Overcrowding and affordability stress: Melbourne’s COVID-19 hotspots are also housing crisis hotspots



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Rebecca Bentley, University of Melbourne and Erika Martino, University of Melbourne

Melbourne is once again grappling with increasing COVID-19 rates. Ten suburbs in Melbourne have been designated COVID-19 outbreak hotspots: Broadmeadows, Keilor Downs, Maidstone, Albanvale, Sunshine West, Hallam, Brunswick West, Fawkner, Reservoir and Pakenham.

The outbreaks have sparked discussions about lockdowns and travel restrictions for people living in these parts of Melbourne and generated intensive suburb-specific testing.

The outbreaks have been attributed to family gatherings in homes and people failing to self-isolate, even after positive test results. This has occurred alongside possible breaches of infection control protocols in hotels accommodating people in quarantine – with security guards from major hotels having contracted the virus.




Read more:
The housing boom propelled inequality, but a coronavirus housing bust will skyrocket it


Socio-spatial clues

While chance and circumstances converge to create outbreaks there are also some obvious factors related to where and how people live that impact their capacity to isolate.

As we potentially face a two year-long wait for vaccines (16 are in clinical evaluation internationally (with one being developed in Australia), we need to acknowledge the spatial concentration of these sites of vulnerability is not random. There are socio-spatial clues as to why we have had outbreaks in these locations.

Four measures: overcrowding, homelessness, housing affordability stress and financial hardship often occur in the same areas.
Shutterstock

First, the hotspots have some of the highest rates of housing precarity and financial hardship across Melbourne. People in overcrowded or unaffordable or insecure housing may have less control over their immediate environment and less capacity to isolate themselves than other community members.




Read more:
Homelessness and overcrowding expose us all to coronavirus. Here’s what we can do to stop the spread


The recent Melbourne outbreaks have occurred largely in areas with:

  • high housing affordability stress: where those in the lowest 40% of income spend more than 30% of their household income on housing,

  • overcrowding: measured in terms of the number of people in a household, their age and gender in relation to the number of bedrooms in a dwelling, and/or

  • homelessness: where a person does not have suitable accommodation alternatives and their current living arrangement is in a dwelling that is inadequate, has no tenure, or if their initial tenure is short and not extendable or does not allow them to have control of, and access to space for social relations.

While housing security seems like an obvious problem to fix, it remains a long-standing, difficult issue for governments to tackle. Going into the COVID-19 pandemic, Australia exhibited high rates of homelessness and spiralling housing costs.

Many people in Melbourne and Sydney live in overcrowded or inadequate forms of housing as a result of what has become known as our “housing affordability crisis”. Alongside this, the numbers of people who require emergency accommodation far outstrip our cities’ capacity to house them on a medium- to long-term basis.

Second, people without savings may be compelled to go to work despite feeling unwell. They need to meet their weekly housing costs and don’t have savings enough to go two weeks (or longer) without income. This can occur even if people have negotiated reduced rent with their landlords.

Where housing and COVID-19 collide

When one considers these housing and financial factors from the perspective of COVID-19 suppression, their geographical clustering should not be disregarded. The areas in Melbourne with high rates of household overcrowding, homelessness, housing affordability stress and (related to this) financial hardship (often measured using people’s self-reported capacity to access funds in an emergency) map closely to areas where there are now high numbers of COVID-19 cases.




Read more:
If Australia really wants to tackle mental health after coronavirus, we must take action on homelessness


Using publicly available data, we created a simple index describing capacity isolate based on the above four characteristics. We created maps of Greater Melbourne to examine the relationship between current COVID-19 cases and these housing and financial vulnerability factors. Our index shows Hallam, Sunshine West, Albanvale, Broadmeadows, Falkner, Reservoir and Maidstone are all in the top two quintiles.

Housing Vulnerability Index for Greater Melbourne.
NATSEM – Social and Economic Indicators – Synthetic Estimates SA2 2016; ABS – Data by Region – Family & Community (SA2) 2011-2016; and UNSW CFRC – Overcrowded Households Australia (SA2) 2016. Data were accessed on 26 June 2020 from AURIN Portal (https://portal.aurin.org.au/), Author provided

Over the last decade, Melbourne has seen itself become more spatially segregated. And household overcrowding and precarity are geographically clustered.

Acknowledging correlation is not causation, these findings suggest solving some of Melbourne’s housing problems might reduce the spread of COVID-19 now and in future outbreaks as we await a vaccine.

Taking this further, when assessing where in cities we are likely to see a spike in cases in the future, we should take housing-related vulnerabilities into account alongside other factors.

While steps have been taken by the Victorian government to address some of the issues we have flagged, such as the one-off payment of up to A$2,000 for eligible renters who are unable to afford rent, and the A$1,500 payment to people who test positive and have no leave cover, more could be done in the medium to long term to reduce the risk of overcrowding, housing related financial stress and precarious forms of housing (that lead to homelessness) across the city.




Read more:
Coronavirus shows housing costs leave many insecure. Tackling that can help solve an even bigger crisis


The past months of COVID-19 restrictions have highlighted how critical housing and financial security are to our health and well-being at both an individual and population level. The Victorian Council of Social Service has noted disasters can be “profoundly discriminatory” in where they occur, and in their impacts.

Successful COVID-19 suppression requires safe and equitable cities and addressing housing vulnerability is one of the many challenges we must take up.The Conversation

Rebecca Bentley, Professor of Social Epidemiology, Centre for Health Equity, Melbourne School of Population and Global Health, University of Melbourne and Erika Martino, Research Fellow, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Growing numbers of renters are trapped for years in homes they can’t afford



Rental stress leaves hundreds of thousands of Australians struggling for years to cover all the other costs of living.
Tero Vesalainen/Shutterstock

Hal Pawson, UNSW

Low-income tenants in Australia are increasingly likely to be trapped in rental stress for years. New evidence from the Productivity Commission shows almost half of such “rent-burdened” private tenants are likely to remain stuck in this situation for at least half a decade.

Rental stress is where a low-income tenant faces housing costs that leave them without enough income for food, clothing and other essentials. The scale of the problem – commonly defined as when rent eats up more than 30% of income – is usually presented as a “point in time” or snapshot statistic.




Read more:
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As the Productivity Commission report reveals, the snapshot number in this situation has increased from 48% of low-income renters in 1995 to 54% in 2018. That’s around 1.5 million people pushed into poverty by high housing costs.

For some, of course, this will be only a temporary problem. On this basis, it is sometimes argued that concerns over Australia’s high rate of rental stress are overstated.

However, the Productivity Commission report, Vulnerable Private Renters: Evidence and Options, highlights longitudinal survey evidence showing that a low-income tenant’s experience of rental stress is increasingly likely to be long-term – not a passing problem. As the commission notes:

[…] a growing number of households find themselves stuck in rental stress.

What is the evidence for this?

This conclusion stems from a comparison of two different tenant cohorts experiencing rental stress as revealed by survey data for 2001 and 2013. Less than a third (31%) of the 2001 cohort remained in stress five years later. But almost half (46%) of the 2013 cohort were.

While many people exit rental stress quickly, the proportion of private.
low-income renters in long-term rental stress has increased significantly.

Vulnerable Private Renters: Evidence and Options, Productivity Commission, CC BY

So, it’s not just that more low-income earners are paying unaffordable rents at a particular point in time. This is increasingly a situation that affected private tenants cannot escape.

Beyond the obvious welfare impacts, recent work argues that excessive rent burdens may also damage human capital and, as a result, reduce economic productivity.

The commission’s findings seem to suggest the ongoing restructuring of Australia’s labour market and housing system is eroding socioeconomic and/or housing mobility. The report notes the significant fall in the numbers who manage to move from renting to owning – from 13.6% of renters in the period 2001-04 to 10.0% from 2013-16.

Perhaps slightly more surprising is the commission’s explanation for the rising rate of (point in time) rental stress for all low-income tenants. According to the report, this results not from increasing unaffordability for the private renter cohort specifically, but from the growing dominance of private rental housing as the tenure in which low-income households live.

The number of private renters has grown as the proportions of owner occupiers and public housing tenants have fallen.
Vulnerable Private Renters: Evidence and Options, Productivity Commission, CC BY



Read more:
Private renters are doing it tough in outer suburbs of Sydney and Melbourne


This, of course, results from the post-1990s failure of Australian governments to expand the supply of social housing to match population growth. By 2018, well over two-thirds (71%) of low-income tenants were renting in the (relatively expensive) private market – rather than from a (rent-limiting) social landlord. Back in 1996, barely half (52%) of them were renting privately.

What does this mean for policy?

The report presents some useful discussion of possible policy directions.

For example, while dismissing rent control as liable to advantage existing tenants at the expense of potential tenants, the report is implicitly critical of residential tenancy laws in most states and territories.

The report advances the broad case that tenancy law reforms, “if well designed”, can enhance tenant welfare “without substantially increasing the cost of renting”. Longer notice periods are particularly favoured because these will “provid[e] vulnerable families more time to find new accommodation and prepare for the move”.

Slightly more controversially, the commission strongly hints at support for outlawing no grounds evictions. The landlord power to end a tenancy without any need to justify the move persists across most states and territories. Discussing this power the report states:

It increases the bargaining power of landlords […] and decreases that of tenants. Landlords’ incentives to carry out obligations, such as repairs and maintenance, decrease when no grounds evictions are available, since this provides them with an avenue to terminate leases in the event of a dispute.




Read more:
Life as an older renter, and what it tells us about the urgent need for tenancy reform


However, having highlighted a private rental affordability problem that is both growing in scale and becoming demonstrably more entrenched, the report is timid on solutions beyond modestly improving tenancy conditions.

It argues in general terms for an increase in Commonwealth Rent Assistance but – beyond tentatively floating a 10% rise in maximum payments – advances no specific proposal.

Expanding the social housing stock as part of the broad-ranging housing strategy Australia badly needs is scorned as “an expensive option”. This is a reference to the narrowly scoped analysis in the commission’s 2017 Human Services report. It favoured market solutions to provide low-income housing – on efficiency grounds.

The “expensive option” assertion is out of line with the more broadly framed analysis of the Productivity Commission’s predecessor, the Industry Commission. The latter concluded:

Public housing and headleasing [when social housing providers sublease private rental properties] are assessed to be more cost-effective than cash payments and housing allowances.

While the Industry Commission report admittedly dates from 1993, the subsequent failure of overwhelmingly private provision for low-income renters surely presents compelling reasons to revisit the investment case for social housing.




Read more:
Australia’s social housing policy needs stronger leadership and an investment overhaul


The Conversation


Hal Pawson, Associate Director – City Futures – Urban Policy and Strategy, City Futures Research Centre, Housing Policy and Practice, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Power bills can fall – but the main attention must be on affordability: ACCC


Michelle Grattan, University of Canberra

The chairman of the Australian Competition and Consumer Commission (ACCC), Rod Sims, holds out the prospect of an absolute fall in electricity bills over coming years – but says this will require focusing centrally on affordability, not just reliability and sustainability.

In its Retail Electricity Pricing Inquiry preliminary report into the electricity market, released on Monday, the ACCC says residential electricity prices have increased by 63% on top of inflation in the last decade, with network costs being the major contributor.

Household bills rose by nearly 44%, from an average of A$,1177 in 2007-08 to $1,691 in 2016-17.

Household bills have risen less than electricity prices because usage has fallen, mainly due to self-supply by solar panels.

The report comes as cabinet is set to consider on Monday the government’s energy policy, which it hopes to take to the Coalition partyroom on Tuesday. Energy Minister Josh Frydenberg last week signalled the government had moved away from the Finkel inquiry’s recommendation for a clean energy target.

Facing the prospect of a shortage of power in the period ahead, the government is particularly focused on the need to increase dispatchable power.

The clean energy target, even in modified form, is also unpopular in Coalition ranks.

The ACCC report indicates that supporting renewable energy has been a relatively minor driver of the spiking of prices.

Sims – who flagged the ACCC findings when he addressed the National Press Club recently – says affordability should be the “dominant” objective in policy but in recent years it has come after several other objectives – including reliability, dividends and sustainability.

He said different approaches were needed to pursue each of the objectives of affordability, reliability and sustainability. As reliability and sustainability were pursued, it was important to do it in “the least-cost way and to let people know the costs”.

“What’s clear from our report is that price increases over the past ten years are putting Australian businesses and consumers under unacceptable pressure,” he said.

The ACCC found that on average across the national electricity market (which does not include Western Australia or the Northern Territory), a 2015-16 residential bill was $1,524, excluding GST. This was made up of network costs (48%), wholesale costs (22%), environmental costs (7%), retail and other costs (16%) and retail margins (8%).

Sims said the primacy of network costs in rising bills was not widely recognised.

Since July 2016, retail price rises were likely to be driven by higher wholesale prices.

“We estimate that higher wholesale costs during 2016-17 contributed to a $167 increase in bills. The wholesale (generation) market is highly concentrated and this is likely to be contributing to higher wholesale electricity prices.”

The ACCC estimates that in 2016-17 South Australia had the highest residential electricity prices, followed by Queensland, then Victoria and New South Wales. SA prices were roughly double those in Europe.

Sims said measures the government had already taken – notably telling companies to make customers aware of better deals, and its plan to scrap the process allowing companies to appeal against decisions of the Australian Energy Regulator – would help lower prices.

The ACCC is now looking in detail at further measures, ahead of making a final report. In the meantime, its preliminary report puts forward some suggestions. These include the states reviewing concessions policy to ensure consumers know their entitlements and concessions are well targeted to the needy, and a tougher stand against market breaches.

It says increased generation capacity (particularly from non-vertically integrated generators), preventing further consolidation of existing generation assets, and lowering gas prices could help reduce the pressure on bills.

The ACCC will also look at how to mitigate the effect of past investment decisions – but it notes that many are “locked in” and will continue to burden users for many years.

It will as well consider what more can be done to make it easier for consumers to switch suppliers.

The report says that “an increasing number of consumers are reporting difficulties meeting their electricity costs, and some consumers have been forced to minimise their spending on other essential services, including food and health services, to afford electricity bills.

“Businesses across all sectors have faced even higher increases over the past 12 months, following renegotiation of long term contracts. Many of these businesses cannot pass the increased costs on and are considering reducing staff or relocating overseas. Some businesses have even been forced to close.”

The ConversationThe ACCC’s final report will be released in June next year.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Lack of internet affordability may worsen Australia’s digital divide: new report



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An affordability gap and increasing reliance on mobile data could limit internet access for some Australians.
29233640@N07/flickr , CC BY-SA

Julian Thomas, RMIT University

We often think of the internet as a levelling, democratising technology – one that extends access to knowledge, education, cultural resources and markets.

But the net also reflects the social and economic divides we find offline.

Released this week, the second report of the Australian Digital Inclusion Index (ADII) reports on data covering four years of local online participation across three dimensions: online access, digital ability and affordability. Together, the three dimensions produce a digital inclusion score.

Since 2014, when data was first collected, Australia’s overall digital inclusion score has improved by 3.8 points, from 52.7 to 56.5. In 2016–2017 alone, Australia’s score rose by 2.0 points, from 54.5 to 56.5.

But there is still a “digital divide” between richer and poorer Australians. In 2017, people in our lowest income households (less than A$35,000 per year) have a digital inclusion score of 41.1, which is 27 points lower than those in the highest income households (above A$150,000) at 68.1.


Read more: Three charts on the NBN and Australia’s digital divide


When the three dimensions are considered separately, the measures of access and digital ability show consistent improvement from 2014 to 2017. However, the affordability measure has registered a decline since the 2014 national baseline (despite a slight bump in the past 12 months).

Online access and digital ability have increased since 2014, but affordability has dropped.
Australian Digital Inclusion Index 2017, Author provided

The cost of being connected

Affordability is a key dimension of digital inclusion.

Internet connectivity is important for accessing a wide range of education, government, health and business services. A decline in internet affordability means Australians on fixed or low incomes risk missing out on the benefits of digital technologies, and falling further behind more connected Australians.

The ADII shows that the cost of data — for both fixed and mobile internet — has declined over 2014-2017. These findings are in line with the ACCC’s ongoing monitoring of prices for telecommunications services, which indicate an average decline in real terms of 3.1% since 2006.

However, when we measure affordability, we are not only looking at the cost of data; we are also interested in what proportion of household income is being dedicated to this service.

The affordability problem with the internet is different from other key household services where there are price pressures, such as electricity and water. The residential consumption of energy has grown very slowly over the last decade, but prices have increased sharply.

With the internet, while we are now getting more data for our dollar, our demand for data has dramatically increased.

A recent report from the Commonwealth Bureau of Communications and Arts Research (BCAR) tracks the affordability of phone and internet use since 2006.

The BCAR report finds that, overall, phone and internet affordability has improved since 2006. However, their data also shows that almost all the gains occurred before 2013, and that, since then, affordability has declined or flat-lined. Further, BCAR’s data suggests that the lowest income households in Australia are now spending almost 10% of their incomes on internet and communications services. In contrast, middle income households are spending around 4% of their disposable income on these services, and for wealthier households, the figure is less than 2%.

Increasing reliance on mobile

Some recent and far-reaching changes in our use of technology are evident here: the extent to which the internet has become an integral part of everyday life, the fact that we are spending more time online, and we are doing an increasing range of activities online. In many households, we are also connecting with more devices.

However, the problem of affordability also reflects another recent development that the ADII highlights: one-in-five Australians now only accesses the internet through a mobile device — and we know that mobile data is considerably more expensive than fixed broadband on a per gigabyte basis.

Mobile-only use is correlated with a range of socioeconomic factors. The ADII data shows that people in low income households, those who are not employed, and those with low levels of education, are all more likely to be mobile-only.

Despite the benefits of mobile internet, this group is characterised by a relatively high degree of digital exclusion. In 2017, mobile-only users have an overall ADII score of 42.3, 14.2 points below the national average (56.5).

Digital inclusion is unequal

In the 2017 report, the ACT, followed by Victoria and New South Wales, are the highest scoring states in the overall digital inclusion score, as they were in 2016. Tasmania remains the lowest scoring, followed by South Australia.

Australia’s national digital inclusion score in 2017 is 56.5, but varies from state to state.
Australian Digital Inclusion Index, Author provided

The lowest scoring socio-demographic groups in 2017 were households earning less than A$35,000 per year (overall score of 41.1), Australians aged over 65 (overall score of 42.9) and those with a disability (overall score of 47.0).


Read more: Regional Australia is crying out for equitable access to broadband


The ADII uses data derived from Roy Morgan Research’s ongoing, weekly Single Source survey of 50,000 Australians. These are extensive, face-to-face interviews, dealing with information and technology, internet services, attitudes, and demographics.

Calculations for the ADII are based on a sub-sample of 16,000 responses in each 12 month period. The index is a score out of 100: the higher the overall score, the higher the level of digital inclusion. An ADII score of 100 represents a hypothetically perfect level of access, affordability, and digital ability. A score of 65 or over is regarded as high; one below 45 as low.

A focus on improvement

An increasing number of Australians are online, but although the costs of data and devices are falling, there is a risk that issues of affordability will leave some of our most vulnerable behind.

Australians with low levels of income, education and employment are consistently less connected than the rest of the population, with consequences that will become increasingly serious as the digital transformation of government and the economy proceeds.

As an increasing number of essential services and communications move online, the challenge to make the Australian internet more inclusive is becoming more urgent. Affordability is a key area for attention, but so is improving Australians’ digital ability.

The issue of affordability suggests a range of possible areas for useful policy intervention. If we think it important to subsidise essential utilities such as electricity for low-income Australians, we may need to consider whether an allowance for internet access for essential services might also be necessary.

The ConversationFor the large number of lower-income Australians who rely entirely on mobile devices for internet connections, we will also need to consider new ways to support digital inclusion. These could include unmetered access to essential health and social services, and the further development of secure, public access wi-fi.

Julian Thomas, Director, Social Change Enabling Capability Platform, RMIT University

This article was originally published on The Conversation. Read the original article.

Budget 2017: government still tinkering with housing affordability


Richard Holden, UNSW

It’s unsurprising that in the lead-up to this year’s federal budget there was a lot of discussion about housing affordability as its centrepiece. Over the past 20 years price-to-income and price-to-rent ratios have doubled. Sydney’s price-to-income ratio is over 12, making it the second-least-affordable city in the world. Melbourne is in fourth place. The Conversation

And in a budget tableau as bland as this one, it wouldn’t have taken much to really play up the housing affordability policies.

Yet the measures in this budget involve not much more than tinkering.

On the minus side, the biggest announcement was a “first home super saver scheme”, which would allow voluntary contributions of A$15,000 per annum and A$30,000 in total (per person if in a couple) to superannuation for prospective first home buyers from July 2017. These could be withdrawn and taxed at 30 percentage points below the normal marginal rate and used for a deposit.

This will cost the government A$250 million over four years and do absolutely nothing to help first home owners. We have seen this movie before, with 50 years of first home owner grants in one form or another. All that happens is that this subsidy goes into the price of existing housing. Sellers benefit, buyers get no joy.

It’s bad economics, somewhat costly, and a cruel hoax on prospective home buyers who are struggling with an out-of-control housing market.

But the biggest minus of all was the absence of any measure whatsoever to address negative gearing and CGT exemptions for rental properties. Sorry, there is one: you now won’t able to deduct an airfare to the Gold Coast to “inspect” your rental property. The government has boxed itself in on this, with Labor having taken a plan to the last election to tackle both of these issues (full disclosure, the Labor plan bears a good deal of resemblance to my McKell Institute plan).

Nonetheless, it is reflective of the state of our politics that the one thing that could really help the most (and which the PM has agreed with very publicly in the past) is off the table.

But the measures aren’t all bad. On the plus side, there were incentives for people over 65 to downsize by allowing A$300,000 of the proceeds of a sale of their main residence to go into their superannuation, above the controversial A$1.6 million cap announced in last year’s budget.

Will the budget encourage older Australians to downsize? Maybe. One measure of how powerful an incentive it will be is that it costs only A$30 million over the four-year forward estimates period. This is not a big government spend.

It’s also unclear whether it will be a large enough financial incentive to overcome the emotional and psychological barriers to moving from the family home after many years in it. There was also a conspicuous absence of reforms to stamp duty, which is a major impediment to downsizing.

There was also good news on affordable housing with the establishment of the National Housing Finance and Investment Corporation (NHFIC). It will provide A$63.1 million over four years to operate a so-called “bond aggregator” that aims to provide cheaper financing for community housing providers. This is a good idea that should have a positive effect, and help address the high cost of funds that often plagues financing of housing for low-income earners.

Consistent with the recent populist policy announcements by this government, foreign purchasers of Australian properties were targeted in this budget. There will no longer be a capital gains tax (CGT) exemption for primary residences of foreign and temporary tax residents, and the grandfathering will only last until June 30 2019. There will also be a lower threshold for CGT withholding (A$750,000, down from A$2 million) on foreign tax residents, and the rate will be increased from 10% to 12.5%.

There were some wishy-washy words about the crucial issue of housing supply. The government has definitely identified the key role that supply plays. They are proposing a variety of “city deals” to provide incentives for zoning reform — especially in western Sydney. That’s all good, but whether it is anything more than the budget-summary feel-good headline – “Working with the states to deliver planning and zoning reform” – remains to be seen.

There was also the announcement of a tax on foreign owners who leave their properties vacant. This is supposed to raise A$16.3 million over four years — which is a rounding error in the scheme of things.

We had a housing affordability crisis before this budget, and we will have one after it. If the first step to recovery is acknowledging that one has a problem, then the government is still on step one.

Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW

This article was originally published on The Conversation. Read the original article.