Response to. Gunns Limited s Draft Integrated Impact Statement on the Proposed Pulp Mill at Long Reach. Resource Planning and Development Commission

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1 Response to Gunns Limited s Draft Integrated Impact Statement on the Proposed Pulp Mill at Long Reach Resource Planning and Development Commission September 2006

2 Submission from Anglicare Tasmania Inc. GPO Box 1620 HOBART TAS 7000 phone (03)

3 Why Anglicare is making this response Tasmania is in the middle of a well documented affordable housing crisis with significant social implications across the state. The proposal for a pulp mill at Long Reach as outlined in the Draft Integrated Impact Statement (DIIS) prepared by Gunns Ltd has the potential to have a major impact on the local housing situation, and as an organisation that works closely with and for people on low incomes, Anglicare Tasmania feels it appropriate to respond to this aspect of the proposal and suggest some strategies for reducing this impact if the development goes ahead. Our relevant expertise and the limitations of our response Anglicare is one of Tasmania s largest community organisations and a significant part of our work involves accommodation support services. We operate a number of such services in the Tamar Valley region. Of most relevance to this proposal are the following services: ACCESS, which provides crisis accommodation and ongoing support to people who are homeless or at risk of homelessness; the Private Rental Support Service, which provides financial assistance to low income earners in the private rental market; and the Emergency Accommodation Service, which provides brokered after hours crisis accommodation to people who are homeless via a state wide Freecall number. Anglicare has also conducted a number of original research projects on the experiences of low income earners in Tasmania, many of which have focussed, directly and indirectly, on housing issues. We were involved in the working groups that supported the development of the State Government s ground breaking Affordable Housing Strategy and chaired the committee which oversaw the development of the new Affordable Housing Organisation (Tasmanian Affordable Housing Ltd). Anglicare was also a driving force in the establishment of the Affordable Housing Crisis Coalition, an unprecedented gathering of housing service providers, community and industry peak bodies and unions which campaigned throughout the 2006 election campaign and pre Budget period on the need for a range of detailed policy and funding measures in response to the housing crisis. Our record of contribution to state housing policy is a strong one. Anglicare is concerned that the pulp mill development will have a significant impact on demand for public services in the Tamar Valley region. We are however confining our comments in this submission to the proposal s implications for housing. 3

4 Our concerns Introduction According to the DIIS, it is estimated that approximately 2,900 workers will be employed during the peak construction period, and that 1,800 of these workers may need to temporarily relocate from intra or interstate. The DIIS reports that an audit of the accommodation available for these workers conducted by the Tasmanian Pulp Mill Task Force in May 2005 estimated that 1,060 of these imported workers would be able to be accommodated within existing private rental and tourist accommodation in the area. This assessment was based on figures that show that occupancy of tourist accommodation during the peak tourist period (the March quarter) was 72.7% of the 3,155 rooms available, leaving 27.3% (861 rooms) free for use by the pulp mill workers, and figures that show 200 properties were available to rent in the area in March The audit assumed that half of these could be occupied by pulp mill workers and that, assuming there were 2 bedrooms per house, 200 workers could be accommodated in this way. The 800 leftover workers would be accommodated for the duration of the construction period in a purpose built temporary accommodation facility. This facility would provide accommodation for workers only workers families would not be housed there and would be dismantled after the construction and commissioning of the mill, after which the site would revert to general industrial use and become an industrial estate. The workers accommodation facility is also presented by the DIIS as a risk management strategy to limit the impact of such a high influx of people into the private rental market (Volume 3, 6 505). During the operating period, 292 people will be employed by the mill, with around 45 (15%) of these people permanently relocating to Tasmania (Volume 2, 6 523). This is obviously a much smaller and more manageable number of people, and as a result, when assessing the impact on the accommodation situation, the DIIS and this submission focus on the construction period. However, it is important to state that the arrival of 45 families in an area with such a constrained housing market will still have an impact. Anglicare s concerns regarding the proposal centre around risk assessment. The DIIS does identify a number of accommodation related risks associated with the project, but Anglicare is concerned that the DIIS does not weight these risks appropriately. The Triple Bottom Line Assessment included in the DIIS (Volume 2, 8 608) classifies the accommodation pressure in George Town potentially created by the mill as being a major negative impact. It proposes to manage this impact by constructing the accommodation facility, which will have a minor positive impact, leading to an overall rating of a moderate negative impact. A moderate negative impact is defined as being an impact that is manageable through normal and appropriate environmental management practices. The net impact will not have any unacceptable long term impacts on the physical, biological or human environment (Volume 2, 7 582). Anglicare is concerned that this finding is not accurate, and that the impact of the mill and its influx of workers on the accommodation situation in the Tamar Valley, particularly during the peak construction phase, has been underestimated. 4

5 Risks identified by the DIIS Possible social impacts of the population influx during the construction period that are noted by the DIIS include (Volume 2, ): Reduced availability of tourist accommodation, which the DIIS argues would be offset by the predicted $39 million that would be spent in the local economy by the workers. Increases in rent owing to landlords capitalising on the increased demand for accommodation. Eviction of existing tenants to accommodate pulp mill workers at inflated rents. The DIIS considers the latter two impacts (increased rent and eviction of existing tenants) as unlikely because of the short term nature of the demand for accommodation and the transient nature of the workforce. The DIIS also argues that responsibility for these impacts rests with the owners of the accommodation they will be the ones to make the decision to take in workers over tourists or local tenants or to increase or maintain rent levels. Overall, the DIIS estimates the impact of the construction period on accommodation would be major for a short period of months, and then moderate for the remaining construction period. In other parts of the DIIS, further risks are identified but not explicitly related back to accommodation issues. For example, Workers may bring their families, including both partners and children, with them for the duration of the contract. The DIIS considers large numbers of families moving to the area to be unlikely as the majority of the construction workforce is assumed to be either already living in the area or single men. Workers relocating permanently and purchasing existing housing stock (presumably to be owner occupied). The DIIS also estimates a 15% increase in land and property prices as a result of the mill. The DIIS sees this as a positive, stating that, Gunns has assessed that no particular community group will be made worse off (Volume 2, 6 543), and argues that it would occur incrementally during the first six months of construction, with new housing construction not expected until later in the construction period. Based on its experience in dealing with the private rental market and accommodation issues, Anglicare feels that the DIIS assessment is overly optimistic, and underestimates the impact of the population influx on the Tamar Valley private rental market. If 1,060 workers are to be accommodated within an already tight rental market, there will be catastrophic implications for people who are already marginalised within that market, such as low income earners, people with disabilities and refugees. Stakeholder consultation undertaken by Gunns as part of the DIIS development process identified concerns around the impact on tourist accommodation facilities, the availability and affordability of appropriate accommodation for the permanent population and the potential for the cost of accommodation in the local and regional areas to increase (Volume 2, 7 567). The DIIS indicates that Gunns have also identified aspects of the above concerns through technical studies, and developed mitigation strategies (Table 158, Volume 2, ). However it appears from a reading of various sections of the DIIS, including Appendices 10 and 37, that the relevant mitigation strategies are mainly confined to a management plan for limiting the impact of the influx of people into George Town which is not outlined in detail in the DIIS or Social Impact 5

6 Assessment, but which would appear to focus mainly on minimising anti social behaviour rather than housing issues, the construction of the temporary workers accommodation facility and the establishment of a community liaison group. The DIIS argues that the mill will result in economic renewal in the area, which will lead to increased employment (external to the jobs provided by the mill itself), up skilling of Tasmanian workers, additional GST revenue for the state, increased average incomes, increased business for freight, chemical and trade and accommodation industries, improved recreation opportunities, increased services and the construction of new housing. Overall, the DIIS argues, the project will have a major positive effect on the Tasmanian economy and a minor positive effect on the Australian economy. The real risks Background According to ABS data (ABS, 2006), the George Town municipality is characterised by lower incomes and higher levels of receipt of the Disability Support Pension (DSP), Newstart Allowance (the dole) and the single parents pension than the northern region as a whole, and indeed the state as a whole. The personal median weekly income in George Town is $273, compared to $314 statewide and $306 regionally, and the household median weekly income is $527, compared to $618 state wide and $601 regionally. Higher rates of receipt of income support payments such as the DSP, Newstart and the single parents pension indicate higher levels of poverty, as these payments generally provide barely sufficient resources to cover the cost of essentials: an analysis by the Brotherhood of St Laurence (2005) found that the incomes provided by Centrelink payments to Australians in a range of life circumstances were almost without exception at levels significantly lower than the Henderson Poverty Line 1. Seventeen per cent of George Town s 1,766 families are single parent families. Recent Anglicare research (Madden and Law, 2005) has identified single parents as being the group most likely to experience severe financial hardship. On these and other indicators, the George Town municipality, like many regional areas across Australia, experiences higher levels of poverty and disadvantage. It is a community that is particularly vulnerable to changes that will increase hardship. Launceston, which will provide private rental accommodation for at least some of the incoming workers according to the DIIS (e.g. Volume 2, 6 540), is the hub of education and training for the north and north eastern region. All year 11 and 12 students in the northern region and all people seeking to pursue certain tertiary degrees, such as nursing and social work, must live and study in Launceston. Those students relying on income support will be on either Youth Allowance or Austudy. Both payments provide an extremely limited income, currently $ a fortnight for a single person over 18 living independently. Youth Allowees are also entitled to a maximum of $ of Commonwealth Rent Assistance a fortnight to meet housing costs. Austudy recipients are ineligible for rent assistance (Centrelink, 2006). These students, and their participation in education, are endangered by any further tightening of the existing rental market. 1 The Henderson Poverty Line is a measure developed in the early 1970s. It estimates how much money individuals and families of different sizes need to cover their essential living costs, and represents a very basic living standard. It is updated every three months and moves in line with average incomes. 6

7 The DIIS acknowledges the high occupancy rates in private rental accommodation in the Tamar Valley (95 97% according to surveys of rental agencies) (Volume 2, 7 584), but beyond that there is little in the DIIS to indicate that the realities of the accommodation situation in the area have been comprehensively considered. Tasmania s affordable housing crisis is acute. Not only are there very high occupancy rates but the properties that are vacant do not stay so for long. On 4 March 2006, a year after the Pulp Mill Task Force accommodation audit, a survey by the Affordable Housing Crisis Coalition found that across northern Tasmania, only 21 of 92 advertised properties (23%) would be affordable for people on low incomes, and three of these properties were a room in a share house. There are also significant problems with the quality of housing in the area (and across Tasmania). The shortage of affordable rental accommodation places increasing pressure on the crisis housing system. What this situation means is that people with low incomes, people with disabilities, newly arrived refugees, single parents and other vulnerable groups are struggling to find housing at all, and when they do find it, are paying astronomical proportions of their income in rent. If, as proposed in the DIIS, pulp mill workers take half of the available private rental accommodation in the area, the impact on the rest of the private rental market will be catastrophic. It is highly unlikely that in an open rental market, pulp mill workers will confine themselves to the most expensive accommodation and leave the affordable housing to those who most need it. The reality is that the tightened housing situation in the Tamar Valley, acknowledged by the DIIS, will affect those least able to afford it. Impact on availability of tourist accommodation The DIIS expresses concern about the impact on the tourist industry if workers take up accommodation that could be used by tourists. For this reason, it proposes that pulp mill workers would only take up the percentage of tourist accommodation that would be vacant even in peak season (27.3% of the total available). Anglicare has two concerns about the DIIS assessment of this risk: first, the likelihood that the percentage of workers allocated to occupy tourist accommodation will bleed into the percentage allocated to occupy private rental accommodation, as they may well consider living in a house or unit far preferable to living in a caravan or motel for 12 months; and second, the fact that the occupation of vacant tourist accommodation will make it harder for people who are homeless to find crisis accommodation. It is not well known in the community that caravan parks, motels and other temporary accommodation are often used to house individuals and families who are homeless. This is because of the critical shortage of crisis accommodation compared to demand. It is even less well known that people are often in crisis accommodation for significant periods because of the critical shortage of long term affordable housing. For example, the Auditor General s report into Tasmania s public housing system found that people in Category 1 on the public housing waiting list can expect a wait of up to six months for public housing (Auditor General, 2005). Category 1 clients include people living in caravans, tents and other forms of crisis accommodation. Anglicare workers already report difficulties in finding people crisis accommodation because of the reluctance of tourist operators to take on clients. The presence of alternative potential tenants in the form of pulp mill workers will create further difficulties. This will mean more people living in cars, in the living rooms of family and friends or in tents. Figures from Launceston City Mission (Ryan, 2006), which provides crisis accommodation to homeless men, indicate that between 1 January 2005 and 31 December 2005, the service provided 2,926 incidences of overnight 7

8 accommodation to a total of 352 clients 2, but there were 372 occasions where clients had to be turned away. Increases in rent The DIIS argues that significant increases in rent are unlikely because the peak demand period is so short (10 12 months). Anglicare submits that this does not reflect what has occurred in the affordable housing market in recent years. Rents have risen significantly during the recent housing boom: an analysis of data from Anglicare s Private Rental Support Service (PRSS) has found that the average rent for a 2 bedroom property in the Launceston area increased by 33.33% between January 1998 and December 2004, with most of the increase occurring since 2001, in line with the housing boom (Wilson, 2005). Anglicare s housing support workers report that rent increases of around $15 a time continue to be common. Many low income earners are already paying rent at levels that place them in what is called housing stress the point at which people are no longer able to afford the essentials of life after paying for their housing. Housing stress occurs when people in the bottom 40% of income earners are paying more than 30% of their income in rent. Analysis of Anglicare s PRSS data (Wilson, 2005) found that in the second half of 2004 in the Launceston area, people on Newstart (the dole) were paying 44.50% of their income in rent, people on the Disability Support Pension were paying 42.75%, single parents were paying 34.79% and people on Youth Allowance were paying a staggering 63.80%. People on wages were on the edge of housing stress, paying 30.39% of their income in rent. As can be seen from these figures, any increase at all in rents will make life even harder for people who are unemployed, people who have a disability, single parents, students and the working poor. Eviction of existing tenants Again, the DIIS argues that this is unlikely because of the short term nature of the demand. It states that landlords are more likely to prefer long term tenants over the short term workforce. Again, Anglicare s experience does not support his. Our research has consistently found that many low income earners in the private rental market move very frequently. For example, 2002 research into low income earners experiences in the private rental market found that research participants had moved an average of 5.3 times in the previous five years, with the number of moves ranging from one to twelve (Cameron, 2002). A 2004 survey of people approaching financial counselling and emergency relief services for support found that 22% of private renters in the survey had moved twice in the previous two years and 12% had moved more than five times (Madden, 2004). And a survey of the whole Tasmanian community conducted by Anglicare found that a quarter of people renting through a private landlord had moved at least once in the previous year (Madden and Law, 2005). The impact of regular moves on low income earners can be profound: being forced to move is disruptive, particularly for children, who may have to change schools if the family cannot find affordable housing in the same area, stressful and expensive. Sixteen per cent of people in the emergency relief services survey identified the cost of moving as a big or very big cause of financial crisis for their household (Madden, 2005). There is a high turnover of tenancies because people are often unable to sustain paying high rent on their limited incomes. Anglicare research has found that 11% of private renters report being unable to pay their rent during the last twelve months due a shortage of money, compared to 4% 2 N.B.: The apparent discrepancy in figures is explained by the fact that clients may have stayed longer than one night. Similarly, clients may have been turned away more than once. 8

9 for the population has a whole (Madden and Law, 2005) and 29% of private renters in the emergency relief services survey said that paying rent was a big or very big problem for their household (Madden, 2004). In this environment, a 12 month tenancy with a highly paid tenant occupying the property would probably be a very attractive option to landlords and it is distinctly possible that landlords would evict sitting tenants to take advantage of this. Workers bringing their families with them The DIIS assumes that the majority of the imported workforce would be single men without families. However, this is, as is acknowledged in Appendix 10 (p.46), speculative. It is very possible that workers will have partners and/or children, and that if they are moving here for months they will want to bring their families with them. It is also possible that the area will see an influx of workers with families due to the indirect jobs that are predicted to result from the development. This factor does not seem to have been taken account of in the audit of accommodation capacity, which looks at accommodating individual workers only, although it is mentioned as having a potential impact on community services and facilities, including schools. The arrival of workers families will place more pressure on existing affordable housing availability. An assessment of this impact is missing from the DIIS. A 15% increase in land and property prices The recent housing boom has been a bonanza for property owners, who have benefited from the rising value of their investment. Many people have made significant profits by selling homes they bought prior to or early on during the boom. However, the boom has had negative impacts, particularly for those at the bottom of the affordable housing market. Housing affordability for first home buyers in Tasmania has been in a pattern of considerable decline since 2001 (HIA Commonwealth Bank, 2006), forcing potential first home buyers to remain in the private rental market. The associated increase in the value of housing has also pushed up rents. As outlined above, Anglicare research shows that rents have increased significantly in the last five years in line with the rise in house prices. A further 15% increase in land and property prices, as predicted in the DIIS, has the potential to put even more pressure on those who can least afford it. Inadequacy of proposed controls As indicated in Appendix 10, estimates of how many workers will require accommodation are based on a number of assumptions, including that no Tasmanian construction workers will require accommodation, that the maximum number of non Tasmanian workers will elect to live in the accommodation facility and that only a minority of workers will choose to bring families. These assumptions may not be accurate. For this reason, and for the reasons outlined above, Anglicare questions the DIIS statement that, there is capacity within existing tourism and rental stock to accommodate approximately 1060 workers (Volume 2, 7 585). And even if the capacity is there, the impact on the people who will be pushed out of the market to make way for the pulp mill workers will be significant. Gunns main mitigation measure will be the construction of a temporary accommodation facility for 800 of the imported workers. Anglicare s assessment is that this will not be enough as the capacity to adequately accommodate a further 1,060 workers in the private rental and tourist market without affecting permanent residents in the area does not exist. The other measures suggested as ways of managing the influx of workers the management plan and the community 9

10 liaison group seem more focussed on managing possible anti social behaviour by workers than on negotiating the housing situation. The DIIS states that if there is overflow from the accommodation facility, these workers can be accommodated in current accommodation and land development proposals in the Launceston area, including the C.H. Smith building development, the York Cove development, the Canal site development and the old Launceston hospital development (Volume 2, 7 585). However, some of these developments are still uncertain, and they are not providing affordable accommodation. If the decision is left to workers, it is unlikely that they would chose high cost boutique accommodation over more affordable housing options. Conclusion The affordable housing crisis is not a new problem: it has been repeatedly identified and well researched at both a state and national level over the past five years. Anglicare believes that the Draft Integrated Impact Statement has underestimated the impact that that the development of a pulp mill at Long Reach will have on the accessibility and affordability of housing in the Tamar Valley region. The risks that housing will become less affordable, particularly for those who are most vulnerable, are significant and the management strategies proposed in relation to housing are short term and inadequate. Given the value of the pulp mill development to the proponent, Gunns Ltd, it is of concern that there are no measures contained within the proposal that adequately manage the impact of the proposal on housing in the region or directly compensate the Tamar Valley community for the loss of affordable housing stock. Recommendations Anglicare has a number of suggestions for ways in which the accommodation sections of the proposal can be modified to ensure that their negative social impacts are minimised. Some of these proposals are not within the power of the Resource Planning and Development Commission to endorse, but we place them on the table at this point in the process for discussion. Immediate Anecdotal evidence indicates that the match of supply and demand in public housing in the George Town area is good, but George Town still experiences a number of problems with its housing stock. In particular, the houses are older and need maintenance, and the available houses do not always match the needs of Housing Tasmania s priority tenants, many of whom require smaller properties than are available. Anglicare suggests that Gunns explore an arrangement with Housing Tasmania, under which Gunns leases existing but currently inappropriate public housing to accommodate workers for the duration of the pulp mill period and commits to constructing (prior to occupying the existing public housing) new public 10

11 housing properties, that better meet Housing Tasmania s needs, on crown land. These new properties will be made available to the displaced tenants and will remain as public housing, under management by Housing Tasmania, after the construction period. The net result, at the end of the construction period, will be a badly needed increase in public housing stock. Long term The DIIS states that after construction and commissioning of the mill, the workers accommodation facility will be dismantled and the site turned into an industrial estate. The outline of design principles presented (Appendix 37) indicates that the facility will be made out of relocatable structures. Anglicare suggests then that after the commissioning of the mill, these structures be moved to another more appropriate site or sites, reconfigured to an appropriate standard for long term residential use and made available as affordable accommodation for disadvantaged Tasmanians. The DIIS outlines in detail the potential economic benefits of the project for Tasmania, including more jobs, higher wages and increased spending in the local economy. The experience of the housing boom in Tasmania demonstrates that the impacts of economic surges do not always trickle down to disadvantaged people. In fact, low income earners will be the last group to be benefit from any economic improvements in the area because so many disadvantages must be overcome. A significant disadvantage is that the DIIS proposes that pulp mill workers will occupy 100 half of the estimated 200 dwellings available for private rent in the area. Anglicare has outlined in detail above what this will mean for low income earners and other disadvantaged tenants. Anglicare submits that it would be an appropriate gesture of corporate responsibility for Gunns to reimburse the community for this by constructing 100 x 2 bedroom units (a housing configuration in particular demand amongst high needs tenants) to be managed by Housing Tasmania as social housing. Anglicare estimates a cost of $200,000 per unit (including land), which would be a total of $20 million a small investment compared to the total value of the pulp mill, if approved, to Gunns. However, Anglicare notes that through its construction division, Hinman Wright & Manser, Gunns would be in a position to leverage significant in kind support that has the potential to reduce costs. The State Government could also be in a position to provide support and reduce costs by releasing crown land. This would help it to meet its own targets for the construction of affordable housing. 11

12 References ABS, Regional Statistics, Tasmania, 2006, Catalogue No , Auditor General, Public Housing: Meeting the need, Special Report No.57, Tasmanian Audit Office, Hobart Brotherhood of St Laurence 2005, Poverty Line Update, Information Sheet No. 3, Centrelink, 2006, payment data for Youth Allowance, Austudy and Rent Assistance (accessed on 22 September 2006), Cameron, P. 2002, Condition Report: Low income earners in the Tasmanian private rental market, Anglicare Tasmania, Hobart HIA Commonwealth Bank 2006, Affordability Report June Quarter 2006, Madden, K. 2004, Bread and Board: When the basics break the budget, Anglicare Tasmania, Hobart Madden K. and Law, M. 2005, The Tasmanian Community Survey: Financial hardship, Anglicare Tasmania, Hobart Ryan, M., pers. comm., 22 September 2006 Wilson, T. 2005, The Dark Side of the Boom: An analysis of the Private Rental Support Service in North and North West Tasmania, Anglicare Tasmania, Hobart 12