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

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 the country 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 policy choices by successive governments, and both the Labor Party and the Liberal Party are responsible for these terrible choices: generous tax-breaks for property investors; and lending policies that have burdened families with record levels of debt and funnelled billions in profit to the big banks. We have also seen the retreat of governments at all levels from providing public housing, and absolutely no protection for renters. This has turned a basic human right into an instrument of 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 nuclear submarines and tax cuts for politicians and millionaires, while families are sleeping in their cars, essential workers are unable to afford a home near where they work, and people are being evicted because they can't pay the unlimited increases to their rents. The government is sitting on its hands when it has the capacity to intervene and stop the worst of this crisis. Make no mistake: the housing and rental crisis is a political choice. It is the result of the social contract being torn up in the interests of big capital. Powerful vested interests have dictated government policy on housing.

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 on interest rate 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 12 months rents in capital cities have grown six times as fast as wages. Renters are set to pay an extra $4.9 billion as a result of rent increases just this year.

Less than one per cent 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 per cent 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 repeatedly claimed, 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 at that time.

Historically, rent freezes have been used in times of rampant inflation. In 1941, the 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 rental pressure and in rent pressure zones. From New York and California to Scotland and Ireland, action has been taken to limit rent increases. 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 coordinated 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 reporting 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. When Labor had the opportunity to freeze and cap rental increases at National Cabinet, they chose not to, so every person made homeless now because of unlimited rent increases is Labor's fault.

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 investing in desperately needed new public housing construction.

In return for the doubling of housing funding, the bill also requires 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 by this bill would apply to the individual property rather than the individual lease, ensuring the 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 notices to vacate at the end of a fixed term tenancy.

Interest rates are also increasing at record speeds. We also saw the RBA increase interest rates at eleven of twelve meetings. The RBA is doing this in response to high inflation that is between half and three-quarters as a 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 0.1 per cent until 2024. We continue to see increasing rents as a key driver of inflation, pushing up interest rates even more.

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. A democratically elected government should have this power to overturn the decisions of elected bankers. 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. So what a farce it has been that the governments have washed their hands of this responsibility. 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, and my colleague Senator McKim will have much more to say on this.

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. That much should be clear to everyone. 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.

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

There is no doubt that a lot of Australians are doing it tough right now when it comes to housing and there is no doubt that Australians have the previous government to thank for this predicament. The previous government, for nearly a decade, sat on their hands and did nothing despite desperate calls for action by community service organisations, homeless Australians and Australians under rental stress, so it has once again fallen to Labor the government to fix yet another crisis left by the previous government. I am pleased to say that, since forming government, that is exactly what we have been doing. Whether you are buying or renting, Labor is getting on with the job with making housing more affordable for all Australians through our ambitious housing reform agenda, squarely focused on boosting and streamlining the supply of housing. You don't need to be an economist to understand that when demand outstrips supply, prices go up and, conversely, when supply increases prices, go down.

The Albanese government has therefore prioritised a range of policy initiatives aimed at increasing the supply of all houses, including public, social and affordable housing, many more homes to buy and more homes to rent. Last month the Albanese government's signature in Housing Australia Future Fund was legislated by parliament, delivering on a key election promise from Labor. This $10 billion fund is the single-biggest investment in social and affordable housing in more than a decade, and it is anticipated that in the first five years alone we will be able to build 30,000 social and affordable homes. To put this in context, this is more social housing than was provided over the past decade from the combined contribution of the Commonwealth, state and territory governments.

In addition to the Housing Australia Future Fund I would like to remind my Senate colleagues of what the Albanese government has achieved on housing in the short time since forming government last year. We have provided an extra $1 billion to the expanded National Housing Infrastructure Facility so we can get more homes on the ground more quickly. We've dispersed a total of $2 billion to the states and territories under the Social Housing Accelerator, which will create thousands of new homes for Australians on social housing waiting lists. We've delivered a new national housing accord, bringing together all levels of government, investors and the building and construction sector in a shared ambition to build one million new well-located homes over five years, starting in 2024. The Grattan Institute has estimated this scheme could save renters up to $32 billion over the next 10 years.

Supporting the National Housing Accord is a $3 billion new homes bonus, a scheme designed to incentivise states and territories to build 1.2 million well-located homes where people need them, as well as the $500 million housing support program for initiatives to help kickstart housing supply. We've also brought together states and territories with an agreement on the National Planning Reform Blueprint to streamline planning, zoning, land release and other measures to accelerate housing supply and improve affordability.

Also provided in the housing legislation recently passed by the parliament is the establishment of the National Housing Supply and Affordability Council, an independent statutory advisory body. The council will not only provide independent advice to the government on ways to increase housing supply and affordability; it will also ensure that our investments in housing are underpinned by expert advice. The culmination of our housing policy has been a phenomenal effort, and I have to take this time to congratulate my friend the Minister for Housing and the Minister for Homelessness, Julie Collins, the member for Franklin, for her incredible hard work and conviction in tackling issues of housing head-on. She has certainly put a lot of effort into sorting this issue out.

In stark contrast to the responsible approach to housing and supply by the Albanese government, the Greens have proposed a bill to place a freeze on rent and interest rate increases. While this idea sounds like a quick and easy solution to the distress many tenants are facing, this proposal is nothing more than another cheap political stunt by the Greens. While we understand that many Australians are finding it tough to find an affordable place to rent and that interest rate rises are often a bitter pill to swallow for those with a mortgage, this government will not support policies which give false hope to Australians who are already feeling the considerable pinch of housing stress. After spending months in this place delaying the delivery of actual concrete action on housing, the Greens are once again putting forward a policy designed to do nothing more than bolster their brand in the run-up to the next election. This bill is not about helping or serving the people of Australia; it is about serving their own self-interested gain of political pointscoring. This fundamentally flawed policy on housing is just another clear example of how they work.

When it comes to the issue of interest rate control, this is nothing but pure electioneering fluff from the Greens. The proposed bill seeks to fundamentally undermine the independence of the Reserve Bank of Australia despite an RBA review in March this year recommending the complete opposite. In fact, the review recommended that the government bolster the RBA's independence by removing the power of government to override monetary policy decisions of the Reserve Bank. The government supports the independence of the RBA and has accepted in principle all recommendations from the March review.

As the Greens also know—or at least they ought to—the policy of rent control is just another red herring. After all, it was the Greens who called for a Senate inquiry into the worsening rental crisis in Australia, only to hear expert witness after expert witness attest to the negative impacts a rent freeze would have on the rental market. If that wasn't enough to convince them of their political folly, there is an absolute trove of academic literature and evidence from around the world highlighting the long-term damage this type of policy represents. Indeed, according to the Grattan Institute, such measures would end up doing more harm than good, resulting in more Australians, not fewer, becoming homeless. They say:

The cap would blunt the incentive to build more housing, leaving us with fewer, poorer-quality dwellings.

…   …   …   

Only when housing is plentiful will it also be affordable. That's the plan renters should get behind.

This is not just the opinion of the Grattan Institute. The Centre for Equitable Housing, a think tank that advocates for all Australians to have secure, affordable housing, recently published a report on the regulation of rentals in Australia, which states:

We find that first generation rent control, or a "rent freeze", would be a poor response to the real challenges facing Australia's housing system, almost certainly making the problem worse for those in real housing stress. Freezing rents has been shown to reduce supply at the lower end of the market, as investors shift to higher-yield property development and withdraw more affordable properties from the market altogether.

The report goes on to say:

In the medium- to long-term, increasing social housing stock is critical to resolving rental unaffordability and insecurity.

There is overwhelming evidence from all over the world that rent control strategies simply do not work and ultimately do nothing but make the crisis worse. Some examples—for the Greens' benefit—of failed rent control policies from around the world include New York. Since the 1940s, New York has restricted annual rent increases, resulting in rents significantly lower than market value. Landlords are left with little incentive to maintain or improve their properties, which has led to an ageing and deteriorating housing stock and the ultimate ghettoisation of many neighbourhoods. The consequence of this has been the emergence of a two-tiered system. While some tenants with long-term and often intergenerational leases pay artificially low rents, others, particularly newcomers, are forced to pay steep market rents. This is a failed experiment which has only led to further inequality and social division.

Well-meaning rigid rent control in Stockholm has unintentionally led to a chronic housing shortage, with waiting lists for controlled rent apartments stretching into decades. This has ultimately led to the emergence of a black market for rental contracts, resulting in further inequity and social division.

Rent regulation was introduced in Paris in 2015. With landlords unable to increase rents above a certain index, many chose to sell their properties rather than lease them. This resulted in increased rental demand and, unsurprisingly, an ultimate increase in rents. The failed experiment was short-lived, with the policy being repealed, after just two years, in 2017.

Berlin also experimented with rent caps by introducing a planned five-year rent freeze in 2020, which ended in disaster. Once again, the policy had the effect of disincentivising investment in the housing sector, ultimately worsening the city's housing problem. In a case which lasted nearly a year, the policy was eventually overturned in Germany's Federal Constitutional Court in 2021. Berlin landlords were subsequently entitled to demand rental back payments on previously frozen rents, resulting in countless evictions of tenants facing significant arrears. This was yet another failed experiment highlighting the legal complexities and pitfalls that rent controls present, once again leaving renters to pick up the pieces.

So the evidence is clear: rent control policies simply do not work. Not only do such policies fail to meet their objectives; invariably, they have the unintended consequence of leaving renters even worse off than before. There is no need for Australia to become yet another failed experiment in the world of rent control that this bill represents. Rather than distorting the housing market with below-market rental rates or removing the independence of the RBA, as the Greens have suggested, the Albanese government is taking the far more responsible and pragmatic approach of addressing the root cause of the problem: supply. The solution is building more homes, and, thanks to our comprehensive housing agenda, that is exactly what the Albanese Labor government is doing.

Maria Kovacic (NSW, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Freeze on Rent and Rate Increases Bill 2023, which is potentially one of the worst bills I have seen come before the Senate in my very short time here. It is policy on the run that will likely compound the problem that it is looking to solve.

Another reason that this is a bad bill is that the Greens currently have an inquiry running in the Community Affairs References Committee, on which I sit and which a Green chairs, where public money and Senate time has been expended and there have been a substantive and intense series of submissions and public hearings. This process is not yet complete. As recently as a fortnight ago we travelled to Melbourne to hear more evidence, spending public money. The tabling of that report is due within the next few weeks, yet for some reason the Greens have decided that they are not going to wait for the outcome of that inquiry and are going to run with this bill instead. They are not going to wait for the outcome of that inquiry. In my view this is disrespectful of the Senate process, but more about that later.

I was reading this bill. I got through the first four items and I thought to myself: 'This isn't too bad. There's not much to see here. It's just tweaking some definitions and some titles. There's nothing really out of the ordinary.' Then I turned to item 5. It is here where we see the true colours of the Greens coming through, akin to the scary red flag of Stalin. Again, I'll have a little bit more on that later.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I can hardly wait.

Maria Kovacic (NSW, Liberal Party) Share this | Link to this | Hansard source

Stay tuned. The Greens have put homeownership in the too-hard basket. The Greens would probably rather see the big super funds or big investment firms, like BlackRock, Vanguard and others, own your home for you but pretend to protect your rights as a tenant and be considerate of you with these faux protections, pushing young Australians away from homeownership into state and institution owned housing. But I digress.

I turn to item 5. Let's have a look at what this requires the state governments to do in order to receive housing funds from the Commonwealth. Bear with me as I read directly from the bill. It states:

(i) rental prices of existing rental properties must not exceed the price the property was rented at on 1 January 2023 for a period of 2 years beginning on the agreement commencement date …

In translation that means a rent freeze for two years. Next it states:

(ii) if the tenant of a rented property changes after the agreement commencement date, the rental price must not exceed the price the property was rented at on 1 January 2023 for the duration of the period …

That means that the rent freeze remains in place even if there is a change of tenant, so, if your tenant goes, you still have a rent freeze on the property that you own. Next it states:

(iii) if a property is substantially renovated after the agreement commencement date and rented, the price the renovated property is rented at must not exceed the median rent price for a property of the same type in the same postcode as the renovated property for the duration of the period …

That means, for example, if a mum-and-dad investor goes to the bank and borrows $150,000 for some basic renovations for their investment property, they cannot determine how much they can rent it for when they are done. A very special formula cobbled together by comrade senators McKim and Faruqi will make that decision for them. They will make that decision for Australian mum-and-dad investors. There is more. Next it states:

(iv) if a property was not rented on the agreement commencement date and is rented after the agreement commencement date, the price the property is rented at must not exceed the median rent price for a property of the same type in the same postcode as the property for the duration of the period …

I had to read that a few times to understand it, and I like to think that I have at least basic knowledge of housing and the property market. This means that, if you currently live in a home that you own and you decide to move somewhere else—like, move in with your partner or your financial circumstances dictate you should go to a smaller property and rent yourself—you can't decide how much you can rent out your house for, even though you have never rented it out before. But don't worry. The Greens have another special formula for that too, so we shouldn't be worried. The bill states:

(v) after the period mentioned in subparagraph (i)—

which I read out earlier—

increases to rental prices are limited to a maximum of 2% every 2 years …

So, regardless of your costs and regardless of the inflationary environment, it's a maximum of two per cent every two years. Next it states:

(b) a ban on no-grounds evictions, including at the end of a fixed-term tenancy agreement …

This means that when the tenancy agreement ends—this is the agreement between you, a mum-and-dad investor, and your tenant—you can't ask the tenant to leave, even though your agreement is finished.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

It's their home.

Marielle Smith (SA, Australian Labor Party) Share this | Link to this | Hansard source

Order!

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I know it's hard for you to understand, but it's their home.

Marielle Smith (SA, Australian Labor Party) Share this | Link to this | Hansard source

Order!

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

It's where people live.

Marielle Smith (SA, Australian Labor Party) Share this | Link to this | Hansard source

Senator McKim, I just called 'order' twice.

Maria Kovacic (NSW, Liberal Party) Share this | Link to this | Hansard source

Next is:

… a ban on sale of premises evictions;

This means if next month you suffer the 13th interest rate rise since the Albanese Labor government came into power and you can't afford the repayments on the property and need to sell it, you can't ask the tenant to leave so you can do that. You have to sell the property with the tenant in place and hope that you can manage that with them whilst you also manage the stress of not being able to afford your loan repayments. Finally, there's:

… any other matters set out in the designated housing agreement.

We don't have enough time to go through that.

As noted by Senator Bilyk, that there is clear evidence of rent caps and freezes making housing markets much worse, further perpetuating the problem. Ironically, Senator Faruqi raised New York, the most expensive housing market in the world, as a shining example of rent caps and rent freezes. I am confused. At the public hearing in Melbourne, Mr Coates from the Grattan Institute had this to say:

With rent controls in that way, there are a few things that happen. One is that you risk reducing the quality and quantity of housing that's made available in the long term. Secondly, you generate a misallocation of the housing stock that means you need much more housing in order to provide the same level of housing to each member of the community. So, in a world where you have strict rent controls, where people are not required to bear the full cost in the long term of what that housing is actually worth, they will hoard it; they will live in a home that's got two extra spare bedrooms or three extra spare bedrooms. This tends to have generational effects, where those that are around when the rent control is first established do very well and those that come in future generations—say, younger families looking for a property—

I am somewhat stunned, as I alluded to in the beginning of my contribution, that the Greens are moving this bill whilst we are in the middle of a Senate inquiry into the very same topic—an inquiry one of their senators is leading and chairing—before the committee has reported back to the Senate with its findings. Is there something that they are worried about? Perhaps the inquiry they have called won't yield the results they want.

This bill from the Greens demonstrates a complete and utter detachment from reality and a lack of understanding of the commercial practicalities of the housing system and the private rental system and the damage the bill would cause. There is little doubt that the implementation of the measures contained within this bill would drive Australian mum-and-dad investors out of the rental market and open the door to institutional investors, further depleting homeownership by Australians. Let's think about that. The Greens want to drive the opportunity of homeownership away from individuals and redirect that opportunity to institutional investors, and they don't care if these institutional investors are domestic or foreign owned. We definitely don't need foreign institutional landlords in the place of mum-and-dad Australian investors. The Greens are happy as long as we entrench Australians into being tenants, rather providing opportunities for them to become homeowners.

I'd hoped that we'd left some of these Stalinist policies like this one back in the 1950s, but, no, the Greens obsession with ultraprogressive regressionism doesn't stop with item 5. Item 6, as outlined in the bill's explanatory memorandum, is a measure called for in the 1937 Royal Commission into Monetary and Banking Systems. 1937—I actually doublechecked in case there was a typo! The Greens are invoking a 1937 royal commission in their explanatory memorandum in 2023, some 83 years later. We have come so far with so many changes to the banking and monetary system in Australia since then, such as the internet, online banking and globalisation, but clearly we haven't come far enough that the 1937 royal commission is now a timeless document. I thank the Greens for bringing it to my attention and to the attention of the Senate once again! I'm sure that I speak for all senators here today when I say that the 1937 Royal Commission into Monetary and Banking Systems should be at the forefront of our deliberations when it comes to managing banking policy!

Forgive my descent into sarcasm, but I'm really annoyed by this bill. Why? Because, again, a committee that I sit on as a senator in this chamber has spent public money and has spent Senate time to set up an inquiry and public hearings across this country during a cost-of-living crisis at the behest of the Greens and now the Greens don't wish to wait a few weeks for the outcome of that process.

But I'm sure that the Greens know, like their colleague, Senator Rice, whom I sit on the Community Affairs References Committee with—the only committee that the Greens chair—that I am very passionate about housing. I do commend the Greens for worrying about renters' rights and the imbalance that sometimes occur between those that own and those that rent. And it made me think about how many people in this chamber are in tune and understand the importance and benefits of homeownership, particularly into retirement.

I spent some two decades helping people plan and achieve their goals of owning their own homes, setting up financial security for themselves and their families, and I know that the senators sponsoring this bill also know these benefits. But, on doing a little bit of research, I quickly discovered that both Senator McKim and Senator Faruqi each own four properties. Yes, you heard me correctly. Four properties each! This includes residential property, a holiday home—which I'm sure is very lovely—and some investment properties.

I know what you are thinking, Acting Deputy President: why would such fierce advocates for renters own so many properties directly contributing to the housing crisis? Well, that's not for me to answer but leads directly to the main issue that nobody in the Greens is talking about, and that is supply. This is not just a rental crisis or a housing crisis but a homeownership crisis, and this crisis has many moving parts to it, not the least of which is the current cost-of-living crisis, which has seen the cost of new supply soar as inflation has gone unmanaged.

Another factor to this issue of supply is the prolific nimbyism of necessary and sustainable development in metropolitan areas, with councils, particularly in New South Wales, being the most prolific. Which councils are they? Green councils. And it's not just a problem in New South Wales; it is also a problem in the federal seat of Griffith, home to some of the Brisbane's wealthiest residents. In April of this year, the AFR reported that the Greens housing spokesperson, the member for Griffith, opposed the development of 1,300 new homes in his electorate. We need to build more homes. We have a supply crisis, and they need to be in everyone's backyard. This is a collective responsibility.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

It has rarely been my misfortune to have to sit in this chamber and listen to a bigger load of rubbish than we have just heard come out of the mouths of Senator Kovacic and Senator Bilyk. What a word salad we have just been subjected to. And, when it's all said and done, through that nearly half an hour of absolute rubbish—of misinformation, of ad hominem attacks, of complete failure to empathise with the crisis in rents and the massive financial pressures facing mortgage holders at the moment—what do I take from it? I take this: we don't want to do anything to help renters and we don't want to do anything to help mortgage holders. That's what I take from that.

I remind people that the major parties in this place—the neoliberal political parties in this place that Senator Kovacic and Senator Bilyk belong to—both support $39 billion every year going from the consolidated fund into the pockets of property investors in this country. Think about that, colleagues: $39 billion a year in negative gearing and the capital gains tax discount. That is money that comes directly from the budget that could be used to actually build more public homes and to encourage the states to engage in rent relief for people. That $39 billion goes straight into the pockets of mostly wealthy property investors, thanks to the collusion between the Labor Party and the Liberal-National coalition in this place.

I'm not going to go to all the misdirection and disinformation that we heard from Senator Kovacic and Senator Bilyk, but one thing I do want to address is the very smart insult that Senator Kovacic threw—she thought it was smart, at least—describing Senator Faruqi and me as 'comrades'. You know what? We are comrades. Senator Faruqi and I are absolutely comrades, as is everyone in the Australian Greens party room, and I'm proud to stand with Senator Faruqi. I'm proud to stand with all of my friends and comrades in the Australian Greens party room, to stand up for renters and to stand up for mortgage holders because—you know what?—someone has got to do it in this place, because it certainly isn't going to be the Labor Party or the Liberal-National coalition in Australia.

People need to understand exactly what pressures people are facing out there in the community. We hear the words 'cost of living' a lot, but one of the main drivers of cost of living is what is undoubtedly a housing crisis in this country. We are hearing story after story. In fact, the committee inquiry that Senator Kovacic mentioned numerous times in her speech has heard story after story from renters who are facing double-digit percentage increases in their rents on an annual basis—completely unaffordable increases in their rents—because greedy landlords are seeing an opportunity to profiteer from a shortage of rental properties and a shortage, critically, of supply of public housing from government.

We will also hear stories—and I've got no doubt we're going to hear stories in a minute from Senator Scarr, who's going to wave some weighty tome around; I have no doubt he's got there with him—about how if you put in place rent controls you will somehow impact on the quality and scale of housing supply. I've got two very simple responses to those arguments from Senator Kovacic and the ones we're about to hear from Senator Scarr. Governments should build more homes for people. Governments should build enough homes so everyone in this country has a place to live and a place to call home. That is the responsibility of government, and government should step up and fulfil that responsibility and build enough homes. That takes care of the supply issue. In terms of quality, the government should legislate minimum standards for rentals and force minimum standards on landlords who are refusing to engage in repairs, to deliver a warm home for people—or a cool home for people who live in the tropics— to deliver a safe home for people or to get the mould off the walls in rental properties. Force landlords to do it, by legislating minimum standards.

This is not rocket science, colleagues. The market is failing, and government needs to step in and regulate. It's as simple as that. We heard the rubbish from Senator Bilyk about the Greens somehow holding up the HAFF. We delivered $3 billion extra into affordable housing in Australia—$3 billion extra that Labor claimed they couldn't afford but suddenly found when the Greens forced to them to by using our balance of power in this place. We also, through using our balance of power in this place, forced to the government to change the proposed $500 million cap on annual disbursements from the HAFF to be used to build homes for people in Australia into a minimum spend of $500 million. Let's be clear about that. When the government introduced that legislation, that $500 million annual disbursement was a cap. It is now a floor. That means, instead of the government not being able to spend any more than $500 million, they now have to spend at least $500 million.

And all the while we were subjected to Senator Ayres and numerous senators on the Labor side, numerous senators on the Liberal side—and even Senator Lambie parroting Labor Party speaking points in the Tasmanian media—telling us to get on with it. Well, you know what? We held our ground and we delivered three billion extra dollars that Labor said they couldn't afford. Somehow, when push came to shove, thanks to the Greens, they found they could afford to put three billion extra dollars into affordable homes in Australia and turn the $500 million into a floor not a cap, as it previously was.

One thing I will say about Senator Kovacic is that she has clearly read the bill and the explanatory memorandum. I give her credit for that and I thank her for, in her speech, referencing the reference that we included in the explanatory memorandum to this bill in regard to a royal commission into banking a long, long time ago—the best part of a century ago now—and some great Labor figures, including Ben Chifley. I reckon Senator Ayres may have heard of Ben Chifley. I reckon that's a reasonable proposition.

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

I have too!

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

And Senator Scarr says that he has too. What happened back in the day was that, post that royal commission, when the Reserve Bank of Australia was formed, there was a very deliberate decision made to give a democratically elected government, through the Treasurer, the power to override the RBA. That is still enshrined in legislation today. When people say the RBA is independent, they're only telling half the story, and it suits the Labor and Liberal parties to talk about the independence of the RBA because it allows them to wring their hands and say: 'Oh, this is terrible. The RBA is putting interest rates up. It's terrible, but there's nothing we can do about it because the RBA is independent.' The RBA is not independent while section 11 of the Banking Act exists, because that section provides the power for the Treasurer to override the RBA.

Let's be very clear about this. Mortgage holders are facing pain. Former Governor of the Reserve Bank Dr Lowe said in 2021 that interest rates would be on hold for many years into the future. Mortgage holders who believed that and, off the back of that comfort, made a decision to get into the property market are facing massive pressures now after the RBA engaged in an historic, record-breaking series of interest rate rises in this country, where they raised interest rates at 11 consecutive board meetings. Many of those people are actually inside out on their mortgages now—their mortgages are bigger than the value of their properties. That situation is actually on Treasurer Jim Chalmers and the Australian Labor Party, because the power is there in legislation for Mr Chalmers to override the RBA, and he is refusing to do it. What we get is the ashen-faced Treasurer coming out and saying how terrible it is and that he understands the pain faced by mortgage holders but there's nothing he can do about it. Well, there actually is something he could do about it, and that is use the powers that were very wisely inserted into statute to override the RBA. Colleagues, it is fundamental in a democracy that, at the end of the day, the power, responsibility and accountability should rest with those who are directly accountable to the people, and that is us in this place. That is the Treasurer, Mr Chalmers. It is not the unelected technocrats who sit on the board of the RBA.

The RBA as it is currently constituted is a peak body of the neoliberal approach to economics, which is currently cooking the planet and destroying nature to the extent that the ecological processes that actually sustain human life on this planet are collapsing around us as we speak. The neoliberal approach to economics has absolutely turbocharged poverty. It has turbocharged climate collapse. It has turbocharged ecological collapse. And people are paying the price. They are living through floods and they are living through bushfires. So many people in this country—one of the wealthiest countries in the world—are being ground into abject poverty thanks to neoliberalism and economic orthodoxy, supported and delivered by the political duopoly in this chamber, the ALP and the Liberal and National parties.

Well, do you know what? As I said earlier, someone has to stand up for renters in this place. Someone has to stand up for mortgage holders in this place. And it ain't going to be anyone if it's not the Greens. We proudly bring this legislation before the Senate, because the housing market has failed. I remind people that the Minister for Housing, Julie Collins, belled the cat on 7.30 four or five months ago when she said that Labor regards housing as an asset class. That tells you everything you need to know about the failure of the two major parties to deliver for renters and mortgage holders. Both these parties fail to understand one fundamental truth, and that is that houses are places where people make their homes. Having a home is a fundamental human right, and there is no reason whatsoever that every Australian should not have a safe, comfortable, dignified home to live in. The only reason they don't is the choices made by the Labor and Liberal parties in this place, who are mainlining neoliberalism and, in doing so, turbocharging the profits of property speculators and prioritising those profits above the right of every Australian to have a safe and affordable home. It is a disgusting disgrace that not every Australian has a safe and affordable home.

I am so proud to be here with my comrades in the Australian Greens standing up for renters and mortgage holders and saying very clearly and firmly that having a home is a human right and that we fundamentally believe in and have the policies to deliver an Australia where everyone in this country has a safe, comfortable and affordable home.

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

Sitting here today, I've just come up with a new theory in relation to economics, and I reckon it may well win me the Nobel Prize for economics! It is this: whatever the Greens propose in terms of economics policy, do the opposite. That's the Scarr rule of economics! I reckon that could well give me the Nobel Prize. It may well put me on a flight to Stockholm to collect my Nobel Prize for economics, following in the footsteps of one of the great neoliberal inspirations I have, Milton Friedman. It could well provide the opportunity to me to get the Nobel Prize for economics!

When I go to Stockholm to collect my Nobel Prize for economics for coming up with my new economics rule, my new paradigm, which is: 'Whatever the Greens propose in terms of economics, do the opposite and you will get a better outcome,' I can talk to people in Stockholm about how rent control has gone in Stockholm. And what will I find? Nine-year waiting lists to get access to rent-controlled apartments in Stockholm. So what have they found in Scandinavia? They've found, just as they have all over the world, that the evidence does not support rent controls. This is the most classic of all classic examples of best intentions leading to negative outcomes—of best intentions paving that famous road to hell, leading to negative outcomes for the people who are intended to be assisted by the policy.

I don't question the motivation of Senator McKim and his colleagues with respect to this policy and this legislation. I tip my hat to them. They care about this issue and want to do something positive about it. But what they're proposing will achieve exactly the opposite of what they're suggesting.

Now, Senator McKim knows me reasonably well, because he knew I would quote from my textbook on basic economics in relation to rent control. Let me remind the chamber what our literature on basic economics tells us about rent control—first, in relation to Australia, since Senator Faruqi has mentioned rent control in Melbourne, Australia. Well, these are the facts. I'll quote from page 43 of my edition of Thomas Sowell's book Basic Economics. He's another great neoliberal. He writes: 'Nine years after the end of World War II, not a single new apartment building had been built in Melbourne, Australia.' So that's nine years under rent control, under what the Greens are proposing in their horrendous economic policy. In economics, we should always do the opposite to what the Greens propose. This is what Basic Economics tells us:

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.

How's that assisting people in need, wanting accommodation? In nine years, not a single apartment building was built in Melbourne because of rent-control laws.

Let's turn to page 44. What happened in the USA? Sowell writes:

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.

One-tenth! Again, how is that helping the people that the Australian Greens want to help?

Let's have a look at what happened in England and Wales. On page 45, he writes:

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 per cent by 1977. A study of rent control in various countries concluded: "New investment in private unsubsidized rented housing is essentially nonexistent in all the European countries surveyed, except for luxury housing."

So that's the impact of rent control—that construction capital would go towards luxury housing, as opposed to affordable housing, under the Greens policy.

And then what happens when you lift rent control? This is what happens. 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.' So this is the flip side. This is the corollary. When you cease rent control, you actually increase supply and thereby assist those seeking affordable accommodation. The evidence is there.

It is just baffling that the Australian Greens continue to put forward these ridiculous economic policies. I will quote from the submission made by the Productivity Commission to the Senate inquiry into the rental crisis in Australia. What did they find? Section 3 is entitled 'More homes, cheaper rent'. Of course, supply and demand—we need to increase the supply of the housing stock in this country, not introduce economic policies which would dampen or depress the supply of housing. The submission says, 'Addressing barriers to the supply of properties will reduce rents.' It's basic economics. Page 10 of the Productivity Commission's submission says:

Increasing the supply of housing will lead to an increase in the supply of rental properties. While most newly-constructed properties are bought by owner-occupiers, about a third of mortgages for the purchase of new dwellings in June 2022 were for investors, most of whom will likely lease the properties in the rental market. And, in 2019-20, about 45% of new homes were bought by first home buyers, probably reducing demand for rental properties.

Even when newly built housing does not immediately come on the rental market, it can still moderate rents.

So, even when the market is given the signal that new supply is coming onto the market, rents fall or at least the increase is moderated, which is exactly what the Greens are trying to achieve—but it will not happen through their policy. The Productivity Commission submission concludes:

Rent control is not an effective way to improve affordability for renters

Governments should avoid policies that artificially depress rents and curtail the supply of new properties.

Direct regulation of rental prices (or 'rent control) involves government regulation of rental prices, either fixing rents for the duration of a tenancy or imposing a rent limit across all tenancies. Australian jurisdictions have not imposed rent controls widely.

  …   …   …

Rent control benefits incumbent renters in the short term—

So those who have already got a premises, tenants, are benefited in the short term, but this is the important point—

but harms all renters in the long term.

So what do the Greens know that all of the experts don't know? All of the evidence from Egypt to the UK to North America to here in Australia at the time of World War II was referred to by Senator Faruqi, who obviously hasn't gone to the trouble of working out the consequences of that policy when it was introduced in Australia. What do the Greens know that all of us don't know?

I come back to Scarr's new theory of economics, which hopefully will lead to me flying to Stockholm to collect my Nobel prize for economics, and that is: 'Whatever the Greens propose in terms of economic policy, do the opposite, and you are guaranteed to get a better outcome.' When I go to collect my prize in Stockholm, I will talk to all those young Scandinavians, Swedes, who are in nine-year queues in Stockholm to try to get apartments, because rent control has not worked in Sweden, just as it has not worked in the United Kingdom, in Egypt, in North America and in Australia, and it will never work. Sadly, I'm afraid the Greens will never accept the reality, because their economics policy is an evidence-free zone.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

Australia is in a housing crisis. Australia is in a rental crisis. Millions and millions of Australians are suffering incredibly because of this. I've just been to a briefing by food relief charities, who tell me there is a massive increase in the number of people accessing their food relief who have never had to access food relief before. Why? Because they cannot afford to live and because, when it comes to the essentials of life—particularly, paying their rent and paying their mortgages—they can't afford to pay for anything else. They can't afford to pay for their medications. They can't afford to put shoes on their kids' feet. Food has now become the discretionary item. That's what they say—'Well, we can't afford to spend anything on food'—and they will go and access food relief.

This is the current situation. We have skyrocketing rents. We have a massive shortage of housing. This has been totally self-inflicted by the neoliberal policies such as those that Senator Scarr has just been espousing—that everything is sweetness and light. The neoliberal policies of state and federal governments over decades are what have made this crisis. We've got 640,000 households in severe rental stress. Because of chronic underfunding of public and community housing, we have got a shortfall of 750,000 homes in the public and affordable housing sector.

So, while Senator Scarr might like to talk about queues in Scandinavia, I'll talk to him about the decades-long queues for people accessing public and community housing in every state and territory in Australia. There has been a massive failure of government policy. We need to have a huge increase in investment way beyond what the current government is investing through the housing affordability future fund—a massive increase in investment in public and affordable housing—and we need to have controls on rents.

I have had the privilege of chairing the Senate inquiry into the worsening rental crisis in recent months, and we have heard from so many renters who have been in so much stress. The evidence has been compelling and heartfelt, and it has really underlined the severity and the urgency of the housing crisis. The challenges that people face can be summed up as four things: the lack of genuinely affordable housing, including public, social and community housing; unregulated and skyrocketing rents; inadequate tenant protections; and systems that fundamentally favour landlords.

This bill, obviously, is addressing one of those—the need for rent freezes and then ongoing rents caps to address that issue of those skyrocketing rents—so that people aren't having to put up with and cope with those rents. I'll tell you the story of Jo, who shared that, since moving to Queensland, she has had to move seven times, costing her over $14,000. She told the committee:

In several of the properties I've rented, maintenance has been very poor.

…   …   …

Getting air conditioning installed in a top-floor flat with no ceiling fans in Queensland was problematic, despite temperatures exceeding 40 degrees Celsius. This same landlord increased the rent at every chance she could. When I finally called time and moved out, she did the same to the next tenant and the next tenant and the next tenant. In the year following my departure, she drove three tenants out with this aggressive approach. Her response? It's what the market demands.

We need to put a stop to this, and this is what the Greens' bill would do. I'll also tell you that rent controls and rent freezes are popular. People know that that is what is needed.

I was also at a briefing yesterday and was told about a recent poll by the Susan McKinnon Foundation. It revealed that Australians believe that capping rent increases is within their top five housing priorities for state governments. Renters want action, but the Labor government is refusing to listen here. Yes, it's a priority of the state governments, but we have got a federal government that has got Labor governments wall to wall across the mainland that could be taking action to be introducing rent controls and rent freezes as per this bill and could be funding a massive increase in the amount of affordable and community housing so that we would be taking the serious action that is needed to tackle the rental crisis.

The Greens are listening to the renters. The Greens are the party for renters. If people want to see action on rental prices, we believe that we have got the answers. We know that we need to have rent freezes and rent controls. We know that governments have to urgently invest in public, social, community and genuinely affordable housing. That's why we have acted. We got the government to commit an extra $3 billion as part of our negotiations on the Housing Australia future Fund legislation.

The third thing we need to do to make life bearable for people on low incomes who are struggling the most, who are the ones that cannot afford to pay these skyrocketing rents, is to increase income support.

Dorinda Cox (WA, Australian Greens) Share this | Link to this | Hansard source

Senator Rice, the time for this debate has now expired. You will be in continuation.