Today, the Turnbull Government is releasing a discussion paper on social impact investing and the development of the social impact investment market in Australia.
The discussion paper sets out a proposed whole of government position on social impact investing for consultation, including the objectives the Commonwealth has for its role in social impact investing, principles to guide Commonwealth Government involvement in the social impact investing market and determining possible regulatory barriers that can be addressed by the Commonwealth to support the market.
This consultation is the next step in implementing the Financial System Inquiry's recommendation to explore ways to facilitate the growth of the social impact investment market.
A key objective is to create an enabling environment for social impact investment that doesn't displace private sector financing.
There are currently over 180,000 people on social housing wait lists across Australia. The number of social housing dwellings would need to grow by almost 50 per cent in order to accommodate this number of people.
We need to create an investment environment to make a meaningful increase to the available stock of affordable housing, one where the involvement of private investment can contribute to increasing supply as demand grows.
One of the challenges faced by all countries developing affordable housing is access to longer-term, low-cost finance. Access to capital is a critical issue for the affordable housing sector and the ability to leverage private sector investment is required to boost the supply of affordable housing.
While in the UK, I am meeting with leading institutions and entities that have been developing more innovative forms of investment. This includes institutions involved with the £1 billion "build to rent" policy that leverages public spending to encourage large private investors into providing more affordable housing.
This week, I visited the Lendlease Elephant Park site in London, UK. The visit provided an opportunity to view first-hand the affordable housing being offered by the project.
The UK Government has been successfully implementing innovative forms of finance to provide additional sources of funding for social infrastructure, including affordable housing.
The Elephant Park project in London offers 25 per cent affordable housing. Half of the 550 affordable homes will be available as a mix of affordable and social rent, with the other half available under shared ownership. The L&Q Group will take ownership and manage the affordable housing to be built at Elephant Park by Lendlease.
Housing affordability is an important issue for Australia. The Turnbull Government is continually looking at ways to improve supply in the area of affordable housing.
At present, the Commonwealth and state and territory governments combined are spending over $10 billion a year on housing, but it is failing to improve outcomes, particularly for those with low-moderate incomes.
The Turnbull Government understands the pressures on many working Australians and their families and will continue to take action to back all Australians looking to work and save for their financial security.
We're working closely with the states and territories to assess the viability of a bond aggregator in Australia to provide cheaper and longer-term finance to affordable housing providers.
We're also looking at how we can better meet the growing demand for housing and relieve any bottlenecks causing shortages, especially in major capital cities.
The Government encourages all interested parties to read the social impact investing discussion paper and consider making a submission by 27 February 2017.
The discussion paper is attached and is also available on the Treasury website.
Download (PDF): Social Impact Investing Discussion Paper