Anne Ruston (SA, Liberal Party, Minister for Families and Social Services) Share this | Hansard source

The National Rental Affordability Scheme Amendment Bill 2019 makes amendments to the National Rental Affordability Scheme Act 2008 to streamline and simplify the administration of the National Rental Affordability Scheme, known as NRAS, until it ceases operation in 2026.

The amendments to the NRAS Act contained in this bill were included in the Social Services Legislation Amendment (Housing Affordability) Bill 2017 introduced in the 2018 spring sittings. On 19 October 2017, the Senate referred the housing affordability bill to the Community Affairs Legislation Committee for inquiry and report. The committee made a number of recommendations, which the government considered in consultation with participating states and territories. The committee recommended that the bill be passed.

NRAS is established by the National Rental Affordability Scheme Regulations 2008. In 2016 the Australian National Audit Office reported that the NRAS legislative framework is complex and unclear. The report noted the regulations could be reviewed with the aim of simplifying and clarifying aspects of their operation. NRAS stakeholders are of the same view. In December 2016 the Department of Social Services consulted with NRAS stakeholders to identify ways to improve the administration of NRAS and reduce the regulatory burden on approved participants.

Over 30 submissions were received with suggestions on how the regulations could be streamlined to support the efficient and effective administration of NRAS going forward. In its submission to the NRAS consultation paper in December 2016, the Commonwealth Ombudsman noted the need to improve transparency for investors in NRAS. The Ombudsman's submission also made recommendations on measures to strengthen the integrity and compliance of NRAS.

In January 2017, the Department of Social Services commenced a review of NRAS to address the concerns raised by the ANAO, the Ombudsman and the NRAS stakeholders. On 15 July 2017, minor regulatory amendments came into effect to address areas of NRAS that imposed disproportionate penalties for compliance which led to outcomes that were inconsistent with the objectives of NRAS. Further regulatory amendments were made in November 2017 and November 2018 to permit NRAS investors to request the transfer of an allocation in certain circumstances, and to provide other protections to investors. In March 2019, additional amendments were made to the NRAS regulations, strengthening the investor protection mechanisms available under the NRAS regulations and introducing a new compliance framework to manage and address misconduct by approved participants of the scheme.

The amendments introduced in this bill clarify ambiguous provisions in the NRAS Act relating to the power to make regulations, and lay the foundation to strengthen and simplify the future operation and administration of NRAS. The NRAS Act requires the NRAS regulations to prescribe that the rent charged for an approved rental dwelling must be at least 20 per cent less than the market rent at all times during the year. The term 'at all times during the year' has been subject to conflicting interpretations over the years. The first amendment supports the correct interpretation of this provision, which is that each time rent is charged it is to be at least 20 per cent less than the market rent. Some people interpreted it to mean the total rent charged across the year rather than each time the rent is charged.

The NRAS Act requires the NRAS regulations to prescribe maximum vacancy periods for approved rental dwellings. The prescriptive nature of the current vacancy provisions have been amended to allow greater flexibility for the NRAS regulations to prescribe permitted vacancy periods. This flexibility will assist the future administration of NRAS should changes be required on how the maximum vacancy periods are to operate.

Two new provisions will be added to the NRAS Act to provide express legislative authority for the NRAS regulations to vary conditions of allocation and put it beyond doubt that conditions may be varied or imposed after an allocation has been made. These provisions will reduce the risk of the Commonwealth when varying or imposing new conditions on allocations. The final amendment provides express legislative authority to transfer an allocation from one approved rental dwelling to another. The ability to substitute dwellings is crucial to achieve the objects of NRAS—to increase the supply of affordable rental dwellings. If an investor decides to leave NRAS, the ability to substitute a like-for-like dwelling ensures the level of NRAS housing stock is maintained.

The government's amendments make several important changes to schedule 1 of the bill. The amendments put beyond doubt that NRAS can include protections for investors, including by requiring approved participants to pass on state and territory incentives to investors in certain circumstances. The amendments also confirm that NRAS can provide protections for NRAS investors and allow for the adjustment of incentives where an allocation has been transferred for cause at an investor's request. NRAS relies on a number of Commonwealth legislative powers, and the amendments set out in these powers give the NRAS Act separate operation within the scope of each of these power.

The evidence given to the Senate inquiry suggested that there may be circumstances where, through inadvertence or oversight, a particular charge for rent may exceed the maximum rent that can be charged, which is 80 per cent of the market rent. The government's amendments permit NRAS to include a power for the Secretary of the Department of Social Services to grant an approved participant dispensation from an inadvertent breech of the 80 per cent rule in certain circumstances where the tenant has been fully compensated for that mistake.

While most approved participants in NRAS behave appropriately towards investors, a small number of approved participants do not do the right thing and make life difficult for investors by not passing on incentives promptly and engaging in other undesirable conduct. The government's amendments will permit the Secretary of the Department of Social Services to accept an enforceable undertaking from an approved participant. Enforceable undertakings are a useful compliance tool currently used by a number of Australian government agencies. The inclusion of this tool as part of the NRAS Act will assist the Department of Social Services to take appropriate action to protect investors where necessary.

The government is committed to reducing rental costs for low- and moderate-income households. NRAS was a flagship Labor program to improve rental affordability by providing a financial incentive to approved participants who rent dwellings at at least 20 per cent below market rents to eligible low- to moderate-income households. As was the case with many other programs, the former Labor government failed to put in the work in the planning stages in order to see the successful implementation of the well-intentioned policies. From the beginning, the scheme was poorly designed with multiple flaws, ambiguous legal requirements and red tape. The government is now fixing this and undertaking a series of legislative reforms to streamline and simplify the operation and administration of the scheme. This bill lays the foundation for improving the NRAS legislative framework to support the efficient administration of NRAS until it ceases operation in 2026. I commend the bill to this chamber.

Question agreed to.

Bill read a second time.