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2022-2023
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
HOUSING AUSTRALIA FUTURE FUND BILL 2023
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments and Requests for Amendments to be Moved on Behalf of the Government
(Circulated by authority of the Minister for Finance,
Senator the Hon Katy Gallagher)
HOUSING AUSTRALIA FUTURE FUND BILL 2023
OUTLINE
These amendments would ensure that no less than $500 million will be disbursed from the
Housing Australia Future Fund (HAFF) in each financial year from 2024-25 onwards. The
Bill would allow up to $500 million to be disbursed in 2023-24.
The designated annual amount to be disbursed from the HAFF Special Account would be
$500 million in each financial year from 2024-25 until 2028-29. From 2029-30, the
designated annual amount would be indexed to grow in line with the Consumer Price Index
(CPI). This would ensure that HAFF disbursements for social housing, affordable housing
and acute housing needs keep pace with inflation from 2029-30.
On 1 June of each year from 2024-25 onwards, an assessment will be made of whether the
total amount to be disbursed from the HAFF Special Account for social housing, affordable
housing and acute housing needs is less than the designated annual amount for the relevant
financial year. If that amount is less than the designated annual amount, an additional transfer
would be made to the Housing Australia Special Account, before the end of the relevant
financial year, to bring total HAFF disbursements for the financial year up to designated
annual amount.
Housing Australia would use any additional transfers to make grants and loans in relation to
social housing, affordable housing or acute housing needs, consistent with the legislated
purposes of the HAFF.
The responsible Ministers (the Finance Minister and Treasurer) would be able to increase the
designated annual amount by way of disallowable legislative instrument. The instrument
could provide for the indexation of the designated annual amount in future years (for
example, to keep pace with inflation). Prior to making a legislative instrument, the
responsible Ministers would be required to consult the Future Fund Board of Guardians on
the impact of the proposed change, with the Board's advice to be tabled in the Parliament
alongside the legislative instrument.
Any increases in payments in relation to social housing, affordable housing or acute housing
needs as a result of a higher designated annual amount (either through CPI indexation or a
legislative instrument made by the responsible Ministers), would have a negative impact on
the underlying cash and fiscal balances. These impacts would occur in the financial year(s)
where the higher payments are made.
The amendments would not affect the analysis of human rights issues in the HAFF Bill.
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NOTES ON AMENDMENTS
Item 1 would insert a definition of designated annual amount in the definitions clause of the
HAFF Bill. The definition relates to the annual amount to be disbursed from the HAFF
Special Account and refers readers to section 33B.
Item 2 would expand the main purposes of the HAFF Special Account in clause 12 to include
making transfers under new clause 33A. Transfers under clause 33A would ensure that no
less than the designated annual amount is disbursed from the HAFF Special Account in each
financial year from 2024-25 onwards.
Item 3 would amend clause 26 to ensure that the Finance Minister only makes transfers from
the HAFF Special Account to the HAFF Payments Special Account when the Minister is
satisfied that the transfer will not breach the maximum amount that can be transferred from
the HAFF Special Account in that financial year. In 2023-24, the maximum amount is $500
million (as per clause 36) and in all subsequent financial years, the amount is the designated
annual amount (as per clause 33B).
Items 4 and 5 would amend clause 29 to ensure that the Finance Minister only makes
transfers from the HAFF Special Account to the COAG Reform Fund when the Minister is
satisfied that the transfer will not breach the maximum amount that can be transferred from
the HAFF Special Account in that financial year. In 2023-24, the maximum amount is $500
million (as per clause 36) and in all subsequent financial years, the amount is the designated
annual amount (as per new clause 33B).
Item 6 would insert a new paragraph into clause 32 (the simplified outline to Part 4) to
clarify that from 2024-25 onwards, the total amount to be transferred from the HAFF Special
Account for the purposes of social housing, affordable housing and acute housing needs must
equal the designated annual amount for the relevant financial year (as per new clause 33B).
Item 7 would amend the heading of clause 33 to refer to "requested transfers" from the
HAFF Special Account to the Housing Australia Special Account. This would differentiate
those transfers from "guaranteed transfers" made to Housing Australia under clause 33A.
Item 8 would amend clause 33 to ensure that the Finance Minister only makes transfers from
the HAFF Special Account to the Housing Australia Special Account when the Minister is
satisfied that the transfer will not breach the maximum amount that can be transferred from
the HAFF Special Account in that financial year. In 2023-24, the maximum amount is $500
million (as per clause 36) and in all subsequent financial years, the amount is the designated
annual amount (as per new clause 33B).
Item 9 would insert new clauses 33A, 33B, 33C, 33D and 33E in relation to the designated
annual amount to be disbursed from the HAFF Special Account in each financial year from
2024-25 onwards.
New clause 33A would provide guaranteed transfers from the HAFF Special Account to the
Housing Australia Special Account in all financial years from 2024-25 onwards where the
total disbursements in the financial year would otherwise be less than the designated annual
amount. This clause would ensure that disbursements from the HAFF Special Account are no
less than $500 million in any financial year from 2024-25 onwards.
Subclause 33A(1) would provide that section 33A applies in all financial years from 2024-25
onwards where the total debits from the HAFF Special Account for social housing, affordable
housing and acute housing needs would be less than the designated annual amount for that
financial year as per new clause 33B. The subclause requires an assessment to be made at the
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start of 1 June of each financial year from 2024-25 onwards to determine whether the total
amount to be debited from the HAFF Special Account would be less than the designated
annual amount for that financial year. This timing has been chosen to ensure that there is
sufficient time to make a guaranteed transfer in financial years where such a transfer is
required to ensure total disbursements equal the designated annual amount for that financial
year.
Subclause 33A(2) would require the Finance Minister to make a transfer from the HAFF
Special Account to the Housing Australia Special Account in all financial years from
2024-25 onwards where the total amount to be disbursed from the HAFF Special Account
would be less than the designated annual amount for that financial year. The amount of the
transfer would equal the difference between the designated annual amount for the financial
year and the amount already disbursed, or expected to be disbursed, from the HAFF Special
Account in that financial year for social housing, affordable housing and acute housing needs.
The transfer direction must be in writing and the transfer must occur before the end of the
relevant financial year, to ensure that total disbursements form the HAFF equal the
designated annual amount for each financial year from 2024-25.
Subclause 33A(3) would provide that a direction under subclause 33A(2) is not a legislative
instrument within the meaning of subsection 8(1) of the Legislation Act 2003. Directions of
this type are administrative in character because they are merely the application of a legal
power in a particular case (i.e. they do not determine or alter the content of the law itself).
Subclause 33A(4) would require the Finance Minister to provide the Housing Minister and
the Treasurer with a copy of any directions made personally by the Finance Minister under
subclause 33A(2).
Subclause 33A(5) would apply when the Finance Minister has delegated the power to give a
direction under subclause 33A(2), as permitted by amended subclause 61(1). When this
delegation has occurred, and the Finance Minister's delegate gives a direction under
subclause 33A(2), subclause 33A(5) would require the delegate to give a copy of that
direction to the Treasury Department. This would allow correspondence to occur between
officials at a departmental level when the power to give a direction under subclause 33A(2)
has been delegated to an official in the Finance Department.
New clause 33B would define the designated annual amount, which is the amount to be
disbursed from the HAFF Special Account in a given financial year from 2024-25 onwards.
If the responsible Ministers have made a determination to specify a designated annual amount
for a financial year under new clause 33C, the designated annual amount is the amount
specified in that determination. If no determination is in force under clause 33C, the
designated annual amount is to be $500 million. The Note to clause 33B specifies that if no
determination has been made by 2029-30 or a later financial year, the designated annual
amount of $500 million in paragraph 33B(b) is to be indexed in line with CPI as per new
clause 33E.
New clause 33C would provide the legislative framework for the responsible Minsters (the
Finance Minister and the Treasurer) to increase the designated annual amount by legislative
instrument.
Subclause 33C(1) would allow the responsible Minsters to determine, by way of legislative
instrument, the designated annual amount for a specified financial year (paragraph
33C(1)(a)), or a specified financial year and each subsequent financial year (paragraph
33C(1)(b)).
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This clause would provide the Government with a mechanism to increase the designated
annual amount in response to investment or policy considerations in the future. For example,
if the Government decides to make an additional credit in the future and the HAFF was able
to support higher annual disbursements from that time, this clause could be used to facilitate
higher disbursements into the future.
The Note after subclause 33C(1) would direct readers to subsection 33(3) of the Acts
Interpretation Act 1901, which provides that the power to make a legislative instrument
includes the power to repeal, rescind, revoke, amend, or vary any such instrument.
Subclause 33C(2) would provide that a determination under subclause 33C(1) could not be
used to reduce the designated annual amount for a financial year (compared to the designated
annual amount for the previous financial year).
Subclause 33C(3) would allow the responsible Ministers to use a legislative instrument under
clause 33C to apply indexation to the designated annual amount. Once the responsible
Ministers determine a designated annual amount by way of legislative instrument, the
indexation provisions in clause 33E would no longer apply, as per the operation of new
subclause 33E(2). However, subclause 33C(3) would allow the responsible Ministers to apply
indexation to the designated annual amount through a legislative instrument issued under
subclause 33C(1). This may be used, for example, to increase the designated annual amount
in the future in line with CPI increases.
Subclause 33C(4) would require a determination under subclause 33C(1) to be made before
the start of the first financial year to which it applies. This would provide certainty of funding
and assist with forward planning in relation to HAFF spending.
Subclause 33C(5) would require the responsible Ministers, when making a determination
under new subclause 33C(1), to have regard to the advice given by the Future Fund Board of
Guardians (Future Fund Board) under new clause 33D, in relation to the impact of making
the determination on the ability of the Future Fund Board to comply with the Act and the
HAFF Investment Mandate, and any other matters the responsible Ministers consider
relevant.
Subclause 33C(6) would require a determination to be in place at all times after the first
determination is made under subclause 33C(1) to adjust the designated annual amount. This
would provide for continuity and avoid confusion about the designated annual amount in
future financial years in the event that no determination is made after a previous
determination no longer has effect. The responsible Ministers would be required to ensure
that this obligation is met.
Subclause 33C(7) would apply if the responsible Ministers vary a determination in force
under subclause 33C(1). It would require the variation to be made before the start of the first
financial year to which the varied amount is to apply. This would operate in a similar manner
to subclause 33C(4), to assist with forward planning in relation to HAFF spending.
New clause 33D would require the responsible Ministers to obtain advice from the Future
Fund Board before making a determination to increase to designated annual amount under
subclause 33C(1).
New subclause 33D(1) would require the responsible Ministers to provide written notice to
the Future Fund Board that sets out a draft of a determination under subclause 33C(1). It
would also require the Future Fund Board to give advice to the Ministers, within a specified
period, regarding the impact of determination on the ability of the Future Fund Board to
comply with the Act and the HAFF Investment Mandate.
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The responsible Ministers must also require the Future Fund Board, in giving advice, to have
regard to the HAFF Investment Mandate, and any other specified matters.
Subclause 33D(2) would require the Future Fund Board to comply with such a request for
advice.
Subclause 33D(3) would require that the period specified by the responsible Ministers for the
Future Fund Board to provide advice must not be shorter than 60 days from the day of the
request for advice. This is to allow the Future Fund Board sufficient time to appropriately
consider and advise on the impact of the proposed adjustments to the designated annual
amount, as specified in the draft determination, on the ability of the Future Fund Board to
comply with the Act and the Investment Mandate.
Subclause 33D(4) would prohibit the responsible Ministers from requiring the Future Fund
Board to have regard to matters that are inconsistent with the Act or the HAFF Investment
Mandate in giving its advice.
Subclause 33D(5) would clarify that the obligation on the responsible Ministers to require the
Future Fund Board, in giving its advice, to have regard to the HAFF Investment Mandate and
any other specified matters does not, by implication, limit the matters to which the Future
Fund Board may have regard in giving its advice.
To ensure transparency and accountability, subclause 33D(6) would require the advice given
by the Future Fund Board under clause 33D to be tabled in each House of the Parliament
along with the relevant determination.
New clause 33E would provide for the designated annual amount to be indexed by changes in
the CPI in each financial year from 2029-30 onwards. This would allow HAFF disbursements
to keep pace with inflation over time and not diminish in real terms.
Beginning in financial year 2029-30, the designated annual amount would be adjusted,
compared to the designated annual amount for the previous financial year, according to the
formula set out in subclause 33E(1). The formula provides that the designated annual amount
is adjusted by multiplying the indexation factor for the relevant financial year by the dollar
amount of the previous financial year.
Subclause 33E(2) would provide that subclause 33E(1) does not apply in relation to a
financial year for which a determination under subclause 33C(1) is in force. This is to ensure
that any new designated annual amount determined by legislative instrument is not subject to
indexation. New subclause 33C(3) would allow the responsible Ministers to use a legislative
instrument under clause 33C to apply indexation to the designated annual amount specified in
the instrument, however the indexation provisions in clause 33E would not apply.
Subclause 33E(3) would provide the formula to be used to calculate the indexation factor for
a given financial year. The indexation factor would then be used to determine the designated
annual amount for the relevant financial year.
This would have the effect of adjusting the designated annual amount in line with CPI. Using
March CPI data in this formula would allow for calculations to be made ahead of the
upcoming financial year to assist with planning.
As an example, to calculate the hypothetical designated annual amount for 2029-30, the
indexation factor would need to be calculated using the All Groups CPI number for the
March quarter of 2029 (the reference quarter) and the March quarter of 2028 (the base
quarter). Assuming the All Groups CPI number for the March 2029 quarter was 123.9, and
for the March 2028 quarter it was 117.9, the indexation factor would be 123.9 divided by
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117.9, which would be 1.051 (rounded to 3 decimal places as per subclause 33E(4)). This
indexation factor would then be multiplied by the designated annual amount in the previous
financial year. Assuming the designated annual amount in the previous financial year was
$500 million, applying the indexation formula in subclause 33E(1) would determine that the
designated annual amount for 2029-30 is $525,445,293.
Subclause 33E(4) would stipulate that the indexation factor calculated under subclause
33E(3) is to be rounded to 3 decimal places.
Subclause 33E(5) would provide for the rounding of amounts calculated under subclause
33E(1) of the HAFF Bill to whole dollars.
The rounding conventions applied by subclauses (4) and (5) would simplify the
administrative processes for calculating the designated annual amount from 2029-30
onwards.
Subclause 33E(6) would ensure the indexation factor is never less than 1, which would
ensure the designated annual amount would never decrease under this clause. This would
allow the Government to plan future spending programs under the HAFF without the risk that
it will not have sufficient funding to meet its obligations under those programs. It would also
provide certainty to key stakeholders, such as the social and affordable housing sector, which
may be responsible for delivering social and affordable homes under long-term contracts that
rely on HAFF funding.
Paragraph 33E(7)(b) would ensure that only the first version of the index number published
by the Australian Bureau of Statistics (ABS) is used (to avoid the result of the indexation
having to be revised later if the ABS changes its calculation). However, if the ABS changes
its index reference period, paragraph 33E(7)(a) is needed to ensure that only index numbers
using the same index reference period are compared against each other.
Item 10 would insert a new sub-heading in clause 34 for "Requested transfers" from the
HAFF Special Account to the Housing Australia Special Account under section 33, to
differentiate those transfers from "guaranteed transfers" made under new clause 33A.
Item 11 would insert subclause 34(1) into clause 34, to facilitate the insertion of subclause
34(2) by the item below. The content of the provision would not be amended by this item.
Item 12 would insert new subclause 34(2) under the sub-heading of "Guaranteed transfers".
This new subclause would apply in financial years where a guaranteed transfer has been
made under new paragraph 33A(2)(b) to ensure that the total amount disbursed from the
HAFF Special Account is no less than the designated annual amount for that financial year.
New subclause 34(2) would provide that when a guaranteed transfer has been made to the
Housing Australia Special Account under paragraph 33A(2)(b), the Housing Minister must
ensure that the Housing Australia Special Account is debited, for the same amount, for the
purposes of making a payment for a purpose specified in paragraph 47C(1)(b) of the Housing
Australia Act 2018. The Housing Minister must do this as soon as practicable after the
amount has been credited to the Housing Australia Special Account.
The Note to subclause 34 would assist the reader by stating that paragraph 47C(1)(b) of the
Housing Australia Act 2018 relates to grants and loans made by Housing Australia in relation
to acute housing needs, social housing or affordable housing. Housing Australia may only
make grants or loans with funds credited under this subclause after formal Government
approval has been received to do so.
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Items 13 to 16 would amend Part 5 of the Bill to reflect the changes to disbursement
framework from the HAFF Special Account from 2024-25 onwards. Under these changes,
Part 5 would operate as a limit on disbursements from the HAFF Special Account for 2023-
24 only (the designated annual amount would apply from 2024-25 onwards). The amended
clause 36 would allow the Government to disburse up to $500 million from the HAFF
Special Account in 2023-24 for the purposes of social housing, affordable housing and acute
housing needs.
Item 17 would expand clause 38, which specifies the objects of investment of the HAFF, to
include making transfers under new clause 33A, which relates to transfers that ensure no less
than the designated annual amount is disbursed from the HAFF Special Account in each
financial year from 2024-25 onwards.
Item 18 would expand subclause 41(2) to include transfers made under new subclause 33A.
This would ensure that the responsible Ministers, in issuing an investment mandate for the
HAFF, have regard to the need to enhance the Commonwealth's ability to make all
permissible grants and transfers from the HAFF Special Account, including those under new
clause 33A (to ensure that no less than the designated annual amount is disbursed from the
HAFF Special Account in each financial year from 2024-25 onwards).
Item 19 would expand the Finance Minister's delegation powers in subclause 61(2) to
include new clause 33A. This would allow, but not require, the Finance Minister to delegate
functions or powers to make transfers under new subclause 33A to the Secretary of the
Finance Department or to an SES employee (or acting SES employee) in the Finance
Department. This delegation power is consistent with the Finance Minister's delegation
powers for other transfers from the HAFF Special Account under clauses 26, 29 and 33.
Item 20 would expand the scope of the legislated reviews of the HAFF Act to include a
consideration of the extent to which transfers under new clause 33A have improved the
housing outcomes for Australians. This would ensure that the review would consider all
permissible grants and transfers from the HAFF Special Account, including those made under
new clause 33A.
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