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10-03-2014, 10:15 PM
FCL's Central Park - the student accommodation portion of the development has been thrown into questionable light - possible abused of NRAS - National Rental Affordability Scheme. Alamak, I really don't know what to make up of the following mess...
ALP housing scheme abused
RICK WALLACE THE AUSTRALIAN MARCH 11, 2014 12:00AM
Central Park developmentThe Central Park development on Abercrombie Street, close to the Sydney CBD, which is subsidised by the NRAS. Picture: James Croucher Source: News Corp Australia < PrevNext >
••••
NEW evidence of the hijacking of Labor’s flagship social housing scheme has emerged, with the companies behind a major Sydney development tapping $80 million in taxpayer subsidies to help build units for wealthy foreign students rather than the low-income Australian households the program was designed to help.
Earlier this month, The Australian revealed that universities had won thousands of grants under the National Rental Affordability Scheme and were filling hundreds of these government-sponsored units with fee-paying international students. The revelations have prompted one of the architects of the scheme — National Shelter executive officer Adrian Pisarski — to call for changes to ensure it delivered truly affordable housing to those in need.
“As one of the people who thought up NRAS in the first place, the original intention was not (for it) to be used for international students. The intention was to house low- to middle-income Australians,” he said.
“To the extent to which it’s happening, it needs to be monitored and the intention of the scheme allowing that needs to be reviewed or at least given serious consideration. It should not be what the NRAS becomes.”
He said there was evidence some international students faced difficulty in the private housing market and some student housing for them could be part of the mix, but the overall goal was to address the dearth of options for those on low wages.
The $4.5 billion NRAS was launched by the then prime minister Kevin Rudd in 2007 as part of his public campaign to tackle homelessness and the “BBQ stopper” issue of rising housing costs for struggling Australians. It was designed to provide subsidies to developers of housing that would be rented to “low- and middle-income households at a rate that is at least 20 per cent below the market value rent”.
A promotional brochure issued by developers Frasers Property Australia and Sekisui House Australia, and seen by The Australian, tells would-be investors in the Central Park development in central Sydney the project is “NRAS-advantaged” and that foreign students pay higher fees than locals, with their total expenditure topping $55,000 a year.
“This provides some guidance as to the calibre of tenant typical of off-campus student accommodation facility such as Abercrombie Street,” the document says.
The giant project, just west of Sydney’s Central railway station, is only two blocks from the electoral office of Deputy Opposition Leader Tanya Plibersek, who as housing minister in the Rudd government was the architect of the NRAS. Ms Plibersek referred inquiries about the NRAS and the Central Park development to Labor housing spokeswoman Jan McLucas.
Frasers Australia chief executive Guy Pahor yesterday defended the project saying it would be open to local students, and increasing the pool of affordable housing within Sydney’s education precinct would free up housing for students and local workers alike.
Outside of Queensland, there is no regulation stating that NRAS tenants have to be Australian citizens and both the universities’ developments and the Central Park project meet the guidelines of the scheme.
The brochure issued to potential investors in the $2 billion project makes it clear that international students would be the major tenant group for the 823-bed facility.
The 34-page document, issued in October 2012, contains the phrase “international student” or “international students” almost 50 times and describes the main student building, on Abercrombie Street, as an “NRAS-advantaged” project.
It talks about how international student numbers at the nearby University of Sydney and the University of Technology, Sydney, and two other tertiary institutions are forecast to grow by 400 per year. In the local area, “85-95 per cent of privately owned student accommodation is occupied by international students”, the document says.
Mr Pahor said although a “significant proportion of the dwellings would be taken up by foreign students”, Australian students would benefit too.
He said it would increase the “pool of affordable accommodation in (the) conventional rental market for both students and local workers”.
“In this application of the NRAS scheme, the pool of inner-city affordable housing stock will grow markedly with benefits extending to the community at large,” he said.
But one critic of the project, a construction industry source, said he was uncomfortable that it did not meet the original intent of the policy.
“In general, I am not adverse to government incentives being used to encourage developers to provide a certain type of product that the market needs; however, NRAS in this case provides very little benefit to its target market and is predominantly benefiting the developer — at a cost to the taxpayer,” he told The Australian.
Estimates contained in the brochure for Central Park state a studio apartment in the Abercrombie Street building would rent for $450 a week at market prices. The scheme stipulates that landlords or developers must offer the unit at 80 per cent of market value, which brings this down to $360 a week.
In exchange, investors get an incentive or tax offset from the government totalling $10,000 per year, or $191 per week guaranteed for 10 years. This takes the total return to $551 a week for investors, according to the prospectus.
Forecasts for the project, which was being offered to institutional investors but is proceeding for now under the auspices of the developers, predict it will return $18.5m in net income in 2015 increasing to $22m in 2019 as NRAS incentives increase in line with the inflation of prices of rental prices.
The investors will receive more than $85m in taxpayer subsidies over the 10-year lifespan of the project in return for offering a 20 per cent rent discount to tenants.
The NRAS scheme has seen more than 20,000 units constructed but has been beset with issues of complexity, bureaucracy and poorly drafted legislation, according to critics. Expectations are that it will not be continued by the current government beyond the 50,000 planned units.
A spokeswoman for the Department of Social Services said that for the majority of allocations of NRAS incentives to universities, the department specifies that local students and those coming from elsewhere in Australia must be given preference.
“While an approved participant may have ‘reserved’ NRAS incentives, they must: comply with all the conditions of an allocation; deliver dwellings within the agreed time frame; and rent the properties to eligible tenants at least 20 per cent below market rent before an incentive is paid,” she said.
Australian Council of Social Services chief executive Cassandra Goldie defended the scheme as a groundbreaking attempt to bring private capital to social housing.
She said the Central Park development was the kind of development you would expect under the scheme and it would absorb rental demand in the area through the construction of desperately needed new housing stock. “This is a scheme that needs to be seen in the broader context of what it does do in the rental market more broadly,” he said.
To be eligible for NRAS as a tenant you must have earned less than $45,956 in the 12 months before you take up residency, and to remain eligible you must earn less than $57,445 in subsequent years. But parents’ income is not factored in, making it easy for many students to qualify.
ALP housing scheme abused
RICK WALLACE THE AUSTRALIAN MARCH 11, 2014 12:00AM
Central Park developmentThe Central Park development on Abercrombie Street, close to the Sydney CBD, which is subsidised by the NRAS. Picture: James Croucher Source: News Corp Australia < PrevNext >
••••
NEW evidence of the hijacking of Labor’s flagship social housing scheme has emerged, with the companies behind a major Sydney development tapping $80 million in taxpayer subsidies to help build units for wealthy foreign students rather than the low-income Australian households the program was designed to help.
Earlier this month, The Australian revealed that universities had won thousands of grants under the National Rental Affordability Scheme and were filling hundreds of these government-sponsored units with fee-paying international students. The revelations have prompted one of the architects of the scheme — National Shelter executive officer Adrian Pisarski — to call for changes to ensure it delivered truly affordable housing to those in need.
“As one of the people who thought up NRAS in the first place, the original intention was not (for it) to be used for international students. The intention was to house low- to middle-income Australians,” he said.
“To the extent to which it’s happening, it needs to be monitored and the intention of the scheme allowing that needs to be reviewed or at least given serious consideration. It should not be what the NRAS becomes.”
He said there was evidence some international students faced difficulty in the private housing market and some student housing for them could be part of the mix, but the overall goal was to address the dearth of options for those on low wages.
The $4.5 billion NRAS was launched by the then prime minister Kevin Rudd in 2007 as part of his public campaign to tackle homelessness and the “BBQ stopper” issue of rising housing costs for struggling Australians. It was designed to provide subsidies to developers of housing that would be rented to “low- and middle-income households at a rate that is at least 20 per cent below the market value rent”.
A promotional brochure issued by developers Frasers Property Australia and Sekisui House Australia, and seen by The Australian, tells would-be investors in the Central Park development in central Sydney the project is “NRAS-advantaged” and that foreign students pay higher fees than locals, with their total expenditure topping $55,000 a year.
“This provides some guidance as to the calibre of tenant typical of off-campus student accommodation facility such as Abercrombie Street,” the document says.
The giant project, just west of Sydney’s Central railway station, is only two blocks from the electoral office of Deputy Opposition Leader Tanya Plibersek, who as housing minister in the Rudd government was the architect of the NRAS. Ms Plibersek referred inquiries about the NRAS and the Central Park development to Labor housing spokeswoman Jan McLucas.
Frasers Australia chief executive Guy Pahor yesterday defended the project saying it would be open to local students, and increasing the pool of affordable housing within Sydney’s education precinct would free up housing for students and local workers alike.
Outside of Queensland, there is no regulation stating that NRAS tenants have to be Australian citizens and both the universities’ developments and the Central Park project meet the guidelines of the scheme.
The brochure issued to potential investors in the $2 billion project makes it clear that international students would be the major tenant group for the 823-bed facility.
The 34-page document, issued in October 2012, contains the phrase “international student” or “international students” almost 50 times and describes the main student building, on Abercrombie Street, as an “NRAS-advantaged” project.
It talks about how international student numbers at the nearby University of Sydney and the University of Technology, Sydney, and two other tertiary institutions are forecast to grow by 400 per year. In the local area, “85-95 per cent of privately owned student accommodation is occupied by international students”, the document says.
Mr Pahor said although a “significant proportion of the dwellings would be taken up by foreign students”, Australian students would benefit too.
He said it would increase the “pool of affordable accommodation in (the) conventional rental market for both students and local workers”.
“In this application of the NRAS scheme, the pool of inner-city affordable housing stock will grow markedly with benefits extending to the community at large,” he said.
But one critic of the project, a construction industry source, said he was uncomfortable that it did not meet the original intent of the policy.
“In general, I am not adverse to government incentives being used to encourage developers to provide a certain type of product that the market needs; however, NRAS in this case provides very little benefit to its target market and is predominantly benefiting the developer — at a cost to the taxpayer,” he told The Australian.
Estimates contained in the brochure for Central Park state a studio apartment in the Abercrombie Street building would rent for $450 a week at market prices. The scheme stipulates that landlords or developers must offer the unit at 80 per cent of market value, which brings this down to $360 a week.
In exchange, investors get an incentive or tax offset from the government totalling $10,000 per year, or $191 per week guaranteed for 10 years. This takes the total return to $551 a week for investors, according to the prospectus.
Forecasts for the project, which was being offered to institutional investors but is proceeding for now under the auspices of the developers, predict it will return $18.5m in net income in 2015 increasing to $22m in 2019 as NRAS incentives increase in line with the inflation of prices of rental prices.
The investors will receive more than $85m in taxpayer subsidies over the 10-year lifespan of the project in return for offering a 20 per cent rent discount to tenants.
The NRAS scheme has seen more than 20,000 units constructed but has been beset with issues of complexity, bureaucracy and poorly drafted legislation, according to critics. Expectations are that it will not be continued by the current government beyond the 50,000 planned units.
A spokeswoman for the Department of Social Services said that for the majority of allocations of NRAS incentives to universities, the department specifies that local students and those coming from elsewhere in Australia must be given preference.
“While an approved participant may have ‘reserved’ NRAS incentives, they must: comply with all the conditions of an allocation; deliver dwellings within the agreed time frame; and rent the properties to eligible tenants at least 20 per cent below market rent before an incentive is paid,” she said.
Australian Council of Social Services chief executive Cassandra Goldie defended the scheme as a groundbreaking attempt to bring private capital to social housing.
She said the Central Park development was the kind of development you would expect under the scheme and it would absorb rental demand in the area through the construction of desperately needed new housing stock. “This is a scheme that needs to be seen in the broader context of what it does do in the rental market more broadly,” he said.
To be eligible for NRAS as a tenant you must have earned less than $45,956 in the 12 months before you take up residency, and to remain eligible you must earn less than $57,445 in subsequent years. But parents’ income is not factored in, making it easy for many students to qualify.
