Affordability: Bonnyrigg - the Sydney suburb that is a model for how PPP housing can work
A troubled area of southwest Sydney is in the midst of a mammoth makeover as state houses in the suburb of Bonnyrigg are pulled down and replaced with a mixture of owner-occupier and social housing.
The district is one of the most disadvantaged in the city, based on levels of income, education and employment. It also has a reputation for anti-social behaviour and violent crime.
The cost of maintaining the properties, which were built in the 1970s and 1980s, was also getting out of hand, and projections of a larger elderly population meant accessibility issues needed to be addressed.
When the project is finished in about eight years' time, more than 800 tired state properties will be replaced with 2500 modern homes - of which 833 will be for rent to state tenants.
The redevelopment of the 81 hectare area started in 2006 with a projected completion budget of around A$1 billion.
The work, to house 3100 people, is being done in 18 stages - stage four is under way - and features a mixture of townhouses, apartments and detached houses.
Properties will have between two and four bedrooms.
Owner-occupier homes are selling for around A$350,000 each. Although the price may reflect the lower socio-economical mix of the area, it is less than most might expect for a Sydney suburb.
One outcome of the completed project is that no one driving along the streets of Bonnyrigg will be able to tell the difference between a state-owned rental property and one that is owner-occupied.
Part of the plan is to remove the stigma some state tenants feel, and increase integration.
The layout is designed for pedestrians and cyclists. There will be nine open space areas, parks will be lit and have line of sight from street traffic as well as surrounding houses. Surveillance of open areas by residents is helped by increased housing density and orientation towards the parkland.
More interestingly, the Bonnyrigg redevelopment is the first social housing project in Australia to use a public private partnership (PPP) to finance and manage the build.
The partnership is between property development firm Becton, Westpac, property maintenance firm Spotless Group and St George Community Housing, a not-for-profit organisation that acts as a tenancy manager for social housing on behalf of the government.
Karen Silk, general manager of Westpac Institutional Banking, says the PPP model the bank has followed has been well established in Britain.
"In the UK it is a A$40 billion market with 1800 housing associations managing social housing in a not-for-profit private sector capacity," she says.
"Social housing is 20 per cent of the market in the UK, but in New Zealand and Australia it is 5 per cent."
Silk says the development has presented a number of challenges for the project's partners, not least because it has so many stages and there is a responsibility to existing home dwellers who are displaced during building work.
"While we do look at it as a financial transaction, we also take into account that there is a social context, and so we have to understand the requirements that come with that," says Silk.
"Some of the challenges are working with a community that is in transition.
"There are community concerns about change, so we have to manage that as well as their expectations. It is a balancing act and requires a strong partnership between government, private sector providers and the community housing manager (St George).
"It is not a big bang approach; you have to ensure there is some flexibility because it is a 14-year project. What might be best practice today can be different in a few years' time. These are the kinds of challenges that are a little more unique for us - because there is not just an economic outcome that is being sought."
Closer to home, Silk says a project such as Bonnyrigg could be replicated in Auckland, so long as there is sufficient scale - a minimum project value of around $300 million appears to be the starting point for a PPP.
"Tamaki is one area where this could happen," she says. "It regularly comes up as a public housing area in need of change and development. The New Zealand Government is looking at that area and we have certainly put forward concepts and ideas.
But the Government would have to make a call on it.
"For a PPP to be truly viable it needs a value of at least $300 million, although it depends on the government, which might want to divest some of its housing stock."
However, though Silk says the government ultimately owns the social houses in any project, there is no prescriptive model around PPPs, with a range of mix-and-match scenarios to choose from.
800 state properties in this suburb to be replaced with
2500 modern homes of which
833 will be for rent to state tenants. The budget for this is
A$1b and the project will house
3100 people in a project being carried out in 18 stages, providing owner-occupier homes costing