Budget boost from housing young people in need

New modelling by Equity Economics finds that fixing a structural policy flaw that locks young people out of social housing would more than pay for itself within four years, before generating hundreds of million of dollars in economic benefit over the longer term.

The Homelessness Australia-commissioned analysis models the fiscal impact of providing community housing to 1,000 young people on Youth Allowance who are unable to live at home safely.

The modelling finds the fix pays for itself inside a single Budget cycle:

• costing $21.6 million to house per 1,000 young people over four years

• recouping $30.2 million in Commonwealth savings over the same period (income tax, income support, health, family violence)

• recouping a further $65 million in state and territory savings, and

• generating long-term economic benefit of $681 million per 1,000 young people housed.

This would change the lives of vulnerable young people trapped in homelessness and tick the boxes identified by the Treasurer this week as priorities for the Budget:

• addressing the intergenerational housing inequity experienced by young Australians,

• driving up young people’s productivity and employment participation,

• delivering targeted cost of living assistance to a vulnerable group, and

• generating budget savings.

The modelling reinforces the Home Time Youth Housing Coalition’s calls to end the “Youth Housing Penalty” blocking access to social housing for highly vulnerable homeless young people at the coming Budget. Currently, a young person on Youth Allowance pays $86.52 a week in rent, compared with $186.33 for someone on the Age Pension. That 54 per cent reduction in revenue makes young people financially unviable tenants for community housing providers.

The penalty is compounded in competitive funding rounds, like the Housing Australia Future Fund, where providers housing young people on lower incomes face higher operating shortfalls that count against their applications. The system actively selects against housing the most vulnerable young Australians.

Homelessness Australia CEO Kate Colvin said a simple fix would boost the fortunes of young people and taxpayers.

“Nearly 40,000 young people sought help from homelessness services last year, alone, without a parent or guardian. Three quarters were still homeless after getting assistance. The system catches them in crisis but doesn’t house them,” Ms Colvin said.

“The reason is structural. Providers are penalised for taking in young tenants. They collect less rent than it costs to provide a tenancy and then face disadvantage when competing for government funding. It’s a design flaw and it can be fixed.

“What this modelling shows is that the fix pays for itself. The Commonwealth gets back more than it spends in just four years. This improves the budget bottom line while transforming the lives of young people doing it tough.”

Shorna Moore from the `Home Time Youth Housing Coalition says:

“Ensuring young people have a stable start to adulthood is a fundamental responsibility of government. A youth housing supplement would ensure Australian young people are not forgotten and that the package of responses to this cost-of-living crisis reaches those who need it most.”

“Government can shield young people from the biggest costs driving homelessness and harm. A youth housing supplement is an inexpensive proposal to unlock housing for young Australians, and the return on investment is enormous – improving young people’s health, education and employment outcomes.”

The modelling draws on estimates from SGS Economics and SVA Consulting and assumes young people live in community housing for an average of four years, during which they re-engage with education and employment pathways. A 31 percentage point increase in education participation translates to an estimated 18 per cent increase in lifetime earnings.

The scale of the youth housing crisis is significant and growing. AIHW data shows 13.2 per cent of specialist homelessness service clients are lone young people aged 15 to 24, yet only 2.6 per cent of social housing households have a young person as lead tenant. Over the past decade, 520 children in contact with homelessness services died, with suicide the leading cause at five times the general population rate.