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Finding More Beds For Rough Sleepers Could Save Victoria $11k Per Person Every Year

A new cost-benefit analysis has illustrated the link between homelessness and the economy.

17/03/2017 11:22 AM AEDT | Updated 17/03/2017 1:21 PM AEDT
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There are significant crime and health costs that be reduced by caring for the homeless.

Investing in last resort housing to combat homelessness in Melbourne would save the Victorian government hundreds of thousands over two decades, a new report from the University of Melbourne has found.

With the number of people sleeping rough in Melbourne reaching "emergency levels", a homelessness analysis conducted by SGS Economics and Planning and commissioned by the University of Melbourne found -- for the first time, the current costs of homelessness reduction benefits to rough sleepers in Melbourne to be $25,615 per person, per year paid by the government.

The analysis found the current estimated costs of homelessness includes a $60,000 construction fee of a bed for a homeless person as well as operational and administration costs, adding up to an estimated $124,400 per bed over 20 years. Alternatively the report calculated that an investment in one last resort bed, which includes options such as boarding houses, emergency accommodation and transitional housing, would save $216,000 over the same period, or $10,800 per bed per year.

Lead author of the report, Ellen Whitte told The Huffington Post Australia an investment in last resort housing would be beneficial for the Victorian healthcare system and see a reduction in crime linked to homeless individuals.

"The returns [of an investment in last resort housing] in a good healthcare system and the reduction of crime are significant," she said.

"A person who lives on the streets is 230 times more likely to end up in jail and there are significant costs attached to that. By investing in this last resort housing, the government can avoid this crime."

The figures are based on calculations by economists at SGS that show that an investment in last resort housing has a cost-benefit ratio of 2.7 -- that is, for every dollar spent on reducing numbers of rough sleepers, $2.70 would be gained by society over twenty years.

Costs of homelessness reduction benefits, per year, per new bed in Melbourne

  • Health Cost Savings - $8,429
  • Individual Costs - $6,500
  • Costs of Reduced Crime - $6,182
  • Improved Human Capital - $4,236
  • Volunteering Benefits - $268

Total - $25,615

The findings come after Melbourne City Council announced a new bylaw that cracks down on rough sleepers in the city by extending the definition of "camping" and banning people from leaving items in a public place without a permit. On Tuesday, the United Nations said that ban is about to "violate international human rights law".

Labor's Shadow Minister for Housing and Homelessness Doug Cameron welcomed the findings and said it highlights the importance of homelessness funding after cuts by the Coalition government for emergency and crisis accommodation.

"The findings reinforce the importance of government funding for homelessness support and expose the damage done by Malcolm Turnbull's cuts," he said in a statement released on Thursday.

"The Coalition has cut $44 million a year in capital and development funding for emergency and crisis accommodation, starting in its disastrous 2014-15 Budget. The cuts have remained in place in the subsequent Budgets, causing a shortfall of $132 million for homelessness support.

"The report finds that the construction of new, permanent last resort accommodation stock makes economic sense, existing accommodation should be protected and maintained and that all levels of government must be engaged."

CEO of youth homelessness prevention charity Kids Under Cover, Jo Swift told HuffPost Australia the report's findings are significant, but also highlights the need for focus to also be put on prevention of homelessness before it happens.

"I think there wouldn't be anyone that wouldn't acknowledge that there needs to be greater investment in every stage of homelessness," she said.

"We welcome the long-term vision outlined in the University of Melbourne report, but we feel that priority for that long-term vision should be placed at the beginning of a young person's life and not simply when a person is most at risk and most in distress – when they are on the streets."

Swift also acknowledged the figures released in the findings should go on to influence Victorian government funding in relation to homelessness reduction, but more needs to be done from within the community.

"That number will undoubtedly go on to inform and influence government policy in the future and that's the kind of education we need as a community to understand the cost to the community because we can make big decision around these things," she said.

"[The report] provided clarity around the numbers we haven't had. I think the Minister responsible does understand the investment that is required but we as a community need to understand there is only a limited financial resource available to address some of these issues.

"It's more about how as a community we can help change this and turn it around. We need more philanthropy and financial support.

Swift believes the growing number of homeless individuals in Melbourne and Victoria is starting to become more of a visual issue for the state and increasingly needs to be addressed.

"It's definitely getting worse, there's no doubt about that. It's becoming more visual which is more distressing for people who aren't normally exposed to that. The most obvious example of that is the recent camp that established itself in Flinders Street in Melbourne," she said.

"Given that we have been named the number one liveable city in the world, seeing things such as that does contradict that mantle. People are now seeing what the community sector have always known, that we have a homeless issue that needs to be addressed."

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