Connect with @JesseUnruh The Australian Labor government just launched their Housing Australia Future Fund (HAFF), a smart new $10 billion pipeline. This new fund will help meet the growing need for affordable housing across the country. Announced by Prime Minister Anthony Albanese, the fund aims to build 40,000 social and affordable homes within five years, reflecting Albanese’s own childhood experiences in public housing. As the program moves forward, it gets delayed and more expensive, calling into question whether it is truly effective or timely enough to make an impact.
Housing Australia also bears responsibility for administering the HAFF, and has just wrapped up the first round of applications under that program. Unlike a typical funding program, this first stage was seen as less of a formula-based funding opportunity and more of an exploratory fact-finding mission. Successful applicants wouldn’t learn they had received approval until October 2024. This was six months after the original submission deadline, yet another sign of a broken and wasteful processing system.
Progress and Projections
Today that number stands at 39% of HAFF projects, which we project to be under way by the middle of 2025. Within that timeframe, over 500 homes are expected to be finished. As Clare O’Neil, Australia’s Minister for Home Affairs, noted, these construction timelines are incredibly fast. For one, they’re light years ahead of the abysmal average turnaround times seen in the private sector.
“If you talk to anyone in industry, they will tell you that’s an extremely quick turnaround for new housing.” – Clare O’Neil
Even with these pledges, worries still hang over whether progress will move fast enough. The average cost per HAFF home is more than $750,000, with several projects going over $1 million. In a big project in Victoria, the state has committed to build 969 homes. It will collateralize these availability payments of $883 million, an average of more than $900,000 for every single home.
The HAFF is unusual in its direct funding structure, which uses so-called “availability payments,” paid out on an ongoing basis over 25 years. Successful applicants from the first round get an average subsidy of $683,000 per project in availability payments. On top of it all, they rake in another $70,000 in interest-free loans. Criticism over how the money has been spent so far has emerged. Just one of those consortia has snagged 20% of all the cash doled out in this first funding wave.
Criticism and Concerns
Critics have expressed widespread doubts about the effectiveness of the HAFF and its ability to produce results quickly. Senator Barbara Pocock spoke to her conviction that direct grants for social and affordable housing would have worked better. She contends that quick action is needed and expressed disappointment over the lack of speed with the HAFF.
“It would have been better for the government to directly fund the construction of social and affordable housing … We need solutions now but the HAFF is too slow.” – Barbara Pocock
Treasury has similarly urged for a more targeted approach to speed up housing delivery through the HAFF. First, the data that exists illustrates the extensive social benefits produced by social housing. For each dollar invested, it generates two dollars in return by advancing health, education, and economic impacts for disproportionately affected communities.
O’Neil countered these critiques by pointing out that the fund’s mission really is groundbreaking. She was particularly firm on how it is changing lives for Australians at the coalface of adversity. This means women and children fleeing from domestic violence, veterans at risk of homelessness.
“This is changing the lives of Australians doing it tough, from women and children escaping domestic violence to veterans and older women at risk of homelessness,” – Clare O’Neil
The Bigger Picture
The HAFF is taking proactive steps to address today’s housing challenges. Second, it seeks to create more sustainable communities by investing smartly. With costs escalating and timelines extending beyond original expectations, doubts are beginning to seep in about its sustainability and success in the long term.
Some other key stakeholders in the housing sector have expressed alarm. They contend that a 6% return on social and affordable housing is more indicative of bad management practices, particularly in management of tenants. Others have criticized the HAFF as a boondoggle for big superannuation funds. They say it fails to respond to the unique needs of the community.
“A slam-dunk victory for big super landlords.” – Andrew Bragg
