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Australians living in public housing will have their rent and utility bills automatically deducted from welfare payments under a federal government plan to reduce homeless.

Draft laws passed through the lower house on Wednesday, however Labor’s human services spokeswoman Linda Burney flagged amendments to be introduced in the Senate.

‘Our amendments will ensure that only people who are in arrears and at risk of homelessness can be included in the scheme,’ Ms Burney said.

‘Such a scheme needs to be about preventing homelessness, it should not be a standard way of collecting rent.’

About 99 per cent of people in social housing pay their rent on time so pensioners shouldn’t be included in the scheme, Ms Burney added.

Labor is also concerned that an agreement for automatic rent deductions from welfare payments would be in a non-written form.

‘It must be recognised that public and social housing tenants are not in a powerful position,’ Ms Burney said.

‘They are likely to agree to almost anything that will keep a roof over their heads.’

It’s therefore up to parliament to make sure the scheme works fairly, she added.

Minister for Social Services Paul Fletcher said the states and territories lose about $30 million nationally because of unpaid social housing.

The plan would ensure stable income streams and a more efficient social housing system, he added.

The scheme will operate everywhere except Victoria, Tasmania and the ACT.