Mehreen Faruqi (NSW, Australian Greens) Share this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to table an explanatory memorandum relating to the bill and have the second reading speech incorporated in Hansard and to continue my remarks later.

Leave granted.

The speech read as follows—

Australia is in the middle of a rental and housing crisis. People renting a home and people buying a home are spending record amounts of their income to put a roof over their head. Too many renters across Australia are staring down the barrel of another rental increase that will push them into homelessness. In a country as wealthy as ours, rising rates of homelessness are a national disgrace. Meanwhile skyrocketing house prices have put buying a home forever-out-of-reach for countless everyday families.

The housing crisis is the result of generous tax-breaks for property investors, lending policies that have burdened families with record levels of debt and handed billions in profit to the big banks, the retreat of governments at all levels from providing public housing, and absolutely no protections for renters. This has turned a basic human right into an instrument for financial speculation that is enriching the already wealthy.

It is unfathomable that the government can find tens of billions of dollars every year in the budget for submarines, tax cuts for politicians and millionaires, and handouts to wealthy property investors while families are sleeping in their cars, workers are unable to afford a home near where they work, and people are being evicted because they can't pay the 20 per cent increases in their rents. The government is sitting on their hands when they have the capacity to intervene and stop the worst of this crisis. This crisis is a political choice that is the result of the social contract being torn up in the interests of big capital.

This Bill responds to the need for national leadership to address the rental and housing crisis by seeking to establish a national freeze on rent increases and interest rate increases.

Freeze on rent increases

Rents are increasing at the fastest rate on record. The 2022 increase in rents was a record. 2023 increases are forecast to eclipse this record. In the past twelve months rents in capital cities have grown six times faster than wages. Renters are set to pay an extra $10 billion as the result of rent increases this year.

Less than one percent of rentals nationwide are affordable for a person earning a full-time minimum wage, making it near impossible for essential workers to afford to rent in most parts of the country. And close to zero percent of rentals are affordable for people on the Aged Pension, Disability Support Pension, Jobseeker or Youth Allowance.

Even with this Bill providing for a two-year rent freeze and a cap on rent increases at two per cent every two years, wages aren't forecast to catch up to the impacts of recent rent growth until 2029.

The Prime Minister has repeatedly claimed that regulating rental tenancies can only be achieved by the states and territories, or that implementing a freeze on rent increases would require nationalising the private rental market. This is an abrogation of responsibility.

Despite what the Prime Minister has led people to believe, rent freezes are not an extraordinary or novel idea, nor are they 'pixie dust'. Tasmanian, Victorian, South Australian and Western Australian governments froze rents for six months when the COVID pandemic hit, and private rental properties were not nationalised. Historically, rent freezes have been used in times of rampant inflation. In 1941, the federal government froze rents to deal with inflation caused by wartime shortages.

Throughout the world rent controls are used to protect tenants from punitive and excessive increases in rent pressure zones. From New York and California to Scotland and Ireland, action has been taken to limit increases in rents. London Mayor Sadiq Khan called for powers to freeze rents for two years. The New Zealand Human Rights Commission has called for a temporary rent freeze throughout the country to tackle the cost of living and rent crisis. Most recently, Spain capped their rent increases in areas where rent is increasing significantly.

Just as the federal government coordinates national policy in areas such as health and education, by offering grants to the states and territories who sign up to a national agenda the federal government can coordinate a national freeze on rent increases and take action on out-of-control rent rises. In fact, when the COVID pandemic hit, the Morrison Government co-ordinated an eviction moratorium via the National Cabinet, proving that it is possible for the federal government to take action on renters' rights.

More recently, the Prime Minister effectively refuted his previous claims when he announced that National Cabinet had tasked the Housing and Homelessness Ministerial Council with examining action on renter rights including the frequency and amount of rent increases, and to report back later this year. In the meantime, families will face eviction and be forced into homelessness because they are being slapped with another unprecedented rental increase that they cannot afford. A national freeze on rent increases is not only necessary: it is possible; and it is urgent.

This Bill establishes the framework for the federal government to work with states and territories to implement a rent freeze by providing additional housing funding to states and territories who adopt rent control measures within their own tenancy legislation. Following the passage of this Bill, the Minister would be required to take all reasonable steps to reach an agreement with the states and territories to implement a freeze on rent increases. In return, participating state and territories would have their housing funding from the federal government doubled.

Currently, the states and territories receive a combined $1.6 billion per annum in federal funding via the National Housing and Homelessness Agreement. The additional funding provided for by the passage of this Bill could be used to immediately boost the supply of public and genuinely affordable housing by buying up existing properties, such as those exiting the National Rental Affordability Scheme, or invested in desperately needed new public housing construction.

In return for the doubling of housing funding, the Bill also require states and territories to implement model tenancy standards. Model tenancy standards would include a two-year freeze on rent increases, and ongoing caps on increases of two per cent every two years. The rental control measures provided for by this Bill would apply to the individual property rather than the individual lease, ensuring that rents could not be exorbitantly increased between tenancies.

Furthermore, model tenancy standards would include a ban on no-cause evictions, including at the end of fixed-term tenancies. This would avoid the perverse outcome that is occurring in Queensland where, despite no-cause evictions supposedly being prohibited, tenants are receiving a notices to vacate at the end of a fixed-term tenancy.

Fr eeze on rate increases

Interest rates are also increasing at record speeds. For the first time ever, the RBA has increased interest rates at eleven of their last twelve meetings. The RBA is doing this in response to high inflation that is between half and three-quarters as result of supply-side pressures—including corporate profiteering—that monetary policy can do little to offset. The RBA is also doing this after providing forward guidance during 2020 and 2021 that interest rates were unlikely to increase above 0.10 per cent until 2024.

Interest rate hikes are increasing housing costs for mortgage holders, with monthly repayments for the average mortgage holder having increased by around $1,000 in the last year. Interest rate hikes are also increasing housing costs for renters, with low vacancy rates allowing landlords to pass on interest rate increases with little ability for prospective tenants to refuse these increases.

The Government has repeatedly claimed that interest rate decisions are out of its hands because the RBA is independent. But the government has the power to intervene and has always had the power to intervene.

Section 11 of the Reserve Bank Act 1959 sets out the procedure by which the Treasurer may overrule the RBA and set monetary policy in the event of a difference of opinion between the government and the RBA. These powers were introduced by Ben Chifley upon the establishment of a central bank in Australia through the Commonwealth Bank Act 1945. These powers were then retained by the Menzies Government when the Reserve Bank of Australia was established and separated from the Commonwealth Bank in 1959.

This framework established by Section 11 was taken from the 1937 report of the Royal Commission into Monetary and Banking Systems which stated that the government should ultimately be responsible for monetary and banking policy.

This Bill would make it clear that the government is ultimately responsible for monetary policy and that Section 11 can be used to freeze interest rates.

Following the passage of this Bill, the Treasurer should invoke Section 11 to freeze the cash rate target and the interest rate on exchange settlement balances at no more than 3.60 per cent for twelve months.

Conclusion

This Bill is proposing real action for renters and mortgage holders in a time of an unprecedented housing crisis. It is possible. It is not a fanciful idea to ask for more.

Over the last three decades of neoliberal economic policy, the role of government in housing has consistently been replaced by the private market, the real estate industry and other large-scale financial actors. Successive Liberal and Labor governments have been more interested in ensuring the big banks, wealthy investors and property developers continue to rake in record profits at the expense of everyday people.

This Bill would reverse that trend by putting the interests of renters and mortgage holders ahead of the big banks, developers and property moguls. Everyone needs a home. Housing should be treated as a home and as a social good, not a speculative financial asset. People should not have to feel 'extremely lucky' to have a roof over their head.

Debate adjourned.