The federal government has agreed to scrap a $500 million a year cap on Housing Australia Future Fund spending in a significant concession to win crucial senate support for its signature housing policy.
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As politicians gather in Canberra for the last sitting fortnight before parliament rises for the winter break, Housing Minister Julie Collins has written to four key crossbench senators and Greens housing spokesperson Max Chandler-Mather to tell them the government will axe the spending cap and make other changes aimed at ending the Senate impasse over the fund.
In the letter, Ms Collins said the government would remove the spending cap and replace it with a guarantee of annual disbursements of $500 million, indexed from 2029-30, and would include provisions empowering the treasurer and finance minister to increase the size of future fund payouts.
Ms Collins has agreed to drop the cap in the face of strident criticism from the Greens that the original proposal was inadequate given the scale of the nation's housing crisis.
The government needs the support of the Greens and crossbench senators to have its legislation passed.
![Housing minister Julie Collins has moved to end the Senate impasse over the Housing Australia Future Fund. Picture by Sitthixay Ditthavong Housing minister Julie Collins has moved to end the Senate impasse over the Housing Australia Future Fund. Picture by Sitthixay Ditthavong](/images/transform/v1/crop/frm/202296158/a5d2f6e5-ea5c-492b-8b37-4a1fd81adf8e.jpg/r0_324_5400_3372_w1200_h678_fmax.jpg)
Under the government's original plan, earnings from investments made by the $10 billion fund would be directed to finance the provision of social and affordable housing. It wanted disbursements capped at $500 million a year and claimed it would deliver 30,000 homes over five years.
The minor party has so far joined the Coalition in opposing the fund, arguing it falls well short of what is needed to remedy the severe shortage of social and affordable housing.
The Greens had demanded that the fund spend $5 billion a year on housing but recently halved that to $2.5 billion, and Mr Chandler-Mather said it should, at the very least, be no less than $500 million a year.
"$2.5 billion is a relatively modest ask in the context of one of the worst housing crises this country has ever seen," the Greens MP said.
Grattan Institute economic policy program director Brendan Coates agreed that the scale of the fund proposed by the federal government "isn't going to solve the problem".
The institute has suggested the size of the fund be doubled to $20 billion, lifting annual disbursements to around $1 billion, which Dr Coates said would be enough to "stabilise social housing as a share of the total housing stock".
"That, to me, is really the floor of what what we should be aiming for," he told the ABC.
![Greens MP Max Chandler-Mather. Picture by James Croucher Greens MP Max Chandler-Mather. Picture by James Croucher](/images/transform/v1/crop/frm/pMXRnDj3SUU44AkPpn97sC/9630bee9-8f43-45fd-b27f-6084b28f98a3.jpg/r0_178_5000_2989_w1200_h678_fmax.jpg)
In her letter to the crossbench senators and Mr Chandler-Mather, Ms Collins did not entertain any change in the size of the fund, but she detailed a series of other measures and changes to address several of their demands.
These included ensuring all funded homes meet design and energy efficiency standards, providing $200 million for repair and maintenance of Indigenous housing, working with the state and territories to develop a consistent definition of affordable housing and requiring the first review of the fund to be completed by the end of 2026.
Ms Collins told the senators and the Greens MP that the government had negotiated "in good faith" and called on the politicians to back the legislation when it is presented for a vote during the current sitting period.
"The $10 billion HAFF is the single biggest investment in social and affordable housing from a federal government in more than a decade, and will deliver tens of thousands of desperately needed rental homes across the country," Ms Collins wrote.
"We urge you all to vote in support of the Housing Australia Future Fund, and the tens of thousands of rental homes it will help fund," Ms Collins said.
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The government has already secured the support of Jacqui Lambie Network senators Jacquie Lambie and Tammy Tyrrell after guaranteeing that each state and territory would receive a minimum of 1200 social and affordable homes each year.
And the government adopted independent ACT senator David Pocock's call for disbursements from the fund to be indexed from 2029-30.
The minister said Housing Australia, which will administer the grants from the fund, was already undertaking preparatory work so that work on new homes could begin as soon as the fund was established.
"The government expects Housing Australia will be in a position to enter into contracts for housing projects under the HAFF this financial year," she said.
But the government has so far baulked at Greens' demands for a national rent freeze.
Mr Chandler-Mather said "doing nothing for rent is not a response to the scale of the scale of the housing crisis".
"We're frustrated that Labor haven't recognized that we kind of ignore the third of the country who rents," he said.
But Ms Collins rejected the claim. She said the government had delivered a 15 per cent increase in Commonwealth Rent Assistance, which was the largest boost to the payment in more than 30 years.