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Public Housing Tenants Lose 70 Per cent of Wages Under new Rent Reforms

The following media statement was issued by the Tenants Union of NSW Co-op Ltd at the beginning of May 2006.

Single parents on 'moderate incomes' lose 93 cents in each additional dollar, and face losing their housing

Public housing tenants who get a job face losing more than 70 per cent of their wages, under changes to the NSW Department of Housing's rent rebate system.

New research by the Tenants' Union of NSW indicates that the Government's 'reshaping public housing' reforms interact with the tax and social security systems to create significant work disincentives for public housing tenants.

Under the new rules, single persons and single parents both face effective average tax rates of more than 70 per cent for almost all wages in excess of $125 pw.

Single parents who work lose 93 cents in each additional dollar of income they earn at most wages in the Department's new 'moderate income' range. At some wages in the range, they face a marginal tax rate of 100 per cent.

The next phase of the reforms, to be implemented in July, will create an additional work disincentive by ending people's tenancies after they earn more than a 'moderate income' - $919 per week for a single parent with two children. The research shows that tenants on these incomes cannot afford the median rent in most of Sydney.

'The new "shape" of public housing under these reforms will be a depressing trap of unemployment and poverty', said the Tenants' Union's chairperson, David Vaile.

'The reforms discourage tenants from getting into work or earning a little more. If you're a single parent asked to do some overtime and you get to keep just seven cents in the dollar, that won't even pay for the baby-sitter. You'll lose more than you gain', Mr Vaile said.

'The NSW Government cannot blame the social security system for these work disincentives' said Chris Martin, Policy Officer for the Tenants' Union. 'In the "moderate income" range, Centrelink payments do not play a part. The largest single contributor to effective tax rates at these wages is the Department of Housing.'

'The result is that if a tenant struggles through the work disincentives created by the withdrawal of Centrelink benefits, they face another round of work disincentives of the same or greater magnitude, created largely by the Department of Housing's reforms.'

'The Tenants' Union calls on the Government to rethink these reforms. Public housing tenants should get a fair reward for getting into work' said Michelle Jones, Executive Officer of the Tenants' Union. 'And public housing neighbourhoods shouldn't become places were people who do work aren't allowed to live.'

Download a copy of the research paper, 'Reshaping public housing' and work disincentives.