I am delighted to join you today at the launch of an ESG Reporting Standard for Australian Community Housing.
As you know our nation faces significant challenges to provide safe, secure and affordable housing for more Australians:
- home ownership remains out of reach for many
- the increasing interest rate environment is placing pressure on households with mortgages and dampening residential construction activity
- pressures in the private rental market are becoming more pronounced
- and after a decade of underinvestment, more social and affordable rental housing is needed.
These challenges particularly affect the vulnerable, including but not limited to:
- women and children leaving family and domestic violence
- older women on low incomes at risk of homelessness
- remote Indigenous communities, and
The Albanese government is committed to helping address these challenges by improving housing outcomes for Australians.
And we know attracting institutional and private capital is increasingly important in a world of constrained government budgets and CHPs with limited equity capital.
It is paramount that opportunities be sought to attract and collaborate with external financiers on feasible projects.
To do this we need to help close the funding gap – the difference between the revenues generated by social and affordable housing and the costs of providing this housing.
This is at the heart of this government’s housing agenda, including our legislation currently before Parliament.
It is landmark legislation to deliver the single biggest Commonwealth investment in social and affordable housing in more than a decade.
The legislation passed the House of Representatives in February and will be before the Senate shortly.
This is the legislation that will create the Housing Australia Future Fund .
Our $10 billion investment through the Housing Australia Future Fund (HAFF) will not only help reduce the funding gap to make social and affordable housing projects more attractive to investors – it will also help create more scale.
The HAFF will generate returns over the long term to provide an ongoing revenue stream to support social and affordable housing and help the CHP sector achieve scale.
As you know, we’ve committed that the Fund will help to deliver 30,000 social and affordable dwellings over its first 5 years, as well as helping address acute housing needs for some of our most vulnerable citizens.
We have already seen the Albanese government’s agenda will support further investments.
Superannuation funds have already shown appetite to invest into housing, including projects on social and affordable housing:
- An Australian Retirement Trust and Queensland Investment Corporation project is using a $500 million investment vehicle to develop up to 1,200 new, mixed-tenure dwellings in south-east Queensland.
- In 2021, Aware Super announced a $900 million commitment to affordable housing projects via a Build-to-Rent pipeline targeted at providing more affordable rental housing for essential workers, who are a key segment of Aware Super’s membership.
The Albanese government is committed to working with investors, including superannuation funds to leverage more private capital into national priority areas, including housing and clean energy.
The Treasurer’s Investor Roundtables are helping achieve that by bringing together leaders from some of Australia’s largest superannuation funds, the major banks and global asset managers.
I participated in the Treasurer’s first roundtable in November that focused on the housing sector.
This included wider discussion on the investment environment and finding tangible actions that promote investment that deliver strong returns for superannuation fund members and other investors while promoting positive outcomes for the Australian community in nationally important sectors.
But government is not alone in driving important new work.
So congratulations CHIA on the leadership you’ve shown in developing this ESG Reporting Standard.
Lenders and investors worldwide are increasingly looking to allocate funds into assets and industry sectors that combine a sound commercial return with positive environmental, social and governance (ESG) outcomes.
The ESG phenomenon is only just beginning.
But to tap into this growing interest in ESG funds, the community housing sector needs to demonstrate its performance and credentials.
It is only the second, countrywide ESG standard in the world.
It follows the UK’s Sustainability Reporting Standard, which was launched in November 2020.
It will help community housing providers diversify their funding base.
It will assist social and affordable housing to grow as an investment asset class.
It will better position Australia’s CHP industry to access the growing wave of ESG capital looking for an investment home, which is expected to top $50 trillion this decade.
As NHFIC’s most recent Social Bond report notes global finance channelled into ESG-related activities has grown exponentially over the past decade.
Capital flowing into social bonds has increased significantly over the past 5 years.
In the European region, social bonds increased nearly 10-fold over recent years.
It’s no longer a case of boards and fund managers choosing to invest in ESG assets as a nice add on.
ESG reporting is becoming law in jurisdictions such as the EU.
Government and corporate leaders are coming under increased pressure to strengthen their ESG skills and integrate sustainability into their policy and planning strategies.
This is demand-driven – investors want to know dollar for dollar where their money is going and what impact it’s having.
And corporations and investment funds around the world are responding.
A recent Harvard University study shows more than a quarter of global investors say ESG is central to their investment approach.
Government support remains an important ingredient to get social and affordable housing projects off the ground, but private investment in social and affordable housing in the UK has been growing.
It now dwarfs government grant funding by a factor of 3 to one.
So the ESG Reporting Standard comes at an opportune time.
The ESG Reporting Standard underscores how critical evidence, accountability and transparency is to major investment decision-making.
These are also, of course, important for government.
Our National Housing Supply and Affordability Council will provide independent, evidence‑based advice to help inform all governments on how to improve housing supply and affordability.
We’ve already established an interim Council which held its first meeting last month.
And as part of our housing legislation before the Parliament, the National Housing Supply and Affordability Council will be established as a permanent, statutory Council.
We are here today talking about how critical partnerships - between government, industry and private capital - will be to address Australia’s housing challenges.
But some have sought to characterise the Albanese government’s commitments as the only mechanism to address social and affordable housing supply in this country.
And as proud as I am of our government’s commitments to social and affordable housing, and the new leadership we are bringing to our nation’s housing challenges, it is critical to understand that we cannot and are not acting alone.
Having already held three meetings with Housing Ministers from across the country, I know that states and territories are stepping up with significant new commitments to build more social and affordable housing.
Then there is the work of you all in this room – community housing providers and institutional investors.
This is of course, in addition to the new affordable housing the Albanese government has committed through the National Housing Accord, and the new social and affordable housing we will build through the Housing Australia Future Fund.
The important new work being launched today will mean the number of social and affordable dwellings grows.
Given the scale of our nation’s housing challenges, Australians understand the urgent necessity of everyone pulling together to address this issue.
There is no one silver bullet - this is about everyone working together.
In just one word, this is about collaboration.
Collaboration between federal, state and local government.
Collaboration between government and community housing providers.
Collaboration with the private sector through residential property developers and institutional investors.
The Housing Australia Future Fund will be a central part of this.
The Albanese government is committed to bringing new national leadership to the task of addressing our nation’s housing challenges.
But we do not act alone.
We welcome new commitments - recognising that we will all need to do more to ensure more Australians have a safe and affordable place to call home.
The launch of today’s ESG reporting standard is another important step on this path.
I commend this ESG Reporting Standard and CHIA for leading this work.
And I look forward to hearing about how implementation and adoption proceeds over the coming couple of years.