Kymberly Martin
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Accessible housing: weighing up the pros and cons

A final draft submission to the Consultation RIS by the Centre for International Economics (CIE), which showed that the costs of accessible housing outweigh the benefits to Australian society, is in dispute.

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The Melbourne Disability Institute and the Summer Foundation, Dalton/Carter report  found the opposite, arguing that benefits outweigh costs and recommends the regulation of LHD Gold level (Option 2) for all new housing.

The report identified four key issues with the Consultation RIS:

  1. The CIE’s ‘problem reduction approach’ over-counts the cost side

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The significant benefits that flow directly from improved design and functionality to the general community are not included.

 2. The CIE’s ‘willingness to pay’ approach under-counts the benefit side

A societal perspective should include consideration of both the potential resources savings plus the value of the improved accessibility. This has not been done.

 3. The CIE’s approach to the opportunity cost of space ignored capital gain and ‘utility of space’

In valuing space to the occupants, the CIE only captures the benefits of enhanced functionality. The value of space should be the sum of both the enhanced functionality from improved accessibility and the capital value.

 4. The CIE’s discount rate that does not reflect current economic practice

The discount rate has a huge impact on the benefit-cost ratios. The CIE uses 7 per cent (as directed by the Office of Best Practice Regulation) when the discount rate widely used is 3 per cent.

The Dalton/Carter report provides a very different policy picture to that presented in the Consultation RIS, even before an adjustment is made to the discount rate. When a discount rate of 3 per cent is used, the case for regulation in the National Construction Code is undeniable.  The report concluded that Option 2 (Gold standard) has particular merit as the most cost-effective of the options to meet the objective of the RIS and include people in wheelchairs. 

It recommended a subsidy program to encourage availability of accessible rental properties to address the problem of the many people that have insufficient income to compete for accessible housing as it enters the marketplace. 

In conclusion, the economics support that what ordinary Australians want is a home where people can be included in family and community life and age in place.