Solving Sydney's public housing crisis is about getting the best out of people

The NSW Department of Housing's greatest asset is people not buildings. And I don't just mean staff.

A housing affordability crisis in Sydney is creating shortages in certain unskilled or low-income occupations - particularly in the northern, inner-western and eastern suburbs that define "Global Sydney".

Yet the Department is landlord to tens of thousands of tenants who live in the areas most affected. With appropriate training and support, many of these people could be provided with pathways out of the poverty traps that currently act as disincentives to finding work.

Helping the Department to rediscover its original mission as a provider of housing assistance to people on low incomes might be a useful beginning. The development of populations of meaningfully employed, low-to-medium income individuals and families in inner-city estates would return public housing to a role obscured by the Department's transformation into a housing provider of last resort.

Individuals and families experiencing significant disadvantage and with complex needs have swamped a system designed to meet the simple housing needs of working people on low incomes. That transformation in its role - and the consequences - has never been adequately addressed in terms of either policy or resources.

One result of this historic shift is that unemployed tenants wanting to re-enter the workforce risk jeopardising their entitlements without a sufficient jump in income to compensate. The Department recognises this and has implemented measures to assist tenants returning to work.

However much more is possible and appropriate. On the supply side, there is scope for partnerships between the Department and other agencies of government and the third sector to proactively seek out and case manage prospective tenants through the range of skill-development, job-readiness and tenancy-related issues they are likely to confront.

There are steps the DoH can take by itself. These might include creating new categories of tenancy that encourage tenant employment by retaining elements of entitlement or by refraining from attempts to recoup a full market rent. Rent might be foregone by the Department in return for the individual making capital investments in equipment or a work vehicle. This involves accepting a trade-off in terms of improving the social and income mix within the estate as the ratio of employed to unemployed rises.

On the demand side, the government's shift from provider to purchaser of services offers another way forward. As a purchaser of services that include a range of maintenance functions like gardening, cleaning etc. it is in a position to make a strategic and large-scale investment in start-up businesses offering training, employment and ultimately even self-employment opportunities to people on low incomes. This might initially cost more than the outcome of a competitive tendering process. But it has the potential to yield dividends in many areas of social and economic policy which appear both on and off the bottom line.

The upsides are many. For the government, the proposal allows it to leverage an under-performing asset - public housing - to intervene in a labour market where few other tools are available. For the DoH, it would assist in achieving its stated objective of improving the social and income mix on targeted estates.

For tenants, there are skills and personal development bonuses without the fear that an increase in income would lead to either the kind of increase in rent that would remove all incentive to employment or to pressure to vacate. Seeing the advantages and improved standard of living enjoyed by their neighbours in this situation may act as incentive to other under-employed estate residents to seek pathways of this sort for themselves.

The downsides can be anticipated. What happens to estates and tenants who don't enjoy the advantages of a sexy, inner-city location? What happens to people with a real and urgent claim for public assistance who are either temporarily or permanently unemployable? How can the danger of creating new categories of "haves" and "have nots" within the larger public housing estate be anticipated and avoided? How can the "pathway" concept be framed to facilitate the eventual departure from public housing of tenants whose economic opportunities are enhanced by this kind of assistance?

The Department's difficulty is a real one. It is income-poor and asset-rich. With the decline of the Commonwealth-State Housing Agreement, the value of the asset is being eroded by its failure to generate enough of a return in the way of income to meet the bill for even basic maintenance.

In this context the response has been the classic one: sell the asset! However in inner-urban areas this overlooks the strategic value of the asset, which is the capacity of enclaves of rent-controlled housing located close to transport and other essential services to supply a labour market currently experiencing shortages in unskilled or lower-paid occupations.

Recent and current redevelopment proposals, in Redfern and Erskineville for example, involve demolition and rebuilding. The number of public housing units will not be reduced. Only the densities will increase as private developments share the space previously occupied by public housing alone.

What might have been lost - particularly in Erskineville, before the proposal was abandoned prior to the recent state election - was one of the best-functioning and most cohesive enclaves of public housing in the inner-city. Its destruction would have been a personal tragedy for many of the existing tenants and undermined the key objectives - and substantial good work - of the Department's Community Renewal Strategy.

This is where the talk of a "whole of government" approach is tested. The DoH - viewed as a stand-alone agency - is a manager of housing, not a community development or employment agency. But it is also an agency of government and government can - and should - take the largest view possible of what is achievable with limited resources.

If Department of Housing tenants were viewed as assets rather than liabilities, the state's balance sheet might look even healthier than it does. And selling these sorts of assets - to potential employers and businesses looking to develop in or relocate to Sydney - might go on adding value to communities for years rather than hitting the bottom line once and disappearing for ever.