Title: The Housing Crisis in Australia Deepens Renters’ Struggles
The rental housing crisis in Australia continues to escalate, pushing more and more renters into poverty and sparking the urgent need for change. While headlines on the issue flood the news daily, it is crucial to remember that rental affordability has long been a pressing concern. Quick fixes and short-term solutions cannot replace the necessity of a comprehensive housing strategy, one that requires sustained effort from all levels of government.
As a former federal housing minister in Australia, I believe it is time to consider some form of intervention in the private rental market, as it is clearly failing a significant number of renters. Shockingly, one in five renters live in poverty, compared to less than one in ten who own or are purchasing their homes.
While rental policy primarily falls under the jurisdiction of the state governments, the federal government also holds a stake in regulating the skyrocketing rental prices. Canberra is obligated to provide housing subsidies to low-income renters through the Commonwealth rent assistance program, which currently amounts to over $5 billion annually.
Implementing a rent freeze, as proposed by the Greens, is not a viable solution in my opinion. However, I do believe that limiting rent increases in the private rental market through a legislated fairness formula deserves attention. This formula, advocated by Tenants Victoria in my home state, would introduce a method of calculating rent that is fair to both landlords and renters, ensuring greater certainty and reducing the unsustainable price hikes faced by low and middle-income tenants.
One effective measure to alleviate rental stress is introducing annual rent increases that are orderly and transparent, possibly tied to an index such as the consumer price index or average weekly earnings. The Australian Capital Territory already follows this approach, and adopting it nationwide could significantly ease the burden on renters. Additionally, encouraging longer-term leases should also be taken into consideration.
Compared to other developed economies, Australia has one of the lowest percentages of public or community-owned housing, making it even more imperative to address this issue. The majority of rental properties in Australia are owned by small-scale investors, who are primarily concerned with maintaining the value of their investments. Consequently, the rental market remains lightly regulated compared to other essential services, with little enforcement of existing rental rules by state and territory governments.
In recent discussions within the national cabinet, housing ministers committed to developing best practice reforms aimed at strengthening renters’ rights. This is a much-needed step forward. Despite the implementation of reforms in Victoria in 2021, issues such as timely repairs and lengthy delays in resolving problems at the Victorian Civil and Administrative Tribunal persist, causing great frustration for renters. As part of a broader housing response, the federal government must press the states to ensure rental prices are moderated.
Back in the early 1990s, when I served in the federal Labor government, we recognized the need for a national housing strategy based on extensive research. This strategy took into account Australia’s economic and demographic changes, such as the shift from a manufacturing-driven economy to a service-focused digital economy. More women were participating in the workforce, while Australians were spending more time in education and delaying marriage and parenthood.
These changes have significant implications for housing policy.
Traditionally, the emphasis on home ownership alone is no longer suitable for today’s realities. Home ownership rates, especially among young individuals with mortgages, have declined. Moreover, the rise of precarious employment through casual and fixed-term jobs has further hindered young people’s ability to purchase a home.
While governments have been primarily focused on increasing housing supply as a solution, the pressing issue at hand is the high proportion of people’s incomes spent on rent. For decades, it has been known that renters should not spend more than 25 to 30% of their income on housing to avoid housing stress. However, many individuals still pay significantly more, and those on the lowest incomes face the daily dilemma of sacrificing meals to afford rent.
Addressing these challenges requires a comprehensive and thorough housing policy, something that has yet to be properly tackled. As we await the delivery of a national housing strategy, urgent policy measures are necessary to combat the housing affordability crisis that is driving more Australians into poverty.
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