Housing for those on low incomes is provided by the private rental market, social housing (public, community and cooperative housing), boarding/rooming houses and caravan parks.

Under the proposed GST, those on low incomes will be entitled to an increase of 4% in their social security benefits as compensation for the predicted increase in the cost of living, that is, increases in the cost of rent, food, etc. Since, as demonstrated below, rental increases alone will absorb more that the 4% compensation package, there is little doubt that the additional burden of the GST will force many into homelessness.

Low-income earners currently in the private rental market have significant affordability problems even after receiving rental assistance (RA) from the government. Of all RA recipients, 39% still pay, on average, 30% of their income on rent; in Sydney the figure is 45% of their income. Studies have shown that even though rents will not incur a GST, rents for RA recipients will increase by 4% to 11% due to the GST being levied on input services such as maintenance, agent fees, lease preparation, letting fees and legal fees.

Commonwealth funding for social housing has declined by about 50% in the last decade through lack of indexation and direct cuts to funding. Hence cuts to Commonwealth grants, and State Government policies, have contributed greatly to the shortages of social housing in the Barwon region. The proposed GST will place an additional financial impost on the Office of Housing as it is proposed that the GST will be levied on the input costs of social housing. As pointed out by the (Victorian) Housing Minister, Ann Henderson (Geelong Advertiser, 6 March), the GST will have a significant impact on the availability of social housing because under the proposed Commonwealth/States Housing Agreement, which the States rejected, the Commonwealth did not include any compensation for the impact of the GST.

In Victoria there are about 14,000 residents in caravan parks and 6000 in boarding/rooming houses. These constitute some of the most socially and financially disadvantaged people in the community, with many being elderly, frail, and suffering physical or intellectual disability. Under the proposed GST, unemployed residents in caravan parks and boarding/rooming houses, who already pay about 50% of their income in rent, will incur a GST of 10% on their accommodation costs for the first 27 days, and 5% thereafter. There seems little doubt that this additional burden could force many of these residents into a position of homelessness.