The federal housing minister has ruled out lifting Commonwealth rent assistance to help tenants cover soaring rents.
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A Productivity Commission report found government rent assistance payments were falling behind the surging rental market.
The independent advisory body suggested pegging the payments to rents, or regularly reviewing them, to ensure they keep pace with fluctuations in the rental market.
Housing Minister Julie Collins told ABC radio higher rental payments were not on the agenda.
"We are focused on delivering our election commitments," she said when asked about hiking the payments.
The commission made the recommendations on rental payments as part of a damning review of the $1.6 billion National Housing and Homelessness Agreement (NHAA) which funnelled Commonwealth cash into state and territory services.
The deal was deemed ineffective and found to be doing little to prevent homelessness and housing stress.
"Over the life of the NHHA, housing affordability has deteriorated for many people, especially people renting in the private market," commissioner Malcolm Roberts said.
The average low-income renter spends more than one-third of their income on rent.
"The NHHA, intended to improve access to affordable, safe and sustainable housing, is ineffective," Mr Roberts said.
"It does not foster collaboration between governments or hold governments to account. It is a funding contract, not a blueprint for reform."
Ms Collins welcomed the commission's findings and said they would inform the national housing supply and affordability council and a homelessness and housing plan, which were Labor election commitments.
"This report confirms that the last decade of policy inaction by the former Liberal-National government has left us with serious housing challenges across the country," Ms Collins said.
The Productivity Commission says two things need to happen to fix the housing crisis: low-income renters need more support to pay for housing, and barriers to boosting housing supply need to be eradicated.
"Building more social housing will increase the supply of housing affordable for low-income households, but social housing is relatively costly and can only be a partial solution to affordability," the report says.
Grattan Institute economist Brendan Condon agreed social housing was only one piece of the puzzle because it was so expensive to deliver.
He said that's why the Commission is focused on bringing down the price of rents generally via boosting supply, and bolstering rent assistance.
The Australian Housing and Urban Research Institute's Michael Fotheringham said now was not the time to give up on social housing, especially to house key workers.
"There is a real need for properly subsidised housing,' he told AAP.
The commission has also taken aim at first-home buyer supports, saying they do little to improve affordability.
Dr Fotheringham agreed that first home buyer grants were counterproductive and money would be better spent on homelessness services or rent assistance.
The commission wants to see a new agreement drafted covering the full spectrum of housing assistance provided by governments.
Dr Condon said the reviewers clearly recognised any agreement aimed at addressing housing affordability issues needed to focus on underlying issues, like getting more housing built.
"Which is largely about trying to get land use planning rules changed in each state and territory, because that's what's preventing more housing being built, particularly close to the centre of the cities where most people still want to live," he said.
The Property Council of Australia welcomed the recommendation for a level playing field in policy for build-to-rent housing, built specifically for renters rather than buyers.
Australian Associated Press
