NRAS Uni rort plot thickens

ScreenHunter_1593 Mar. 11 10.24

By Leith van Onselen

The Australian has continued its justified attack on rorts in the $4.5 billion National Rental Affordability Scheme (NRAS), which has seen large sums of taxpayer money used to subsidise rental accommodation for international students.

Today, the newspaper has uncovered that half of all university accommodation built under NRAS nationally, and 70% in Victoria, has been let to foreigners, raising legitimate concerns over the efficacy of the Scheme:

The figures supplied by the Department of Social Services reveal that of the 622 taxpayer-assisted units built on or near university campuses in Victoria, 422 of them – 70 per cent – are filled by international students…

The Department of Social Services said $147 million of federal funds had been spent on the NRAS so far, used to build some 20,000 units. As the incentives on each NRAS unit run for a decade, the ongoing subsidy will cost the government about $200m a year in coming years, rising as more housing is built…

While the intended beneficiaries of the policy were low-paid workers, the fact that the incentive remains the same regardless of how many bedrooms are in the property has made it attractive to universities and student housing providers. Students – including foreign students often backed by wealthy families – usually don’t breach the $47,000-a-year earnings cut-off.

Using taxpayer funds to subsidise foreigners is ridiculous, and the funds should instead be targeted at low income locals. The incentive structure of NRAS should also be changed to encourage the construction of larger apartments and houses suitable for local families, rather than shoebox-sized apartments for students.

That said, I would hate to see NRAS abandoned altogether because of these rorts. Given many lower income Australians are unlikely to ever be able to afford their own home, as well as the busted state of Australia’s rental market (whereby insecure one-year rental terms are commonplace), there is scope for the Government to assist in the provision of longer-term affordable leases that provide renters with greater security of tenure.

NRAS is not bad in principle, rather it has been implemented poorly with bad incentives built-in. Fix these incentives, and ban provision to foreigners, and you have the makings of a good Scheme.

Obviously, freeing-up the supply-side of the housing market would also help to ameliorate some of the pressures emanating from high rental costs, and should also be pursued with vigour by the various levels of government.

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16 Responses to “ “NRAS Uni rort plot thickens”

  1. jimbo says:

    This scheme needs to be seen for what it really is – just another mechanism to divert public funds into private pockets. Interesting to see its efficacy being questioned, although one would doubt whether any action would be taken on the basis that it is providing undue benefits to foreign parties. That would pop the lid on a tightly packed can of worms that’s for sure.

    • The Government no longer builds social housing, so schemes like NRAS do have a place provided they are implemented properly.

      • Andy! says:

        How the hell is there provision for foreigners getting NRAS!? Well done public service – no care/no responsibility rings true again.

        And to the specufestors exploiting this loophole at the expense of the needy AUSTRALIAN people it was designed for, I can only hope there’s a retrospective court ruling for what you’ve done – moral concerns fall on deaf ears with you lot.

      • NMT says:

        Hansard 1-3-1898 Constitution Convention Debates
        “QUOTE Sir JOHN DOWNER.- I think we might, on the attempt to found this great Commonwealth…….. and say that there shall be embedded in the Constitution the righteous principle that the Ministers of the Crown and their officials shall be liable for any arbitrary act or wrong they may do, in the same way as any private person would be.” END QUOTE

        They are TOTALLY liable……send them down with the sodomites

      • Frederic Bastiat says:

        But Leith, why is the NRAS needed…doesnt it just divert attention away from what is really needed, lower land costs and the flow on effect of cheaper hoursing (including rentals)?

        If your argument is that short-term leases create too much uncertainty for tenants etc…is that actually affected by the NRAS?

        Isnt it likely that long-term leases and other more renter-friendly agreements would emerge if we had a more competitive rental market for landlords, due to lower land costs and the ability of renters to become buyers with relative ease?

        I think you nailed it years ago…its all about land supply, everything else is a distraction

      • N.C. says:

        @ Frederic Bastiat – NRAS tenancies are, in the main, subject to the same insecure laws that allow short term-leases and provide no security of tenure.

        Can’t see why anyone would be surprised about any of this. The private sector will always do what the private sector does: seek to profit. Put them in charge of affordable housing and they will find a way to make it pay…

        What’s missing from this whole conversation, as far as I’ve seen, is a closer look at the University sector. The steady erosion of funding and the recalibration of the sector as good for business rather than good for society has left us with callous, profit driven university Boards who take one look at NRAS and say “yes, please, we can see a few quid in that…”

      • Andy! says:

        @NMT +1

  2. Labrynth says:

    I think this is a bit of a storm in the tea cup scenario.

    Yes, it seems the system has been abused by a few but that happens in any government funded policy.

    Looking at the numbers, its 422 of 20,000 units are being used for student accommodation in Victoria or 2%.

    To lease out an NRAS property you need an NRAS property manager. Just tell the property managers to restrict letting of these apartments to Australian citizens.

    In terms of building bigger apartments it won’t happen. In a feasibility scenario when you are trying to pack as many units on as possible, reducing the number of apartments but still using the same building footprint (making them bigger) will pretty much stop construction for units in desirable places close to amenities as it is not feasible any more.

  3. MrMedved says:

    This scheme was devised to keep union members employed during the ‘GFC’ and to coat the pockets of developer mates. Policies from the blue team and red team are predictable in that the are designed for vested interests and not the public. So let me see –

    1. Housing built for foreigners to buy (apartment boom approvals, building off the plan, etc.) – check.
    2. Housing built for foreigners to rent via taxpayers (NRAS rorting) – check.
    3. Housing purchases for foreigners supported by taxpayers (FHOG in NSW) – check.
    4. Housing open to purchase for foreigners with disregarding any oversight (Chodley Wontok) – check.
    5. Housing speculation subsidised by taxpayers (negative gearing) – check.
    6. Housing limited to push up prices (supply choking policies) – check.
    7. Rentiers continue to collect land rent privately (ignore Henry review) – check.
    8. Residency to foreigners for sale (888 visas, ‘education’ for PRs, etc.) – check.
    9. Suppress salary/wages and employment (457 visa changes/increases) -check.

    So if there is ever a politician who utters the phrase “housing affordability” you know that they are a wretched, deviant miscreant who has no integrity whatsoever. They do not serve the public.

    • N.C. says:

      “This scheme was devised to keep union members employed during the ‘GFC’ and to coat the pockets of developer mates.”

      An interesting theory, but for those of us who can recall the initial murmurings of the NRAS scheme it fails to ring true. You’ll need to think back to the 2007 National Housing Conference, at least, where American and Canadian bureaucrats came to tell us all about how you can coax the private sector into leveraging up and delivering all the social good that governments now steadfastly refuse to pay for. All it takes is just the smallest of tweaks to the tax system…

      Yes, governments of ‘both’ persuasion are to blame, because they constrain the common sense of the Public Service with predictable ‘market-always-delivers’ ideology. It’s not so much about conspiracies as it is the blind reliance on this sort of rhetoric by those who seek power. In accepting this, we ensure that real power – and wealth – remains in the hands of those vested interests who actually do benefit from policies like NRAS. The rest of us will just have to make do.

      Argh. Rant over.

  4. Explorer says:

    The units on uni land also provide accommodation for young Australians from regional towns and cities and from the bush.

    • Mav says:

      Your “head in sand” approach of ignoring all data and attempt at creating a false counter narrative has now reached epic proportions.. You are one step away from becoming a troll.

  5. Felixfrost says:

    Does anyone know of any decent literature about building co- operative housing?

    I have a number of friends in the same boat as me – not willing to take on debt as a freelancers – who have around $200000 deposits.

    I’d quite like to build a block based on the idea of ongoing rental cooperative. Building something that you can have a 100 year mortgage on . . . these models exit in Europe . . . any links/books that spring to mind MB’s about how to finance this?

  6. nimby says:

    Education is supposed to be a lucrative export industry, but it’s taking the housing of the disadvantaged. These students are supposed to give inputs into our economy, not come here and take from us! Where would asylum seekers live, if social housing is under so much pressure?

  7. Neville Gearless says:

    It doesn’t make sense to have a subsidy system for low income housing and at the same subsidies for speculators. One makes the other less effective. Even then, the scheme misses its target.

    Double’ly useless.