This article is from the Australian Property Journal archive
THE federal government’s Commonwealth Rent Assistance (CRA) payment leaves one in two of its recipients in rental stress, as the supplement fails to keep up with soaring rent prices.
According to Anglicare Australia’s Reforming Rent Assistance report, written in response to the 2023 Report on Government Services, which shows that the cost of rent assistance has grown to $4.9 billion per year, the payment is in urgent need of an overhaul.
The analysis shows that not only are half of all participants in rental stress as the payment has not been raised in line with rents, but the payment excludes those on the lowest incomes.
For example, just one in three of those on the government’s Jobseeker payment are eligible.
Outcomes are worst for young people, with two thirds of recipients under the age of 24 under rental stress.
The inequitable structure of the payments means that a single person on Youth Allowance payments, for example, must spend a third of their income on rent before they can receive any assistance, meaning they are put under rental stress before they can receive a first payment.
In comparison, a single person on the Age Pension is eligible for rent assistance when they have spent just 14% of their total income rent.
Young people are also worse off, due to the higher likelihood of their living in sharehousing, with the cut-out rate for shared accommodation at $270, around $30 less than the average room in an Australian major city, excluding bills.
At 38%, only one in three people on JobSeeker are eligible for the payment, while for young people out of work fare, with only 12 % of those on Youth Allowance eligible.
The current state of eligibility rates means those on higher payments and incomes are received more favourably, while those on lower incomes receive less help.
According to the report, the payment was initially introduced to reduce government spending on social housing.
But at $5.3 billion, Commonwealth Rent Assistance payments are costing the government nearly four times as much as the current cost of social housing and homelessness services combined.
Anglicare Australia is calling for “an immediate restructure of Commonwealth Rent Assistance”, in order to expand eligibility for those on the lowest incomes.
The paper’s recommendations include:
- An immediate increase to Commonwealth Rent Assistance, and benchmarking the rate of the payment to rents instead of CPI
- Reforming the eligibility criteria so that people on the lowest incomes can get help
- A boost to social housing to make the rental market more affordable.
The Real Estate Institute of Australia’s president, Hayden Groves, has welcomed the report, adding that without additional supply to the market the situation will only get worse.
“REIA’s Real Estate Market Facts: A 20-year report found that over the past 20 years, the weighted average median rent for 3-bedroom houses in the eight capital cities increased 41.4% to $506 per week. The median rent for 3-bedroom houses increased in all capital cities ranging from 30.6% in Melbourne to 84.0% in Hobart,” said Groves.
“Since 2002, the weighted average median rent for 2-bedroom other dwellings increased 39.3% to $474 per week. The median rent increased in all capital cities over the past 20 years ranging from 26.1% in Sydney to 90.9% in Hobart.”
Groves noted that this is a sharply different state of affairs than in 2002, where the CRA payment covered 24.4% of weekly rental payments, with 2022 seeing just 16.9% covered.
In 2002, rent assistance covered 30.9% of the real median weekly rent for Perth and 21.3% of the median rent for Canberra.
“This means that despite large rent increases payments range from a maximum of $48.60 per week for a single sharer to $96.81 per week for a family with 3 or more dependent children,” added Groves.
According to Groves, one reason for the payment not keeping up with rental increases is it’s being indexed to the overall Consumer Price Index (CPI) rather than just the rental component of the CPI.
“It would be better if CRA was reviewed annually and paired with a better indicator of rental movements within State and Territory rental markets,” said Groves.
“We’re urging the governments to address this issue as a matter of urgency and hope the Interim Supply Council takes these issues as seriously to assist the millions of renters affected Australia-wide.”
