As first announced in the federal budget earlier this year, a new National Housing Finance and Investment Corporation (NHFIC) will be established by 1 July 2018 to operate an affordable housing bond aggregator to provide “long-term, low-cost finance for affordable housing providers”.
In the recently released Mid-Year Economic and Fiscal Outlook (MYEFO) for the 2017–18 financial year, the government revealed that it had received more than 50 submissions to its consultation paper on the National Housing Finance and Investment Corporation (NHFIC), the National Housing Infrastructure Facility (NHIF) and the affordable housing bond aggregator, with more than 120 stakeholder groups consulted in targeted roundtables.
The MYEFO document outlines that the NHFIC, a new Commonwealth corporate entity dedicated to improving housing outcomes, will be established by 1 July 2018.
It will have an independent board with responsibility for making all investment decisions and “have the flexibility to tailor finance to meet the needs of recipients and be guided by an investment mandate”.
According to the MYEFO, the government will provide $1.1 million over three years (from 2018–19) to establish the NHFIC, which will house the $1 billion NHIF that will use tailored financing to fund infrastructure that unlocks new housing supply.
NHFIC bonds will be government-guaranteed
The government has now revealed that the NHIF will “no longer be a terminating fund and will be able to reinvest its income to continue addressing housing infrastructure needs on an ongoing basis”.
Eligible entities for NHIF finance include state, territory and local-government-owned corporations and utility providers as well as registered Community Housing Providers (CHPs).
The NHFIC will also comprise an “affordable housing bond aggregator” that will pool the financing needs of eligible registered CHPs to “drive efficiencies and cost savings”.
To provide stability and confidence, the government will guarantee the bonds issued by the NHFIC (unless otherwise determined in writing by the Treasurer).
The government will also provide a $150 million line of credit to the NHFIC until the end of 2022–23 to provide “greater flexibility in the provision of credit”.
The NHFIC will also provide registered community housing providers with support services to assist in developing their capability, funded from the NHIF.
The government will also provide $10.0 million to undertake a communications campaign to inform Australians about how housing affordability measures can assist them, and $1.1 million over two years from 2017–18 to contribute to a review of the national regulatory system for community housing being led by the NSW Registrar of Community Housing.
“The development of a consistent national approach to the regulation of community housing will assist in the growth of the sector and implementation of an affordable housing bond aggregator by the NHFIC,” the MYEFO document read.
Speaking after the release of the Mid-Year Economic and Fiscal Outlook on Monday (18 December), Treasurer Scott Morrison and Minister for Finance Mathias Cormann outlined that the government is “continuing to implement the comprehensive housing affordability plan, announced at the 2017–18 budget, designed to improve outcomes across the housing spectrum”.
Legislation has already passed to assist first home buyers to build a deposit inside superannuation through the First Home Super Saver Scheme, provide older Australians wishing to downsize with “greater flexibility” to contribute the sale proceeds of their home into superannuation, and strengthen the rules that apply to foreign persons owning Australian property.
Budget ‘on track’ to balance in 2020–21
According to the Treasurer and Minister for Finance, real GDP growth is forecast to lift “as the drag from mining investment diminishes”.
Non-mining business investment, housing consumption, public final demand and exports are also expected to support growth in 2017–18. However, dwelling investment is forecast to fall slightly.
The joint release said: “[The] Mid-Year Economic and Fiscal Outlook (MYEFO) confirms that the budget remains on track to return to balance in 2020–21.
“Despite the many challenges faced, this is the government’s fifth consecutive budget update with a projected return to balance in 2020–21.
“An underlying cash deficit of $23.6 billion is now expected in 2017–18, an improvement of $5.8 billion compared to the deficit reported at the 2017–18 budget. The projected surplus of $10.2 billion in 2020–21 is an improvement of $2.7 billion compared to May’s budget estimate.”
The release went on to outline that, since the 2017–18 budget, the underlying cash balance has improved by $9.3 billion over the forward estimates.
“The net operating balance is similarly expected to improve from a deficit of $18.2 billion in 2017–18 to a surplus of $6.8 billion in 2019–20 and further building to a surplus of $20.9 billion in 2020–21.”
It concluded: “The 2017–18 MYEFO confirms that the Turnbull Government is delivering on its fiscal strategy and efforts to restore the budget to balance, while promoting a strong economy, boosting jobs and guaranteeing the essential services which Australians rely on.”