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Social housing – where rents are typically capped at 25 per cent of tenants’ incomes – can make a big difference to the lives of vulnerable Australians.
The Federal Government should establish a Social Housing Future Fund, which could make regular capital grants to state governments and community housing providers.
Such a fund could boost social housing with little or no hit to the federal government’s budget bottom line. Since the initial endowment is an investment, it wouldn’t appear on the underlying budget balance.
Instead, only the annual returns on the fund, less debt interest costs and any capital grants allocated, would affect the budget balance each year.
For example, the government could issue $20 billion in bonds, and invest it into the fund.
The government would have to pay interest on the bonds but can generally earn higher returns on its investment.
If matched state funding was forthcoming, the Future Fund could provide 6,000 social homes a year – enough to stabilise the social housing share of the total housing stock. It would double the total social housing build to 48,000 new homes by 2030, and 108,000 by 2040.