The Australian has published a series of good articles today (here and here) explaining how the National Rental Affordability Scheme (NRAS) – a $4.5 billion scheme launched by the former Labor Government in 2007 amid claims that it would increase the supply of affordable rental housing to low and moderate income households – has actually turned into a rort used by universities to supply subsidised accommodation to international students:
The Australian revealed that universities had won thousands of grants under the National Rental Affordability Scheme and were filling hundreds of these government-sponsored units with fee-paying international students…
Outside of Queensland, there is no regulation stating that NRAS tenants have to be Australian citizens.
…one critic of the project, a construction industry source, said he was uncomfortable that it did not meet the original intent of the policy.
“In general, I am not adverse to government incentives being used to encourage developers to provide a certain type of product that the market needs; however, NRAS in this case provides very little benefit to its target market and is predominantly benefiting the developer — at a cost to the taxpayer,” he told The Australian.
According to The Australian’s Judith Sloan, a key deficiency with the NRAS is that the maximum $10,000 subsidy is attached to the dwelling rather than the tenants attached to the unit, meaning that a one bedroom unit can attract the same subsidy as a house, giving developers the incentive to supply shoebox student accommodation rather than homes targeted at locals:
The obvious incentive is for developers to build the smallest possible dwellings that will attract the NRAS subsidy. Forget the nurses and teachers with families. This scheme is almost perfectly designed for university accommodation…
My guess is that many units are dogboxes, with the pretence of a kitchen and a tiny bathroom.
In principle, I have no objection to the Government providing subsidised rental accommodation (although freeing-up the supply-side of the housing market would likely ameliorate some of the pressures). In fact, given Australia’s busted rental market – whereby insecure one-year rental terms are commonplace – there is scope to provide longer-term leases that provide renters with greater security of tenure.
However, any such programs must be reserved for locals and targeted more towards dwellings appropriate for workers and families, not university students.
