NSW Government policy on employer-provided residential housing and other forms of rental assistance for employees has recently been reviewed in the light of the Auditor-General's special audit report, Rental and Management Aspects of Public Servant Housing. The Auditor-General raised various concerns in regard to employer-provided employee housing and the extent of compliance by public agencies with Memorandum 89-52, Public Sector Staff Housing.

To address these concerns, a new employee housing policy has been developed and is set out in the attached policy guideline, Employee Housing Policy. Significant changes introduced by the policy include:

while the policy requires, as a general principle, full market rents to be charged, Chief Executives may approve the
charging of less than market rates (within certain parameters as set out in the policy);

the requirement for annual rental valuations for each individual property by a registered real estate valuer has been
abolished (the policy now allows a range of options in relation to rental assessments); and

agencies must prepare an Employee Housing Manual.

The attached policy will take effect immediately and replaces the policy set out in Memorandum 89-52, Public Sector Staff Housing and the Public Sector Staff Housing Guidelines issued by the Department of Industrial Relations, Employment, Training and Further Education (DIRETFE) in June 1992.

Further information on employee housing can be obtained from Mr Theo Vermeulen, Premier's Department, on 228-5516 or Mr Barry Riley, Public Employer Services, DIRETFE, on 266-8414.

John Fahey
Premier

Issued: Personnel Policy Division, Premier's Department
Contact: Theo Vermeulen, Principal Policy Analyst (228 5516)
Date: 10 May 1994

PUBLIC EMPLOYMENT INDUSTRIAL RELATIONS AUTHORITY 
PUBLIC SECTOR MANAGEMENT ACT 1988

DELEGATION

Under section 60 (1) of the Public Sector Management Act 1988 ("Act" ), l, Jane Diplock, the Acting Director-General, Department of Industrial Relations, Employment, Training and Further Education, hereby delegate to Department Heads and to those persons exercising the functions of a Department Head, as specified in column 2 of Schedules 1 and 2 to the Act, respectively, (referred to hereinafter as "Department Head") the function of the Industrial Authority with respect to:

Rental on Public Service Employee Housing Under section 99 subsection (1), a Department Head exercising this delegation may direct that a fair and reasonable sum as rent be fixed for premises belonging to the Government to be deducted from the salary of the officer or employee.

The amount of rent to be deducted is to be fixed in accordance with Premier's Memorandum No. 94-10 on Employee Housing Policy.

Pursuant to section 99 subsection (2), a Department Head exercising the delegation shall when giving a direction under subsection
(1), either fix the amount of rent to be deducted or specify a person by whom the amount of rent to the deducted is to be fixed.

I hereby authorise the sub-delegation of this function, provided that a record is maintained of officers to whom the exercise of such functions has been sub-delegated.

Dated this 10th day of May, 1994.

Jane Diplock,
Acting Director-General,
Department of Industrial Relations,
Employment, Training & Further Education.


Employee housing policy

Policy statement

The NSW Government provides employee housing when needed to maintain government services to the community.
Agencies must charge full market rent for such employer-provided housing except in exceptional circumstances as detailed in this policy.

Similar principles apply when public agencies provide other forms of rental or housing assistance.

Legal and policy basis

1. Public Sector Management Act 1988
2. Industrial Relations Act 1991
3. Premier's Memorandum 92-39: Total Asset Management Manual
4. Treasury Circular G1991/20: Accounting Policies for Revaluation of Non-Current Physical Assets
5. NSW Treasury Paper (annual)

Guidelines on Fringe Benefits Tax for Inner Budget Sector Agencies Related legislation

1. Annual Report (Statutory Authorities) Act 1984
2. Annual Report (Departments) Act 1985

Reporting requirements

The Regulations of the Annual Report Acts 1984 and 1985 require public agencies to report on their personnel and industrial relations polices.

Agencies are also required, under the reporting requirements of the Total Asset Management Manual, to report on property maintenance strategies and achievements in their annual report.

Principles of managing employee housing

Chief Executives may approve the provision of employee housing:

when such assistance is essential to the continuation of priority government services and the employee cannot obtain
private accommodation which is of a reasonable standard, in a reasonable location and at a reasonable rent; or

when the special duties to be performed require the employee to live on-site or close to the work site.

All Chief Executives must charge full market rent for employee housing, unless special circumstances exist that justify reduced rentals, or less than market rates are specified in an existing award or agreement.

Chief Executives are obliged to ensure that their agency pays fringe benefit tax on the difference between the reduced rental rate and the full market rate when special circumstances result in the use of reduced rental rates.

Chief Executives are required to assess and set rental rates for their agency's employee housing annually in line with market rates using rental benchmarks (see Procedures). In addition, Chief Executives are required to obtain rental assessments from a registered real estate valuer once every five years.

In managing employee housing, Chief Executives must comply with the asset maintenance requirements set out in the NSW Government's Total Asset Management Manual.

Chief Executives must prepare and maintain an Employee Housing Manual, setting out agency objectives and procedures.

With the aim of bringing all housing arrangements in line with the employee housing policy, Chief Executives should ensure that housing and rent arrangements set out in existing awards or agreements, and any new claims from employees or unions for housing and rent assistance, are included in any relevant negotiations for new enterprise agreements.

Rental income derived from employee housing may be kept by agencies and used directly for the maintenance of their employee housing or treated as general revenue.

Special circumstances that justify charging less than market rent

Chief Executives may approve charging less than market rates for employee housing in the special circumstances outlined below. However, Chief Executives should consult with other public agencies operating in a particular location, to ensure their decisions have regard to the level of rent paid by public employees generally in the location.

The rates below represent minimum payment levels. In some cases a higher rate may be more appropriate depending on the particular circumstances of the rental situation.

• For audit purposes, accessible records must be kept for each case where a less than market rate rental is charged, on the special circumstances that justify the reduction in rent.
• Remote locality 80% of full market rent may be charged in remote or isolated locations where agencies have difficulty attracting employees.
• Shortage of rental accommodation 50% of full market rent may be charged where market rents are high due to the scarcity of rental accommodation.
• Essential occupation 50% of full market rent may also be charged where occupation of the residence is essential to performance of duties required.
• Essential occupation and high rentals 30% of full market rent may be charged where the occupation of the residence is essential to performance of the duties to be performed and the full market rent would be unreasonably high.
• Special cases 30% of full market rent may also be charged where it is necessary to protect cost-effective working arrangements and/or recognises the particular difficulties faced by low income employees.

Authorisations
Under section 99 of the Public Sector Management Act 1988, the functions of the Industrial Authority in regards to employee housing are delegated to Chief Executives of public agencies. The Chief Executive of the agency is responsible for the implementation of the Employee Housing Policy and must approve:

• the provision of employee housing; and
• any rentals charged by agencies for employee housing set at less than full market rates in line with special circumstances
  as detailed in this document.

Procedures to be followed
Assessing rental levels

To determine market-rate rentals for employee residential housing, Chief Executives must:

1. obtain individual property rental assessments from a registered real estate valuer at least once every five years at the same time as the asset valuations required by Treasury Circular G1991/20 Accounting Policies for Revaluation of Non-Current Physical Assets; and
2. assess (and adjust if necessary) market rents for their properties on an annual basis by utilising either:
3. • benchmark market rentals for individual localities, as provided by a registered real estate valuer; or
   • "Housing Indexation Figures" provided by the Australian Taxation Office for assessing FBT.

Maintenance of employee housing Government maintenance policy, as detailed in the Total Asset Management Manual (released by Premier's Memorandum No. 92-39), requires agencies to develop effective management policies for assets including employee housing. Specifically, under the guidelines, agencies are obliged to:

• Prepare an Asset Maintenance Strategic Plan to be submitted to the Cabinet Capital Works Committee annually;
• Obtain approval to the Asset Maintenance Strategic Plan by the agency's relevant Minister; and
• Report on maintenance strategies and achievements in their Annual Report.
• Employee housing manuals Chief Executives must develop and maintain agency employee housing manuals covering, as appropriate to the organisation, the following points:
• • government policy and eligibility guidelines;
  • assessment of rents and rental reviews;
  • tenancy agreement;
  • tenanting to members of the public;
  • vacancy/movement of tenants;
  • salary deductions for rentals;
  • rates, rate rebates and excess water charges;
  • repairs and maintenance;
  • capital improvements;
  • fringe benefit tax; and
  • purchase and disposal of houses.

Further information

General Personnel Policy Division (PPD)
enquiries Premier's Department

Charging less Public Employer Services (PES)
than market Department of Industrial Relations,
rents Employment, Training and Further Education

Maintenance Capital Works Unit
requirements Premier's Department