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EXPLANATORY STATEMENT

Issued by authority of the Minister for Housing, Homelessness and Cities

Housing Australia Act 2018

Housing Australia Investment Mandate Amendment (2026 Measures No. 1) Direction 2026

Subsection 12(1) of the Housing Australia Act 2018 (Act) provides that the Minister may, by legislative instrument, give the Board of Housing Australia directions about the performance of Housing Australia’s functions. The Board is subject to the requirements of the Act, the Housing Australia Investment Mandate Direction 2018 (Investment Mandate), the Help to Buy Act 2024 (HTB Act) and the Help to Buy Program Directions 2025.

The Act establishes Housing Australia to improve housing outcomes for Australians. Housing Australia (previously the National Housing Finance and Investment Corporation) commenced operation on 30 June 2018. It is a corporate Commonwealth entity in the Treasury portfolio and is governed by an independent board.

Housing Australia improves housing outcomes for Australians through its financing, guarantee, and capacity building functions. Housing Australia operates the Housing Australia Future Fund Facility (HAFFF), the National Housing Accord Facility (NHAF), the Affordable Housing Bond Aggregator and the National Housing Infrastructure Facility as part of its financing function. Housing Australia provides support for capacity building of eligible registered community housing providers (CHPs) through its capacity building function and administers the Home Guarantee Scheme as part of its guarantee function. Housing Australia has other functions conferred by legislation, such as Help to Buy functions under the HTB Act. The Home Guarantee Scheme is now administered by Housing Australia as the Australian Government 5% Deposit Scheme.

The HAFFF and the NHAF were established on 8 December 2023. They are the mechanisms by which Housing Australia administers the Government’s commitment to support the delivery of 40,000 new social and affordable dwellings. Housing Australia now delivers these dwellings under the Housing Australia Future Fund (HAFF) Social and Affordable program.

The purpose of the Housing Australia Investment Mandate Amendment (2026 Measures No. 1) Direction 2026 (Instrument) is to support the operation of Round 3 for the HAFF by changing the financing limits for the HAFFF and the NHAF, which necessitates raising the total possible size of guaranteed liabilities of Housing Australia and the current value of the Affordable Housing Bond Aggregator Reserve (AHBA). Specifically, the Instrument:

•                 Increases the limit on HAFFF and NHAF concessional loans. These are no interest loans that can only be issued to certain project proponents listed in paragraphs 28F(1)(f) to (i) and 28T(1)(f) to (i) of the Investment Mandate;

•                 Amends the current limits for HAFFF availability payments and NHAF grants. These are recurring grants made over a period of 25 years to finance HAFFF projects and NHAF projects. The limits are set for each financial year from 2024‑25 to 2030‑31, at which point the limits are indexed in accordance with sections 28NA and 28ZAA of the Investment Mandate; A HAFFF project is a project of dwellings that increases the availability of social or affordable housing (or both). A NHAF project is a project of dwellings that increases affordable housing; and

•                 Increases the  guaranteed liabilities of Housing Australia.

–               The total guaranteed liabilities of Housing Australia, at a particular time, are the sum of the current values of all amounts that are, or can be as a consequence of current liabilities of Housing Australia (other than guarantee liabilities) expected to be payable to a person other than the Commonwealth and guaranteed by the Commonwealth under section 51 of the Housing Australia Act 2018.

The Act does not specify any conditions that need to be satisfied before the power to make the Instrument may be exercised.

No public consultation was undertaken on the Instrument as the amendments are targeted and machinery in nature. Housing Australia was consulted in the development of the Instrument.

The Instrument is a legislative instrument for the purposes of the Legislation Act 2003 (the Legislation Act). As a direction made by a Minister to a person or body, the Instrument is exempt from sunsetting and from disallowance. The sunsetting exemption is pursuant to paragraph 54(2)(b) of the Legislation Act and item 3 of the table in section 11 of the Legislation (Exemptions and Other Matters) Regulation 2015 (the Legislation Exemptions Regulation). The disallowance exemption is pursuant to section 42 of the Legislation Act and item 2 of the table in section 9 of the Legislation Exemptions Regulation. Accordingly, no statement of compatibility with human rights is required under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011.

The Instrument is subject to the automatic repeal process under section 48A of the Legislation Act. This section provides that where a legislative instrument only repeals or amends another instrument, without making any application, saving or transitional provisions relating to the amendment or repeal, that instrument is automatically repealed. By virtue of subparagraph 48A(2)(a)(i), the Instrument is automatically repealed on the day after the commencement of the Instrument which results in the amendment of the Investment Mandate.

The Instrument commenced on the day after registration.

Details of the Instrument are set out in Attachment A.

ATTACHMENT A

Details of the Housing Australia Investment Mandate Amendment (2026 Measures No. 1) Direction 2025

Section 1 – Name

This section provides that the name of the instrument is the Housing Australia Investment Mandate Amendment (2026 Measures No. 1) Direction 2026 (the Instrument).

Section 2 – Commencement

This section provides that the Instrument commenced on the day after registration.

Section 3 – Authority

This section provides that the Instrument is made under the Housing Australia Act 2018 (the Act).

Section 4 – Schedules

This section provides that each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in the Schedule to this instrument has effect according to its terms.

Schedule 1 – Amendments

Limits on making HAFFF loans and availability payments

Section 28N of the Housing Australia Investment Mandate Direction 2018 (Investment Mandate) provides for limits on making loans and grants under the Housing Australia Future Fund Facility (HAFFF).

Subsection 28N(2) sets parameters for HAFFF loans. A HAFFF loan must be:

•                 a no interest loan;

•                 to finance a HAFFF project that increases available social or affordable housing, or both;

•                 made during the period 2024‑25 to 2028‑29; and

•                 issued only to specific project proponents:

–               a registered community housing provider (CHP) that is a registered charity and a constitutional corporation;

–               an entity that is a registered charity whose primary purpose is either directly or indirectly improving housing outcomes for Aboriginal or Torres Strait Islander people or members of the Australian Defence Force; or

–               a registered charity and constitutional corporation whose primary purpose is either directly or indirectly improving housing outcomes for members and former members of the Australian Defence Force.

Subsection 28N(3) sets the limit for the sum of all HAFFF loans that can be made between 2024‑25 to 2028‑29. Item 1 of the Instrument replaces the current limit of $1.735 billion with $3.345 billion.

Subsection 28N(4) provides for two types of grants that can be made under the HAFFF – HAFFF availability payments and HAFFF upfront grants.

Paragraph 28N(4)(a) defines a HAFFF availability payment as a recurring grant made over a period of 25 years to finance a HAFFF project that increases available social or affordable housing, or both.

Subsection 28N(5) sets the annual limits for HAFFF availability payments. Item 2 of the Instrument amends paragraph 28N(5)(a) to substitute the reference to 2027‑28 with 2028‑29, with the effect that the annual limit for HAFFF availability payments for each financial year between 2024‑25 to 2027‑28 is $368 million.

Item 3 of the Instrument further amends the annual limits for HAFFF availability payments by repealing paragraph 28N(5)(b) and substituting the following limits:

•                 for the 2028-29 financial year – $565 million;

•                 for the 2029-30 financial year – $666 million;

•                 for the 2030-31 financial year and each later financial year – $666 million (as indexed annually in accordance with section 28NA of the Investment Mandate).

Consequential to these changes, item 4 of the Instrument amends section 28NA of the Investment Mandate so that subsection 28NA(1) refers to indexation starting on 1 July 2031, not 1 July 2029 (when indexation previously commenced).

The Instrument does not amend the limits for HAFFF upfront grants.

A table overview of these changes is set out below.

These amendments are made to support funding round 3 of the Housing Australia Future Fund (HAFF) and management of the funds available for HAFFF loans and availability payments more broadly.

Limits on making NHAF loans and availability payments

Section 28ZA of the Investment Mandate provides for limits on making of loans and grants under the National Housing Accord Facility (NHAF).

Subsection 28ZA(2) sets parameters for NHAF loans. A NHAF loan must be:

•                 a no interest loan;

•                 to finance a NHAF project that increases available affordable housing;

•                 made during the period 2024‑25 to 2028‑29; and

•                 only be issued to specific project proponents:

–               registered charities that are constitutional corporations;

–               registered charities whose primary purpose is either directly or indirectly improving housing outcomes for Aboriginal or Torres Strait Islander people, or members of the Australian Defence Force; and

–               registered charities that are constitutional corporations whose primary purpose is either directly or indirectly improving housing outcomes for members and former members of the Australian Defence Force.

Subsection 28ZA(3) sets the limit for the sum of all NHAF loans that can be made between 2024‑25 to 2028‑29. Item 5 of the Instrument replaces the current limit of $179 million with $1.146 billion.

Subsection 28ZA(4) defines a NHAF grant as a recurring grant made over a period of 25 years to finance a NHAF project that increases available affordable housing.

Subsection 28ZA(5) sets the annual limits for NHAF grants. Item 6 of the Instrument amends paragraph 28ZA(5)(a) to substitute 2026‑27 for 2028‑29, with effect that the annual limit for NHAF grants for each of the financial years 2024‑25, 2025‑26 and 2026‑27 is $72 million.

Item 7 of the Instrument further amends the annual limits for NHAF grants by repealing paragraph 28ZA(5)(b) and substituting the following limits:

•                 for the 2027‑28 financial year – $103 million

•                 for the 2028‑29 financial year – $196 million

•                 for the 2029‑30 financial year – $196 million; and

•                 for the 2030‑31 financial year and each later financial year – $196 million (as indexed annually in accordance with section 28ZAA).

Consequential to these changes, item 8 of the Instrument amends section 28ZAA of the Investment Mandate so that subsection 28ZAA(1) refers to indexation starting on 1 July 2031, not 1 July 2029 (when indexation previously commenced).

A table overview of these changes is set out below.

The total of guaranteed liabilities of Housing Australia and the current value of the AHBA Reserve

The Board of Housing Australia must not enter into a transaction which would result in the sum of the total guaranteed liabilities of Housing Australia, and the current AHBA Reserve, exceeding the limit set out in subsection 34(1) of the Investment Mandate.

•                 Subsection 11(2) of the Investment Mandate limits the size of the AHBA Reserve to $4 billion.

Subsection 34(2) of the Investment Mandate defines the total guaranteed liabilities of Housing Australia, at a particular time, as the sum of the current values of all amounts that either are, or can be as a consequence of current liabilities of Housing Australia (other than guarantee liabilities) expected to be, payable to a person other than the Commonwealth and that are guaranteed by the Commonwealth under section 51 of the Housing Australia Act 2018.

To support the increases to HAFFF availability payments, NHAF grants, and HAFFF and NHAF loans, item 9 of the Instrument increases the limit in subsection 34(1) from $26 billion to $44 billion.

Summary of amendments to grant limits