The
revelations concerning the National Rental Affordability Scheme are a
spectacular, but in many respects textbook, example of how migration driven
population growth undermines government efforts to solve social problems in
general, and meet infrastructure needs in particular.
The
National Rental Affordability Scheme was established to help low-income or
disadvantaged people who were being financially crippled by high rents. It was,
and still is, a worthy objective, though it is regrettable that Australia’s
rapid population growth has pushed up housing prices, damaging housing affordability
and having knock on consequences for rents, helping create the problem in the
first place.
The
scheme provides incentives of $10,000 a year to unit developers who agree to
charge rent at 20% below market rates. Some 20,000 units have been built under
the scheme, but it turns out that 40% of them have gone to students, in many
cases from overseas. One in two student units constructed under the scheme has
been let to foreign students. In Victoria the picture is even more dramatic,
with seven out of ten units being let to foreign students.
The
theory behind bringing in and educating overseas students is that it brings in
revenue, a kind of export income. In practice, as we see here, taxpayers are
subsidising it in a major way – the total cost of the scheme is $4.5 billion –
and poor Australians struggling to pay the rent miss out.
This
is unfortunately all too typical of the impact of population growth on
infrastructure provision, particularly in our cities. Money which should be
solving infrastructure problems gets diverted into capacity expansion, so our
housing, transport, schools and health services never seem to be able to keep
up.