Explanatory Memorandum
(Circulated by authority of the Assistant Minister for Competition, Charities and Treasury, the Hon Dr Andrew Leigh MP)Chapter 3: Increasing the cap on the Housing Australia Special Account
Outline of chapter
3.1 Schedule 3 to the Bill amends the Housing Australia Act to increase the cap on the balance of the Housing Australia Special Account from $1 billion to $4 billion. The Schedule recognises the importance of ensuring that the cap does not constrain the ability to provide additional credits to the Housing Australia Special Account.
Context of amendments
3.2 The Housing Australia Special Account was established by section 47A of the Housing Australia Act.
3.3 Amounts are credited to the Housing Australia Special Account in accordance with section 47B of the Housing Australia Act, under Part 4 of the Housing Australia Future Fund Act 2023, and from other appropriations.
3.4 The Housing Australia Special Account may be debited for the purpose of making certain loans and payments to Housing Australia under section 47C of the Housing Australia Act. The Housing Australia Special Account is used to support the delivery of key activities by Housing Australia that fund the provision of social, affordable, and acute housing in Australia. These activities include the AHBA, the HAFFF and the NHAF.
3.5 The AHBA operates by Housing Australia making loans to registered community housing providers, using money borrowed from the Commonwealth and by raising finance by the issue of bonds on the commercial market. The Housing Australia Special Account is used to provide loans to Housing Australia to on-lend to community housing providers through the AHBA reserve, and for liquidity management of AHBA bonds, through a line of credit.
3.6 The HAFFF provides finance for eligible projects that increase the supply of social housing, affordable housing and housing that address acute housing needs across Australia while the NHAF provides finance for eligible projects that increase the supply of affordable housing across Australia. The Housing Australia Special Account is used to provide funds to Housing Australia to make loans and grants to eligible project projects for the HAFFF and the NHAF.
3.7 The cap on the balance of the Housing Australia Special Account is provided by subsection 47D(1) of the Housing Australia Act.
3.8 Where any amount credited to the Housing Australia Special Account result in the cap being exceeded, subsection 47D(1) of the Housing Australia Act requires any excess amount to be deducted into the general Consolidated Revenue Fund. As a result, any funds in excess of the cap credited to the Housing Australia Special Account will not be available to support Housing Australia's activities.
3.9 Prior to this amendment, the cap on the balance of the Housing Australia Special Account was $1 billion. This amount reflected the original size of the AHBA reserve and the line of credit. The cap has not been changed since Housing Australia was established in 2018.
3.10 In the 2024-25 Budget, the line of credit was increased by $3 billion to a total of $4 billion. Funding for this increase was appropriated in the Appropriation Act (No. 2) 2024-25.
3.11 In July 2024, the AHBA reserve was increased from $1 billion to $4 billion via an amendment to the Housing Australia Investment Mandate Direction 2018 to reflect the additional $3 billion being made available to Housing Australia under the line of credit.
3.12 The Government is increasing the cap on the balance of the Housing Australia Special Account in line with the increased line of credit and AHBA reserve. The increased cap assists with the careful coordination of additional credits to the Housing Australia Special Account to ensure the balance does not exceed the cap. These credits may be for activities including the AHBA, the HAFFF and the NHAF.
Detailed explanation of new law
3.13 The Housing Australia Act is amended to increase the cap on the balance of the Housing Australia Special Account to $4 billion.
[Schedule 3, item 1, subsection 47D(1) of the Housing Australia Act]
3.14 The intent of the increased cap on the balance of the Housing Australia Special Account is to strengthen Housing Australia's ability to improve housing outcomes. The increased cap facilitates the additional $3 billion being made available to Housing Australia through a line of credit supporting the AHBA. The increased cap recognises that the previous size of the cap constrained Housing Australia's ability to deliver key activities that fund the provision of social housing, affordable housing and housing that addresses acute housing needs.
3.15 The increased cap acknowledges the importance of ensuring that the cap does not constrain the ability to provide additional credits to the Housing Australia Special Account. It assists with the careful coordination of additional credits to the Housing Australia Special Account to ensure the balance does not exceed the cap. These credits may be for activities including the AHBA, the HAFFF and the NHAF.
Commencement, application, and transitional provisions
3.16 Schedule 3 to the Bill commences and applies from the day after Royal Assent.
[Section 2 of the Bill]