Sunday 4 November 2012

Bond Interest: The Queensland Experience

The state and territory governments deal with interest accrued from residential rental bonds in different ways. I have developed an interest in this issue because of the recent events that have taken place in Queensland. This is what happened...

The QLD Tenants Advice and Advocacy Service (TAAS) is funded at state level by the Queensland Government. Or rather, it was. QLD Housing Minister, Bruce Flegg, decided to discontinue tenant advice services and reallocate funds towards social housing.
The 20-something affected services quickly swung into action and created a powerful grass-roots movement. The Commonwealth Government, through Housing Minister Brendan O'Connor, stepped in with emergency funding taking tenants’ services through until June 2013. At this stage, we don’t know what happens after that.

At first glance, you might think Mr Dis-Honourable made the right decision. After all, people are homeless...right? But think again. It is patently clear he does not understand push factors into government housing, for example, mental health issues. Tenant advice services help vulnerable and marginalised individuals with problems that might result in their removal from existing housing onto the streets.
 


If we understand housing to be a significant yet under-rated human right, how would an action contributing to housing by detracting from it make any sense whatsoever? In any attempt to tackle homelessness, the government needs to understand the social ramifications of its action. We have seen that 1970’s style with the well-intentioned creation of public housing ghettoes. In the ghetto (insert falsetto).

I also understand that the funding allocated to tenant advice services in Queensland is but a small proportion of overall interest generated from tenants’ bonds. So how will its reallocation to the creation of additional public housing stock alleviate the stress placed on housing to any significant degree? Last year, the collective interest earned in Queensland amounted to about $41 million and a mere 12% (about $5 million) was allocated to tenants’ advisory services.

Or does Mr Dis-Honourable have other ulterior motives? I’m a straight shooter and naturally suspicious…but his decision to introduce a three-strike policy sounds ominous.
He wants to ‘crack down on unruly tenants’ by evicting them if they receive three strikes for disruptive behaviour like noisy parties, vandalism, or destruction of property. But these kind of social issues are usually managed by other laws. For example, criminal charges can be levied against a person for certain things, like assault and battery. If these deterrents aren't effective, shouldn’t they be reassessed? He is basically saying is law-breakers don’t have a right to housing. I quite agree with measures which encourage respect for government housing and deter property damage. But even prostitutes, junkies, and other degenerates need a place to live. With changes such as this foreshadowed, TAAS will be needed to protect the rights of public housing tenants.

My understanding is that we ('the taxpayers') pay money ('tax') to our governments for community programs and services. Mr Dis-Honourable has presented Queensland with a false dichotomy. Clearly, it’s not a question of one or the other. The provision of public housing for vulnerable and marginalised peoples is a core government service in a wealthy country like Australia.

The Queensland Tenants’ Union also makes an interesting comparison between tenants and landlords in the context of government-funded home buying incentives. In Queensland, I understand the government has reintroduced stamp duty concessions for repeat home buyers.
Tenants are expected to pay tax and forego interest earned on bonds to support a system that perpetuates injustice while the government actually supports the concentration of wealth in repeat home buyers who become landlords. It is structural inequities such as this that result in the clique - the rich get richer and the poor get poorer.
 

I support the use of economic stimulus provided it is applied in a fair and equitable manner. I guess it is the dream of most Aussies to have a home and a patch of grass to call their own. If the Commonwealth government was to step in and reform the sector, here’s an idea. For tenants who want to own their own home one day, why can’t the interest earned on rental bonds be allocated towards a deposit?
 
In my next instalment, I will look into what happens to bond interest in other state and territories.

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