Where has the ACT government’s much touted $699 million worth of budget promises to public housing gone? JON STANHOPE & KHALID AHMED can account for $81 million of it, after that, it’s a question the Housing Minister won’t answer… 

HOUSING Minister Yvette Berry has been in the public domain accusing the Canberra Liberals of inaccuracies in their claims that the bulk of the public housing funding promised by Labor and the Greens in successive Budgets between 2015 and 2018 was never delivered. 

The alleged clash was reportedly started by claims by Opposition Leader Elizabeth Lee and shadow housing minister Mark Parton that the government promised $700 million for public housing, but in fact only $81 million was spent.

An examination of the relevant Budget papers reveals that the claims made by Ms Lee and Mr Parton are correct. 

The audited financial statements of Housing ACT (HACT) for the years 2015-16 to 2019-20, reveal that capital appropriations during that period totalled $80.9 million.

The Budget papers from 2015-16 to 2017-18 refer to the government’s investments in the Public Housing Renewal Program (PHRP). Unfortunately, there are inconsistencies in the amounts stated – even within the Budget papers for the same year. For example, the 2016-17 Budget Paper No. 2, Page 32, declares that the government is “investing more than half a billion dollars over four years” (in the PHRP), while Budget Paper No. 3 for that year variously asserts it is investing $357 million and $393 million. 

Notwithstanding these discrepancies, the total of the investment claimed will be made is up to $699 million. The government has provided a total figure in the 2017-18 Budget Paper No. 3, Page 188, where it states: “The government’s total investment in the Public Housing Renewal Program will be $608 million”.

In response to the Liberals’ assertions, Berry is reported to have said that the Liberals aren’t doing the maths properly and that “this has to be one of the worst examples of ineptitude we have seen. It’s an embarrassing display of their understanding of how government works”.

Berry then advised that the PHRP leveraged off the Commonwealth Government’s Asset Recycling Initiative under which the ACT government, by selling off public housing or other assets, received a 15 per cent bonus from the Commonwealth on top of the sale price and then reinvested both the money from the sales and the bonus payment into the construction and purchase of new public housing.

We all understand that Ms Berry’s response was driven by politics, but it nevertheless leaves unanswered the question at the heart of the imbroglio – namely what precisely is the current status of the promised $700 million investment in public housing, as well as begging other questions.

If, for example, the renewal program is based on selling public housing land and reinvesting the money accrued into new public housing stock, it raises a serious question about the veracity of assertions the government has made about its commitment to investment in public housing, which have led the community and members of the Legislative Assembly to believe that new money would be appropriated for that purpose.

The fact is money was not directly appropriated to HACT, but dwellings were transferred to it over successive years as equity injections totalling $457 million, with money for the procurement of these properties being provided to other government directorates.

The Minister has, unfortunately, not provided sufficient information about the Asset Recycling Initiative (ARI) to enable a full understanding of the level and source of investment in new housing.

A major omission is advice on the value of the public housing land transferred to the Land Development Agency (LDA) and its successor, the Suburban Land Agency (SLA).

In the Audited Financial Statements for HACT for 2015-16, Note 34, Page 313, in small font, reveals:

“The capital distributions to owners each year will depend upon the number and value of the properties scheduled for transfer to the Suburban Land Agency under the Public Housing Renewal Program and Asset Recycling Initiative. In 2015-16, the site for Owen Flats was transferred. In 2014-15 the Currong Apartment site transferred. The Currong Apartment site was significantly more valuable than the Owen Flats site.”

The same note referring to the relevant parcels of land appears in the subsequent years’ audited statements. Table 1 below summarises the capital distributions by way of transfers of land from HACT to LDA/SLA, and equity injections in HACT by way of transfer to it of dwellings.

The first point to note is that the redevelopment of the sites transferred to LDA/SLA resulted in a loss of 1288 dwellings for HACT, while 1094 dwellings were returned – a net loss of 194 dwellings through the PHRP.

Secondly, while the government returned $457 million worth of assets to HACT, it took from it land with a book value of $222 million, with the consequence that the net return to HACT was $235 million, a far cry from the $608 million the government had claimed.

A further important question is how much money has the government made through the sale of the land taken from HACT and how was it spent? 

Media reporting from those years clearly indicates that the multi-unit housing sites generated much higher revenue than their reserve prices, which in any case would have been far higher than the book value.

There are three possible scenarios for the cash and in-kind returns from the sale of the public housing land, namely:

• they were less than $457 million, in which case, the government made a net investment in public housing, albeit less than the $235 million highlighted in Table 1 above; or
• they were roughly equal to $457 million, in which case, the government made no new investment in public housing, contrary to its claims in successive Budgets and in the media; or
• they were more than $457 million, in which case, the government made more money than it returned to public housing.

One would expect that HACT would receive the full benefits derived from the sale and development of public housing land and the incentive payments. 

This is surely what the community would expect and is in fact also reflective of long-standing agreements with the Commonwealth that prevent state/territory governments from “raiding” their public housing authorities to prop up their budgets.

It is also worrying that Treasury officials are reportedly unable to ascertain how much of the housing renewal program was funded by the asset recycling program. One would expect any functional organisation to monitor and record the detail of such programs, especially if they are established in collaboration with and the agreement of the Commonwealth government.

By creating the “illusion” of a massive investment of more than $600 million, the government has not only distorted the community’s understanding of the program but achieved tacit approval for the dislocation of more than 1000 households from their neighbourhoods and support networks without any serious objection or questioning. 

The “unspoken” narrative was: “How could anyone object to such an investment in public housing?” The unanswered question is: “Why would the Greens with their professed commitment to public housing be a party to this charade?

Two questions the minister should respond to are: 

• where is the $700 million? and 
• how much money has the government made from the sale of public housing land? 

Jon Stanhope is a former chief minister of the ACT and Dr Khalid Ahmed a former senior ACT Treasury official.