Asset management

The Queensland Government commits several billion dollars each year towards its Capital Program. This investment in capital, both for economic and social infrastructure, provides a stimulus for improving the productivity of the Queensland economy. Assets created by Queensland's Government Capital Program are recognised as a key resource in the delivery of its services.

The Department of Housing's property portfolio, with an approximate value of $13.5 billion, is one of the State Government's most significant assets. In 2007-08, an additional funding injection of $500 million over five years was provided from the Queensland Future Growth Fund to accelerate the expansion of Queensland's social housing asset base. Another $60 million over four years, from 2007-08, has been provided for improved housing provision for rural and remote Aboriginal and Torres Strait Islander communities.

Strategic management of this portfolio ensures the development of accommodation solutions to assist those with greatest need, while maximising the value, life and condition of property assets.

Managing the construction, acquisition and disposal of assets to ensure value for money

The construction and acquisition of social housing is influenced by demand, existing availability of social housing, population growth, and availability of suitable land for construction of housing. The department's rolling three-year new construction and acquisition programs allow for the provision of a range of housing options which increase the mix of dwelling types in the portfolio, and better match the changing demographics of its client base.

The department's housing designs continue to evolve with industry improvements and have been modified to include features which enhance mobility, address climate issues, provide outdoor space and keep maintenance to a minimum. At the same time, design improvements over the past five years have enabled the department to lower the cost per dwelling by reducing the average floor area of new constructions, excluding components such as drying balconies in units, using less expensive products where appropriate and maximising utility space.

In 2007-08, the department completed construction of 411 rental units and purchased 455 rental units, adding a further 866 social housing dwellings to the portfolio. The department also commenced construction of 574 rental units and purchased land to facilitate the future construction of approximately 548 rental units.

Number of departmentally owned dwellings added to the portfolio

To help address the growing requirement for affordable and appropriate accommodation for clients with greatest need, the department is adding studio units and apartments that are targeted towards smaller households. An innovative way of adding one and two-bedroom dwelling types to the portfolio is through the acquisition of existing motels. This complements the department's construction program in a significantly shorter delivery timeframe and at a reduced cost compared with traditional construction. The average cost per unit, inclusive of purchase price and refurbishment, is approximately 75% of the cost of purpose-built new constructions. In 2007-08, the department acquired nine motels which, after refurbishment, will yield approximately 150 studio-style rental units.

In addition, the department is also pursuing other new and innovative ways to deliver affordable accommodation. To reduce capital costs and encourage the building industry to take up residential construction opportunities, in 2007-08 the department commenced a trial of alternative capital works delivery and procurement methods and introduced innovations such as:

• issuing performance-based design briefs to consultants, rather than prescriptive briefs, and
• adding an invitation in tender documents for builders to come up with methods of construction or detailing which would reduce costs.

The department has also initiated a trial of non-traditional capital procurement methods such as:

• bundling of projects, where several projects are simultaneously tendered on the basis of geographical grouping, providing an opportunity for construction companies to achieve and pass on economies of scale and efficiencies in resource management,
• serial tendering, where tenderers submit a lump sum tender on multiple projects scheduled for out-years. This form of procurement has the benefit of providing work continuity to tenderers over a two or more year period, and will encourage low cost, market-standard housing solutions. While this process has not yet proven to be less expensive or quicker in the trial to date, there is potential that the tenderers may learn from their experience and achieve possible savings with future designs, and
• factory-built, where contractors are invited to provide housing design and construction solutions which offer either a pre-fabricated or kit home solution. In 2007-08, the department trialled projects utilising a variety of these methods. Results indicate that this strategy is best suited to projects in remote areas, where local subcontractors are unavailable, or in response to natural disasters.

The department is also investing capital to purchase surplus Government land which would be suitable for housing development. By conditioning the sale of this land to private developers for the inclusion of social housing and other affordable private homes, the department is increasing the supply of affordable and appropriate housing. In 2007-08, the department established agreements with developers for sites in Cairns and Brisbane to provide 23 sites for social housing and 23 sites to be made available to first home buyers. The criteria established by the department for first home buyers includes a household income of less than $90,000 and not more than 30% of income being used for mortgage repayments.

The department strategically disposes of assets to:

• assist tenants into home ownership. In 2007-08, 70 households were assisted through the Sales to Tenants program,
• provide redevelopment opportunities. The removal or demolition of adjoining detached houses has provided opportunities to construct multi-unit dwelling complexes. This results in a greater number of clients assisted and utilises the equity held in land holdings, and
• minimises the future financial burden of properties in poor condition.

The objective of disposal is to identify assets surplus to existing or anticipated requirements and ensure that maximum return is achieved so that further housing assistance can be provided with the sale proceeds. However, the department recognises the increased demand for social housing and has consequently limited the disposal of properties in recent years.

Preserving the value and extending the remaining useful life of the social housing portfolio

The department's assets are maintained in a way to ensure they continue to support the business objectives and service delivery requirements of the department, and to ensure that Government investment represented in the dwelling portfolio is managed prudently. This involves assessment of the maintenance needs of the portfolio over the immediate, medium and long-term, and responding to identified maintenance requirements.

Objectives of portfolio operations and asset maintenance for social housing assets owned by the department include:

• ensuring tenants' health, safety and security issues, including all associated statutory requirements, are adequately addressed,
• ensuring the accuracy and currency of property condition data on which asset decisions are made,
• optimising the useful life of property portfolio assets and therefore maximising the number of long-term housing opportunities available,
• minimising the backlog in maintenance, and
• optimising service capacity and asset value.

In 2007-08, the department ensured dwellings were maintained to an acceptable and appropriate standard through a targeted maintenance program, at a cost of $126.7 million.

The department also invested $94.9 million in the upgrade and refurbishment of properties to improve dwelling amenity and functionality, and to address tenants' health and safety issues.

Ensuring a consistently high standard of asset management across all social housing

The department's asset strategies are guided by the service delivery objectives outlined in the department's Strategic Plan, the Housing Act 2003 and the Commonwealth State Housing Agreement. They are also intended to pursue efficient and cost-effective management which provides best value for money to Government.

A strategic asset management process is in place to assess properties when required. The process aims to efficiently manage the alignment of the asset portfolio through major upgrade/refurbishment, demolition, redevelopment and disposal.

To ensure all social housing is maintained to an appropriate and consistent standard, the department developed an Asset Management Framework to build the property management capabilities of registered providers. The department will be conducting property condition appraisals for non-department owned properties for community housing registered providers. The data from the appraisal will be beneficial to providers for their development of Asset Management Plans, which is required under the Housing Regulation 2003.

For the 34 Indigenous communities, the department has maintenance arrangements with QBuild and local Indigenous councils to allow tenants to request responsive maintenance through a dedicated free-call telephone line linked directly to the department's Call Centre. In 2007-08, the department also implemented design and construction standards for remote Indigenous housing to ensure housing in remote communities is of a comparable standard to other forms of social housing.

Property condition data is central to maintenance and upgrade management practices as it provides the basis for determining targeted maintenance and upgrade programs. Property condition information is updated through property condition assessment inspections with the intention that no information is older than three years. Data is also updated as building components are replaced by the service provider and on completion of upgrade activities.

A Property Standard Index (PSI) has been developed by the department in partnership with the Queensland University of Technology and Commonwealth Scientific and Industrial Research Organisation. This index describes the condition of an asset in terms of its short-term maintenance requirements, amenity level and lifecycle stage. Properties with an overall PSI result of 3 are considered to be of an acceptable standard. Dwellings with a score of 8 or greater for the maintenance component are considered to be in very good physical condition and have a remaining useful life of 50 years. Consistently, around 98% of departmental-owned dwellings have a maintenance score of 8 or greater.

Identifying and tapping into opportunities to re-shape the social housing portfolio

Within the social housing asset portfolio, there are a large number of properties which can be redeveloped into more appropriate housing using equity held in existing land assets. During the year, the department took advantage of several redevelopment opportunities in the greater Brisbane area, making use of existing assets (dwellings and vacant land) to secure larger parcels of vacant land for the construction of new dwellings. For example, the department replaced detached housing with medium density accommodation in Carina Heights, Stafford, Coopers Plains, Everton Park and Holland Park West producing 68 new units of accommodation which could potentially house up to an additional 120 people.

Further, the department is undertaking land consideration projects which provide additional social housing to optimise outcomes for clients in exchange for making land available for private sector development. In 2007-08, the department finalised two projects which involved the exchange of land at Annerley and Carina Heights for the construction of two unit complexes at Holland Park, totalling 14 units of accommodation. These projects proved extremely successful, attracting significant interest from private sector developers, with construction tenders reflecting a strong demand for the department's land.

In recent years, the department has strategically weighted its capital works programs towards one and two-bedroom dwellings. This approach enables the department to respond to the high client demand for smaller accommodation types and also maximise its return on capital expenditure.

The department is also working closely with the Brisbane City Council in providing additional redevelopment opportunities through local and neighbourhood planning, particularly in the Coopers Plains, Stafford, Chermside and Murarrie areas. Revised town planning for these suburbs will allow the department to redevelop sites while improving social diversity and optimising client outcomes through private sector developments.

Last year, the department undertook a review of housing issues in the Bowen Basin in consultation with local authorities to respond to a range of housing issues that emerged as a result of the mining boom. To realign the portfolio in the region during 2007-08, the department purchased, constructed, or commenced construction of 142 dwellings, purchased 12 land development sites, and made available to regional councils additional vacant departmental land sites.

Properties will continue to be identified where the department is able to redevelop and realign existing properties to provide more appropriate housing for clients.

Measuring our performance

Property condition data

Property condition data is central to maintenance and upgrade management practices of the department as it provides the basis for determining targeted maintenance and upgrade programs. Properties are rated as 'acceptable' when they are 'considered to be in very good physical condition', not significantly dissimilar to a newly constructed dwelling.

Data for 2007-08 is unavailable due to a methodology review being undertaken by the department in conjunction with the Commonwealth Scientific and Industrial Research Organisation to more accurately reflect the lifecycle component of assets. However, previous results are provided below.

Property Standard Index (overall score)	Actual
	2005–06	2006–07
Aboriginal and Torres Strait Islander Housing Rental Program	5.2	4.9
Public Housing	5.0	4.7
Crisis Housing	4.8	5.2

Source: Property Standards Index.

Measure: Key measure from the Ministerial Portfolio Statement 2007-08.

Percentage of departmentally-owned properties in very good physical condition (PSI maintenance result of 8 or greater)	Actual (%)
	2005–06	2006–07
Aboriginal and Torres Strait Islander Housing Rental Program	96.0	97.6
Public Housing	98.5	98.0
Community Housing	86.2	89.2

Source: Property Standards Index.

Measure: Key measure from the department's Strategic Plan 2007-2012.

Appropriate utilisation of dwellings

To ensure effective use of resources, the department compared households against its social rental properties to measure overcrowding.

Percentage of dwellings without overcrowding	Actual (%)
	2005–06	2006–07	2007–08
Aboriginal and Torres Strait Islander Housing Rental Program	95.4	95.4	94.9
Public Rental Housing	99.1	99.0	99.0

Source: SAP.

Measure: Key measure from the department's Strategic Plan 2007-2012.

Tenant satisfaction

The department received client feedback through National Social Housing Surveys on whether the features of a particular dwelling met the needs of the client's household and its location. The features specified in the survey are the size of the home, modifications, easy access and entry, car parking, yard space and fencing, privacy and the safety and security of the dwelling. The department's performance, as rated by clients, is highlighted below.

Percentage of social housing tenants satisfaction	Results (%)
	Previous *	2005	2007	National
Dwelling amenity
Aboriginal and Torres Strait Islander Housing Rental Program	-	75%	83%	78%
Public Housing	78%	78%	81%	78%
Community Housing	85%	87%	81%	85%
Dwelling proximity to services
Aboriginal and Torres Strait Islander Housing Rental Program	-	91%	92%	89%
Public Housing	88%	88%	88%	86%
Community Housing	85%	87%	87%	89%

Source: National Social Housing Surveys.

Measure: Key measure from the department's Strategic Plan 2007-2012.

^* The previous result for the Public Housing survey relates to 2003-04 and the Community Housing survey relates to 2002-03.

2008-2013

The department will:

• manage the social housing portfolio to maximise the department's ability to meet the current and future needs of clients,
• maintain a consistently high standard of asset management practices across the department and ensure value for money outcomes, and
• assist community organisations to achieve a high standard in asset management for social housing.