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. 3) Direction 2026

Subsection 12(1) of the Housing Australia Act 2018 (the 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 Housing Australia Investment Mandate Direction 2018 (Investment Mandate) constitutes those directions.

The Act established Housing Australia to improve housing outcomes for Australians. It is a corporate Commonwealth entity in the Treasury portfolio and is governed by an independent board. The Board is subject to the requirements of the Act, the Investment Mandate, and other relevant legislation.

Housing Australia improves housing outcomes for Australians through its guarantee, financing and capacity building functions under the Act. Housing Australia also has other functions conferred by legislation, such as the Help to Buy Act 2024.

Housing Australia operates the Housing Australia Future Fund Facility (HAFFF), the National Housing Accord Facility (NHAF), the National Housing Infrastructure Facility (NHIF) and the Affordable Housing Bond Aggregator (AHBA) as part of its financing function. 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 programs under the Housing Australia Future Fund (HAFF) Social and Affordable program.

The purpose of the Housing Australia Investment Mandate Amendment (2026 Measures No. 3) Direction 2026 (Instrument) is to improve the operation of the HAFFF and NHAF to support Round 3 of the HAFF and the long-term integrity of programs funded through those facilities. In particular, the Instrument:

• requires Housing Australia to apply amounts disbursed from the Housing Australia Future Fund (and any investment income derived from those amounts) only to meet HAFFF availability payment liabilities, make HAFFF upfront grants, or make investments under section 59 of the Public Governance, Performance and Accountability Act 2013;
• strengthens the eligibility requirements for special purpose vehicles (SPVs) seeking finance under the HAFFF and NHAF, by requiring certain SPVs to be registered charities;
• supplements the decision-making factors Housing Australia must consider when making financing decisions for SPV-led projects under the HAFFF and NHAF, to ensure that public investment produces lasting outcomes in the charitable and community housing sectors; and
• updates the monetary limits for HAFFF upfront grants so that reprofiled grant funding can be used for eligible projects through to the 2029-30 financial year.

These amendments are operational in nature and are designed to strengthen safeguards and improve the integrity of the HAFF program framework for Round 3 and future funding rounds.

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

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

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 commences on the later of the day after it is registered and immediately after the commencement of the Housing Australia Investment Mandate Amendment (2026 Measures No. 2) Direction 2026.

Details of the Instrument are set out in Attachment A.

ATTACHMENT A

Details of the Housing Australia Investment Mandate Amendment (2026 Measures No. 3) Direction 2026

Section 1 – Name

This section provides that the name of the instrument is the Housing Australia Investment Mandate Amendment (2026 Measures No. 3) Direction 2026 (the Instrument).

Section 2 – Commencement

The Instrument commences on the later of:

• the day after it is registered on the Federal Register of Legislation; and
• immediately after the commencement of the Housing Australia Investment Mandate Amendment (2026 Measures No. 2) Direction 2026.

Section 3 – Authority

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 the Schedules to this instrument are amended or repealed as set out in the applicable items in the Schedules, and any other item in the Schedules to this instrument has effect according to its terms.

Schedule 1 – Amendments

Application of HAFF disbursements and investment income

The Housing Australia Future Fund (HAFF) is the fund which is, in part, operationalised and delivered through the Housing Australia Future Fund Facility (HAFFF). The financial arrangements for the HAFF are established in the Housing Australia Future Fund Act 2023 (HAFF Act).

Under that Act, a minimum amount (currently $500 million per financial year) must be disbursed from the HAFF each year. This amount is indexed to annual growth in the Consumer Price Index from the 2029-30 financial year (see sections 33B and 33E of the HAFF Act).

After accounting for amounts debited directly from the Housing Australia Future Fund Special Account (HAFFSA) under sections 26, 29 or 33 of the HAFF Act, the residual balance is transferred through the Housing Australia Special Account (HASA) and paid to Housing Australia for the purpose of making grants or loans in the performance of its financing function in relation to acute housing needs, social housing and affordable housing.

Where those amounts are received before corresponding HAFFF liabilities fall due, Housing Australia may invest them under section 59 of the Public Governance, Performance and Accountability Act 2013 (PGPA). Section 59 of the PGPA Act allows a corporate Commonwealth entity to invest money that is not immediately required for the purposes of the entity, but only in the forms of investment permitted by that section or otherwise authorised under the PGPA framework. Any return derived from such investments forms part of the same funding stream.

Prior to these amendments, the Investment Mandate did not confine those amounts to specified HAFFF grant liabilities. As a result, HAFF disbursements and associated investment income could have been applied to other Housing Australia facilities or activities, rather than being directed to the HAFFF liabilities they were intended to support.

As part of HAFF Round 3, the Government agreed that residual annual disbursements under the HAFF Act would be transferred to Housing Australia, with the disbursement and investment income to be used as the first source of funding to support long-term HAFFF liabilities.

These amendments address this by confining the use of HAFF disbursements and investment income to specified HAFFF purposes as explained below.

Use of HAFF disbursements

Item 6 of the Instrument inserts new section 28NB into Division 3 of Part 4A of the Investment Mandate.

Section 28NB applies to amounts paid to Housing Australia that have been credited to the HASA under paragraph 33A(2)(b) of the HAFF Act and debited from that account to make a payment to Housing Australia for the purpose specified in paragraph 47C(1)(b) of the Housing Australia Act (paragraph 28NB(1)(a)). Section 28NB also applies to any return on an investment of those amounts (paragraph 28NB(1)(b)).

The effect is that Housing Australia can only spend these amounts to:

• fund HAFFF availability payments (being the recurring grants, made over 25 years, that support the delivery of social and affordable housing projects under the HAFFF) (paragraph 28NB(2)(a)),
• make HAFFF upfront grants (being one-off grants to finance HAFFF projects)(paragraph 28NB(2)(b)), or
• make investments in accordance with section 59 of the PGPA (paragraph 28NB(2)(c)). 

The restriction ensures that amounts flowing from the annual HAFF disbursement are directed to the HAFFF liabilities they were intended to fund.

Charity registration requirement

Items 2 and 7 of the Instrument amend subsection 28F(2) and subsection 28T(2) of the Investment Mandate respectively, by adding a registered charity requirement to the definition of HAFFF SPV and NHAF SPV.

The HAFFF and the National Housing Accord Facility (NHAF) provide finance in the form of loans and grants for eligible housing projects. To receive finance, a project must be proposed by an ‘eligible project proponent’, which includes entities such as States and Territories, registered community housing providers, certain registered charities, and special purpose vehicles (SPVs).

Sections 28F and 28T of the Investment Mandate set out the eligibility requirements for project proponents under the HAFFF and the NHAF respectively. In general, an SPV is required to have as its primary undertaking the development of projects to increase the availability of social or affordable housing and to have at least one member that is an eligible project proponent under the relevant program. However, prior to these amendments, the Investment Mandate did not require the SPV itself to be a registered charity.

The registered charity requirement is triggered where at least one of the SPV’s members is a non-government eligible entity of the kind mentioned in paragraphs 28F(1)(f) to (i) or 28T(1)(f) to (i) of the Investment Mandate. These include:

• a registered community housing provider that is a registered charity and a constitutional corporation,
• a registered charity with the primary purpose of improving housing outcomes for Aboriginal or Torres Strait Islander people, 
• a registered charity with the primary purpose of improving housing outcomes for members of the Australian Defence Force, and  
• a registered charity with the primary purpose of improving housing outcomes for former members of the Australian Defence Force, that is also a constitutional corporation.

However, the charity registration requirement does not apply where the SPV’s members are only government type bodies or entities such as (see paragraphs 28F(1)(a) to (e) and 28T(1)(a) to (e)) of the Investment Mandate:

• a State or Territory,
• a local governing body,
• a local-government-owned corporation (other than a utility provider) that is a constitutional corporation, 
• a State-government-owned corporation (other than a utility provider) that is a constitutional corporation, or
• a Territory-government-owned corporation (other than a utility provider) that is a constitutional corporation. 

This is intended to ensure public financing does not flow to an SPV capable of distributing value outside the charitable housing sector. Where an SPV is not a registered charity, it is structurally capable of distributing profits or transferring value outside the charitable housing sector.

The charity registration requirement means that an SPV that includes a registered community housing provider or other eligible charitable entity as a member must be a registered charity.

The requirement applies to SPVs under both the HAFFF and the NHAF. This supports the government’s objective that public investment under the HAFF and NHAF produces lasting housing outcomes in the charitable and community housing sectors.

Safeguards for SPV-led projects

Items 3 and 8 of the Instrument repeal paragraph 28J(k) and paragraph 28W(k) of the Investment Mandate respectively, and substitute expanded provisions that require Housing Australia to consider additional matters when assessing SPV-led projects.

As part of Round 3, the Government agreed to strengthen safeguards to ensure that public investment produces lasting housing outcomes in the charitable and community housing sectors, particularly in relation to SPV-led projects.

Housing Australia must have regard to certain matters when making financing decisions under the HAFFF (section 28J of the Investment Mandate) and the NHAF (section 28W). Before these amendments, where the project proponent was an SPV, Housing Australia was required to consider the extent to which its underlying eligible members would be involved in the project over its duration. However, those provisions did not specify the nature, depth or form of that involvement.

Where the project proponent is an SPV, Housing Australia must now consider the following matters in addition to the existing decision-making factors in sections 28J and 28W:

• the extent to which the SPV’s underlying eligible members are involved in the project and the extent to which they influence the governance of the SPV (subparagraphs 28J(k)(i), 28J(k)(ii) and 28W(k)(i), 28W(k)(ii)),
• the operating history, background and registration status of certain underlying eligible members, as well as the length of time any relevant underlying eligible member has been a registered community housing provider or registered charity (subparagraphs 28J(k)(iii), 28J(k)(iv)) and 28W(k)(iii), 28W(k)(iv)), and
• the extent to which financial benefits arising from the project would be distributed to any underlying eligible member that is a registered charity and whether that distribution is consistent with that member’s involvement (subparagraphs 28J(k)(v) and 28W(k)(v)).

The new considerations give Housing Australia the flexibility to consider the involvement, governance influence and operating history of the underlying eligible members of the SPV. In practice, these considerations are particularly relevant to underlying eligible members that are registered community housing providers or registered charities.

Meaningful governance

Prior to these amendments, the Investment Mandate required Housing Australia to consider the extent to which underlying eligible members would be involved in a project but did not require an assessment of whether that involvement extends to governance influence or decision-making authority within the SPV.

The new considerations draw a distinction between two related but different questions: whether an entity is involved in the project and whether that entity has influence over how the SPV itself is governed (for example, through board representation or voting rights) (subparagraphs 28J(k)(i), 28J(k)(ii), 28W(k)(i) and 28W(k)(ii)). An entity may be involved in delivering a project without holding governance rights within the SPV structure.

By requiring Housing Australia to consider both factors, the amendments ensure that financing decisions take account of whether the charitable or community housing entities behind the SPV hold governance influence that reflects a genuine role in the oversight and strategic direction of the vehicle.

Operating history and registration status

The new considerations require Housing Australia to consider the operating history and background of the SPV’s underlying eligible members, including their experience in developing, owning or operating social or affordable housing (subparagraphs 28J(k)(iii), 28W(k)(iii)), and how long they have been registered as a community housing provider or charity (subparagraphs 28J(k)(iv) and 28W(k)(iv)).

These matters are directed at ensuring that the entities behind SPV-led projects have genuine operating capability and an established sector presence. For instance, a recently incorporated charity with no housing delivery history that is included as a member of an SPV only to satisfy the eligibility requirements (without genuine operations) may not reflect the intended strengthening of the charitable and community housing sector that the HAFF program is designed to support.

However, the consideration of operating history and background does not apply to an underlying eligible member that is an Aboriginal and Torres Strait Islander housing organisation (within the meaning of the Investment Mandate) (see subparagraphs 28J(k)(iii) and 28W(k)(iii)). This reflects that First Nations housing organisations may be at an earlier stage of development and the Government’s policy is to build the capacity and capability of Aboriginal and Torres Strait Islander housing organisations, rather than to impose requirements that could act as a barrier to participation.

Definition of Aboriginal and Torres Strait Islander housing organisation

Item 1 of the Instrument inserts a new definition of Aboriginal and Torres Strait Islander housing organisation into section 4 of the Investment Mandate. The term is used in new subparagraphs 28J(k)(iii) and 28W(k)(iii), as described above.

An Aboriginal and Torres Strait Islander housing organisation is defined to mean either:

• a registered charity whose primary purpose is improving, directly or indirectly, housing outcomes for Aboriginal or Torres Strait Islander people (being an entity mentioned in paragraph 28F(1)(g)); or
• a HAFFF SPV, at least one member of which is such an entity.

The definition utilises the existing description of entities in paragraph 28F(1)(g) of the Investment Mandate. That description was part of amendments publicly consulted on in 2023. Maintaining consistency across the definitions within the Investment Mandate ensures smooth interaction with relevant provisions and prevents any conflicts with existing financing decisions under the HAFFF, NHAF and NHIF.

The definition is intended to be broad and inclusive of the various providers who make up the First Nations housing sector, including community-controlled organisations and First Nations-led organisations. This ensures that organisations which provide a range of other services to communities in addition to First Nations housing, such as health organisations, are not excluded. It also does not require the entity to be registered with a recognised state and territory regulatory scheme for community housing providers.

The requirement to be a registered charity is consistent with eligibility for all types of applicants (except for government bodies) for all HAFFF, NHAF and NHIF financing programs. The regulatory obligation and oversight of charities provides additional security that the funding will continue to support social and affordable housing over the long term. Additionally, the specific guidance for the provision of housing by charities applies a principles-based test to determine whether the housing provision is consistent with a charitable purpose (see the ACNC Commissioner's Interpretation Statement: Provision of housing by charities, available at www.acnc.gov.au).

Retention of financial benefit

The considerations are also directed at ensuring that public investment produces enduring benefit within the charitable and community housing sector. Housing Australia must consider the extent to which financial benefits arising from the project would be distributed to any underlying eligible member that is a registered charity, and whether the distribution is consistent with that member's involvement in the project (subparagraphs 28J(k)(v) and 28W(k)(v)).

Depending on the project structure, financial benefits may include income returns during the funding period, capital returns associated with ownership of dwellings, ownership interests in entities holding project assets and entitlements to capital growth.

This supports the intended outcome that public investment under the HAFFF and NHAF should produce enduring benefit in the charitable and community housing sector, and that economic benefit should not disproportionately accrue to private participants where the charitable or community housing sector is undertaking meaningful governance or operational responsibilities.

HAFFF upfront grant limits

Items 4 and 5 of the Instrument amend subsection 28N(6) of the Investment Mandate to update the monetary limit for HAFFF upfront grants. Item 4 inserts new paragraph 28N(6)(ba), and item 5 amends paragraph 28N(6)(c) so that the $0 limit applies to financial years after 2029-30 (previously, after 2025-26).

The annual HAFF disbursement supports long term HAFFF liabilities. Those liabilities include HAFFF availability payments and HAFFF upfront grants.

As noted in the section above, a ‘HAFFF upfront grant’ is a one-off grant to finance a HAFFF project that increases available social housing.

The Investment Mandate places monetary limits on the amount of HAFFF upfront grants that Housing Australia may make. Before these amendments, the limits for HAFFF upfront grants were:

• $388 million for the 2024-2025 financial year,
• the unused amount from that 2024-2025 limit for the 2025-2026 financial year, and
• $0 for each financial year after 2025-2026.

The Government has agreed to reprofile existing HAFFF upfront grant funding so that it can be used in current and future financial years as projects progress.  This aligns the limits with the expected timing of Housing Australia's grant payments, rather than requiring the full amount of upfront grant funding to be dealt with within the earlier financial year limits.

The limits are now:

• $350 million for the 2026-27 financial year and each later financial year until the end of the 2029-30 financial year (new paragraph 28N(6)(ba)), and
• $0 for each financial year after 2029-30 (paragraph 28N(6)(c)).

The $350 million is a single, fixed amount that is available across the 2026-27 to 2029-30 financial years as a whole. New paragraph 28N(6)(ba) applies that same limit to each financial year in that period. It does not provide a new or additional $350 million for each financial year. Any HAFFF upfront grants made in one financial year in the period reduce the amount remaining available in later financial years. For example, if Housing Australia makes $200 million in HAFFF upfront grants during the 2026-27 financial year, a maximum of $150 million remains available for HAFFF upfront grants across the remaining financial years through to 2029-30. The total amount of HAFFF upfront grants that Housing Australia may make across the period is therefore $350 million.

The amendments support the continued use of HAFFF upfront grants for eligible social housing projects through to the 2029-2030 financial year. They do not change the nature of a HAFFF upfront grant. The amendments also do not change the separate limits applying to HAFFF loans or HAFFF availability payments.

Timing and application

Item 9 of the Instrument inserts new Division 11 into Part 7 of the Investment Mandate. This division contains application provisions for the amendments made by the Instrument.

SPV eligibility and safeguard amendments

Section 48 of the Investment Mandate sets out the timing and application rules for the amendments to the SPV eligibility provisions (subsections 28F(2) and 28T(2)) and the SPV decision making criteria (paragraphs 28J(k) and 28W(k)).

These amendments apply from commencement to financing decisions made by Housing Australia under Part 4A or Part 4B of the Investment Mandate, unless the decision directly relates to another financing decision that was made before the commencement day (subsections 48(1) and (2)).

Under the Investment Mandate, ‘financing decision’ means a decision to make a loan or grant. This means that where an application is made before commencement, but the financing decision is made after commencement, the amended SPV eligibility provisions and decision-making criteria apply to that financing decision. For example, if a Round 3 application is lodged before commencement and Housing Australia makes the financing decision after commencement, section 48 applies the amended requirements to that decision.

Carve-out for Rounds 1 and 2 financing decisions

The new provisions do not apply to a financing decision made after commencement if that decision directly relates to another financing decision made before the commencement day.

This carve-out ensures the amendments do not disturb projects approved under earlier funding rounds. For example, if a Round 2 funding arrangement is later varied or novated so that a different SPV becomes the project proponent, the new requirements do not apply to that later decision merely because it occurs after commencement, provided it directly relates to the original pre-commencement financing decision. The practical effect is that the amendments apply to Round 3 and future funding rounds.

Spending limitation

Section 49 of the Investment Mandate sets out the timing and application rule for new section 28NB. Section 28NB applies to amounts paid to Housing Australia on or after the commencement day, and to returns on the investment of those amounts.
 

HAFFF upfront grant limits

The amendments to subsection 28N(6) apply from commencement. This means that, from commencement, Housing Australia may make HAFFF upfront grants in current and future financial years, in accordance with the new monetary limit in subsection 28N(6).