It has been estimated that in the mid-1990's there was a national shortfall of 150,000 affordable dwellings as the number of low income households grew by at least 70%.
This crisis of supply has occurred at the same time as funds provided by the Commonwealth Government through the Commonwealth-State Housing Agreement (CSHA) have declined steadily since 1986.
In the past decade alone the funds have declined by 26% with a further reduction of $80 million estimated by National Shelter for the current Commonwealth State Housing Agreement.

Waiting lists for public housing are as long as 15 years in metropolitan Melbourne.
People with severe economic hardship in the private rental market (paying frequently as much as 70% of their income in rent) are now seen as a low priority and many may never achieve public housing unless they have 'special needs' that fit the categories determined by the guidelines of the State Government's Segmented Waiting List.
It is a tragedy that many clients of HAAG who are aged in their 70's and 80's are too healthy to qualify for early housing.

The State Government, faced with ageing public housing stock and a reduced budget, is managing this burden of a declining allocation of Federal funds by selling housing stock it deems to be uneconomic to maintain, and more significantly, turning to the private sector to provide the core growth in affordable housing.
As we have seen with the privatisation of public utilities such as gas, electricity and public transport, private enterprise is believed by thestate government to deliver services more efficiently.
In the case of affordable housing, the state government has proceeded with a plan to invest in the establishment of six Housing Associations to seek ways of increasing housing supply.
The Housing Associations have been funded under the Strategy for Growth in Housing for Low Income Victorians initiative. $70 million of capital assistance has been provided from the Government, which "can be leveraged with non-government borrowing and other sources of capital".1 The government believes this is "a better use of limited government resources through attracting private sector finance and social capital into affordable housing".

HAAG has staunchly opposed the State Government's investment in private enterprise provision of affordable housing.
We believe that only governments can adequately address the funding required to respond to the depth of the current housing crisis and fear that the focus by private companies on financial and stock growth could quickly erode the fundamental elements of affordable housing established by public housing such as affordability, security of tenure, access for people on low incomes, and tenants' use of the political process to address management problems.
Many housing commentators and industry representatives have questioned the ability of Housing Associations to grow adequately without the provision of a substantial level of housing stock to assist them to leverage further investment funds. The State Government has left the door open for this to occur by stating that public housing stock transfers could happen where "it could clearly be demonstrated that it would contribute to broader strategic housing policy objectives."

Older persons' housing

The lack of public housing and government encouragement of private models of housing provision has provided the opportunity for an emerging interest from private investors in retirement living and related housing 'products'.

While housing options for wealthy retirees in the form of resident funded retirement villages and serviced apartments are well known through advertising in the daily papers, it is not so well known that there are emerging private investment trends aimed at people on lower incomes as well.

Two such examples are the development of Residential Parks and the private rental semi-independent living model provided by Village Life.

Residential Parks

Residential Parks are a development of the Caravan Park model that is targeted towards older people with a moderate amount of retirement savings. While they are covered under the Caravan Parks Division of the Residential Tenancies Act, they differ from the traditional Caravan Park.

Many Caravan Parks, originally established as places where people stay for short periods for holidays, have developed varying proportions of their Park for long term or permanent residents. The accommodation is mainly in the form of a standard caravan with an attached annexe. This has proven to be an attractive option for many older people who see the opportunity to own a comparatively low cost home in a community atmosphere and often in an attractive environment such as beachside on the Mornington Peninsula.

Residential Parks are, in many cases, purpose built housing developments where residents purchase a so-called transportable home that may cost between $50,000 to more than $100,000.
The Park is often constructed with complete infrastructure of roads, water, utilities and sewerage and may number upwards of 200 homes.
In appearance they look like part of a normal suburb and may have recreation facilities such as a community hall and bowling green.
There are some legal complexities with the arrangements in Residential Parks because the resident usually has a contract for the purchase of their dwelling that may spell out a range of rights and responsibilities, while also being covered by the Residential Tenancies Act (RTA) for the leasing of the site.
There is also some debate about the legal coverage of this accommodation as certain sections of the RTA may technically cover Residential Parks but could be challenged. For example, the RTA states that a dwelling must be capable of being moved from the site within 24 hours.
The permanent nature of dwellings in Residential Parks puts into question whether this would be possible.
Legislative reform to adequately cover this form of accommodation is required, particularly to address the need for better security of tenure and resident participation in Park decision-making processes.
The State Government in Western Australia is trying to address some of these issues with the Residential Parks (Long Stay Tenants) Bill 2004 that is currently before Parliament.

Many Caravan Parks have closed or been converted into Residential Parks in recent years due to two main factors. Firstly, steep increases in land tax have put a large impost on owners' costs (even though much of this cost has been passed on to Caravan Park residents). It is hoped that a recent review of land taxes that has exempted Caravan Parks will have an impact on owners currently considering closure.

The second factor is rapid increases in land values. Many owners are looking to sell their land holdings, seek local government planning approval for subdivision, or transform their parks into more upmarket models like the Residential Parks.
A Caravan Park in Gippsland is currently offering residents the opportunity to take up a new lease on their current site if the residents can afford up to $159,000 for the privilege. The local banks are keenly participating by offering residents hefty loans to be able to stay.

While Residential Parks are providing a much needed accommodation option for older people with moderate savings, it is feared that the trend will continue to displace older people on low incomes in caravan parks, many of whom would be eligible for public housing if they could get in, as well as many others who rely on this form of housing as an emergency option.

Village Life

Village Life describes itself as "Australia's largest provider of rental accommodation for seniors, offering residents an independent and affordable lifestyle in a friendly and relaxed community environment."

Their advertising states that they provide affordable rental accommodation in modern furnished villa units with all meals provided and a laundry service.
This rapidly expanding company stated in its Annual General Meeting that it was managing 3315 units with a goal to expand this to over 5000 by the end of the 2005 financial year, a projected increase of 66% in one year.
It is unclear whether Village Life is still on track to achieve this target as in February they issued stock market advice that it was downgrading its projected earnings for the year from $15.4 million to $11.5 million, causing a drop in its share price from $2.60 to $2.05.

'The Age' newspaper described the price fall as a brutal response from the market.

In Victoria they currently operate fourteen villages with a further three currently under construction. The number of units in each village ranges between 42 and 110.

Older people are attracted to Village Life for a number of reasons. Firstly, unlike public housing, there appears to be little or no wait to get into Village Life accommodation. Residents are attracted to the fact that they are among a community of other older people and may be at a stage of life where they enjoy not having to prepare their meals. The units are well designed and comfortable for a single person.
Each village is generally managed by a live-in husband and wife team from varying work backgrounds who are responsible for all aspects of day to day services.

Village Life residents generally pay 85% of their income in rent plus 100% of their Commonwealth funded rent assistance. Some of the newer villages are charging 90-95% of income. Residents are also responsible for their own electricity and other costs such as additional groceries, toiletries etc.

HAAG has had some concerns about Village Life accommodation and assisted a tenant to take legal action in one case. This involved a village not giving appropriate rent notice under the Residential Tenancies Act and some other anomalies. Village Life were forced to improve their practices and agreed to change their tenancy agreements for everyone across Victoria.

We are concerned that some people may be attracted to Village Life accommodation without sufficient cash reserves as it is clear that no one could manage their budget solely on the aged pension.
Also, we are concerned that the provision of meals, while covered by the Food Safety Act for its preparation, is not legally regulated for quality, unlike hostels and nursing homes.
There also seems to be little provision for individual dietary plans where required, for example, if a person is a diabetic.
Also, HAAG believes there could be better procedures in place for resident involvement in issues that affect the management of their accommodation. At present residents are encouraged to contact Village Life in Queensland through a freecall number.
A resident committee structure would be more effective but it is unclear whether Village Life is prepared to support this level of resident participation.

HAAG is currently conducting a series of focus groups with residents and hopes to use this information to inform Village Life and the state government about necessary areas of reform.

Conclusion

There is no doubt that the increasing ageing of the population is being responded to by the private sector as they see a gold mine of investment opportunities. It is clear that companies that target their opportunities to older people who have significant assets will bring the greater returns.

For this reason HAAG fears that private sector investment in affordable housing, whether encouraged by government through financial support such as the Strategy for Growth in Housing for Low Income Victorians or providing opportunities for private investors simply through a lack of support will rapidly change the definition and supply of affordable housing.

It is eroding the fundamental principles that the Commonwealth/State Housing Agreement (CSHA) was based upon when it was created immediately after the Second World War.
Principles such as affordability, access for people on low incomes and security of tenure will drop down the list of priorities of companies whose first responsibility is to their shareholders and the pursuit of an increasing profit margin.

Governments have a responsibility to ensure that vulnerable people on low incomes have the protection of government housing due to its main focus on service provision, not profit. Sadly, current trends are moving away from the exercise of this fundamental approach.

Footnotes

1. Minister of Housing Press Release Tuesday 12th October 2004
2. FAQ, Industry Development site, Office of Housing webpage 2005
3. FAQ Industry Development site, Office of Housing webpage 2005
4. Village Life website 2005
5. The Age Personal Investor 6th February 2005