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

It is basic economics. I keep this book under my seat in this place. It's called Basic Economics. Let me quote from Basic Economics. You don't need to listen to me to tell you what is wrong with rent caps, price controls et cetera. It's been tried across the centuries, and in every single place it has been tried, it has failed—every single time. Every time. Let me quote from page 43 of my trusty handbook, Basic Economics:

Rent control has effects on supply as well as on demand. Nine years after the end of World War II, not a single new apartment building had been built in Melbourne, Australia, because of rent control laws there which made such buildings unprofitable.

That's in our own country. Did you know after World War II we had rent control in Melbourne, and for nine years not a single new residential apartment block was built in Melbourne—for nine years, until they got rid of rent control? That's Australia, but the same thing has happened all over the world. They had rent control in Egypt in 1960, and this is what an Egyptian woman who lived through that era said in 2006 about rent control:

The end result was that people stopped investing in apartment buildings—

who would have thought!—

and a huge shortage in rentals and housing forced many Egyptians to live in horrible conditions …

That's Egypt. Let's go to California.

Let's go to California, Senator McKim:

After rent control was instituted in Santa Monica, California in 1979, building permits declined to less than one-tenth of what they were just five years earlier.

People didn't build buildings. Why? Because they couldn't get the return on investment. Let's go to England and Wales:

Under rent control in England and Wales, for example, privately-built rental housing fell from being 61 percent of all housing in 1947 to being just 14 percent by 1977.

That was the impact of rent controls in England and Wales. It goes on and on and on.

Let's go to Toronto, Canada—

Senator McKim, let's go to Canada:

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after rent control was imposed in Toronto in 1976, 23 percent of all rental units in owner-occupied dwellings were withdrawn from the housing market.

Nearly a quarter of all buildings were withdrawn from the housing market in Canada in 1976 after they introduced rental control. We're actually seeing a manifestation of that in Australia at the moment. Many landlords are taking their houses or apartments out of the market because of interference with their ability to control their own properties. That's happening here today. That's the impact of overregulation in this space.

What happens when you do the opposite? What happens when you get rid of rent control laws? We've got an example of that too.

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.

They got rid of rent control laws in Massachusetts, and for the first time in 25 years new supply came online. That's what happened in Massachusetts.

This has been tried all over the world. It has never worked anywhere in the world. It is basic economics. The only way to solve the housing issue at the moment is to bring in more supply. That is the only way that the issue is going to be fixed. It is basic supply and demand. It is basic economics. That is the way the world works. There are those who may wish for it to be otherwise, but that is the way the market works. I say to those who are proposing it—with, I recognise, the best of intentions—the reality is the consequences of your policies don't necessarily reflect your intentions. This could in fact hurt the very people who you're seeking to help.