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Acknowledgements

Regional Development Australia Mid North Coast (RDA MNC) acknowledges the Department

of Education, Employment and Workplace Relations (DEEWR) for the funding provided to

undertake this project. We would also like to acknowledge and thank the many participants

who donated their time and valuable insights during the focus groups held as part of this

research project. Furthermore, we would like to thank all the stakeholders who have shared

their knowledge and ideas into this process outside of the focus group sessions.

The full report is available via download from the Regional Development Australia Mid

North Coast Website: http://www.rdamidnorthcoast.org.au/

DISCLAIMER

This publication is produced by Regional Development Australia Mid North Coast based on information available at the time of publishing. All opinions conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness. Regional Development Australia Mid North Coast does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequences of their use.

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Introduction

This is a condensed version of a research project that has been undertaken for the

Department of Education, Employment and Workplace Relations (DEEWR) by Regional

Development Australia Mid North Coast to build knowledge and understanding of issues

related to the supply of additional affordable housing in the New South Wales Mid North

Coast which can support additional training and employment outcomes for the region in

addition to increasing housing supply. Funding for this project was provided through the

Flexible Funding Pool (FFP) to support the activities of Local Employment Coordinators in

priority employment areas and the Building Australia’s Future Workforce strategy.

Housing is a central component to stability of one’s life. The importance of housing is not

represented by the current affordability and accessibility of the housing market. In

particular the housing market of the Mid North Coast is under pressure to provide more

affordable housing to the local population.

The Mid North Coast of NSW has an older population, especially when compared with the

rest of NSW. This contributes to lower average incomes in the region, which in turn

represents a challenge for the housing construction sector and the effective supply of

affordable housing.

Findings – Opportunities for Workforce Development

The findings highlighted in the full report in relation to workforce development

opportunities and barriers to support construction in the Mid North Coast are:

Opportunities to increase employment and economic activity in the building and

construction sector within the region to further examine import replacements, as

current import levels support 357 jobs outside of the region.

To increase the number of local businesses involved in larger scale projects, a

consortium of local businesses could work together to bid on these larger projects

and undertake group buying of materials to reduce costs for smaller operators.

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Additional promotion of construction as a rewarding career to new and existing

entrants to the workforce. Stimulating the housing construction industry has strong

potential to boost employment in the region and through this the Mid North Coast

can offer a great career and lifestyle package.

For the stimulus of the housing construction market on the Mid North Coast in the

current softening labour market, particular focus should be given to targeting

existing support programs and the development of new programs where needed, to

meet the specific needs of the industry.

Findings - Regional Construction Environment

There are significant non-residential construction projects currently in the region, or

projects which have been awarded funds and yet to commence (including Pacific Highway

upgrade, upgrades to the Port Macquarie and Kempsey Hospitals, regional airport upgrades,

Charles Sturt University campus e.t.c). Although this does not address affordable housing,

increases in construction in the region supports the regional economy and skills

development. There is concern among local industry of the over utilisation of external

companies and employees for large projects and that options to increase local supply

include:

Supporting the formation of local consortiums where businesses team up to work

together as a group to take on big scale projects that would normally go to

companies from outside the region

Group buying of construction materials to reduce costs for smaller operators, and to

promote collaboration

Opportunity for filtering tenders through local industry companies to help local

businesses apply and keep on track with what tenders are available.

Findings – Potential Models appropriate for Mid North Coast

The findings highlighted in the full report in relation to identifying potential models and

projects within the affordable housing sector which are appropriate to the Mid North Coast

are:

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working with the Indigenous community and the Local Aboriginal Land Councils in

the region to identify and develop affordable housing;

Discussions be held with all relevant parties in regards to the collaborative model

proposed which utilises available land from the Department of Housing, churches or

local aboriginal land councils in combination with a collective of local builders;

Realising the potential of the older population in the Mid North Coast region to

stimulate investment in housing – both in the redevelopment of some housing stock

and in the development of new investment strategies for the region’s older

population;

Increasing the local supply of inputs into the Residential Construction sector in the

region. The sector currently imports $146 million (2010-2011 financial year) which

supports 357 jobs outside of this region. This could reduce costs of materials as well

as increase employment opportunities and boost the regional economy.

Unlocking the ability of local government to deliver affordable housing through both

new and established mechanisms; and,

Attracting new participants into the housing and land development industries in the

Mid North Coast region. Such additions have the potential to both add investment

to the sector and encourage innovation amongst existing participants.

Potential Projects for the Mid North Coast

Through consultation with the Mid North Coast community, stakeholders and industry,

research and data analysis and advice from project consultant Professor Beer the following

potential projects were identified.

In considering these proposed models, it is important to note that boosting the effective

demand for housing is an important step in increasing the demand for building-related

labour. Greater construction activity will also help to attract new businesses into the region

and support existing enterprises. It is noted that the potential projects described in this

section are not exhaustive of all options for the region; they are ones identified during this

project and through engagement with stakeholders.

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Consortium of Local Builders

A local company on the Mid North Coast, Maxd121, has offered a potential model

(Appendix B, full report) for the development of affordable housing to meet the need within

the region for low income earners to be able to make the step to purchasing their own

home. The goal of this model is to see that the target market (namely low income families)

are facilitated through existing and potentially new government programs, and even new

applications of existing programs, in achieving the goal of purchasing a new home. Homes

produced under this program would have to meet the requirements of ‘affordable housing’

for the specific local, i.e. distance from CBD and services, price etc.

The model offers the idea that the formation of a ‘consortium’ of builders (from the local

area) would have the opportunity to participate on an equitable basis in the program.

However if builders were to participate they must adhere to the requirements of the

program so there is a guaranteed outcome to meet the objective, i.e. to deliver the product

within the allowed timeframe, at the specified cost (within the affordable range for low

income families of the local), and to the design of the program.

There would be cost savings through bulk planning and agreements with providers (i.e.

prefab, and other add on industries to the sector), and there would be a fixed process under

the program for the delivery of the home regardless of the suppliers and builders used. This

allows for the stable and predictable production of the product. Homes would be built to

meet needs such as: affordability, cost and energy efficiency, needs of target market and

the locals within the region.

Part of the model will require all local services to be consulted first hand before any non

local services are retained, i.e. all building material and construction service to be locally

obtained. The potential benefit to flow on industries in the Mid North Coast is highly

significant under this model.

Key needs to achieve the program are also identified:

Affordable land

Affordable turn key build packages

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Lending body to look at duel mortgage

Land with reasonable access to CBD

Variety of options in which clients could purchase a home and land package

Comfortable designs with energy efficient aspects

Cooperative of likeminded builders to share construction demands

Strong development team to integrate, market and facilitate the program

Structured links between land providers and development group

The potential of such a program offers significant opportunity to the affordable housing

market for the Mid North Coast. It utilises the private sector to ‘champion’ the push for

affordable housing and targets a high priority stakeholder group ‘low income families’.

Further investigation in to such models offer a significant way forward to stimulating the

housing construction and associated local industries on the Mid North Coast.

Local Aboriginal Land Councils

The Mid North Coast has 5 Local Aboriginal Land Councils situated within the region. As

previously identified the Indigenous populations are one of 5 target groups for affordable

housing in the region. The rate of homelessness for the Indigenous population is four times

that of non-indigenous Australians and Aboriginal and Torres Strait Islanders are 10 times

more likely to be sleeping in overcrowded conditions (Australian Institute of Health and

Welfare 2011). Consultation with the Local Aboriginal Land Councils within the region on the

matter of affordable housing generated promising discussion.

Kempsey Local Aboriginal Land Council at present is creating a data base of assets owned

and the potential of those assets. Kempsey Local Aboriginal Land Council aims to have a

plan in place within the next 12 months which should identify any land available for

purchase. Nambucca and Coffs Harbour Local Aboriginal Land Councils both identified that

they would be open to partnerships in relation to any land they had available and the

potential for affordable housing projects on that land. This conversation was in the context

of the question ‘Do you have any land available which could be sold in relation to an

affordable housing project?’ Biripai identified that any land they owned already had a house

on it and Purfleet/Taree Local Aboriginal Land Council identified there is about 18 blocks of

land that if approached could be discussed in relation to a potential sale.

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In particular, further in discussion with Coffs Harbour Local Aboriginal Land Council they

identified that they have the capabilities to be a service provider for affordable housing in

the future if the opportunity existed.

These discussions provided an adequate understanding that the Local Aboriginal Land

Councils within the region are aware of the affordable housing issues and are approachable

in regards to what their assets and services can provide.

Collaborative Model with NSW Department of Housing

Housing NSW in collaboration with local organisations and organisations looking to expand

their services into the region is in discussions for potential implementation of an affordable

housing model. Housing NSW is an agency of the Department of Family and Community

Services and is one of the largest providers of social housing in Australia. As a social housing

provider, Housing NSW is in a position to understand what the affordable housing sector

needs. Housing NSW is currently in discussion with a number of community housing

providers and local building companies towards developing a housing model to address the

shortage of affordable housing across the Mid North Coast region.

Collaboration between a number of organisations that have the potential to create, manage

and service affordable housing is central to the model in discussion for the Mid North Coast.

Importantly the concept generates promise towards growth in workforce and providing

affordable housing options for low to moderate income earners.

The model aims to stimulate the regional economic and social base, growing jobs and skills

as well as address the regions shortage of affordable housing. Initial interest in pursuing

such a model stems from discussions between Housing NSW, Marist Youth Care Ltd, the

local Catholic Church Diocese and local builders. The model identifies potential;

Employment growth for the local population

Growth of the local construction industry

Opportunities for construction training

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Opportunities for local builders to be part of a social business partnership

Opportunities for Land Councils to enter into a partnership to generate employment

possibilities for the Indigenous population

Triple bottom line objective- Social, Economic and Environmental outcomes

And generate new injection of funds into the local economy

Land options, although not specifically identified, are recognised as available pending

further discussions, through 3 separate organisations. The availability of land and

willingness of stakeholders to get involved in implementing an effective model is a positive

step in the right direction.

The success of implementing part of the above model into the Mid North Coast affordable

housing market would have a generous impact on the market. Any effort to lower the

amount of households without a shelter over their head or in housing stress is a success.

Further this model considers the entire process of implementing an affordable housing

strategy including the construction of dwellings. Up-skilling youth as part of this model is

resourceful and employing the services of Marist Youth Care to manage such a role would

ensure knowledge and service is provided by an experienced source.

Consideration of the services needed to support such a model is also provided. The region

already maintains a range of service providers which manage social and community housing

properties. These providers have the capacity to maintain Head Leases and Sub Leases as

well as support the needs of the rental clients. The Many Rivers Regional Housing

Management Services (MRRHMS) is an example of one such provider.

MRRHMS is a ‘not for profit’ Aboriginal Corporation set up to act as a Property and Tenancy

Management Agency (MRRHMS 2012). MRRHMS provides:

Assistance with Asset (property) Management;

Assistance with rent collection and arrears management

Assistance with the co-ordination and management of Repairs and Maintenance;

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Assistance with CTTT applications and representation at CTTT Hearings, and

Assistance with Rent Setting. (MRRHMS 2012)

Assistance with matters such as those listed above give clients who Head Lease their

property to a Social or Community Service provider assurance that their property is

maintained and rent is paid. MRRHMS currently manage a portfolio of around 350 houses

under a Head Lease agreement with NSW Aboriginal Housing Office.

Taking Advantage of Demographic Opportunities

As noted in the full report, the Mid North Coast of NSW has an elevated age profile when

compared with the remainder of the state. This profile has some disadvantages from a

housing supply perspective, as older persons – including those on age pension incomes and

superannuants – have lower average incomes when compared with national and state-wide

trends. On the other hand, this population group tends to have significant wealth holdings.

There is therefore the potential to develop strategies that draw upon this wealth to invest in

housing in the Mid North Coast.

A number of strategies have been suggested in various parts of Australia to encourage

investment in affordable housing by this age group. This includes:

Partnering with a financial institution – such as a local bank or finance sector

intermediary - to encourage investment into the local housing market. This could

take the form of either a Trust-type vehicle that guaranteed rates of return to

investors through the use of a pool of investment or the simple promotion of

investment opportunities.

It is worth noting that for this group of investors, a secure, guaranteed income is

often more important than high returns. Current rates of return would be

sufficient to attract investors from this source into the market.

RDA Mid North Coast should work with the building industry and locally-

represented financial institutions to develop such investment vehicles and guide

their activities into key developments within the region.

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The older population also presents an opportunity to revitalise the development of the

region’s housing stock and stimulate housing construction. One of the opportunities is the

renewal of stock through the demolition of existing housing and the construction of new,

higher density dwellings, some of which are likely to meet affordability criteria. Key actions

in this area include:

Reviewing local government planning and development approval processes to

facilitate urban renewal. Potentially, RDA Mid North Coast could source funds for

local government to commission a review of their planning schedules in this area.

o The development of a model code – shared and agreed with local councils –

on urban renewal on the Mid North Coast would be an important step to

more effective redevelopment activity.

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Mobilising Local Government Potential

As the discussion above has highlighted, development approvals on the Mid North Coast can

take a considerable period of time. On average, development approvals take 70 days or

more in the region, well below the ‘best practice’ standard across Australian local

government of 3 to 4 working days. The available data suggest that local government

development approval processes may be under-resourced with respect to staffing. It is

important to acknowledge that such delays:

Add to the uncertainty facing developers;

Impose additional holding costs on developers;

Discourage investment in land holdings and new development by adding to the

management task confronting would-be developers.

The net effect is to add to housing construction costs and reduce affordability.

One of the key actions to be taken in stimulating the housing sector in the Mid North Coast

is the review of planning practice. Actions that could be undertaken within the region –

perhaps under the guidance of RDA Mid North Coast – include the establishment of a

Working Group to reduce development approval times. Such a group should include

representatives of local government, state government and the housing industry – including

both developers and home builders. Further work in this area could include the

investigation of ‘best practice’ approaches to development approval, possibly linked to the

implementation of an Urban Integrated Design Strategy.

There is a second important way that the potential of local government in the region could

be mobilised. Across Australia many local governments have made effective use of their

land holdings to promote the supply of affordable housing. Two examples are given below:

Brahma Green, City of Salisbury, South Australia. The City of Salisbury is an outer

metropolitan local government in Adelaide. It has long history of providing

affordable housing and it is an important manufacturing centre. In 2009 the City

recognised that housing was becoming unaffordable for many low income residents

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and decided to take direct action. It converted a small block of land it owned into 8

medium density properties, which were constructed by the private sector. It then

worked with a state government agency – HomeStart finance – to develop a financial

package which allowed low income households to enter home ownership by buying

the dwelling but not the land. That is, households moved into a form of shared

ownership with the council where the local government retained a proportion of the

final resale price. Residents benefited as the cost of purchase was significantly

reduced and they were able to enter owner occupation where previously that would

have been impossible.

The city of Townsville has been confronted by high housing prices. The city

responded by inviting specialist social housing providers – both the Brisbane Housing

Company and the Gold Coast Housing Company – to establish in the region with the

assistance of grants of land surplus to council’s requirements. Through this strategy

– which has been used in a number of regional centres up and down the Queensland

coast – secure and affordable housing has been provided to some of the most

vulnerable people within these communities. Importantly, such strategies also take

full advantage of Commonwealth financial structures. Such organisations are also

well placed to take advantage of affordable housing stimulus measures such as the

National Rental Affordability Scheme (NRAS).

Both of the strategies outlined above have the potential to boost the supply of affordable

housing through new and innovative actions by local government. Other, well established

actions should also be pursued, and this includes an increased effort in applying for Federal

Government programs.

Seeking New Participants in the Housing and Development Industry

The focus groups with industry participants noted the challenges confronting existing

participants within the sector. Some noted that they have moved away from a more active

role because of the difficulties they have encountered in the past, the uncertainty of current

market conditions and difficulties at various times in securing high quality labour.

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Previous research has noted that regional labour markets can be confronted by the small

scale of their industry – with smaller, locally based builders and developers responsible for

most development and not able to achieve economies of scale in production and planning.

Attracting large, external housing and development industry participants into the region

would carry a number of potential advantages including:

The potential for economies of scale in production, with consequent cost

advantages;

Better access to finance through the larger scale of national or state-wide companies

developing land and housing;

National marketing and development;

Skills upgrading for existing and future staff;

Improved processes;

The potential to attract labour from outside the region and, in the longer term, for

personnel hired from within the region to move to other markets.

RDA Mid North Coast could work in partnership with local business and peak organisations –

such as one or more Chambers of Commerce – to attract new participants into the region.

Conclusions

This report highlights that there is strong demand for affordable housing and the

construction sector in the Mid North Coast region and with demographic pressures this is

likely to increase if additional measures are not taken in the short to medium term. The

supply and demand barriers to affordable housing are extensive, although reducing some is

not unattainable. Many stakeholders within the region identified similar barriers in their

relationship with the housing industry. This suggests that a regional approach working

towards reducing barriers to affordable housing is important.

To achieve successful workforce development in the housing construction industry the Mid

North Coast must be ready to tackle the barriers that have been identified at all levels

within the sector. Businesses need to be supported in growth especially with regards to

staff training. The quality of training is of a high calibre in the region, but as identified there

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are areas for significant improvement: support, focussing on improving completion rates;

retention, through promoting the worth of career prospects available; targeting training to

meet workforce needs avoiding surplus of particular trades.

There are significant construction infrastructure programs in the Mid North Coast, with

funding approved for Pacific Highway; Port Macquarie and Kempsey Hospitals; airport

upgrades and the development of the Charles Sturt University campus. This will boost the

construction sector and employment in the region, however more is required to ensure

local inputs are utilised. After the construction work of these projects, additional health

workers and university students will be required and attracted to the region, both of whom

will require housing. The health sector in the region is likely to increase its workforce by

2,000 over the next 5 years and some of this workforce will move to the region and

purchase homes – further stimulating the construction industry.

Recommendations

Regional Development Australia Mid North Coast will seek to raise the priority of additional

affordable housing developments in the region with the RDA Committee (Board). Subject to

available funding, RDA MNC seeks to undertake a pilot affordable housing project and will

examine opportunities for cross regional strategic projects with relevant funding programs.

Further, RDA MNC will continue to identify potential resources (including grants and

relevant funding programs) to advance any of the following recommendations.

Recommendation #1

That RDA MNC work with stakeholders, councils and community partners to establish an

Affordable Housing Task Group to advance the recommendations identified in this report

and identify resources to pilot or implement applicable projects.

Recommendation #2

Further investigation on the establishment of a consortium of local building providers to

assist local organisations, as a group, tender for larger projects and source products with

greater economies of scale. RDA MNC could play a role in this process, given its capacity to

facilitate and bring players together.

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Recommendation #3

Ongoing engagement with the Local Aboriginal Land Councils (LALC) and government

agencies responsible for indigenous affairs in the region to explore options for the

contribution of available land to support affordable housing developments for the

indigenous population. The LALC’s in the region have identified they are approachable in

regards to partnerships and land purchases.

Recommendation #4

Further engagement and investigations are held with all relevant parties in regards to the

collaborative model proposed which utilises available land from the NSW Department of

Housing, churches, councils and Local Aboriginal Land Councils in combination with a

collective of local builders and training providers.

Recommendation #5

Investigate further the mechanisms available to encourage investment in affordable housing

by superannuants in the region with significant wealth holdings who are looking for

secure/guaranteed returns. This will include engagement with financial institutions

(including credit unions).

Recommendation #6

The establishment of a working group to focus on reducing development approval times in

the region. Such a group should include representatives of local government, state

government and the housing industry.

Recommendation #7

Relevant local businesses, peak organisations, Federal and State Government agencies work

to attract new larger external housing and development industry participants into the

region. Such additions have the potential to add investment to the sector, jobs and

encourage innovation amongst existing participants.

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Recommendation #8

Examination of residential construction sector import replacement opportunities to support

more local industry and employment growth. This should also include involvement with the

Industry Capability Network (ICN), Indigenous Coordination Centre (ICC), Indigenous

Business Council and others.

Recommendation #9

Completion rates of existing worker trainees is strong in the region and therefore

encouragement of up skilling and/or diversifying in skills for the existing workforce should

be supported to increase intake and strengthen the sector. This also includes examining the

opportunity for multi-trade qualifications.

Recommendation #10

Identify ways to increase apprenticeship completions for the building and construction

sector in the region.

Recommendation #11

With collaborative partners, that there is further investigation into the development of a

labour pool of building and construction employees.

Recommendation #12

That there is continued engagement with appropriate stakeholders to develop affordable

housing through the use of shared equity models. This could include arranging a financial

package allowing home ownership by the purchase of the dwelling but not the land. That is,

the local council (or other land owner) retains a proportion of the final resale price.

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© Copyright Regional Development Australia 2013

Regional Development Australia – Mid North Coast Oxley House, 133 Gordon Street

Port Macquarie NSW 2444

T: 02 5525 1500