This research models several politically acceptable pathways to reform negative gearing and CGT so as to reduce impacts on less sophisticated property investors. Two reform models— a rental deduction cap of $5,000 and a progressive rental deduction based on income—could lead to savings of over $1.7 billion each. Both are progressive in nature, reducing tax savings from negative gearing as tax assessable income increases.

This research investigated the relationship between increasing housing prices (or housing wealth) and the increased consumption expenditure of households from before the GFC and afterwards. The analysis revealed that following the GFC, old and middle-aged households showing slightly lower consumption levels despite their houses increasing in price.

This report considers the findings from an evidence-based policy inquiry into individualised forms of housing assistance which assessed whether their implementation could lead to improved services and better outcomes for low-income and vulnerable households. It sets out future policy options arising from the research and inquiry panel discussions. A diverse range of households, with varied economic and demographic profiles, are ‘in need of’ or ‘vulnerable to need for’ housing assistance. Australian and international experience indicates a number of ways in which individualisation of housing assistance can respond more sensitively to the varied needs of different population groups. Demand-side housing assistance options could incorporate tailored forms of assistance that enable intermittent support for households able to transition into employment or maintain their current housing, alongside increased support to those with ongoing and/or complex needs. Success in the Australian context requires services that are sufficiently resourced to attend to both the immediate and long term needs of clients as well as having access to longer term housing which is not only affordable but also suitable for people’s needs. Demand-side strategies will not work without attending to the well-evidenced shortage of affordable and suitable supply for very low-income households. Government has a major role in investing in this sector as the market has not produced supply at the price and of the type required. Policies to address the shortage of housing supply should be part of wider reform process that takes into account taxation and fiscal policy. Another means of individualisation is through creating markets (or quasi markets) for welfare services. This could entail private, not-for-profit and government organisations competing to provide different types of housing assistance. Housing assistance clients could have a personal budget to access the ‘bundle of assistance’ they require. There are practical difficulties in applying this approach to housing assistance which involves assets as well services. Similar to the NDIS, the assessment for such housing assistance could consider individual goals, objectives and aspirations across various aspects of life (e.g. housing, employment and education); assessment of reasonable and necessary support needs in relation to these goals; and assessment of available informal supports. A competitive culture in a multi-provider setting may provide consumers with more choice but can undermine the coherence of care and level of professional coordination. In addition, there is a risk that private agencies may reduce choice by lowering their price in the short term in order to eliminate competition. Monitoring and regulation of service quality is required to ensure service standards remain high. The extension of choice can be achieved in other ways other than through competition and the market. Another option for policy makers to extend choice is through stock transfer of public housing units to community housing agencies to enable diversity in providers and types of provision, management and links with support services. Alternatively, landlords could be encouraged to offer differential rents (depending on the length of tenancy). So for example, tenants who sign up for a long-term lease might be able to secure a reduced rent. As for the future, housing agencies will achieve the best outcomes in terms of service delivery if they can adopt a pragmatic rather than ideologically-driven market agenda. Welfare services that attend to the intrinsic factors that motivate staff to commit time and energy in providing services are more likely to achieve their objectives than those that prioritise short-term profit-maximising. The extension of choice is a desirable objective for housing agencies but the route to achieve it should be broad-based and experimental. There is much to be gained for organisations adopting a more experimental approach to service delivery in which new approaches are piloted and then evaluated.

The research finds that Austria demonstrates a model of a successful federally legislated housing system. It has a national level legislative framework outlining the business model for not-for-profit housing provision, establishing cost rent setting rules and delineating conditions for the use of direct and indirect subsidies. This ensures contestability and transparency in the allocation and use of subsidies, promotes efficiency and facilitates private investment to grow supply. There is growth in Low Profit Housing Authorities which are driving new supply and taking over management for municipal housing. The research finds local government can play a role in preparing responsive housing strategies and facilitating partnerships with local service providers. In German case studies local governments play a key role in allocating housing assistance and monitoring social contracts with landlords. City governments have played a direct role in land banking, enabling equity funding and also direct provision in Austria, Germany, Canada and the US, and have demonstrated the value of inclusionary zoning. In the United States, declining public funds have been supplemented by Low-income Housing Tax Credits, more than doubling affordable housing output. Also in the Rent Assistance Demonstration Program housing assistance subsidies are used to leverage private investment in US public housing. This process has engaged public housing providers in the market and driven entrepreneurial approaches in public housing. Further research could model these programs in the Australian context but findings suggest the development of a sustainable affordable housing industry requires: National coordination Long term mechanisms for adequate funding Efficient and effective tools to channel private investment Integrated and sophisticated local planning Opportunity for public housing providers to be engaged in the industry Anticipating maintenance and funding it Innovations in linking demand assistance to capital investment New funding models which drive cultural change

This research recommends that housing assistance be provided under a tenure-neutral model. Currently households with similar needs receive fundamentally different levels and types of housing assistance depending on their housing tenure (i.e. owner, private renter, in social housing etc.) rather than needs. The research found that large proportions of households with diverse demographic characteristics living in both ownership and rental tenures appear to be in housing need: Large numbers of lower income households who receive income support don't get enough financial assistance to alleviate financial strain High proportions of low to moderate income households who need assistance don't receive income support Housing assistance appears to most effectively offset financial strain for households with moderate to higher incomes who receive housing assistance. The evidence suggests that demand-side responses to housing assistance in conjunction with a supply-side response for a more individualised model of housing assistance would promote better outcomes.