The Tasmanian Government must redirect funding that it would have used to pay back its historic housing debt to programs that increase access to social housing, reduce homelessness and improve housing supply.
The Commonwealth will today announce that it will waive the state's historic $157.6 million housing debt after reaching a deal with Tasmanian senator Jacqui Lambie for her support of tax cuts.
The deal is conditional on the state government using the saved funds for housing purposes, that could include measures to bring in changes to planning and zoning.
The deal lasts until 2041-42, when the government would have paid back the debt under current forecasts, and saves $230 million in interest and principal repayments.
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The state government must also report annually the "key actions and outcomes" that have been undertaken using the funds consistent with future population and economic growth projections, and highlight the funding in its annual budget papers.
The historic housing debt stemmed from a Commonwealth loan partnership that helped the state build houses between 1956 and 1989. The government pays back $15 million per year - enough for 30 affordable housing properties.
Housing Minister Roger Jaensch said having the housing debt effectively waived was a "marvellous" result for Tasmanians.
"We estimate this could mean around 80 more houses for people on the social housing waiting list across Tasmania, each year," he said.
Federal Housing Minister Michael Sukkar said the state and federal governments had worked "hand in hand" to reach the agreement.
"Waiving this loan will support the Tasmanian Government's efforts to reduce homelessness, increase access to social housing and improve housing supply across the state," he said.
Liberal Bass MHR Bridget Archer described the announcement as "a wonderful, collaborative achievement for the entire state".
News of the impending deal broke on Friday, prompting speculation over details of the agreement. Former premier David Bartlett questioned whether the $157.6 million would be excised from the Commonwealth grants process, effectively making it a "zero sum game" if GST revenue was used instead.
But in the agreement, the Commonwealth will "exclude the amount waived" from its calculation of the GST share revenue, "conditional on the Commonwealth Treasurer confirming this in writing to Tasmania's Treasurer".
In July, Mr Jaensch told The Examiner the historic debt was preventing the government from doing more on housing, but was also "not going to fix everything overnight".
This sentiment was echoed by Danny Sutton, the chief executive officer of community organisation Colony 47, who was hopeful of direct results for those facing housing stress in Tasmania.
"Even though this is an important first step, we see that there's a lot more investment that's needed," he said.
"We want to see that, long-term, the people that are on our priority waiting list across the state - there's about 2300 households - can be catered for."
Senator Lambie released broadcast advertisements on Saturday afternoon foreshadowing the visit from Mr Sukkar to confirm the deal she struck with the Commonwealth in July, saying "I reckon Tasmanians, you're going to love it".
Tasmanian Labor housing spokesperson Alison Standen called on the state government to review its Affordable Housing Strategy and Affordable Housing Action Plan 2019-2023 in light of the debt deal.