Executive summary

• Housing affordability is a significant issue for low income households in receipt of social security payments.
• The social security system recognises the additional financial challenges that non-homeowners face in two ways:
  –      providing Commonwealth Rent Assistance (CRA) to assist with the cost of rent for those social security recipients in the private rental market and
  –      relaxing the assets test eligibility for payments for non-homeowners compared to homeowners.
• Declining rates of home ownership and lower levels of public housing provision mean that more social security recipients are accessing private rental accommodation.
• Rental costs have been rising at a higher rate than CRA thresholds and rates, leading to increased numbers of recipients experiencing housing stress, that is, where housing costs exceed 30 per cent of the gross household income.
• While CRA does reduce housing stress for many income support recipients, the majority of those aged under 25 remain in housing stress even after receiving CRA.
• Both homeowners and non-homeowners are subject to an assets test to determine their eligibility for receipt of income support payments. The family home is excluded from the test. Non-homeowners have a relaxed assets threshold to compensate for this, however most have few assets anyway.
• There have been a number of proposals to include at least some consideration of the family home in the assets test arrangements, but there has been no action on this to date. While such changes may ensure social security payments are better targeted and reduce outlays, they would not address housing stress among non-homeowners.
• Proposals for changes to CRA to improve support for those faced with high rental costs have not been acted on, even where potential offsetting savings have been identified. In view of the increasing levels of housing stress being experienced by income support recipients, it would appear timely to revisit these proposals.