one third of NT homeowners, at an estimated cost of $100 million to the government.

A majority of this funding has been repurposed from other government programs, including $27 million from the $100 million public housing stimulus program, which funds local businesses to undertake upgrades and repairs and maintenance at public housing in urban areas in the Territory, including at town camps.

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These outcomes suggest the government may have miscalculated the scheme’s incentive structure. Nonetheless, if we accept subsidisation of small businesses in the housing sector as a sensible government strategy to manage an economic downturn, there are serious policy implications. This includes concerns about which houses will receive the benefit of this funding.

Specifically, this money can only be spent by private homeowners. This excludes the vast majority of householders in remote NT communities, where, according to the recent Remote Housing Review, there are only 15 Indigenous homeowners.

This means the money will necessarily be funneled to urban populations in places like Darwin, Katherine, and Alice Springs, where elections are, according to various analyses, won and lost.

A previous version of the Home Improvement Scheme was established by the former Country Liberal Party government to support tradespeople at the conclusion of the construction phase of the Inpex gas project. This time around, while the Northern Territory Government has elected to create a new list of housing work for private-owned residential properties, an extensive list of very urgent repair work already exists.

The 2017 Living on the Edge: Northern Territory Town Camps Review details the condition of housing and essential services infrastructure across the Territory’s town camps. Town camps are typically home to Indigenous populations located on the peripheries of better-serviced urban areas such as Alice Springs, Katherine, Borroloola, Elliott, Tennant Creek, and Darwin.

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Commissioned by the then Department of Housing and Community Development and led by Deloitte consultants at a cost of $2.37 million, the Town Camps Review contains 16,000 pages of surveys and analysis of conditions across 43 town camps. It estimated that the total cost to bring all town camp houses up to the standards of the Residential Tenancies Act would be $77,702,182.

The urgency of housing upgrades in town camps has been aggravated by physical distancing guidelines that require residents to isolate in crowded housing that often includes dysfunctional wet area amenities.

As the 2018 Commonwealth Remote Housing Review noted, planned and regular repairs and maintenance are key to maintaining housing assets and resident health outcomes.

Thus, rather than generously subsidise homeowners to install new blinds, extend decks or construct second sheds, the government should direct funding to work it has already identified as urgent.

A critic of this position might note the coronavirus travel restrictions in place for remote NT Indigenous communities, but many of the town camps are in urban areas and could be accessed by tradespeople safely.

In more remote contexts, there are local businesses that could complete work identified by the Town Camps Review. In either case, travel restrictions will be relaxed in the NT well in advance of all HIS applications being assessed.

The government is right to support housing and small businesses during the downturn, but the focus of this subsidy should be redirected from private assets, and instead focused on dealing with the substandard amenities common in town camps across the NT.

As of this week, the Commonwealth government has also announced direct cash grants for home renovations, where such funding should also be directed towards improving the health impacts of social housing.

While homeowners in urban settings vent their frustration about bureaucratic delays and the backlog of HIS applications, for public housing tenants who are already too familiar with waiting for work to be done, particularly in town camps, the backlog of urgent work is much longer standing, and the government should prioritise its focus on them.

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