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Regulating rent increases could provide cost-of-living relief for those feeling the biggest squeeze.

The rising cost of everyday essentials has most people feeling the pinch. But if you’re a renter and haven’t already been hit with a rent increase, there’s a good chance you’re especially worried.

Property data sources like CoreLogic show rents in Australia are climbing across capital cities and the regions. Meanwhile, vacancy rates are also at record lows – below 1 per cent in some areas – as the demand for rental housing continues to drive up prices.

While landlords have benefited from these stunning rent increases, the real impact is felt by households – many on low incomes – relying on rental housing, says Dr Chris Martin, Senior Research Fellow from the UNSW City Futures Research Centre.

“If there’s a supply response, it just can’t come fast enough,” Dr Martin says. “In the meantime, it’s causing pain to households, many of whom are already in rental stress, and it can displace them from the communities they want to be in or have been in for a long time.”

Currently, tenancy laws regulate the frequency of rent increases – usually no more than once every six or 12 months, depending on the jurisdiction. Tenants can also challenge a rent increase for being excessive to the general market level of rents for comparable premises.

“We currently have very light regulation of rents during tenancies, in terms of frequency of increases and ‘excessive to market’ provisions, and there’s no regulation of rents at the beginning of tenancies at all. It’s just whatever the market will bear,” Dr Martin says.

But greater use of rent regulation, including capping the amounts rents can increase during tenancies, could be one way to help relieve pressure on renters’ pockets and keep them in their homes.

“Proper rent control hasn’t been discussed for a while in Australia, but it’s something that should be on the research and policy agenda,” Dr Martin says.

The argument for controlling rents

Dr Martin says housing is often treated as a means to grow wealth rather than a fundamental need. He says there’s no reason housing shouldn’t be considered, and regulated, like many other essential goods or services are.

“There should be regulation of rents in principle because everyone needs housing, and the consequences of not having it are dire,” Dr Martin says.

Regulating the price of rents would help ease a significant cost of living pressure for households, Dr Martin says. It would better enable renters to stay in their homes through more affordable pricing, while preventing landlords from taking windfall gains at their expense.

“Rents are increasing but not the quality or output of the housing service. This is the problem with property investment: it promises that you can make a lot of money doing absolutely nothing,” Dr Martin says. “A landlord just happens to have acquired property in a place that has become more desirable. In almost all cases, the dwelling quality is declining while they make more gains.”

In the absence of rent regulation, Rent Assistance paid through the social security system is the principal policy intervention for housing affordability in Australia. However, Dr Martin says it isn’t effective enough because many households in need are ineligible, and the amount is insufficient to make market-level rents affordable for many.

“There are about a quarter of a million low-income renters who don’t receive Rent Assistance at all and are paying unaffordable rents,” Dr Martin says. “And for more than a third of people who do receive it, even after accounting for all their Rent Assistance going towards the rent, they’re still in rental stress.”

The other alternative to private rental is the social housing sector. However, the construction of new social housing has stagnated for decades, and what little stock is available can’t keep up with demand.

“While social housing does provide more affordable rents, there’s not nearly enough to meet the needs of everyone who needs it,” Dr Martin says.

Regulation of rents could be pro-housing development, Dr Martin says, as it encourages landlords to increase land use intensity, increasing the availability of rental housing.

“If you’re the owner of land and rents are properly regulated, the way to increase your rental income would be to develop it further. So, rent regulation could be consistent with or even encourage rental housing development.”

Making rent control work in Australia

While you might think rent control in Australia would be innovative, many states – particularly New South Wales – already have a history of rent control measures during economic crises.

Rents were regulated as part of the Fair Rents Act during the First World War, and a form of control was also reintroduced in 1931 during the Great Depression to help make housing more affordable. Rents were also regulated nationally throughout the Second World War, where rents were capped at the 1939 levels.

“To this day, there are still a handful of properties that would be covered by post-war rent control regulations in New South Wales that have kept them well below the market level,” Dr Martin says.

But there are also other forms of rental regulation in many countries today.

Most Canadian provinces have guidelines that stipulate the maximum percentage increase in rent that can be charged in the next year. Ireland introduced location-specific rent regulation where rents are capped at 2 per cent a year in designated ‘rent pressure zones’. Some properties in the United States are also subject to regulation where rents are benchmarked and adjusted to historic price levels.

Dr Martin says capping rent increases in line with the Consumer Price Index could be one of the ways to implement rent control in Australia. The rationale would be that it maintains the real value of the landlord’s return on their investment. In the interim, though, we could return to a temporary freeze on rent increases to alleviate the pressures on renters immediately.

“During the early days of the COVID-19 pandemic, some states introduced six-month rent freezes, which helped to keep households in their homes,” Dr Martin says. “We should be looking around the world to see how other countries have successfully implemented rent control for the long term, without being too prescriptive now about any particular method.”

Eliminating no-grounds eviction

Another fundamental reform in tenancy law is needed to make any rent regulation work – strengthening the legal security of tenants. In particular, eviction laws must be reformed for any rent regulation measures to be effective, Dr Martin says.

“If rents are regulated, but you’re not also providing reasonable security for tenants, landlords can threaten tenants with no-grounds evictions to put their properties back onto the market,” Dr Martin says.

Victoria has tightened their tenancy eviction laws recently – no-grounds evictions can only be served at the end of the first fixed term – while Queensland and Tasmania still allow no-grounds termination at the end of any fixed term. All other Australian jurisdictions still allow no-grounds terminations at the end of fixed terms and periodic leases.

Dr Martin says reforms need to go further to ensure landlords can’t unreasonably terminate tenancies without grounds, including at the end of fixed terms, as it undermines every other tenancy right such as challenging a rent increase.

“The legal insecurity of being a renter in Australia is routinely exploited by landlords,” Dr Martin says. “Getting rid of no-grounds terminations is something all jurisdictions should be looking to do right now to better protect renters.”

The Greens have called on Environment Minister Tanya Plibersek to take a leading role in convening an emergency meeting with UN member states after a fifth effort to pass a global agreement to protect the world’s oceans and marine life has failed. 

Greens spokesperson for healthy oceans, Senator Peter Whish-Wilson said:

“Tanya Plibersek promised Australia would take a global leadership role in ocean protection, and now is the exact time for her to act on that promise. 

“Sadly talks to pass the UN High Seas Treaty have failed, but it’s not too late for Tanya Plibersek to convene an emergency meeting with UN member states and take a true leadership role in protecting the world’s oceans and marine life. 

“Ultimately the fate of the oceans depends on global action on climate change, and Australia still has significant work to do to be considered a global leader in this space. 

“For instance, Australia likes to talk a big game on marine protected areas – which have been a key area of the UN High Seas Treaty discussion – but using any other country’s definition of a protected area, Australia’s achievements are laughable because we largely allow oil and gas activities in these areas.

“A failure to make progress on a UN High Seas Treaty now threatens the livelihoods and food security of billions of people around the world. It’s been 40 years since the last international agreement on ocean protection was signed and we can’t wait any longer. 

“I implore Tanya Plibersek to convene an emergency meeting with UN member states and take a true leadership role in protecting the world’s oceans and marine life.”

The first shipment of one million foot and mouth disease (FMD) vaccine doses supplied by the Australian Government has arrived in Indonesia.

The doses will be distributed by Indonesian authorities to ensure they are delivered to the areas most in need.

“We’ve been able to match the doses to the FMD strain present in Indonesia. These doses will be highly effective in providing protection to Indonesian livestock,” said Minister for Agriculture, Fisheries and Forestry and Minister for Emergency Management Murray Watt

“This is part of our three-pronged approach to keep Australia FMD-free – helping our neighbours deal with the outbreak, strengthening our biosecurity borders and enhancing our preparedness at home.

“In the months ahead, Australia will supply a further $4.4 million in FMD vaccines as part of a $10 million biosecurity package recently announced for Indonesia,” said Foreign Minister Penny Wong.

“The successful delivery of these vaccines demonstrates Australia’s commitment to supporting Indonesia’s response to the outbreak and underscores the close collaborative relationship between our two countries.”

This year marks the 20th Anniversary of the 2002 Bali bombings in which 202 people, including 88 Australians, were tragically killed, and many others injured.

This anniversary will be a difficult day for many in Australia, Indonesia and around the world, and our thoughts are with the survivors, families and loved ones of those killed.

The Australian Government will host a memorial service at Parliament House in Canberra to mark the anniversary on 12 October 2022.

A commemorative ceremony will also be held on 12 October at the Australian Consulate General in Bali, Indonesia.

We will pay tribute to the courage and resilience shown by so many whose lives were forever changed by these attacks.

The Australian Government welcomes survivors and their family and friends, and the family and friends of loved ones lost, to attend the memorial service or ceremony. The Australian Government also extends an invitation to those involved in the response to the blast to attend the memorial services.

Those who wish to attend these services should contact the Department of Foreign Affairs and Trade for further information via baliservices2022@dfat.gov.au or by phoning 1300 555 135 (in Australia) or +61 2 6261 3305.

In addition to local services being held around Australia, the Indonesian Government and local communities in Bali will also hold commemorative events.

We also remember the 38 Indonesians who were killed in the bombings. We recognise the ongoing work that Indonesia and Australia do together to counter the scourge of violent extremism, and the strength, courage and cooperation of our peoples.

Greens Leader and Workplace Relations spokesperson Adam Bandt has said any deal reached at the Jobs and Skills summit risked becoming nothing more than an ‘historical footnote’ without Greens support, as unless Labor chooses to work with the union-busting Liberals, the only pathway for legislative implementation of Summit outcomes requires Greens support.

Mr Bandt said Australian workers need a wage rise now to deal with the cost of living crisis. Mr Bandt also said the Greens would move to amend any post-Summit legislation to lift wages now, saying a narrow focus on skills and productivity, while important, will leave too many people behind and take far too long to lift the living standards of everyday people. 

Backing the ACTU’s focus on the care economy and their call for industry-wide bargaining, Mr Bandt said the Greens would go even further and push in the Senate for a greater role for government in setting wages across the board, especially in sectors where women are the majority of the workforce.

The Greens Finance and Employment spokesperson, Senator Barbara Pocock, is also attending the summit, and said the upcoming Jobs and Skills summit was ‘doomed to fail’ to lift wages and living standards if it refused to consider the tax and social security system, especially the Greens’ push for free childcare, accusing the Labor government of trying do ‘half a Hawke’, noting that Bob Hawke’s summit resulted in the creation of Medicare only because issues of broader importance to workers were on the table.

Senator Pocock, who is chairing the country’s first ever Senate Select inquiry into Work and Care, will argue at the summit workers need both a pay rise, and practical help with the cost of childcare, health and housing – things that are all essential to participation in work. The Stage 3 tax cuts can be used to fund this, rather than boost the income of the very wealthy and fuel further inequality.

Background

Mr Bandt and Senator Barbara Pocock will attend the summit. Mr Bandt said he will outline further Greens’ proposed reforms to the Fair Work Act that the party will raise as amendments to any post-Summit legislation in a speech to Kingston Reid’s Jobs Summit ‘Fringe Festival’ on Wednesday 31 August in Canberra.

At the opening of Bob Hawke’s summit, the then Prime Minister sought “to seek broad agreement on the relationship between a successful prices and incomes policy and the implementation of policies on industrial relations, job creation and training, taxation, social security, health, education, and the other major community services”.  However, the current government’s ‘Jobs and Skills Summit Issues Paper’ has sought to exclude discussion of many issues relevant to working people, and has relegated the issue of wage growth to a discussion about bargaining (see p. 5) instead of considering more fundamental reforms.

The government is focussed on immediate action to deal with skills and labour shortages, but is failing to offer any similarly immediate solutions to low wage growth. For workers covered by enterprise agreements still in force, any reforms to bargaining may not flow through for up to 3 years, and workers in hard-to-bargain sectors need help lift their wages now.

Mr Bandt’s intervention follows a speech to the National Press Club where he said the Greens will have a greater focus in this term of Parliament on the economy and cost of living, as Labor becomes a centre-right party, the Liberals become a far-right irrelevance and the Greens take the mantle of Australia’s social democratic party. 

The Greens will seek two amendments to the Fair Work Act to lift wages, with further amendments to be announced next Wednesday:
set the minimum wage at 60% of the full time adult median wage, which would result in a new minimum wage of $23.76 per hour, to be phased in by the Fair Work Commission; and
lift minimum wages in women-dominated industries faster, including in the care economy, by guaranteeing that award rates will rise by at least 0.5% above CPI in women-dominated industries.

“Unless Labor chooses to work with the union-busting Liberals, any changes to workplace law will need the Greens in the Senate.

“Summit outcomes could languish as an historical footnote unless they’ve got Greens support.

“The Greens won’t be a rubber stamp for government side-deals with big corporations. 

“If and when any proposals from the Jobs Summit hit the Senate, the Greens will push to change the law to guarantee wage rises.

“Liberal and Labor have spent three decades stripping back awards and now people are struggling. Government can’t keep leaving people’s wages up to the market. 

“The government should treat low wages, especially in the care economy, as urgently as they’re treating skills shortages. 

“We need to lift low wages from the bottom up, not just wait for any future skills reform to trickle down.”

Senator Barbara Pocock, Greens spokesperson for employment said:

“If the test is making working people’s lives better, the summit is doomed to fail unless it lifts low wages now and provides immediate cost of living relief. 

“Instead of the unfair Stage 3 tax cuts, the government should fund free childcare, get dental into Medicare and build affordable housing, giving households real cost living relief immediately.

“Bob Hawke understood that tax, social security and health reform are part of the bigger picture, but this government is only doing half a Hawke.  
“It will be a lost opportunity – and more of the same – if women come out of the Jobs and Skills Summit with actions that go in the wrong direction, like keeping Stage 3 tax cuts that deliver twice the benefit to men than women while refusing to make childcare free. 

“While promising ‘a strong overarching focus on women’s experiences’ and a focus on equal opportunities and equal pay’, the Summit Issues Paper offers no practical pathway forward to improve outcomes for women. It’s a case, so far, of all talk no action. 

“We need pay increases in the fast expanding care and services economy. We need targeted access for women to the expanding skilled jobs sector as the energy transition unfolds across Australia. We need to make childcare free. And we need to improve the supports for workers with caring responsibilities, especially casuals, by giving them not only paid domestic violence leave, but the chance of a paid holiday and sick leave.”