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Commonwealth Rent Assistance

 

Commonwealth Rent Assistance

Commonwealth Rent Assistance (CRA) is a non-taxable income supplement funded by the Federal Government. A household is eligible for CRA if they pay more than a minimum rent threshold and receive a qualifying social security payment such as Newstart, Youth Allowance or the pension. CRA may be payable to people who rent in the private or community housing rental markets. It is not paid to those renting housing from State or Territory housing authorities as housing authorities already subsidise rent for these tenants.

Commonwealth Rent Assistance is payable at the rate of 75 cents for every dollar of rent payable above the rent threshold until the maximum rate of payment is reached. Rent thresholds and maximum rates vary according to a customer's family situation and the number of children they have. [1]

 

Rent thresholds and maximum rates are indexed in March and September each year to reflect changes in the Consumer Price Index. The rates of rental assistance are located on the Department of Human Services Website .

 

Issues

 

  • CRA eligibility is conditional on being in receipt of a Commonwealth benefit or allowance. This means that there is a significant targeting error associated with CRA; many low-income tenants are simply not eligible and ‘fall through the net’. People on low wages are most at risk because their wages mean they are ineligible to receive CRA [2]

 

  • The CRA payment rate is applied uniformly across Australia, regardless of rental conditions in different regions. [3]   People who live where the costs of renting are significantly higher are disadvantaged.

 

  • CRA payments are indexed to Consumer Price Index (CPI). The composition of the CPI basket means that it is a poor reflection of housing costs as only 6 per cent of the CPI basket is comprised of rent, while rent accounts for approximately 35 per cent of income for those eligible for CRA. [4]

 

  • Growth in the maximum CRA payment has been outstripped by rental prices growth over the past decade. [5] For example In June 2016, 1.35 million singles and families receive CRA. The Median payment was $130 a fortnight. [6] 68 per cent of CRA recipients would have spent over 30 per cent of their income on rent.

 

  • In June 2016, around 1.35 million income units (singles and families) received CRA. This is an increase from 1.34 million in 2015. The number of income units receiving CRA has risen by 44 per cent since 2000 (up from 937,100). This could be attributed, in part, to eligibility changes following the introduction of the FTBA in 2000 from the formerly Family Allowance payment plan [7]

 

  • The Department of Treasury’s Australia’s Future Tax System Review 2011 (the Henry Review) recommended that the CRA program be reformed so that maximum CRA thresholds are indexed to movements in national rents, rather than CPI.

 

  • The Henry Review called for better targeting of CRA with a separation of income support and family payments. Support for the additional housing costs associated with children, it is proposed, would be delivered via family payments.

 

  • The Productivity Commission, in 2011, recommended that the CRA program be completely overhauled and reformed. [8] [9]

 

  • The Productivity Commission in 2017, in their Reforms to Human Services Draft Report , 2017, recommended that the Australian Government review CRA, including an increase the maximum CRA payment by about 15 per cent to reflect the fall in the relative value of CRA caused by average rents rising faster than the consumer price index since 2007 and indexing the maximum CRA payment amount to reflect changes in rental prices nationally [10] .

 

Resources

Department of Social Security; Commonwealth Rent Assistance

Information on CRA eligibility conditions and payment procedures.

https://www.dss.gov.au/housing-support/programmes-services/commonwealth-rent-assistance .

Department of Human Services (Centrelink)

Information on CRA

Productivity Commission (2017) Report on Government Services 2017 VOLUME G Housing and homelessness.

Information link

Australia’s Future Tax System (Henry Tax Review)

Recommendations for reform of CRA

A Better Lease on Life Report

A National Shelter Report prepared by its member organisation, the National Association of Tenant Organisations and Penny Carr and Maria Tennant

Productivity Commission (2017) Reforms to Human Services Draft Report

Recommendations for reform of CRA

 


 

REFERENCES


[1] https://www.dss.gov.au/housing-support/programmes-services/commonwealth-rent-assistance

[2] National Welfare Rights (2014) The impact of rent assistance on housing affordability for low income renters Australia

[3] Op. Cit.

[4] EY, (2016) Housing and the social security system, APH, Accessed November 2017

https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1617/HousingSocialSecuritySystem

[5] Productivity Commission (2017) Introducing Competition and Informed User Choice into Human Services: Identifying Sectors for Reform, p145

[6] AIHW (2017), Housing Assistance in Australia https://www.aihw.gov.au/reports/housing-assistance/housing-assistance-in-australia-2017/contents/financial-assistance .

[7] AIHW (2017) Housing Assistance in Australia https://www.aihw.gov.au/reports/housing-assistance/housing-assistance-in-australia-2017/contents/financial-assistance

[8] Scarr L. June (2014) Productivity Commission proposal for move social housing recipients into more expensive areas. News Com Pty Accessed November 7 th 2017

http://www.news.com.au/finance/money/budgeting/productivity-commission-proposal-for-move-social-housing-recipients-into-more-expensive-areas/news-story/b78cdcb87aa450db9af4bebef1f73172

[9] Productivity Commission (2017) Report on Government Services 2017 VOLUME G Housing and homelessness . Accessed November 7 th 2017 http://www.pc.gov.au/research/ongoing/report-on-government-services/2017/housing-and-homelessness

[10] Productivity Commission (2017) Introducing Competition and Informed User Choice into Human Services: Identifying Sectors for Reform, ) http://www.pc.gov.au/inquiries/completed/human-services/reforms/draft , page 165

 

 

Updated November 2017

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