Housing investment bill set to unlock funds for regional Australia

The National Housing Finance and Investment Corporation Amendment (Unlocking Regional Housing) Bill 2023 was introduced to Parliament on 11 September.

This bill would offer local governments greater assistance in accessing NHFIC funds for housing-enabling infrastructure, which plays a critical role in addressing housing supply issues in regional Australia.

The housing supply crisis has recently taken centre stage for the Albanese government, with the national cabinet endorsing an updated target of 1.2 million “new, well-located” homes over five years starting from 1 July 2024.

Furthermore, regional Australia witnessed a surge of individuals seeking a change in scenery during the pandemic, further exacerbating the supply issue.

In fact, the majority of essential workers in these areas are grappling with housing stress, defined as spending more than 30 per cent of their income on housing costs, be it rent or mortgage repayments.

As a result, the bill amends the NHFIC Act 2018 to ensure that the NHFIC can distribute funds from the National Housing Infrastructure Facility (the NHIF) to regional, rural, and remote Australia, to help unlock essential funds.

It aims to achieve this through:
1. Incorporating an objective for NHFIC to ‘provide finance, grants or investments that support the provision of housing-enabling infrastructure in regional, rural and remote Australia’.
2. Requiring the minister to scrutinise what action needs to be taken so that the NHIF distributes at least 30 per cent of its funds each year to projects in rural, regional, and remote Australia.
3. Clarifying that local governments and utility providers are eligible to receive NHFIC funding, given the lack of precedent for direct access, as indicated in the 2021 Statutory Review.
4. Requiring the NHFIC to be more proactive in identifying housing projects to support and accompany project proponents through the application process, notably for smaller actors such as community housing providers (CHPs) and local governments.
5. Ensuring at least one NHFIC board member has expertise, appropriate qualifications, skills, or experience in housing needs in regional, rural, and remote Australia.
6. Requiring NHFIC annual reports to address whether the eligibility criteria in the Investment Mandate are appropriate or restrictive for delivering on NHFIC’s functions.

Joshua Trevitt, a mortgage broker at JT Home Loans, is optimistic that this bill will stimulate the market artificially and generate increased interest in property purchases and construction.

He noted that recent property purchases have been quicker compared to the past two years following increased home spending during the COVID-19 pandemic.

Additionally, this year has witnessed fewer new construction deals, although volumes remained steady thanks to refinancing.

NHFIC falling short in regional communities

The NHFIC operates as a corporate Commonwealth government entity, governed by an independent body.

One of the NHFIC’s primary functions is to provide loans, investments, and grants through the administration of the NHIF to enhance housing supply. This includes funding for new or upgraded housing-enabling infrastructure, such as sewerage, water, electricity, transportation, and roads.

However, since its establishment in 2018, the NHFIC “has failed to achieve its goals of improving housing supply in Australia, especially in regional, rural, and remote areas”, as stated by the federal government.

Given that local governments possess limited funds and are key providers of enabling infrastructure, such as sewerage and drainage, funding often falls short in remote Australia.

The bill stated: “Local governments and utility providers struggle to independently finance critical infrastructure, such as sewerage and drainage, necessary for boosting housing supply.”

As such the bill aims to address some of these shortcomings by directing funding to local governments in regional, rural, and remote Australia.

[Related: Budget slammed for not addressing the housing crisis]