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Hard work leaves public renters in the lurch

INCREASES in rents paid by the state's public housing tenants are the main reason some of them lose 93 cents of every dollar earned above a "moderate income" threshold, a report shows. Report by Matthew Moore SMH May 1 2006.

At some wages within the moderate income band, single parents can lose 100 per cent of additional money earned in what the author of the report says is a huge disincentive to work.

The report, Reshaping Public Housing and Work Disincentives, by the Tenants Union of NSW, illustrates how changes in the public housing system interact with changes in the Commonwealth social security system and the tax system to discourage public housing tenants from earning much extra money.

When tenants get jobs and enter the moderate income band, social security payments decrease and rents rise, meaning there is little net financial incentive to find work, the report says.

Single tenants and single-parent tenants who get a job can expect to lose more than 70 per cent of all wages earned in excess of $125 per week, the report says.

The changes are part of a NSW Government policy Reshaping Public Housing, which was introduced last year and targets housing for those most in need. The report's author, Chris Martin, said the further changes in July will result in any tenants who moved into public housing from last July losing their accommodation once their income reaches certain thresholds. Single people have to move out once they earn $688 per week and single parents with two children must move out once their income reaches $919 per week.

Kerry Cole lives in public housing in Riverwood and says the changes will discourage many tenants from looking for work. This is because they will not risk the certainty of a roof overhead by developing a skill, and then taking a job with a wage that could disqualify them for public housing.

But with a new qualification in counselling, and plans to start a business of her own, she is not worried that the changes will eat up her future income or force her to rent privately. "My goal is to move forward and I have done the hard yards," she said. "To me, housing was only ever going to be a stepping stone. I don't want to be a long-term stayer."

A spokeswoman for the Housing Minister, Cherie Burton, denied the policy was a disincentive. "The whole point of the policy is to encourage people ... who have the ability to earn higher incomes to get out of housing," she said.

The problem was not that tenants had to pay more rent as their incomes went up, but that the tax system was too harsh on low- and middle-income earners.

But Mr Martin said NSW could not blame the Commonwealth for the fact that a tenant on a moderate income loses nearly all the benefit from working more. `The largest single contributor to effective tax rates at these wages is the Department of Housing."

❑ The State Government will redirect $420 million into increasing public housing for the elderly by2800 homes over five years.

The Premier, Morris lemma, said yesterday: "Over the next decade the demand for social housing for older people will grow by around 36 per cent."

He said there had been a huge demographic shift in demand for public housing. In the 1970s more than 70 per cent of applicants were couples with children; last year it was 11 percent.

His spokesman said the funds would come from "reprioritising" the public housing budget.

Much of the new housing will be in areas with ageing populations, such as the North Coast, Central Coast and western Sydney. A further $75 million will be spent on modifying homes.

Photo: Public housing a steppingstone... Kerry Cole with two of her children, Amanda,10, and Daniel, 8, at home In Riverwood. Photo: Robert Pearce