Paul Scarr (Queensland, Liberal Party) Share this | Hansard source

That's the impact on supply. And it wasn't just Victoria. How about Egypt?

In Egypt, rent control was imposed in 1960.

So this isn't new.

An Egyptian woman who lived through that era and wrote about it in 2006 reported:

The end result was that people stopped investing in apartment buildings, and a huge shortage in rentals and housing forced many Egyptians to live in horrible conditions with several families sharing one small apartment.

And it's not just Egypt. Let's go to England. I quote again from the book. This is page 45:

In terms of incentives, it is likewise easy to understand what happened in England when rent control was extended in 1975 to cover furnished rental units. According to The Times of London:

Advertisements for furnished rented accommodation in the London Evening Standard plummeted dramatically in the first week after the Act came into force and are now running at about 75 per cent below last year's levels.

That's what happened in London in 1975. Let's go to Toronto. Let's go to another continent. We've been to Australia; we've been to Africa; we've been to Europe. Let's go to North America. This is what happened in Toronto:

Within three years after rent control was imposed in Toronto in 1976, 23 percent of all rental units in owner-occupied dwellings were withdrawn from the housing market.

That's what happened in North America. You don't have to have a PhD in economics like Dr Thomas Sowell to work out that rent control does not work. It has never worked. In fact, it actually hurts the people it's intended to help.

And then what happens to these places? What happens in these places when they actually remove rent control? Let's take the corollary. What happens when you remove rent control and you let the market act and let people make their individual decisions? Again, I quote from page 47:

In Massachusetts, a statewide ban on local rent control laws in 1994 led to the construction of new apartment buildings in some formerly rent-controlled Massachusetts cities for the first time in 25 years.

You ended rent control, and actually got new apartment buildings for the most vulnerable in society for the first time in 25 years when you removed rent control. That's basic economics. We need more of that—more basic economics. This isn't new, this stuff. You don't have to be John Maynard Keynes or Milton Friedman to get it. It's not new; it's all there. I'm happy to lend my copy to anyone in the Greens at any time; just come around to my office. I'll even buy you one! I quote it so often to you, Senator McKim. I'll buy you one! I'll get 12 of them.

At the same time, I must say, it's a bit difficult to sit here and be lectured to by those opposite sitting in the Labor Party coming from my home state of Queensland. I see what the Queensland government is doing; they're drinking the same Kool-Aid as the Greens in terms of this urgency resolution. They have this ridiculous proposal at the moment with respect to land tax. They want the land tax threshold for Queensland investors to take into account properties which are held in other states. That's absolutely crazy stuff. And what's the consequence? What happens when you change the tax system in this way? What happens when you introduce rent control? The investors leave. The landlords say: 'It's too hard. If it's not going to be profitable for me, I'll go and invest my money somewhere else.' That's what happens. It's basic economics. That's what we're seeing in Queensland.

I want to take the opportunity, because I think it is relevant to this debate in relation to housing supply and what we need to do, to quote from an article by Nila Sweeney in the AFR of 25 September 2022:

Queensland's new land tax rule will not take effect until the middle of next year, but property investors Peter and Joanna Meek are not waiting around.

They're not waiting around; they're selling up. What do they say?

"We have three rental properties in Queensland; we've already sold one, and we're in the process of selling another," Mr Meek said. "We're planning to move into the last property as we're unable to find a decent rental, so that's three rentals off the market already."

That's what those landlords are doing in response to the Queensland Labor Palaszczuk government's proposed land tax reforms. People are simply leaving the market; the landlords are leaving the market.

Further from the article:

SQM Research managing director Louis Christopher said the rental supply crunch would worsen as a result of the state government's tenancy and tax reforms.

"I fear it will get worse for tenants as the scarce supply—

Supply and demand, that's what it's about—

pushes rents higher," Mr Christopher said. "But the proposed rental freeze and the new land tax rule will not solve the problem. It will only encourage landlords to walk away …

That's the problem. That's what basic economics tells you. That's what the experience from all over the world tells you: when you introduce things like rental freezes, massive changes to land tax and laws which make it more difficult for landlords to be flexible with respect to their investments, they walk away. Then the supply of rental properties decreases and rents go up. And who's hurt? The most vulnerable in our society.