Plibersek gets caught out

097608-bd4521a2-a9c3-11e3-9f08-bce3f3e5d11fIs anyone really surprised that the $4.5 billion National Rental Affordability Scheme, launched by Labor in 2007, has turned into a scam-fest, gamed by dodgy developers on-selling their rights under the scheme and universities happy to see the taxpayer subsidise their efforts to recruit more fee-paying international students?

Rick Wallace of The Australian put me onto this story and, at first, I didn’t believe that international students were entitled to 20 per cent below market rents in newly constructed buildings.  But when I found an application form, lo and behold, it was true. Indeed, someone on a bridging visa is also entitled under the NRAS.

The former housing minister, Tanya Plibersek, has been trying to tell us that there was nothing she could do; that she was advised that it would be illegal to exclude international students.  Really?  Really?  We have no problem excluding international students from Medicare (although they do lob up at public hospitals) and state governments have no problem excluding them from transport concessions.

I think she might have been telling a bit of a porky.  Here’s my theory.  The NRAS was very slow to get off the ground, in part, because the low income tenants looked pretty undesirable (paying rent, caring for property) for potential developers, even in the context of a massive subsidy (positive gearing + tax credit = great deal as long as rent is paid).

Along comes the idea of housing students, both local and international.  Better tenants, better payers.  The state governments, who are generally beholden to the universities, were keen (save Queensland) and pressed for the inclusion of student accommodation.  And here’s the kicker: parental income is irrelevant in terms of assessing whether or not someone is eligible for NRAS accommodation.  This is a boon for some local students, as well as international ones.

Can I also point out what a laughable outcome this scheme has produced – 14,000 units built in six years.  Given that we probably need somewhere in the order of 120,000 to 150,000 new dwellings PER YEAR to accommodate our growing population, 2,300 per year of NRAS accommodation just doesn’t hit the sides, let alone affect rents.  And all for billions of taxpayer money (each unit costs $10,500 per year, with generous annual indexation, for ten years).

If governments are really interested in creating more affordable housing, they need to look at their land release policies, their development application processes and the taxes and charges they levy on new developments.  Schemes such as the NRAS have no place.

Here’s the news story:

FORMER housing minister Tanya Plibersek’s claim that it was discriminatory and impractical to prevent foreign students accessing taxpayer-subsidised housing meant for low-income Australians has been undermined by revelations the commonwealth raised no objections to Queensland Labor closing the same loophole.

Social Services Minister Kevin Andrews also revealed yesterday his crackdown on exploitation of the $4.5 billion National Rental Affordability Scheme would extend to a “disturbing” trend of trading in NRAS entitlements, which he has referred to the Australian Securities & Investments Commission and state-based regulators.

Ms Plibersek, who under the Rudd government launched and championed the NRAS to develop cheap rental housing for low-income Australians, said earlier this week she was advised by commonwealth bureaucrats it was discriminatory and ill-advised to block foreign students from accessing the scheme.

But the Queensland government said yesterday Ms Plibersek’s department had raised no concerns about restricting NRAS eligibility to Australian permanent residents when the state, then led by Labor premier Anna Bligh, put forward the proposal.

And the head of the National Affordable Housing Consortium, a leading not-for-profit builder of NRAS units in Queensland, claimed he had also told Ms Plibersek and her department that students should not be the priority for the scheme, and if they were to be included, it should be limited to those from rural areas.

The Australian has revealed in the past week that the scheme, which provides incentives of more than $10,000 a year to developers of housing if they agree to charge rent at 20 per cent below market rates, has been used to build units for thousands of students, including many from overseas.

Queensland is the only state to prevent foreign citizens becoming NRAS tenants, closing the loophole that has seen vast blocks of taxpayer-assisted student accommodation pitched predominantly at the fee-paying foreign student market.

New figures released by the commonwealth yesterday revealed that of the 19,000 tenants of the NRAS scheme, which was originally aimed at low-paid workers, more than 1500 are international students.

Ms Plibersek said earlier this week she “investigated whether we should have exclusions for particular groups like that” but her department recommended against it because of the danger of administrative complexity and breaching discrimination laws. The Queensland government confirmed yesterday that the Department of Housing and Public Works had advised the commonwealth that it planned to impose the restriction within its borders and no objections were raised.

Queensland Minister for Housing and Public Works Tim Mander said the NRAS had played a role in creating affordable housing but there needed to be tight eligibility criteria.

“NRAS properties tend to be an ideal fit for people who don’t necessarily need public housing, but still struggle with the cost of living,” he told The Australian. “However, to be eligible in Queensland, applicants have to be Australian citizens or have been granted permanent residency.”

Robert Schwarten, who was the Queensland housing minister at the time the scheme was being introduced, said he designed the prototype for the program and it was never intended to house students. “It was for working people and people on low wages. In terms of students coming here and living in these things, no. I designed the scheme for poor people, not students,” he told The Australian.

But he defended Ms Plibersek, whom he called an excellent housing minister, saying she was probably restricted by the complexity of other states’ legislation in preventing foreign students from becoming NRAS tenants.

Mr Schwarten, now retired from politics, said Queensland’s laws were more straightforward and allowed him to block non-Australian residents from occupying NRAS units.

Ms Plibersek declined to comment on the Queensland government’s statements, saying only that the Abbott government was “trashing a good program to soften up Australians for a cut to affordable housing”.

As revealed in The Australian yesterday, Mr Andrews has commissioned a review of the scheme with a view to closing the loopholes that have seen universities and developers tap taxpayer funds to build student housing for foreign students.

Yesterday, he said the trading in NRAS subsidies by developers and real-estate spruikers would also be reviewed by the government. “We’ve discovered that there’s a trade in the licences so much so that some of them are now being traded for about $20,000 on the market,” he said.

Industry sources said profiteering could occur when developers bought a site, won NRAS incentives, then sold the site for a higher price with the NRAS incentives attached, or when developers or incentive holders switched them between sites.

“While the legislation prohibits NRAS entitlements from being sold, they can be transferred to another project, and developers are using consultancy payments and the like to get around the prohibition on selling them,” one source said. The Department of Social Services, which is auditing NRAS grants, has warned that charging extra fees for incentives could lead to the incentives being withdrawn. It has included a referral area on the NRAS website to allow investors and developers to report examples of abuse.

“Where the ‘trading’ of incentives is likely to constitute a breach of corporations or consumer law, the department has and continues to refer cases to relevant authorities, including the Australian Securities & Investments Commission and state consumer affairs commissioners,” the department said. The Australian National Audit Office confirmed yesterday that it was also eyeing an audit of the NRAS.

National Affordable Housing Consortium chief executive Mike Myers, whose organisation has built a record 2300 NRAS units, said when used properly, the program was a godsend for struggling tenants, saving them about $90 a week on rent. He said it would also generate more than 300,000 jobs, based on a Bond University study commissioned by the not-for-profit housing sector.

But he said his organisation, and others in the sector, had warned Ms Plibersek and the commonwealth about problems with the design of the NRAS, including the ability of foreign students to access properties under it. “We probably share your concern about the foreign student issue and wrote to the previous government about that,” he told The Australian.

“Me and, I’m sure, others in the not-for-profit housing sector, thought student access to NRAS was not a priority, but if it was included should be targeted to low-income Australian students, particularly those from rural and regional areas who struggle with the extra costs involved. Obviously they decided not to do that or they didn’t want to do that.”

Andrew Tyndale, the investment banker turned philanthropist who first highlighted issues with universities winning large numbers of NRAS places, yesterday urged the Abbott government not to abandon the scheme. “It is a major success in policy terms, and addresses one of Australia’s most pressing problems,” he told The Australian. “To date, NRAS has received support from both sides of the house, enabling it to be one of the few really successful social policy interventions of the last decade.”

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20 Responses to Plibersek gets caught out

  1. Thanks for your excellent post, Judith.
    Plibersek has many inept actions and leftist / femininist causes she espouses – including the girlie’s femininist idea the Julia dearest was badly treated by the media because she is a woman.

    There are other arcane ways of expressing derivated penis – envy – but I am going to be in trouble already.

    But few appreciate that she messed up the Health portfolio by not bargaining well enough_ Australia paid well over the price New Zealand managed to negotiate with the drug companies.
    She – like dear Julia is alleged to be a ”better negotiator than Abbott” [When all the players were bedfellows?!] Explore the product of google search for:

    Geoff Seidner socialist dystopia plibersek new zealand medicines cheaper.
    To find merely these:
    Socialist Dystopia: The denouement re Tanya’s repeated frau
    Cognate Socialist Dystopia: Plibersek admits,,, 18/3/13

    I guess the challenger to Shorten may be Albenese – who also has problems of the Labored kind.
    Remember your article embeded in these posts? You Judith postulated that Albo was responsible for Labor’s worst policy?
    Do – google search: Albenese worst socialist dystopia
    Geoff Seidner
    East St Kilda

  2. Mayan

    Getting rid of various silly city planning notions and their consequent impediments to the release and development of land, and zoning laws would do more for housing affordability than the current ‘affordability’ schemes and planning practices which amount to little more than price supports.

  3. Token

    The apartments at Central Park were very aggressively marketed to those dreaded Chinese buyers noted in tbe oyher threads.

  4. Sean

    How the scheme works

    Imagine a property has a purchase price of $350,000 and attracts a market rent of $350 a week. Under the NRAS the property owner must reduce the rent by 20 per cent, so the tenant’s rent will be $280 a week.

    But the owner also receives a government incentive of $9981 a year or $192 per week. That brings the income on the property to $472 a week.

    http://theage.domain.com.au/home-investor-centre/incentives-for-affordability-20120629-215yi.html

  5. brc

    You say the NRAS has no effect – and that is true at the macro level – but at the micro level there are particular places that are in the sweet spot for he NRAS due to land prices and high tenancy rates. In such places, a NRAS land rush creates a seriously depressed market for people with existing properties- the new properties are marketed at 20% below market rate, so existing properties are well below that. Most properties are barely cash flow positive as it is, so this makes them a lot worse, especially for retirees who have set up properties in their super fund.

    The worst part is that this now creates a class of squatters paying below market rent, and it will be harder to move these people on as the years go by. The government needs to move and cut this cancer before it completely mestatisizes.

    Also take a look at aged care facilities. These places are already optimized at getting government cash and I know that several have taken advantage of NRAS as an easy source of funding.

  6. Go Tiges

    She has form as a financial illiterate. From Andrew Bolt’s blog

    I note Health Minister Tanya Plibersek is claiming the ALP’s Health Insurance Reforms stop people earning $50K subsidising the health insurance of people earning $250K.

    You might be interested to know that a person earning $50K pa pays $5,400 pa including Medicare levy. A person earning $250K pa pays $89,800 pa including Medicare levy. That’s 16.6 times more tax despite only earning 5 times as much income.

    Does Tanya Plibersek seriously think people earning $250K spend 16.6 times more time in hospitals? Indeed on a related topic does she think $250K people have 16.6 times more children being educated by the Government? The suggestion that someone who has paid $89,800 in tax might at best get about $1500 back in a rebate for health insurance is some how bludging off the person paying only $5,400 is so utterly preposterous that one wonders how absurdly innumerate Plibersek is to have arrived at this conclusion.

  7. Squirrel

    I am (certainly) not here to defend Ms Plibersek, but this:

    “FORMER housing minister Tanya Plibersek’s claim that it was discriminatory and impractical to prevent foreign students accessing taxpayer-subsidised housing meant for low-income Australians has been undermined by revelations the commonwealth raised no objections to Queensland Labor closing the same loophole.”

    could, of course, be an illustration of public servants blowing with the wind, so to speak. In a similar vein, the comments above about PBS negotiations are probably at least as much a reflection on the officials who would have handled that process – although the buck does (or should) stop with the Minister.

  8. C.L.

    Is anyone really surprised that the $4.5 billion National Rental Affordability Scheme, launched by Labor in 2007, has turned into a scam-fest, gamed by dodgy developers on-selling their rights under the scheme and universities happy to see the taxpayer subsidise their efforts to recruit more fee-paying international students?

    No.

    Next question.

  9. Tony

    And guess where the students are – in her electorate!

  10. FORMER housing minister Tanya Plibersek’s claim that it was discriminatory and impractical to prevent foreign students accessing taxpayer-subsidised housing meant for low-income Australians …..

    I smell the odour of a snout buried very deeply in this particular trough.

  11. MT Isa Miner

    Steve at the Pub

    #1222915, posted on March 13, 2014 at 1:39 pm

    FORMER housing minister Tanya Plibersek’s claim that it was discriminatory and impractical to prevent foreign students accessing taxpayer-subsidised housing meant for low-income Australians …..

    I smell the odour of a snout buried very deeply in this particular trough.

    I wonder how many tertiary institutions including private colleges are in the electrorate of Sydney? Seeing as how it has Recorded the country’s highest proportion of rented dwellings, 57.3%.

  12. Combine Dave

    Rick Wallace of The Australian put me onto this story and, at first, I didn’t believe that international students were entitled to 20 per cent below market rents in newly constructed buildings. But when I found an application form, lo and behold, it was true. Indeed, someone on a bridging visa is also entitled under the NRAS.

    Can you clarify this part for us. Bridging visa’s to what? Perm residency?

    Close the planning dept down. Release the land. Take the restrictions off foreign buyers, get some more housing built :P

  13. Up The Workers!

    Poor James Hird of Essendon.

    If only he had been caught selling heroin, his missus could have been Deputy Federal Leader of the A.L.P. by now, and he would never have to work again.

  14. red breast

    Honorary University Professorship title soon for Tanya?
    Then United Nations ambassador for poor housing schemes (oops) I mean housing for the poor.

  15. Persie Veerantz

    The Victorian state government has recently gazetted reforms to rural living and residential zones to release more residential land. Guess what? Local council planning departments are advising councils not to adopt the new provisions. Someone needs to take a big stick to local government bureaucracy to free up the availability of residential land.

  16. Brown cardi

    The wife of an ex con, what do you expect.

  17. Absolutely totally fed up

    Most are totally missing the point. This is a 2 tiered scheme to benefit the scammers and the odd developer. This scheme has totally wrecked bases for traditional investors. I live in a large regional city that has had over 600 of these NRAS properties and still counting. Looks like it will end up over 1000. This has driven property values down, created negative enquiry and will cause a number to go “to the wall”. Those who believed and backed a regional city’s future are being gutted. They are not the mega rich or the superannuated. They are not those who live and breathe the next “handout” “leg up”. They are ordinary Australians trying to get ahead and ensure they are not a burden on society. NRAS has obliterated this. They cannot rent their houses. They cannot pay their rates or their over exorbitant Body Corporate fees with the e orbit ant insurance fees if you live north of Brisbane. Like everything else the Labour Govt touched….this is a Rort for the mates. Disgusting and poorly executed.

  18. Sunburned Country.

    To all the Australian Disable, Aged and less fortunate…. The joke is on you five to ten years on waiting lists while International and Local Students and so called Asylum seekers are laughing all the way… Suck it up you know Australia could care less about you. We are to busy looking after EVERYONE ELSE.

  19. CafeAnarchist

    What blows me away is not foreign students taking advantage of the scheme. After all they are simply accepting what is offered them by Labour’s mates.

    No, what blows me away is that Tanya Plibersek intended the scheme to include, as she delicately put it, key workers. Who turn out to be nurses, teachers and police. The rational apparently being so they might live close to their work.

    Don’t get me wrong. These are worthy essential professions. But on what reasonable basis can the taxpayers be expected to subsidise housing for a particular set of middle income earners? Being members of strongly unionised professions doesn’t cut it for me.

    This is another pustule of union-ALP corruption that needs to be lanced Andrew.

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