Is Homes Victoria about to declare insolvency?

I don’t take much of what the Herald Sun says about anything to be honest. It is a muckraker of the first order. Sensationalism in reporting is its core mission. 

One report, though, that appeared to be truthful was the House of Cards article published on October 23 written by reporter Shannon Deery. It drew on information in a ministerial briefing accessed through a Freedom of Information (FoI) request that has subsequently not had its content publicly challenged or corrected by the Victorian Government. 

To the contrary, more detail was provided by a spokesperson to the Herald Sun supporting the view there is a crisis. Some quotes from the article follow:

“A ministerial briefing, released under FoI, shows the delivery of programs is at high risk because of Homes Victoria’s dire financial position. Infrastructure maintenance, the capability to meet operational requirements, compliance and financial sustainability are also at risk.”

“Despite a recent increase to its base funding, the agency continues to operate at an unsustainable loss and is being propped up with cash from the Andrews Government’s signature Big Housing Build.”

“A government spokeswoman said the core operations of Homes Victoria were largely funded by rental income derived from public housing tenants. She said over a decade rental revenues and funding from the Commonwealth National Housing and Homelessness Agreement had declined in real terms. About 50 per cent of Homes Victoria’s revenue comes from rents collected from tenants and 45 per cent from the Commonwealth’s National Housing and Homelessness Agreement (NHHA) – which over the past 10 years, the Abbott-Turnbull-Morrison government failed to adequately fund”.

The Save Public Housing Collective (facebook.com/savepublichousingcollective) has checked on the Commonwealth funds provided to Homes Victoria for various functions it should carry out. A link to the most recent report on how funds are allocated follows:

https://federalfinancialrelations.gov.au/sites/federalfinancialrelations.gov.au/files/2022-03/vic-soa-2020-21.pdf

This report includes estimates for the 2021-22 and advises the Commonwealth’s contribution to Homes Victoria was estimated to be $426.43 million split 50-50 between housing and homelessness services.

There is no doubt that the federal government underfunded these services over the years of LNP governments but to blame this and public housing tenants’ rents as being the cause of a financial crisis does not appear to have any foundation.

Full disclosure of Homes Victoria’s financial position is needed before the election on November 26. Housing Minister Pearson and Treasurer Pallas should not be allowed to avoid full transparency on the basis of an election. 

Disclosure needs to start with rental income and how it is spent: supporting public housing, including maintenance, or on the Public Housing Renewal Program (PHRP) and now Big Housing Build (BHB) projects?

• How much is it costing Homes Victoria (HV) for staff and consultants working on PHRP and BHB projects and is public housing rental income being allocated to these expenses?
• What will be the impact of new housing stock being fully funded by but managed or owned by community housing providers on Homes Victoria revenue, compared to having it retained as publicly managed housing?
• What are the accumulated losses of rental income through public housing stock transfers to community housing organisations and how much are they being paid for ongoing management of that stock?
• How much has Treasury “clawed” back from Homes Victoria and its predecessor agency in recent years and what will it take this financial year and beyond?

Mainstream media loves talking about millions

Treasurer Chalmers’ October Budget had no funds for public housing nor eradicating homelessness. 

Instead, we have a promise of a new “Housing Accord” with industry superannuation funds and the private construction industry to deliver one million new affordable homes within five years, beginning in 2024. 

Unions have welcomed the announcement with the ACTU saying they look forward to members making profits from this type of investment for their members’ retirement incomes. 

Around one million dwellings have been built during the past five years across the country, so it is unclear if this will continue in full over the same period or will an “accord” deliver on top of this with two million homes being built?

The idea of delivering actually affordable, secure housing to those in urgent need of it now and in growing numbers and making profits on what is built, frankly, does not stack up. 

To deliver profits an enormous subsidy or grant program will have to be put in place by the federal government. 

This is link to some other responses to the “accord” idea:

https://agedcarenews.com.au/2022/10/26/federal-budgets-350m-housing-boost-draws-mixed-reception/

We can only wait to see what will be announced. •