Investing in social housing, in the era of working from home

By Rob Pradolin

Welcome to the sixth of our 12-part series which will attempt to explore the role that housing can and should play within Australian society and why it is important to our economy that we house all Australians. 

This series intends to draw on a range of perspectives centred around housing and homelessness. We will hear a range of views from business, the not-for-profit sector and hopefully government, as to why they believe housing is an important social and economic building block for Australia’s future prosperity.  

This month we have asked Peter Colacino, Chief of Policy & Research, at Infrastructure Australia to share his thoughts around why the objective around housing all Australians, and in particular investing in social housing in the era of working from home, should be considered an economic imperative for Australia ...

As Australians continue to feel the impacts of COVID-19 and the rolling series of lockdowns, adequate housing for many members of the community is a barrier to maintaining productivity and avoiding social isolation. 

With one in three workers still based at home as a result of the pandemic, and 10 per cent of the total workforce intending to continue working remotely into the future, the measure of adequacy for housing has shifted. So too, the importance of suitable and affordable broadband has grown.

This shift has created, for many workers, a new hurdle for accessing work. The home internet connection becomes the link to economic and social opportunity, the living room the office as well as the place for family and the costs of utilities have shifted from employer to employee. 

As we spend more time working from home, the pressure on those in an unstable or unsatisfactory housing situation has intensified. This risks further detaching those who are already vulnerable from economic and social opportunities, and risks pronouncing isolation.

Infrastructure Australia’s recent report Infrastructure beyond COVID-19 anticipates the value of face-to-face contact and agglomeration in CBDs is such that two-thirds of those working remotely will return to the office and CBDs. 

However, for those remaining at home, and those with reduced frequency in the office, optimising their productivity while working remotely is critical both to the economic performance of the nation and to avoid entrenching of financial disadvantage for individuals.

The pandemic, and the new needs of our workforce, should serve as a catalyst for the owners of housing for those on the fringe, including public, community and affordable housing, to rethink the economic value fit-for-purpose housing offers through enabling participation.

It is already widely understood that social housing is an economic enabler. As noted by KPMG in its evaluation of post-GFC investment in housing, social housing provides on average multiplier boost to the economy of $1.30 for every $1 spent. 

However, just as the Commonwealth Treasury has noted, economic infrastructure provides an estimated four dollar return for every one dollar spent, although the impact of each project varies and the benefits of good projects can be many times higher.

Defining housing quality and pinpointing its incremental benefits remains a key challenge. To secure appropriate prioritisation of housing it will be necessary to turn the focus from considerations of the macro impacts of housing, to gaining a deeper understanding of the specific benefits of tangible housing projects and interventions. It is now paramount to consider the role that investment in fit-for-purpose housing plays in connecting its residents to the workforce. 

While it’s clear that many frontline roles cannot be undertaken remotely, research from the University of Sydney in September 2020 found the diversity of people working remotely is relatively high, both during and before the pandemic. While the transition to working from home has been most substantive in white collar roles, it extends beyond that. Clerical and administration roles shifted from 20 per cent to more than 56 per cent remote, while sales staff working remotely shifted from 22 per cent to 30 per cent of the workforce and more than 10 per cent of the labourer and machine operator/driver workforce is also remote.

Analysis from McKinsey across nine countries has shown that many activities such as information gathering and processing, communicating with others, teaching and counselling, and coding data can theoretically be done remotely.

With much of the workforce operating at least intermittently from home, the challenge of meeting people’s housing needs has been complicated by the suitability of a person’s housing to allow them to work from home. Housing now has a resounding impact on the kind of employment people can access as a result of its location, physical and digital connectivity and configuration.

The challenge of housing inequity, with social housing failing to meet the modern needs of the community, was highlighted in the 2019 Australian Infrastructure Audit. In particular, social housing faces the dual challenges of ageing, inappropriate assets and long waiting lists. This is exemplified by many multi-bedroom dwellings remaining under-occupied, while there is overcrowding elsewhere. 

While this inequity in access is not new, the pandemic has thrust it into the spotlight. The acceleration of the move of the workplace online has also accelerated the move of social housing from social policy to a paramount economic issue that could directly impact our economic recovery. If we are to hasten the economic recovery, address workforce constraints and boost workforce productivity, it is critical that every individual has the opportunity to participate. With as many as one in 10 Australians now living in social housing, and two-thirds of that group employed, it is critical this substantial cohort is provided the opportunity to engage in the workforce. 

Social housing tenants in the workforce are both more likely to exit social housing, and more likely to have access to higher incomes. The opportunity to achieve these two outcomes is now more closely tied to the nature of the property.

To encourage investment, we need more data and robust analysis of how public, community or affordable housing infrastructure interventions have improved outcomes for individuals. It is well known that investing in social housing has benefits for residents and our national economy, but we understand less about how these benefits are impacted by the type of housing we invest in. We need to better define fit-for-purpose housing and the economic case for enabling interventions.

The other side of the coin from Australia’s property boom has been pronounced challenges in the delivery of affordable housing. While existing community housing appreciates in financial value, locking up the balance sheets of owners, these assets age, deteriorate and their service value erodes as they no longer meet the needs of residents. The costs of minor maintenance, the costs to heat, cool and digitally connect, all grow.

While there is an established and growing need to refresh existing social housing assets, the opportunity to use the sale of existing houses to fund new, higher-quality dwellings strengthens. 

Despite the opportunity, well-intentioned community attitudes to maintain the level of publicly-supported housing can compound the challenges associated with inadequate housing stock. Perceived friction associated with recycling or transitioning of housing stock to private ownership to create a stream of revenue for investment in new housing assets is a major hindrance. It is incumbent on the owners of existing public housing to educate the community on the shortcomings of existing assets.

If we are to address the challenges of economic and social isolation that impact those in publicly supported housing, it is critical that we can support an informed public discussion about the contribution of housing and digital connectivity to our communities. COVID-19 provides a catalyst for this discussion, and a burning platform to build the data and knowledge to support modern, right-sized assets to meet the needs of the post-pandemic home-based workforce.

I hope you found the above perspective by Peter interesting and insightful. While what was said may not align with our view of the world, we all need to listen and digest what is said by others in order to find common ground. This is why we are focusing on the fact that the provision of shelter is a fundamental human need (not human right) and without that need being met, we have unintended social and economic consequences that will span generations. 

Doing nothing is NOT AN OPTION! We need to act, and we need to act now. All of us need to be part of the solution so please feel free to write to me with your thoughts: [email protected]