Economic and taxation benefits of the national rental affordability scheme

Abstract

<p>Australia is experiencing a housing affordability crisis, a problem primarily affecting families on low-to-moderate incomes. The median house price continues to increase and is currently more than five times the gross annual median household income. To stimulate additional supply of affordable rental dwellings throughout Australia, the Australian Government, in partnership with state governments, implemented the National Rental Affordability Scheme (NRAS) in 2008. As at December 2015, 37,217 new rental dwellings had been approved under NRAS, of which 30,037 had been built and either tenanted or available for rent. <br/>More than 622 million dollars of government funding was initially committed to the NRAS program. In light of this spending, this paper conducts a 'value-for-money' assessment of the NRAS initiative. Therefore, the objective of this paper is to quantify the gross benefits of NRAS to the Australian economy, the Australian Government as well as state and local government agencies. To do so, it quantifies total government revenue, in dollar value as at the 2013-2014 financial year, direct and indirect employment and income generated from various economic activities driven by NRAS. <br/>This paper is divided into four sections. Firstly, an overview of housing affordability in Australia and the NRAS program is presented. Secondly, the paper describes the methodology and assumptions undertaken in this research. Thirdly, the paper outlines and discusses the findings of government revenue and employment generated by NRAS. Lastly, the paper concludes with key findings as well as potential areas for further study on economic and taxation benefits of NRAS.</p>