RESIDENTIAL TENANCIES AMENDMENT (SOCIAL HOUSING) BILL 2018

2nd Reading Speech

15 August 2018


The Hon. ADAM SEARLE (12:32): I lead for the Opposition in debate on the Residential Tenancies Amendment (Social Housing) Bill 2018. The Opposition does not oppose the legislation. However, it has three amendments, which have been lodged with the Clerk for consideration in Committee, that address concerns we have with the bill in its current form. The bill proposes various amendments to the Residential Tenancies Act 2018 and the Housing Act 2001 to allow for a rental bond scheme to be applied retrospectively to existing tenancy agreements under certain conditions and to provide for the termination of existing tenancy agreements in instances of fraud. The bill could exacerbate the incidence of homelessness if it is not implemented properly. Concerns regarding the legislation have been raised and the Opposition believes that some of them warrant further attention by the Minister and are embodied in the amendments.

There is no question that homelessness is on the rise in this State, as it is in many other jurisdictions. We could never be proud of the 37 per cent increase in homelessness that was revealed in the last census data. The impact that this bill could have on some vulnerable tenants has not been made clear. There will need to be considerable oversight and, indeed, a timely review of the legislation similar to the agreed review regarding the antisocial behaviour legislation in 2015. In seeking to do some good, it is critical that we do not create a situation that exacerbates homelessness or impacts unnecessarily on vulnerable tenants who may be third-party victims of the kinds of behaviours the legislation is seeking to address. That is the substance of Labor’s first amendment.

The introduction of this bill comes three years after the introduction of the Residential Tenancies and Housing Legislation Amendment (Public Housing—Antisocial Behaviour) Bill 2015. The three-year statutory review of the 2015 amendments is due to be handed down shortly by the Auditor‑General. I understand that the Government is expected to respond to those findings by November of this year. This bill forms part of a broader policy change within the Department of Family and Community Services [FACS] which will see the introduction of bonds for tenants who have intentionally or negligently caused damage of $500 or more in a Family and Community Services property.

The Opposition does not condone the types of behaviours that the legislation seeks to address nor does it condone tenants wilfully damaging their property in any manner. However, the broader policy does not require legislative change. There is nothing to stop FACS from charging new tenants a bond; all that is required is a policy change. It is understood that FACS intends to introduce that policy change during the course of the year in particular circumstances. The aim of this legislation is to allow FACS to charge a bond to existing tenants who have instigated at least $500 worth of damage.

As we understand it, those rental bond scheme guidelines are yet to be made public but I note the Parliamentary Secretary incorporated “FACS Housing – Ministerial Guidelines Rental Bonds – 2018” inHansard. I thank the Government for providing those guidelines to the Opposition late this morning. It is good to have it disseminated but one of the flaws in the bill, which we seek to address in an amendment, deals with these guidelines. The guidelines are provided on page 46 of the bill, in proposed section 156D (7), and state:

Rental bond guidelines mean any guidelines approved by the Minister for the purpose of the section.

The problem with that is it means that the Minister has an absolute fiat to provide guidelines or change them and no doubt a prudent Minister and a prudent government would disseminate them publicly. However, they do not have to do so and there is no scrutiny of the guidelines by the Parliament. At the appropriate time we will propose in amendment No. 3 that the guidelines be implemented by way of regulations made under the legislation so that this House, or indeed the other House, may scrutinise appropriately it, either through the Regulation Review Committee or through the deliberations of this House. We think that is a safer and more appropriate institutional course of action.

It is appropriate to have these guidelines available before the legislation is finalised but it comes very much at the heel of the hunt. Although I have seen the guidelines, the Opposition has not had the chance to consult with external stakeholders and we do not know whether they have received them. We have not had the opportunity to determine whether the guidelines are fit for purpose and that is one of the reasons we think it should not simply be an administrative action by the relevant Minister but it should be through a regulatory process.

Concerns have been raised within the sector that seeking a bond could potentially place pressure on specialist homelessness service providers as vulnerable tenants may not be able to financially cope with the imposition of a bond. There are concerns that brokerage would potentially be utilised for the purposes of those tenants providing a bond. We would like the Government to clarify and rule out that specialist homelessness services would be required to use brokerage in such a way and in instances where a tenant is unable to provide a bond following a course of action that FACS might undertake, including a termination notice should the bond not be paid within 14 days of the notice being issued.

As I understand it, the bill provides that a termination notice must state that there is an opportunity for a repayment plan and that repayment plan could be up to 24 months or, in some instances, 36 months. The bill should not make life difficult for specialist homelessness service providers in the instance that tenants seek their assistance at the same time knowing that the maximum market rent will be charged. We understand that will be capped at $1,400, but the reality of property prices in Sydney is that in most locations that maximum will become the payment and everyone will pay that amount. It is important in that instance that there be a proper repayment plan. Schedule 1 to the bill refers to amending the Residential Tenancies Act 2010 with respect to incorporating provisions relating to the rental bonds scheme. Specifically, it states:

Proposed section 156D enables the Corporation and the Aboriginal Housing Organisation to require a tenant to pay a rental bond at any time after the agreement has commenced.

Adding new section 156D is a retrospective change that will allow the NSW Land and Housing Corporation, which is the landowning entity of the State Government for social housing, and the Aboriginal Housing Office to require existing tenants who have intentionally or negligently caused more than $500 worth of property damage to pay a rental bond at any time prior to the end of their tenancy agreement. In addition, new section 156C enables landlords to give a termination notice for non-payment of a bond once payment is more than 14 days overdue. We understand that the termination notice given for non-payment of the rental bond scheme if the payment is 14 days overdue makes clear that, on paying the bond or on agreeing to a repayment plan, tenants will not be required to vacate the premises. That is an important qualification.

A collective of stakeholders, including the Tenants’ Union of NSW, Homelessness NSW, Shelter NSW, People with Disability Australia, the NSW Council of Social Service and the Combined Pensioners and Superannuants Association of NSW, have issued a statement highlighting a range of concerns regarding the rental bonds scheme. Homelessness NSW Chief Executive Officer Katherine McKernan stated:

This is not only creating further barriers for people in accessing housing but it will also mean that homelessness services will potentially have to use brokerage funding to cover it. The government may end up paying for these costs itself.

Leo Patterson-Ross, Senior Policy Officer of the Tenants’ Union of NSW, stated:

The time and money the department will spend on administering the system would be better spent on providing new housing, completing the maintenance backlog or providing more assistance to homeless people.

Dean Price, Senior Policy Officer at People with Disability Australia, identified:

People with disability already face huge barriers in finding an affordable and accessible place to live in. Public housing is one place where many people with disability find a home, and introducing bonds will make this much more difficult to access.

Karen Walsh, Executive Officer of Shelter NSW, stated:

The policy will have a serious impact on those people already doing it tough. There is not adequate protection for people with dementia and other mental health issues, the behaviour of people from outside the household, or decades old damage caused by former occupants which is only recently discovered.

That issue of ensuring that when we are holding tenants to account in the way proposed in this legislation an appropriate benchmark is set, is the subject of Labor’s second amendment—that is, a condition report needs to be done at a point in time so that when we hold a particular tenant to account there is a baseline against which to measure their custodianship of the property. If we are going to sling people out of their homes for doing damage, whether recklessly or intentionally, we must ensure that they are responsible for the damage. It is not just fair and just; it is an obligation of government and of us as legislators and policymakers to ensure that that proper step is taken.

The collective statement I just referred to was issued on 21 June, a couple of days after the budget was handed down and on the same day that the Minister in the other place delivered her second reading speech on this legislation. So the Minister did not have the statement to hand. It would be useful if the Government, during this debate or at a subsequent point in time, would respond to the concerns raised in that collective statement. We are mindful that the stakeholders who made that statement have an enormous number of members and that they have access to a large number of persons who are vulnerable, who have concerns about the scheme proposed in the legislation and who might be confused about what it means for them and how it will work.

We believe the absence of guidelines until today will also concern people when we are making a decision on retrospective laws, as we are being asked to do in this case. It would have been preferable if the guidelines had been available earlier, but I ask the Government to promulgate them to affected parties and stakeholder groups as quickly as possible, to consult with them about the contents of the guidelines and to make any necessary adjustments in line with feedback from those stakeholder groups. As I said, if we are going to do this, let us do it properly. We must address any unintended consequences to ensure that, in seeking to do some good, we do not incidentally make life harder for those who are already doing it tough. Earlier in the year the department had discussions with various stakeholders. I note one of the comments that the Minister made in her second reading speech. She said:

… safeguards will be put in place to ensure the needs of vulnerable clients are taken into account as well as any extenuating circumstances faced by social housing tenants. For example, no rental bond will be required of a victim of domestic and family violence where the damage is caused by a perpetrator of domestic violence.

We appreciate and endorse the Minister’s comments. We understand that stakeholders could provide a variety of examples, whether they involve domestic violence or people with disabilities or elderly tenants suffering from dementia or Alzheimer’s disease. All members in this House—and particularly members in the lower House, who have direct responsibility for constituents—could give many examples of damage that has been done by tenants but it has not been wilful or even negligent; it has simply been because of the circumstances faced by the tenant.

I imagine the Government will respond that there will be some discretion in the legislation, but I draw the attention of members to page 3 of the bill and new section 154FA relating to termination by the tribunal in certain cases of tenant fraud. New subsection (5) alleviates the tribunal from having to make a termination order if the tenant satisfies the tribunal that there are exceptional circumstances that justify the order not being made. The term “exceptional circumstances” has been judicially interpreted and limited to not entirely unique circumstances but a very narrow range of circumstances. It is the Opposition’s view that that safety valve in the legislation is simply not sufficiently robust or broad enough to deal with a variety of unintended circumstances. That is the substance of Opposition amendment No. 1, particularly in subsection 5 (a); subsection 5 (b) in our amendment replicates what is already in the legislation. I ask honourable members to give earnest consideration to that amendment.

In 2015, amendments were passed to the Residential Tenancies and Housing Legislation Amendment (Public Housing—Antisocial Behaviour) Act. Section 154D allowed for hardship considerations. I suggest that similar amendments need to be made with respect to this legislation because we want to ensure that in improving the situation in social housing we do not further escalate rates of homelessness in this State. Some of the responses from the Homelessness NSW survey are quite instructive. The shadow Minister in the other place quoted them quite extensively. I will quote a couple of paragraphs that I believe are particularly pertinent. One reads:

There are so many set-up costs when you get into housing. You go from nothing and need to get furniture, food, fridges. All of these are a massive expense and to put a bond on top of this is going to be too much. Are the government forgetting people are struggling?

Another response reads:

If people are unable to re-access social housing, then there are often no options left for them. Generally, they are not a preferred candidate in an overcrowded private rental market and often they end in unsafe situations whilst waiting to re-access housing. Homelessness NSW also raised concerns regarding retrospective penalties for damage that was present prior to the bill being introduced, as well as it creating a disincentive for reporting any property damage that may occur. It expressed concerns about fairness and due process in respect of retrospectively applying a bond for damage made before the policy was introduced. Homelessness NSW stated:

Applying the bond for existing tenants will also create disincentives for current tenants in terms of reporting property damage. This may lead to properties being left in poor condition for lengthy periods of time.

This concern requires the amendment I have outlined to ensure that a condition report is completed for the property in question and that any existing damage is noted and rectified. If landlords are to fulfil their roles and seek rental bonds it is important they understand that they have a duty to ensure the property is up to scratch before instigating a rental bond scheme. The system must not in any way, shape or form prevent tenants from making requests for maintenance or repairs for fear that they might be held responsible for the damage, especially in instances of normal wear and tear. A provision should be inserted in this legislation or the guidelines—or perhaps both—to ensure that tenants, particularly elderly tenants, who wish to have simple repairs come forward without fear and announce that they require repairs to their property. This is because the legislation is retrospective.

Let us assume that a tenant is living in a property with pre-existing damage—it was not their fault. When this legislation comes into force and effect the risk is that they will be held accountable for that damage or have to explain it. For those reasons they are fearful that they may have to foot the bill or pay a bond and so may not come forward. That damage may be discovered at a future point in time and they are held to account. At that point they attempt to explain that it pre-existed their tenancy or that a third party or domestic violence perpetrator was responsible. It is an unknown what the decision-maker will do. Labor believes that condition report is an important social justice measure, so it is the subject of amendment No. 2.

The damages figure this legislation is dealing with is reported to be $16 million. I ask the Government to clarify that. There is an extensive social housing waiting list—at times cited as numbering 55,000 and at times 60,000. However, we know that more than 100,000 people have applied for and are waiting for social housing, and potentially many more people yet to be placed on the waiting list need housing. The minimum average wait time for a two-bedroom or three-bedroom property in metropolitan Sydney, on the Central Coast, in Newcastle, in the Illawarra and on the North Coast is 10 years. Considerable concern has been expressed about some of the property sell-offs that have taken place over the years and the high number of vacant properties in New South Wales. In 2011 there were 99 vacant properties and there are now 1,500 vacant properties, if not more. I will be glad to hear from the Government whether the number of vacant properties has changed, but the last time the Opposition checked it was around 1,500.

The Government should amend the bill to ensure that all provisions under schedule 1 relating to rental bonds in corporation or Aboriginal Housing Office [AHO] tenancy agreements apply to premises that have had a property condition inspection subsequent to the commencement of the bill. Consideration must be given to amendments that allow for a formal means of discretion in collecting bonds with specific regard to undue hardship such as domestic violence, disability, mental health and elderly tenants. I propose to move these important amendments, but I would welcome the Government either adopting Labor’s amendments or moving its own in this respect.

A review of the bill in the near future will create confidence that any issues surrounding homelessness or unintended consequences of the legislation that exacerbate homelessness or make it difficult for tenants to have repairs undertaken for fear of reprisal or having a bond placed on them will be avoided. The agency must have confidence that it will not suffer further administrative costs. Labor understands that the budget was handed down a few days before the Minister introduced the bill and is unsure whether the burden of administrative costs in relation to the repayment plans, overseeing the bond scheme, undertaking property condition reports and ensuring everything runs smoothly will be placed on the department. I imagine that there will be administrative costs. The Opposition is keen to hear from the Government what the foreshadowed costs will be over the next 12 months and whether those costs have been included in the budget.

Labor notes that funding in the 2018-19 budget for maintenance was significantly reduced by $34 million from the 2017-18 budget. We also note that specialist homelessness services are underfunded and under immense pressure. In 2016-17 they provided assistance to more than 74,000 clients, despite being contracted to deliver services to only 58,000 clients that year. Schedule 1 to the bill inserts a new section 154F that requires the NSW Civil and Administrative Tribunal to terminate a residential tenancy agreement when the tenant has been found guilty of a fraud offence under section 69 of the Housing Act 2001. Currently, there is no direct method of eviction for this conviction. Instead, tenants are generally convicted for failure to pay the debt created by the actions to which the alleged fraud relates. There have been examples where the FACS has also used the section 85 no grounds notice.

I appreciate the requirement for this legislative change. Examples in the media of late have been alarming. The bill as written allows for these evictions to apply in very minor instances, where the failure to disclose was unintentional, or where a third party has caused the alleged fraud. It has been explained that FACS will proceed to conviction only in more serious or wilful cases of fraud. Many stakeholders received that briefing from the department and were advised that only in instances of serious or wilful cases of fraud would FACS proceed to evict tenants with those particular convictions. But that is not how the bill is written, and it is imperative that an amendment be moved to ensure that FACS instigates those terminations only in relation to cases of fraud.

Mandating termination, except in cases of exceptional circumstances, removes the ability of the tribunal to consider all relevant circumstances before terminating a tenancy and may in some circumstances result in unjust outcomes—for example, in cases where domestic violence or elder abuse can be demonstrated to have been a factor in the circumstances in which the fraud occurred. We know that takes place. There are many examples of elder abuse that could potentially result in a tenant being convicted of fraud. In those instances, the tribunal must have the ability to apply discretion. I am concerned that, as the bill reads, the tribunal will not be permitted to exercise discretion. It is imperative the bill is amended to allow that, and Labor proposes such an amendment as one of our three.

An alternative and more appropriate mechanism would be for termination on the basis of conviction for fraud to be added to section 154D of the Residential Tenancies Act. This would still allow appropriate discretionary powers in instances where undue hardship or particular circumstances should be considered—namely, those provided for in the current section 154D (b). Schedule 2 proposes a raft of changes to the Housing Act 2001 and extends a provision that enables the Secretary of FACS to terminate the lease of a public housing tenant who is a registrable person within the meaning of the Child Protection Offenders Registration Act 2000.

Other amendments about which the Opposition has no concern include to new section 58B, where residential tenancy agreements may be terminated by a community housing provider, as defined by new section 58A, on the recommendation of the Commissioner of Police—again, in instances of registrable persons—where police believe the tenant poses a risk or is at risk themselves, and with the approval of the Secretary of FACS, in the same way that the Secretary of FACS is able to terminate a residential tenancy agreement of a public housing tenant who is a registrable person. Obviously the community housing providers agree with this particular change, as does the Opposition.

Alternative housing will still be made available. This is part of the proposed amendments that will make it simpler and less burdensome on community housing providers in instances where they need to move tenants. The bill proposes amendments to new sections 69B, 69C, 73 and 74 (2A) that will empower the Secretary of FACS for the purposes of accessing information and documents for the purposes of investigating or preventing fraud and the recovery of any payments obtained fraudulently. The Opposition does not have any concerns relating to those changes. The Opposition does not oppose the bill. We have raised suggestions and concerns on behalf of stakeholders because the collective statement was issued immediately after the Minister delivered her second reading speech and I believe some of those concerns need to be taken into account.

Housing is a difficult area and a great deal of the burden is placed on the many stakeholders that work hand in hand with housing and community housing providers. The Opposition does not want cost shifting that results in tenants turning up at the door of specialist homelessness service providers seeking the use of their brokerage funding. That would only exacerbate problems in the sector and the rate of homelessness. The targets should be those who deliberately and wilfully damage public property, and those who fraudulently obtain a benefit at the expense of good tenants and those on the waiting list who are being deprived of the opportunity of a home, which I am sure they would care for. It is important that we get this legislation right. It is important to get the driver, the ministerial guidelines, right. In that spirit of cooperation, Labor proposes three sensible and balanced amendments and urges all honourable members to join it to improve the legislation.