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Housing assistance and employment in Australia

Commission research paper

This paper was released on 9 April 2015 and it examines the links between housing assistance - social housing and Commonwealth Rent Assistance - and employment.

Please note: Background papers 2 (Annex C), 5 and 6 were added to Volume 2 on 10 June 2015.

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  • Media release
  • Contents
  • Erratum

Changing public housing rent settings unlikely to boost employment among tenants

A recommendation to move public housing tenants to market rents, while allowing them to receive Commonwealth Rent Assistance (CRA), has been made repeatedly over the past two decades. In Housing Assistance and Employment in Australia, the Productivity Commission finds that this policy change would be unlikely to improve employment rates among public housing tenants.

In a flagship research report released today, the Commission used large administrative datasets at both Commonwealth and State level to examine the links between housing assistance and participation in employment. Rent setting arrangements in public housing have long been thought to discourage participation in employment - prompting calls for policy change.

The Commission's research found that employment rates among income support recipients in public housing are likely to remain very low - at about ten per cent of the working age population - even if tenants are moved to market rents and CRA, if no other efforts are made to address directly the disadvantages of tenants.

'Productivity Commission research has found that it is the characteristics of individuals, and not the characteristics of the housing assistance that they receive, that matter to participation in employment', explained the Chairman of the Commission, Peter Harris.

Simply shifting tenants to market rents and CRA is likely to leave many tenants financially worse off, yet without any greater ability to access employment. CRA recipients are no more likely than public housing tenants to find employment, after accounting for the characteristics of individuals.

Many existing policies provide assistance to public housing tenants seeking employment, but employment rates have not changed much over the period examined in this project (2003 to 2013). Nevertheless, said Harris, 'Joint Commonwealth/State trials addressed directly to the circumstances of public housing tenants, and applying innovation by not-for-profit groups may well be beneficial'.

The Commission's research also found no evidence that the potential problem of applicants avoiding employment while waiting for public housing in order to remain eligible represents a major concern in South Australia and Western Australia.

This flagship project demonstrates the value of improving poorly-developed major administrative datasets in Australia. It drew on large administrative datasets - from the Commonwealth Departments of Human Services and Employment and the state housing authorities of South Australia and Western Australia. Administrative datasets represent a rich source of information, but are not generally available for research and evaluation in Australia, unlike in several other developed nations. Improved private and public researcher access to data of this type is likely to shed light on many other policy questions.

  • Preliminaries
    • Cover, Copyright and publication detail, Foreword, Contents, Acknowledgments, Abbreviations and expanations and Glossary.

Volume 1

  • Chapter 1 What is this report about?
    • 1.1 The main focus of the report
    • 1.2 Why look at housing assistance and employment?
    • 1.3 Why might housing assistance affect employment?
    • 1.4 Research questions considered in the report
    • 1.5 Structure of the report
  • Chapter 2 How does housing assistance work?
    • 2.1 Who is eligible for housing assistance?
    • 2.2 How is assistance provided and how large is it?
    • 2.3 What happens to assistance as income rises?
    • 2.4 How does assistance affect financial incentives to work?
  • Chapter 3 Links between housing assistance and employment
    • 3.1 Findings from previous research
    • 3.2 Data used in the analysis
    • 3.3 What are the links between housing assistance and employment?
    • 3.4 Are young people particularly affected by public housing rent setting rules?
    • 3.5 Some other observations from the analysis
  • Chapter 4 Welfare locks and stability effects
    • 4.1 Findings from previous research
    • 4.2 Data used in the analysis
    • 4.3 Research results
    • 4.4 Further research is needed
  • Chapter 5 Summary and policy observations
    • 5.1 Summary observations
    • 5.2 Policy observations
    • 5.3 A potential way forward: better employment incentives for public housing tenants
    • 5.4 Improving stability in the private rental market
  • Appendix A Public consultation
  • References

Volume 2

  • Background paper 1 Institutional and policy arrangements
    • Annex A History of housing assistance
  • Background paper 2 Housing assistance and financial incentives to work
    • Annex A The Productivity Commission's Tax and Transfer model
    • Annex B Maximum incomes for receipt of FTB A
    • Annex C Examples of budget constraints and effective marginal tax rates
    • Annex D The effects of variation in social housing rent setting between states
  • Background paper 3 A profile of working-age housing assistance recipients
    • Annex A A profile of working-age housing assistance recipients (Excel workbook available online)
  • Background paper 4 A profile of public housing applicants and tenants in South Australia and Western Australia
    • Annex A A profile of public housing applicants and tenants in South Australia and Western Australia (Excel workbook available online)
  • Background paper 5 Links between housing assistance and employment
  • Background paper 6 Links between public housing and employment in South Australia and Western Australia

The Commission has identified several incorrect values that were reported in the descriptive statistics for young ISP recipients living at home at 30 June 2013 (table 3.3 on page 29 of the report). All values have been revised and the amended table.

The changes do not alter the conclusions in the accompanying text. The website version of this publication has been amended to reflect this erratum.

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Model available on request

The Productivity Commission Tax and Transfer 2014 model is available on request by emailing