Stakeholder views of the regulation of affordable housing providers: Final Report

This study contributes to discussions in government and among not-for-profit housing providers about the way regulation can assist their efforts to increase the supply of affordable rental housing in Australia. It is based on conducting interviews with large and small providers, regulators, non-government organisations (NGOs) representing tenants' interests and investors in affordable housing in the states of Victoria, New South Wales (NSW), Queensland and Tasmania. In March 2010, the authors published a Positioning Paper (Travers et al. 2010) reviewing the potential strengths and weaknesses of regulation as a core component of plans to expand the not-for-profit sector in Australian housing. There were three main arguments. First, we suggested that regulation by itself is not a panacea or magic bullet that can address what is widely recognised as a housing crisis. However, it is one condition alongside a long-term program of investment directed at providers that will enable them to leverage private capital from banks and investors. Second, through reviewing literature in public administration and regulation studies, we identified that there are potential risks, as well as benefits, from regulation. These include creating administrative burdens. Third, we argued that effective regulation has to balance the interests of different stakeholders, such as providers, tenants and investors. Experience in other countries, such as England, the Netherlands and the USA, indicates that getting this balance right and maintaining it can be difficult. In this Final Report, we address these issues in more depth, drawing on interviews with those working in affordable housing. Chapter 1 introduces the research questions, and how these relate both to the policy context and the academic field of regulation studies. Chapter 2 examines how our interviewees understood the purpose of regulation. All interviewees agreed that there were four main purposes: accountability; reducing risks; establishing confidence; and protecting tenants. NGOs representing tenants felt that regulation could do more in ensuring affordable rents, as happens in England. Some providers believed that regulation does not influence the lending decisions of banks, and should not constrain their own commercial activities. Chapter 3 considers the impact of regulation, which we argue is conceptually difficult since stakeholders have different expectations. The chapter focuses particularly on the issue of administrative burdens and 'red tape'. Some interviewees expressed concerns about the amount of work, and the limited amount of feedback received from regulators. The chapter suggests practical steps that can be taken to improve the effectiveness of regulation, and combat perceptions of ritualism. Chapter 4 considers views on how regulation should develop. Through analysing responses to a consultation paper (Australian Government 2010), it demonstrates that there is widespread support for a national framework, although there are considerable differences in how stakeholders understand the issues. It also reviews concerns among providers about the independence of regulators from State Housing Authorities, and suggests some policy options. Chapter 5 considers the future of regulation. It argues that the stakeholder model offers a valuable tool for governments and regulators in identifying the potential risks in regulation. It suggests that the problem of administrative burdens may grow, and it is important to streamline the operations of different agencies. The chapter argues that we should have realistic expectations of regulation. It can create the conditions for the expansion of affordable housing, but this will also require considerable public and private investment. The main recommendation is that effective regulation has to bring together different stakeholders. It is only possible to build a consensus on regulation through recognising that there are different interests, and encouraging public discussion of the inevitable tensions and occasional conflicts.