Report

The business case for social housing as infrastructure

15 May 2019
Description

Research Summary

This research investigated frameworks for funding social housing as infrastructure, including cost-benefit analysis and alternatives such as ‘avoided cost’ and ‘housing adjusted life years’, to develop stronger analytical methods.

Research Outcomes

Business cases and cost-benefit analysis (CBA) are conventional features of infrastructure decision-making processes in Australia, and are used to evaluate the societal benefit of proposed projects. However, business cases and CBA have been contentious in terms of design and deployment. Funding commitments are regularly made prior to the completion of business cases and CBA, diminishing their value as a decisive part of infrastructure development decisions.

For social housing, business case and CBA processes could provide useful evidence of the wider societal benefits of social housing provision, but the nature of contemporary policy decision-making means that political will remains an important factor in investment decisions.

The development of public infrastructure appraisal methods such as CBA can be understood as a consequence of long-term infrastructure investment creating a demand for improvements in assessment and increased analytical capacity in the public and private sector, in the context of competition for funding. This indicates a degree of circularity: ongoing funding to support sector expansion is important in promoting economic analysis in the social housing sector, which is also seen as a step towards increasing industry funding.

There is a presumed association between infrastructure provision and economic productivity within appraisal processes and infrastructure agency remits. This relationship is recognised by public servants and representatives from the social housing sector, indicating that infrastructure conceptualisations may not be appropriate for arguing for housing as a welfare intervention, but more apt for proposals that generate employment outcomes, such as key-worker housing.

Therefore, the pertinent question is not whether social housing is infrastructure, but whether such a conceptualisation is the best standpoint from which to found advocacy for increased social housing investment. The answer to this question depends on the purpose of the intervention. The resources required to develop appraisal methodologies and analytical capacities underscore the importance of choosing an appropriate basis for further development of social housing business case methodologies.

Alternatives to conventional infrastructure CBA methodologies include: avoided costs financial appraisal; a public welfare conceptualisation; and the proposition that the whole of society values providing for those in need. These examples provide a stronger conceptual link to the welfare focus of social housing. It is also possible that adopting social housing as infrastructure as a central argument for business cases may risk diverting funding to new areas of intervention, rather than increasing funding for providing housing for those most in need.

"Previous cost-benefit analyses of social housing either focused on specific benefits arising from housing, or omitted the range of non-market traded benefits that accrue from social housing, such as wellbeing, security of tenure and social inclusion" - Professor Jago Dodson, RMIT University.

Publication Details
Identifiers: 
ISBN: 
978-1-925334-76-0
ISSN: 
1834-7223
DOI: 
10.18408/ahuri-5314201
Issue: 
AHURI Final Report 312
Access Rights Type: 
Open
Language: 
English
License Type: 
CC BY-NC
Peer Reviewed: 
Yes
Published year only: 
2019
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