Wednesday, 1 November 2023

Residential Tenancies Amendment (Rent Freeze and Caps) Bill 2023

Second reading

Debate resumed on motion of Aiv Puglielli:

That the bill be now read a second time.

John BERGER (Southern Metropolitan) (10:23): Today I rise to speak on the Residential Tenancies Amendment (Rent Freeze and Caps) Bill 2023. It is a wideranging bill, but at its crux it is about renters, so I want to begin by talking about my experience in this. As many in this chamber would know, I am a renter. It was only last week when I visited Camberwell in my electorate of Hawthorn, which I know dearly misses its hardworking and dedicated Labor member of Parliament Mr John Kennedy. But when I visited I was joined by the Minister for Planning in the other place Minister Kilkenny. The minister was coming to my community to see what the government is doing in partnership with our local government partners to unlock spaces in Southern Metro and deliver more housing for locals, to get things done, to utilise the existing space and to build better homes and communities for the 21st century. As we know, a few weeks ago our government signed the affordability partnership with industry partners in recognition of the team Victoria’s effort needs to fight the housing crisis. They will help clear the backlog of planning permits, give builders, buyers and renovators a better idea of how long approvals will take and importantly streamline dispute resolution. Minister Kilkenny said:

We’ll boost housing supply … and give industry greater certainty with a planning system that works for Victorians – not against them.

That is what we on this side of the chamber are doing – boosting supply, getting things done. Our landmark housing package on 20 September is clear. The goal is clear. We have a plan to boost housing supply and increase affordability, and it is part of that affordability partnership to build 800,000 Victorian homes. It is Australia’s biggest and one of the biggest reforms to our housing sector in generations. We are the fastest growing state in Australia, and our population is going to hit 10.3 million by 2051. But that means we need to build, and that is what we will do, including 2.24 million homes and a target of 420,000 across regional and rural Victoria. Victoria’s Housing Statement: The Decade Ahead 2024–2034 is bold. It is doing what matters.

Now to deal with the matter at hand: perhaps the Greens do believe that this will lead to a relieving of housing stress in Victoria, despite all evidence suggesting otherwise, but the fact of the matter is this is not what Victoria needs. Those that support this move in Victoria will often cite other similar experiences across the world. It is good to look to far horizons to see how we can make our home a better place to live. Supporters of a rent freeze or a rent cap often forget that every city has a unique history, a unique infrastructure and unique conditions that make up their individual needs and strengths. Melbourne is a very different place from, say, New York, which is a very different place from London, and so on. These other jurisdictions have widely different infrastructure to Melbourne and completely foreign reasons for needing to control their rent, and sadly, the rent freeze experiments rarely work.

New York is probably the most infamous example of a rent freeze, and how well did that turn out for them? When I say ‘New York, New York’, do the words ‘affordable housing’ come to mind? A knee-jerk, poorly thought out rental policy has led to New York being the face of the housing crisis across the world, and the Greens would like to bring that to our city. How can we forget San Francisco? A similar story to New York, San Francisco’s rental controls have all but killed supply for the city and forced prices up to a ridiculous ceiling, but both these cities face high rates of homelessness. They are each an example of how poor approaches to housing supply and demand have a direct effect on homelessness, specifically driving people out of homes and onto the street.

This should remind everyone that the stakes in the housing policy game are much higher than just rental stress. Because of this, we must be careful. We must be measured, and we must not take directives to unveil policies that could well have the exact opposite effect of what we want. Homelessness has a direct impact on individuals’ health and wellbeing. It is harder for an unhoused individual to find a job, leaving them in a vicious cycle of poverty. Drug use, abuse and victimhood are higher for those facing homelessness, and it is not just a matter of financial insecurity; it is a matter of life and, in many tragic cases, death.

For that reason we cannot be so frantic. We cannot risk taking steps that have so many times backfired across the world. While the Allan Labor government is one of the most progressive governments that Victoria and Australia have seen, we are not going to take great leaps forward on policies knowing that the outcome may be detrimental to vulnerable Victorians. Unless you have the infrastructure to support drastic measures like rent freezes, the rent freeze will cause the supply of housing to dry up, leaving many people not just without affordable housing but without any housing at all. Really what this bill wants this government to do is go back in time and build infrastructure that does not exist in the present, which is exactly why the Allan Labor government’s housing statement is building homes to address supply.

I have been very critical of rent controls and have discussed several examples of rent freezes and their results, but it would be apt to speak about one more rent freeze: Melbourne’s rent freeze in 2020. That is right – we cannot forget that we had a rent freeze as an emergency measure during the COVID-19 pandemic and in recognition of the severe financial hardship many Victorians faced to keep each other safe. The then Andrews Labor government put forward the COVID-19 Omnibus (Emergency Measures) Act 2020. This introduced several urgent temporary measures, including a rent freeze. These were introduced to deal with an actual crisis, not an ongoing one. Solutions that will leave Victorian housing affordability better off for generations to come must be sustainable, not mimic the failed model of the most expensive city in the world. This means encouraging the industry to participate, as Victoria’s housing statement does, not making Victoria an unattractive place to develop in the long term. The freezing of rents during COVID-19 was an emergency measure. At the time it was the right thing to do, but it is the last thing we need in 2023 and going forward. During COVID-19 we needed a bandaid. If all we do is keep slapping on the bandaid, then nothing will be fixed and our rapidly increasing population will have no place to live.

The key issue is supply. Housing affordability is an urgent matter; no-one is denying it, but in the scheme of things homelessness is much worse. What good will a freeze on rents be if more Victorians are sleeping rough? Much of the cause of the housing crisis in Victoria is our ever-increasing population. As I mentioned earlier, we are expecting to surpass Sydney in population soon and hit over 10 million by 2051. In many ways this is exciting. Many of these future Victorians will be coming here for better opportunities. What good is a rent freeze if these future Victorians have nowhere to live? If we fail to address the housing supply, then we will see a much grimmer Victoria than the one we are in now, and let me tell you, this is exactly why we need to work with both the public and the private sector to ensure that the most possible homes are built in Victoria as quickly as possible. This is basic economics: if there is less of something, then demand goes up, and as the demand goes up so do the prices. Prevent the illness; do not just treat the symptoms.

In short, this bill is severely misguided. This government is serious about the housing crisis in Victoria, and this government is serious about long-term results for Victorians. This government is serious about getting on with the job at hand and getting the most social and affordable housing for Victorians. The housing statement will bring a boom in investment into our state housing that will see demand managed and prices brought down. This is a long-term solution for what may well be a long-term issue across the world. We are putting together regulatory reforms that will ensure that Victorian housing and land will be used for what is needed. It is this government that introduced the rent increase cap which limits rent increases in Victoria to once every 12 months. Prior to this, tenants were vulnerable to rent being increased once every six months, leaving them in vulnerable positions, often needing to look for new housing. The 12-month cap on rent increases ensures that tenants can enjoy the same stability without fear of an increase every six months.

While we are discussing the vacant residential land tax, the State Taxation Acts and Other Acts Amendment Bill 2023 currently before the house seeks to introduce an expanded vacant residential tax to include unimproved land – ‘unimproved land’ is defined as land without a residence. This reform has reasonable exemptions and a window of time long enough for owners to be able to improve their land. This is not a punishment, it is a motivation. This is an incentive for home owners to engage with the rental market. With more houses on the market, there is more supply and lower demand. And then of course we are supporting the building of enough houses to house current and future Victorians.

Whilst the housing statement is the newest and most ambitious arm of the Allan Labor government’s housing platform, we have been committed to improving housing in Victoria from day one. We know that this is a multipronged approach. The Home Stretch campaign is something the staffers in my office know a lot about, and that has extended out-of-home care until the age of 21 – not kicking out a young child under that age in the state. This is making a real difference to homelessness levels. With this, I hope the chamber will indulge me associating myself with the words of the Minister for Children Minister Blandthorn, who yesterday announced that the Premier will make a formal apology in Parliament on behalf of the government to the survivors of all the abuse in institutional settings, in the last week of November, because where someone lives – their home – should be safe, and we are a government that recognises that. We have invested $300 million annually into fighting homelessness, and this year’s budget, the 2023–24 budget, included $67.6 million over four years to continue this response, which includes multidisciplinary support, as I noted previously, which is vital to provide support for rough sleepers and those who continue to experience homelessness.

Back to the Big Housing Build, which is bringing homes and jobs to thousands of Victorians, in my electorate of Southern Metro there are several Big Housing Build projects underway. As I mentioned earlier when I was talking about Minister Kilkenny’s visit to Southern Metro, we have the Bills Street housing project in my community of Hawthorn, and down in Prahran right near my office we have the Bangs Street project. These housing projects are delivering supply for those who need it most.

The housing statement is also a commitment to refurbishing the dilapidated and dangerous public housing blocks across Melbourne. Built in the postwar boom to handle the population and migrant boom, many of these apartments are not fit to be lived in, and they have got to go. The Allan Labor government is replacing them with brand new blocks with more flats and better facilities. The housing statement is also delivering housing for regional communities across Victoria. Over the next 10 years the Allan Labor government is set to deliver 425,000 homes across regional Victoria. This government is serious about housing and housing affordability. We know how to bring prices down, and that is through building more homes.

To wrap up my contribution on this bill, I would also like to quote another minister from this place, Minister Shing, who yesterday in question time after a question about housing said that although sometimes the Greens political party engage in good faith, most of the time the Greens political party do not – they try to score points from cheap shots. This will not deliver results for Victorians, it will deliver publicity for the Greens political party, and it is disappointing to see them hide behind one of the most pressing issues of our time. If the bill were to pass, the Greens political party would claim it. However, this side of the chamber is about doing the work – the policy building and the action work. The minister said yesterday that her department is willing and able to assist – the department, with specific concerns raised, can endeavour to solve issues. Minister Shing rightly called out the use of individual concerns to weaponise the situation we are in, weaponisation which seeks to create a false narrative. Minister Shing said clearly that she is happy to engage with anyone around this space and the other chamber, even the Greens political party – happy to engage with you when you are operating in good faith. But yet again this bill is another distraction. It is not what Victorians voted for; it is not what the Allan Labor government has a mandate for. We are not about TikTok; we are about governing. We are not about cheap sound bites; we are about delivering real results. The Allan Labor government is committed to taking care of housing supply in a way which will deliver long-term results, not a kneejerk reaction that has proven to be a failure in so many jurisdictions. We will continue to get on with it.

Evan MULHOLLAND (Northern Metropolitan) (10:36): I rise to speak on the Residential Tenancies Amendment (Rent Freeze and Caps) Bill 2023, proposed by the Greens political party. They have been calling for a rent freeze in Australia for some time now. In August 2022 the Greens called for a nationwide two-year rent freeze to protect renters from what they deemed a rental crisis, and I would agree with that characterisation.

The bill aims to amend the act to prevent excessive rent increases and evictions. It proposes a two-year rent freeze period starting from the day after the bill receives royal assent during which rent cannot be increased above the amount payable on 1 January 2023 or a certain percentage of median rent for the area and type of premises. It aims to limit the rate of rent increases after the rent freeze period to 2 per cent every two years, unless there are exceptional circumstances such as capital improvements or approval by the director of Consumer Affairs Victoria or the tribunal; prohibit residential rental providers from giving renters notice to vacate because a fixed-term residential rental agreement has ended; give renters more rights to challenge excessive rent proposals; and empower the director of consumer affairs to determine median rents for different postcode areas and types of premises and to approve or refuse applications for rent increases above the median rent.

As the Greens party have identified, Melbourne rents have been significantly increasing in recent months and years. In fact according to SQM Research, rents for all dwelling types in Melbourne have increased by 17.8 per cent in the past year alone. It is easy to understand the instinctive appeal of this bill. After all, rents are increasing and becoming more unaffordable, and the goal of this bill seems to be to limit those increases. Despite this superficial appeal, this is a very bad bill, if implemented, and it would likely – in fact certainly – have devastating consequences for Victorians.

Rent freezes and caps are not a new idea, not even remotely. They have been tried in many parts of the world and at best are ineffectual and at worst have serious negative consequences. I will come back to that in a moment, but I want to explain the economic effects a little. The bill fixes rents for two years and limits rent increases to under 2 per cent every two years. Rents are frozen in nominal terms, so that means the real effect of this bill is to reduce rents by the rate of inflation in the first two years. After that, the effect of the bill is to limit the rents by 2 per cent less inflation in real terms. Since inflation in recent years has been well over 2 per cent, this will likely also represent a reduction in real terms. The effect of this bill is to bring in a form of price ceiling to the rental market, and because of inflation the ceiling is lower than it may appear at first glance. It is not simply freezing rents or limiting increases but likely mandating a decrease.

Fundamentally, prices in the free market are determined by the interaction between supply and demand. Bringing in a price ceiling does nothing to either increase supply or reduce demand, so this bill does nothing to alter the fundamentals of the rental market. It simply drives a wedge between supply and demand and artificially suppresses the real price. Perversely, what you end up with is less rentals on the market, because the asking price is lower and more people are looking for rentals because the price is lower. I am sure someone will say that the rental market is not a perfect market – or something like that – and to an extent that is probably true. However, it certainly is not true to the extent that it needs to justify this bill, as shown by real-world experiences, which are almost exactly as expected. It is well understood in the field of economics that price controls lead to shortages and other negative consequences, and in the case of the rental market these include a reduction in the supply of rentals, reduced economisation of renters, reduced quality of rentals supplied and a reduction in investment in rentals, including the quality of rental stock. For example, if the rent is lower, people may decide not to have a flatmate. This does nothing to help with the rental crisis. As I mentioned earlier, rent controls have been tried across the world and at best are ineffectual because there are huge loopholes, or they may limit rent increases only to very large amounts, or they have negative consequences.

We know that rent controls have actually already been imposed in Australia. In 1939 the Australian government used wartime powers to impose rent controls, which fixed rents at their then level, much like this bill does. According to a paper by Nigel Stapledon at the UNSW School of Economics, this heavily distorted the market. It states that the World War II price controls exacerbated the post-World War II shortage of housing, which then accentuated the subsequent spike in prices. The paper concludes by saying:

… the period of rent and price controls around WW2 … distorted the market and produced consequences not intended by policy-makers of the time. Those consequences were a significant decline in the stock of rental properties which in turn forced a major shift towards owner-occupation …

Perhaps that is the Greens’ intent with this bill. Perhaps they want to bring in rent controls so they can force more people into home ownership. There are different ways to go about trying to enable more young people into home ownership. It is certainly not new taxes, and it is certainly not rent controls. Rent controls have also been used in San Francisco for some time, exploiting a change to the law in 1994. Stanford economists in a paper published in the American Economic Review found:

… that landlords actively respond to the imposition of rent control by converting their properties to condos and tenancies in common or by redeveloping the building in such as a way as to exempt it from the regulations.

And:

In sum, we find that impacted landlords reduced the supply of available rental housing by 15 percent.

And:

This reduction in rental supply likely increased rents in the long run …

They also found:

… the conversion of existing rental properties to higher-end, owner-occupied condominium housing ultimately led to a housing stock increasingly directed towards higher income individuals.

Perhaps this is a cunning secret plan by the Greens political party to support wealthier people in their electorates. As we know, compared to a lot of parts in my electorate – some are Green electorates – if you look at the scale of income, it is usually at the higher end in the Greens electorates within my electorate. It caused income inequality to actually increase. They are always talking about income inequality over here. We know from the economic evidence, the real-world experience, that actually rent controls cause income inequality to increase.

I am absolutely loath to watch the ABC, but I tuned into Insiders recently only to hear the Greens federal housing spokesman Mr Max Chandler-Mather saying that rent caps have been tried around the world and espousing the virtue of rent caps, citing a New Jersey study. And I thought, ‘Very interesting’. The study I believe he is referring to is titled Thirty Years of Rent Control: A Survey of New Jersey Cities by John Gilderbloom, University of Louisville. It seems like he did not actually read it, though. It looks like he did not even make it to the first page, which states:

Housing activists and policymakers need to look at new … approaches to address rental affordability problems.

In the case of New Jersey rent control was very moderate and had loopholes that you could drive a truck through. The study essentially found that rent control policies which do not impinge on the market do not cause negative consequences, which is entirely expected, but do not actually reduce rents. Nonetheless it did also find that:

… rent control seems to reduce the median number of rooms; therefore, when median monthly rent remains the same, rent per room was significantly higher when rent control existed.

I did not see Mr Chandler-Mather mention that on Insiders. It seems he likes the titles of studies to refer to but does not actually read them. In metropolitan New York, where over 44 per cent of dwellings are rentals and despite having the largest rent control scheme in the nation, rent-to-income ratio is a staggering 67 per cent, and studies show that rent-controlled properties in New York are more likely to be dilapidated. The economic theory and overwhelming body of international evidence do not support the use of rent freezes, rent caps or the like to improve affordability. The vast bulk of economists do not support these policies, and a vast number of stakeholders and experts recognise this.

I have been listening closely to the views of experts and stakeholders about what the real-world impact will actually be. I asked a number of questions in the inquiry which was put forward by my colleague Mr Limbrick, the inquiry into stamp duty in Victoria, and I know Ms Copsey knows about the responses, because she was sitting next to me as I was asking about rent freezes as well. I will just go through a few comments from a few experts that spoke about this. Brendan Coates from the Grattan Institute, which usually lines up with the Greens political party on all sorts of issues, actually said:

Those that have a rental property that is a rent-controlled apartment, for example – this is widespread in places like New York – do very well, but no-one else can get into the area, so you end up with a two-tier rental market. I think that is something we should really try to avoid.

In an op-ed in the Age Brendan and his colleague Joey Moloney went further, stating that:

Ultimately, if we freeze rents, more Australians could become homeless …

and that would be the end product of this bill. Matthew Kandelaars from the Urban Development Policy Institute of Australia said:

… the, although perhaps very obvious, unintended consequence – that all it would do would be to reduce supply across the market. The incentive for someone to invest as a landlord into making that property available on the rental market, that incentive would be reduced. I think you would probably quite frankly see a lot of properties move into the short-stay accommodation market rather than the permanent rental market which would have again that unintended consequence on rental affordability.

Quentin Kilian from the Real Estate Institute of Victoria said:

We would certainly urge in the strongest terms not to bring in any form of intervention in the form of a rent cap or a rent freeze. There is ample evidence around the world that interventions of that nature do not assist the market; in actual fact they probably again discourage or dissuade investment into the market.

Robert Carling from the Centre for Independent Studies said on rent freezes:

I think it would be very damaging. That is another thing – probably the second thing that most economists could agree on is that rental freezes are not the right way to solve the rental affordability problem. They just damage supply, and it is supply that we need.

Very well said. I will go through another one. Keith Ryan, Housing Industry Association, said:

… a rental freeze would be … a very drastic move, and it would cause I would expect a great deal of disruption. We need to keep in mind that a lot of the providers of rental stock for housing are mums and dads, people who might own a house or two who are doing it hard with interest rate increases, further regulation, extra costs, and for them a rental freeze would be disastrous … I appreciate the superficial attraction, but ultimately it would lead to a lack of supply of homes for rental, and that cannot be great for tenants. They are already queueing up by the dozen to get into a house to look at trying to rent it and then having to go into a bidding war potentially in some cases to get that house or home. We certainly do not want to see that continue. We would be very concerned if there was a rental freeze.

Cath Evans, CEO of the Property Council of Australia, said:

… if we moved to a rent-capping environment, that would be a huge disincentive for investment into that asset class. We also want to encourage large institutions like superannuation funds to enter our residential market here as well, and they need certainty for their members about their return on investment. So rental capping would be a complete disincentive for us to attract investment capital into Victoria.

Sam Tarascio from Salta development said:

… from our point of view, if rental capping was to become real, we would no longer be in the residential development space. And I say that because rental capping would need to come along with capping of our land tax and our council rates and – how you would do it, I have no idea – your cost of interest. So you cannot cap the revenue side and leave the cost side uncapped. Basically it is a recipe for going bankrupt, and so why would you invest in that category?

I note that Salta developments has a number of properties in Greens electorates which, probably, Greens voters are living in. So you have more supply, you have people investing in more supply, which ultimately, as I stated earlier, leads to a reduction in rents.

I want to go to YIMBY Melbourne. Jon O’Brien said the overwhelming economic evidence is against rental caps or controls:

Rent control … benefits the people who are already there … rent control locks people out of the city …

I know they are super interested, as am I, in helping people that cannot get into the rental market. Rent caps and rent freezes only help people that are already there, but we see the Greens political party ‍– and I see it in my electorate – go around with their little cards to rental inspections where people are lining up around the corner getting them to sign their rent freeze bill. What on earth will a rent freeze bill do for people lining up around the corner in my electorate? We need more supply, but whenever there is any proposal for new developments in my electorate, we see Greens councillors at the City of Yarra, the City of Darebin and the City of Merri-bek knocking back new developments – and they have done it over a decade. As I said in my maiden speech, at the first sign of any proposal for a new development that would house people of my generation, people and protesters with green triangle placards swoop in quicker than a seagull to a chip on St Kilda Beach. Seriously, the answer to allowing more people that are lining up – they are lining up; it is sad to see, going into a bidding war for a rental. What on earth will a rent freeze do for those people?

Interjections from gallery.

The ACTING PRESIDENT (Sonja Terpstra): Order! Can I please have silence from the gallery.

Evan MULHOLLAND: The Greens political party and its members come to this place, as many other places, lecturing the rest of us, claiming their positions are based on unquestionable international evidence, to listen to the experts. You hear it almost every week: ‘Listen to the experts.’ They are putting up this bill or this bill: ‘Listen to the experts.’ But too often these claims, these positions, are simply cover for a more radical agenda. For a party that disparages Donald Trump-style populism, nobody beats the Greens political party. Here they are in this place pushing a policy that has negative consequences, dire consequences, for renters and housing affordability and is not supported by the vast majority of experts and the vast body of international evidence and stakeholders and real-world evidence. It is not imaginary, by some economist. We know this does not work. This exposes I think the Greens as populist demagogues pushing populist policies.

I think the most disgraceful thing about this deceptive campaign – and we see it on the glue posters around Brunswick and Carlton and Richmond: ‘Rent freeze now!’ – and the push for a rental freeze is that you know that you are wrong. If you are one of those people lining up around the corner in Collingwood because of a lack of rental availability, a rental freeze would make that queue even longer. Who on earth does the Greens party believe invests in those properties to make them available? It is mum-and-dad investors. It is superannuation funds looking to invest in our market, which we know they would not if we had a rent-controlled environment.

I will go to one other thing: why are they doing this? They are pushing this big rental freeze campaign. I thought to myself: why are they doing this? Why are they pushing a policy that they know in their heart of hearts does not work? All the evidence, all the real-world evidence, and all the economists say it does not work. Why are they doing this? And then I saw last week they are now pushing price controls. Woolies and Coles – you are going to intervene in the market.

A member: Like Venezuela.

Evan MULHOLLAND: Like Venezuela, exactly. I am like, why are they doing this? And then I look at recent –

Interjections from gallery.

The ACTING PRESIDENT (Sonja Terpstra): Sorry, Mr Mulholland. We will just have a short break while we clear the gallery.

Public gallery cleared.

Evan MULHOLLAND: That is actually the second time that has happened to me during a Greens debate on renting. The first time somebody actually yelled out, ‘Eff the economists!’ I will not say that full word, but it starts with F. So I find it quite amusing that this is the second time this has happened.

But I want to get back to what I was getting at before: why are the Greens pushing a policy that they know is wrong? Why are they putting up glue posters everywhere saying ‘Rent freeze now’ when all the evidence – including real-world evidence and real experience that has happened around the world and in Australia – every single economist, all the experts and industry associations and people that invest in property to make it available have all said that it is the wrong move? Why do they keep pushing this policy? And then I see them pushing this cost-of-living campaign, and their solution is actually price controls like in Venezuela, which as we know will lead to shortages of food. What is the reason? I had a real think about it, and then I had a look at a lot of the election results and saw a massive eating up of the Greens vote by the Victorian Socialists party. So I think the Greens have made a calculation – I think the wrong one – that they must go even further to the radical extreme fringe left, the soviet left, in order to counter their base on their left flank, because let us face it, the Greens are not the old protest party. The Greens are an establishment political party that are facing a fight from their left flank, so to face off their fight they need to go even further to the left, even though they know in their heart of hearts all those policies have devastating outcomes. We know from real-world experience of price controls as well that that would lead to devastating outcomes for poor people.

The people who will suffer the most under these kinds of policies are younger people and my generation, residents that live in the inner city in places like Brunswick, Northcote and Richmond. I know this because I myself have been a renter in Abbotsford. I know what it is like going into a rental inspection, bidding against 10 or 15 other people and thinking that you are going to get it, over and over again, but you do not. And that is heartbreaking, but I want to see those queues shorter. What I really care about is looking after those people in those rental queues. This bill from the Greens does absolutely nothing to assist the people in those queues – absolutely nothing. What would a rent freeze do for people trying to get into a rental? As I said, it will make the queue absolutely longer – like the breadlines that would result from their price control campaign. It would make the queues longer, because people would get out of their investments, people would turn it into other uses and people would not look for flatmates. We know from the international evidence, the real-world evidence, that that is what actually happens under rent controls: if someone moves out, they do not get a new flatmate.

What we want to see is more supply, but as I was saying earlier, anytime we get a sensible development for more supply the Greens political party knock it back. We see it all the time. We definitely see it at Banyule City Council, where they have got a Greens mayor. We see it at Yarra. We see it absolutely everywhere, and we have seen it over the years. To be honest we see it from the media as well. And I am very glad the Age newspaper has now editorialised in favour of more supply, because as my colleague Mr Limbrick would know, the Age newspaper has been the chief campaigner for nimbyism for decades – any angry photo of some people with green placards and grey hair looking grumpy outside of a development and the Age was there to swoop in and chuck it on the front page. With the policies being espoused now by the government, had they been done under Matthew Guy, there would have been sanctimonious outrage.

We see a massive development around Abbotsford of really, really suitable rentals, which has actually made rentals lower there. Back then you had the Greens pushing back against it, you had the Age pushing back against it and you had a whole bunch of people pushing back against it, implying there were dodgy things going on, with no evidence. But what we see with the supply particularly around Victoria Street near Victoria Gardens is that rents are actually lower there than most other places of similar proximity to the CBD, because there is more supply. We know that more supply leads to lower rents, more investment leads to lower rents, whereas rent freezes reduce the supply, reduce investment in the market and only help people that are already in there and do nothing for those people that get handed out little Greens cards about rent freezes who are lining up around the corner of rental inspections. I think this is a cynical policy, and I urge the house to reject this bill.

David LIMBRICK (South-Eastern Metropolitan) (11:05): It was the great economist Milton Friedman who said:

One of the great mistakes is to judge policies and programs by their intentions rather than their results.

This is a clear case of that. As surely as night follows day, shortages follow price controls or price caps, and that is exactly what we see here. In the last sitting week of Parliament the Greens were arguing for price controls on food, which of course would result in food shortages or lack of food even being able to be produced, as we have seen in Venezuela, Argentina, the Soviet Union – many of these places. But now we see they are proposing price caps on housing. Of course shortages in this context mean homelessness. What the Greens are proposing is a plan for homelessness.

I do not often have nice things to say about the government, but I will say this about the current state government and the federal government: they have both openly resisted and pushed back against the idea of price caps. I think the Treasurer himself rubbished the idea and spoke about market mechanisms, which I was very happy with. I will say this: the Labor government has not fallen for this extremist idea of central planning and price controls, which is a good thing. As Mr Mulholland eloquently articulated, what reduces prices is more supply. If we want more supply, one thing that we do not do is what is proposed by this bill, and I will quote from the bill itself:

… if the rented premises has not previously been let, or has not been let on or after 1 January 2021 –

the rent will be –

… no greater than 10% more than the median rent determined by the Director under section 41F for the postcode area and type of the rented premises …

Who on earth is going to build a new house or new apartment that is able to be rented when the rent on that apartment will not be determined by what the market can bear? It will be determined by some bureaucrat who will just take the median price in an area, which is crazy in itself. Can you imagine taking the median price in South Yarra, for example, and then trying to apply that to a cheap apartment that someone was trying to build? It is an absolutely crazy idea.

As has been stated by others, it is not like it is a new idea. This is not something that has not been tried around the world. It has been tried with catastrophic consequences – San Francisco, for heaven’s sake. If you want to see how terrible this policy is, look at what is happening in San Francisco right now. Homelessness is absolutely out of control. It is because people do not want to invest in housing because of these controls. Other places like New York and places such as Paris have ended up with decreased supply through rent controls. In Sweden there are chronic housing shortages; in Berlin, the same thing. We have many places throughout the world to look at already.

I will say this: the government at least acknowledges that the problem is supply. I know that the government has spoken about making more streamlined planning controls. I very much look forward to seeing what the government is doing in this space, because I would like to see much easier planning controls. The Greens constantly talk about how they want housing, and yet when was the last time they did anything other than attack developers, the people that build houses? These are the people that build houses, and they are the bad guys. This is absolutely crazy.

I will say this: I commend the government for resisting this craziness. What the Greens are proposing is a recipe for homelessness, just like their policies on groceries are a recipe for food shortages. We have seen this in history, we have seen it throughout the world. This is a terrible plan.

Jacinta ERMACORA (Western Victoria) (11:10): The issue of housing affordability and housing supply is definitely a significant challenge in this country. We know that Labor is the only party in a position to take practical action on this issue. I want to acknowledge two prior contributions, from Mr Limbrick and Mr Mulholland – very informative and a very good debate on this topic.

Rental stress and financial stress within households are on the rise, and we continue to face the homelessness challenge. This has not happened in isolation. Housing prices have risen as have interest rates at the same time. The Grattan Institute – and I acknowledge the reading that my colleagues have done; I too have done some reading – have pointed out in their submission to the Productivity Commission review of March 2022 titled The National Housing and Homelessness Agreement Needs Urgent Repair:

… housing costs would have risen less if more housing had been built. Australia has not built enough housing to meet the needs of the growing population. Australian cities are not delivering the best mix of housing location and density, given what people would prefer.

This comes to the crux of the matter. We need more housing stock, and the Allan Labor government is taking action on this challenge. The best thing we can do to make rental properties more affordable for Victorians is build more of them.

We also know that everyone deserves the chance to have a safe, secure and affordable home, whether they own it or not. This government has a track record of standing up for Victorian renters. We have introduced 130 reforms to make renting fairer. Victoria has the strongest rental protections in the country, but when it comes to protecting renters’ rights, there is always more work to do to make sure renters get a fair deal. That is why this government has worked hard to expand and protect renters’ rights, with more than 130 reforms already in place. Through our landmark housing statement this government will make renting fairer by restricting rent increases between successive fixed-term rental agreements, banning all types of rental bidding, protecting renters’ personal information and extending notice-of-rent-increase and notice-to-vacate periods to 90 days. This was a bit of a cyclic scam used by owners, in a way, where the notice to vacate was used as a mechanism to increase rent. That now is prevented. We are holding agents and property managers accountable by introducing mandatory training and licensing for industry professionals and introducing tougher penalties for real estate agents and sellers who break the law. We are also supporting renters in need by delivering a rental stress support package, establishing rental dispute resolution Victoria and introducing a portable rental bond scheme.

These initiatives are in addition to our $5.3 billion Big Housing Build and our housing statement target to build 800,000 new homes across the state over the next 10 years, because when you have more homes they will be more affordable. As Kos Samaras of the RedBridge Group commented in the Saturday Paper on 12 August 2023:

… the Victorian government deserves credit for implementing significant reform to tenants’ rights in 2017, for a cohort that was largely invisible in politics. Six years ago, their reforms were scoffed at by their political opponents and some in the media. These reforms were ahead of their time, taking bold steps towards addressing the many ailments afflicting renters in Victoria.

We have succeeded in empowering renters to make modifications to their rental properties – to put up a painting or build some shelves without being policed. Victorians no longer have to make that difficult choice between keeping their pet or securing a rental property. And these reforms have importantly set minimum standards to enhance the safety and energy efficiency of rental housing. These reforms ultimately benefit renters yet are also good for landlords, who know their properties are both safer and more sustainable.

The 130 reforms have been bolstered through our landmark housing statement. They have made the rental process fairer. We have established rental minimum standards, and the Allan government is holding agents accountable. This government recognises the critical role their profession plays. Their understanding of their obligations and provision of accurate information and advice will be improved with ongoing training and licensing for industry professionals. These reforms are helping with the rental crisis and subsequent rental stress Victorians are feeling.

The rent freeze idea is really just a sound bite, however thoughtful, and not a long-term policy. It may offer some temporary, short-term relief, but it does not have a track record of success. There are many examples of rent control attempts or trials failing or falling into pitfalls with changing administrative laws around the world. A current example of this is cited in the Guardian on 14 September 2023.

Evan Mulholland interjected.

Jacinta ERMACORA: I didn’t hear you say that one. Did you come up with that one as well? It says:

A loophole in Scotland’s temporary rent controls has seen private landlords raise rents for new tenancies more than anywhere else in the UK, data reveals.

The slogan used by the Greens to have a rent freeze is a sound grab with no empirical evidence. Evidence around the world is unconvincing at best. It is populist politics and an easy thing to say, but let us face it, at the end of the day our housing crisis comes down to the fact that as long as housing stock is low, housing prices and rental prices will stay high. This is to do with demand and supply.

The challenge is particularly significant in regional Victoria, and that is why I am so proud of the Allan Labor government’s Regional Housing Fund. The Allan Labor government is investing $1 billion in the Regional Housing Fund to deliver more than 1300 social and affordable homes across the regions for Victorians who need them most. In addition to that, there is the $150 million Regional Worker Accommodation Fund. This government has committed to working with councils, regional partnerships and local communities to determine the right mix of stock and locations for each region. In my region in the south-west councils are already being proactive and implementing real solutions instead of depending on populist politics. Moyne shire have been incredibly proactive, building key worker accommodation on their council caravan lands. Well built and available as a tourism option when the current pressures ease, these cabins have been an outstanding success. As the Standard reported on 14 February 2023:

Moyne Shire Council’s worker housing schemes are proving enormously popular as the regional rental crisis continues to bite.

… its worker cabins and Work and Play program have helped scores of workers move to the region.

When it comes to regional labour shortages, as I say, there are always pyjamas involved. It is not a matter of driving from one suburb to another to get to a job. When you get a job in regional Victoria and it is not where you live, you have to move. You have to pack a suitcase to do that. So accommodation is inextricably linked with the ability of the economy to grow and continue to tick along in regional communities. Cabins in both Koroit and Mortlake have been fully booked, meaning the council is able to support businesses right across the shire. I congratulate Moyne shire for their initiative, and I hope that this can be expanded across the state. It is a great idea and should be followed.

This also frees up housing stock for families needing to rent and contributes to an increase in the supply of housing – a practical initiative that is actually happening and that increases supply. I recently travelled to Yarriambiack shire in the Lowan electorate and was so impressed by the work their council is doing. They are building housing units for older people, particularly women. These women are in Murtoa, for example, living in three- and four-bedroom houses and wanting to downsize, but there are no smaller properties available. Again, this is a terrific initiative, and as the Weekly Advertiser reported on 4 October:

The Wimmera is set to reap the rewards … that will see elderly people stay living in the community, while bringing skilled workers and young families to the region …

because they will then be able to access the three-bedroom family-sized homes that the older people vacate.

These are tangible actions initiated by local government and supported by the Allan Labor government. This is how it gets done in a practical way. There is much more, such as the $26.5 million over the next four years for agencies to increase access to housing and homelessness support for people across Victoria. The Allan Labor government is the only party that is in a position to take action on these issues, fixing housing affordability for families, singles, the elderly and young people. There is more work to be done, for sure, but empty policies such as freezing rents should be seen for what they are – an easy sell that makes the Greens look good but is no practical solution for Victoria’s housing supply and certainly does not impact the lives of Victorians.

Joe McCRACKEN (Western Victoria) (11:23): I rise to speak on this bill. I recognise the intent to solve a problem, the problem being that rent is unaffordable. I am just not sure that this is the right solution for that problem. The bill aims to amend the Residential Tenancies Act 1997 to prevent excessive rent increases and evictions; introduce a two-year rent freeze period starting on the day after the bill receives royal assent; limit the rate of rent increases after the rent freeze to 2 per cent for a period of two years unless there are exceptional circumstances, such as capital improvements or approval by the director of Consumer Affairs Victoria or the tribunal; prohibit residential rent providers from giving renters notice to vacate because a fixed-term residential rental agreement has ended; and give renters more rights to challenge excessive rent proposals. It also empowers the director of consumer affairs to determine median rents for different postcode areas and types of premises and to approve or refuse applications for rent increases above the median rent.

I do make the point as well that we are currently in the process of an inquiry which is looking into rental and housing affordability. That inquiry has finished the hearings stage but it has not gone into the deliberation stage yet, and I would just lightly make the point that the outcomes of that inquiry have not been, obviously, determined and released. This bill does in a sense pre-empt that, and we would hope that maybe once the inquiry is completed we might be able to see the full suite of recommendations and then consider the options from there.

I do actually sit on that inquiry, as well as a number of my colleagues from the Greens and across the chamber as well, and there has been quite a significant amount of evidence, so I do want to touch on the evidence that has been given today. A couple of points that I want to make more broadly, though: rent caps might be helpful in the short term. I acknowledge that they might be a short-term fix, but I do have a question over the longer term benefit, or perhaps otherwise, to the market in terms of the impact on the supply side of things and perhaps the rental supply from people going into that market. I guess the real challenge is incentivising supply in the market to ensure there is a market-based solution free from distortion. While I have a lot of sympathy with the Greens, who have brought this to the chamber today – I am trying to recognise that there is actually an issue; I agree with you that there is actually an issue – I am not necessarily sure that this is the best solution that might result in an outcome which everyone might desire. But I respect that you are bringing it forward, and I understand what you are trying to do.

Some of the evidence that we heard at the inquiry – I will just talk through a few of the different hearings that we had. We heard from a number of renters, and they had a discussion about a number of factors present within the rental market. Of concern were a number of different things, actually, relating to disputes and how they are resolved. Some talked about the significant backlog at VCAT, which is quite cumbersome, along with the challenges associated with navigating Consumer Affairs Victoria, particularly with notices of complaints, notices of breaches and those sorts of things.

We heard from local councils, and there were a number of points that were raised. One of the more consistent messages that I heard coming through was about the challenges associated with planning schemes, particularly in the sense of allowing more supply to come on line. We heard evidence that sometimes it can take over two years just for a relatively simple planning scheme amendment to go through the system and enable more land to come onto the market, which obviously increases supply. I guess that in itself is a significant factor in reducing the ability of the market to provide more housing at a point in time when it needs to.

We did hear some models that were considered, particularly from Assemble homes and Nightingale homes, and I have since met with Assemble homes. I went to their pilot program in Kensington. It was actually quite remarkable. They have a program which is called ‘Build to rent to buy’, and they support people in that program. They have a fixed cost of rent over a five-year period per se, and at the end of that five-year period you get the option to buy the property, but if you do not want to, you do not have to. Throughout that five-year period there is support given in terms of financial counselling to reach that goal of purchasing the home if you wish. That is a pretty good model, I think, and maybe something to consider as a way forward, but again I would not want to pre-empt the outcome of the inquiry.

There were a number of groups, such as the Council of Single Mothers and their Children, the Council of the Aged and the student union, that all cited that rental increases are challenging for their respective members and their participants – and no doubt they are. It is a real challenge. I am a renter myself; I understand exactly what that is like.

We also heard from estate agents, who gave evidence that the 2021 rental laws have had a significant impact on reducing supply in the market. We also heard evidence that, despite what some might assert, rent does in fact go up and down. There have been periods of when that has happened more often than not, but it does actually go up and down. When asked about the impact of rental control, the evidence given – and I quote from rental property agents – was that it would be ‘the final nail in the coffin’. When probed on this evidence, it was revealed that rental providers would have even less control over the property that they are putting into the rental market and that rental control might force people to leave the market, therefore reducing supply. This might have an even more detrimental impact on the price of housing, which is in effect rent, so that is what we are talking about in terms of a rent cap. Short term, you might have a benefit, but long term there might be challenges.

The Real Estate Institute of Victoria gave evidence that was very similar. They talked about densification as well, and so that basically means that you have more, denser property closer to infrastructure like public transport, which means you can get more bang for your buck out of the existing infrastructure.

The Property Investors Council gave evidence. They provided a significant amount of data and reports and statistics suggesting that rent caps and controls would be ‘catastrophic’ and would reduce investor demand. It would also drive supply away from the market. They looked at a whole heap of different jurisdictions as well, and they cited the ACT, which also have rent caps there – the highest rental market in the country. So I guess renters end up paying the price for that.

We also heard from the Grattan Institute and the Centre for Independent Studies. Both cited planning as a really big concern and the need to densify, and they also indicated that any rent control or rent cap would probably cause more harm than good to the market.

We also heard evidence from a Swinburne professor who highlighted a number of different issues but noted that the government’s target of 800,000 houses in 10 years was ‘pie in the sky’, which means it is not really deliverable, which means that the private sector is going to have to fill some of the gap. What that gap looks like – well, it is unclear at the moment, because we do not know how many houses of the 80,000 a year are going to actually be delivered.

We also heard from another group, YIMBY, which is ‘Yes In My Backyard’, who are again advocates for densification, particularly in areas with good infrastructure – that is, again, schools, transport links and those sorts of things.

I will finish up there, and I note that the intent behind this is to help people that are finding it really difficult in the rental market. I really understand and appreciate that. It is a big challenge. I just worry that the solution has been jumped to before the outcome of the inquiry has been released. The report has not been written; deliberations have not been gone through. It is a big challenge for renters and rental providers to come to some sort of equilibrium about what is acceptable and what might be challenging, and I am not sure that long term this bill goes to reach that. Again, I do not want to demonise the people like you guys that have brought this forward, because I understand that the intent that you are trying to achieve is not necessarily bad. I just think that this is probably not the right solution for the problem that is there. So for what that is worth, I at least commend you for raising the issue, and I hope that more broadly we can have the discussion once the inquiry report is released about how this state really does address affordable housing. You know, people in my generation and many others around here as well – Mr McIntosh probably does not need that support. Facetious, I know, but it is a real issue, and I think it does need addressing. But as I say, I am just not sure this is the right solution.

Sarah MANSFIELD (Western Victoria) (11:34): I would just like to go to a question that was I think put to us by the opposition, which is: why are we doing this? Because we are listening to our community. And I really acknowledge the distress that these debates can cause for some people, and we have heard and seen that in the chamber today. And I just want to recognise those people who are really struggling at the moment with cost-of-living pressures. I know this is a really difficult subject. We have around a third of Victorians who are renters, and a growing number of them are doing it really tough. Unlimited rent hikes and rents that are rising faster than people’s wages are forcing people into record levels of housing stress, homelessness and poverty, and that is what we are talking about. Successive Victorian and federal governments have doggedly pursued policies that have turned housing into a commodity whilst simultaneously failing to invest in public housing. Housing, widely considered as a fundamental human right, has been repackaged as an investment, with special treatment given to property developers and investors who are motivated by profit. While this has certainly benefited some, it has also led to the worst rental crisis we have seen in decades for millions of Australians.

We should keep increasing supply, particularly supply of public housing, but it is interesting hearing Mr Mulholland speak about planning roadblocks hindering development, particularly when the Victorian Liberals took to the last election a policy of restricting housing development subdivisions and preserving local identity through neighbourhood residential zones. Maybe this is another example of a Liberal being able to hold two ideas in their head at once. Meanwhile, the highest increases in housing density since 2011 have been in councils with greater Greens representation. The most Greens council, Yarra, approves 99 per cent of applications. But supply will always lag demand as developers will not build or release properties unless there is a profit to be made. It also does nothing to help the people who are struggling to keep a roof over their head right now.

The Greens believe that to protect those renters from the enduring stress and uncertainty of unlimited rent increases we urgently need rent controls and are calling for a two-year rent freeze followed by ongoing caps on rents. This is not, despite what we are being told, a radical idea. Many places around the world have rent controls that coexist with a healthy housing market. Combined with strong tenant protections and not-for-profit housing construction, the housing market can in fact operate in line with the public interest. Scotland froze rents for 12 months in 2022 and now has an ongoing cap of 3 per cent. Germany has a nationwide cap based on size, location and quality of the property. Certain properties in New York have a permanent freeze on rent increases. There is a 2 per cent cap in rent pressure zones in Ireland. In China urban areas have a 5 per cent cap. Denmark introduced a new 4 per cent cap after an inflation-linked cap saw rents rise too fast. And here in Australia the ACT links rent caps to inflation. The sky did not fall in there; investors continue to enter the market, and even the Real Estate Institute of the Australian Capital Territory has said that rent caps are fine.

This Labor government refuses to acknowledge the evidence available to us and instead has developed a housing policy that fails to disrupt the fundamental driver of the housing crisis: the financialisation of housing as a primary asset. Their policy fails to recognise the urgent need to shift the balance of power between landlords, real estate agents and tenants. The Greens’ Residential Tenancies Amendment (Rent Freeze and Caps) Bill 2023 aims to do just this by providing greater predictability and stability for people who rent.

Just like the emergency measures act, this bill responds to an unprecedented public emergency – the current rental and housing crisis. The amendments contained in the bill are absolutely necessary to counteract the significant economic and social impacts we are seeing from the housing crisis. Everywhere we turn in our communities we are hearing it and seeing it – the growing number of people who are experiencing homelessness, people and families falling deeper into poverty, the increased number of people seeking food relief. We can do something about it, and we must. The right to housing is more than simply a right to shelter. The International Covenant on Economic, Social and Cultural Rights clearly states that it is a right to have somewhere to live that is adequate. Whether housing is adequate depends on a whole range of factors, including affordability and security. How can we think that rent controls are asking for too much when all they would do is help people have somewhere adequate to live?

We understand that many people are struggling with the cost of living, not just renters, and that is why there are other initiatives we are pushing for at the state and federal levels that would bring down inflation and help mortgagors, first home buyers and those who depend on rental income. However, the Greens are especially focused on ensuring that the increasing cohort of people who are at risk of homelessness are protected from the rising cost of living to make sure that everyone has their basic needs met. These people are largely renters. Beyond the risk of homelessness, research shows that housing affordability is a key factor in a person’s health and wellbeing. When a significant proportion of income is absorbed by higher rents, there is simply less capacity for money to be spent on food, let alone healthy food, and things like health care. Housing insecurity is a uniquely stressful situation, something I saw increasingly frequently while working as a GP. People would come in with anxiety and ask for a mental health care plan, but the driver of their anxiety was not knowing how they were going to pay their next rental instalment. What they needed was stable housing, not a mental health care plan.

I have also heard from regional communities in my electorate who are seriously impacted by the rising cost of their rentals. Many regional areas are experiencing rapid population growth. Rising rents were already occurring pre pandemic, but the pandemic caused a dramatic and historic rise in rents, hitting a peak in 2021. While the exodus from the city to regional Victoria has certainly slowed, rents continue to rise at above-average rates in regional areas. In Warrnambool, for example, rental costs have risen by 36.4 per cent over the past five years.

Some will argue that if a person cannot afford a rent rise, they have the option of moving to a cheaper rental property. This is problematic for several reasons. Firstly, the costs of moving can be significant and create financial stress in and of themselves, especially for those who are on lower incomes and who do not have savings to fall back on, not to mention the stress and the inconvenience of having to move, and this is cumulative each time you have to move because of a rent increase. Secondly, and perhaps more importantly – and this goes to some of the arguments we have heard from both sides today – there needs to actually be an affordable rental to move into.

Regional Victoria has some of the tightest rental markets in the country. The Surf Coast shire has a current vacancy rate of 0.45 per cent and at times during the past few years has had a vacancy rate of zero. Warrnambool has a vacancy rate of 0.53 per cent, and Loddon shire has a vacancy rate of 0.02 per cent. Those who argue that capping rents will just worsen the availability of rentals as people will not have as much incentive to move fail to recognise that most people do not want to have to move regularly. In any case, a substantial increase in rent in an environment where there is limited rental availability means that they cannot just move to a cheaper rental in the neighbourhood, because they simply do not exist. In regional areas rent rises are forcing people to move to completely different towns to find housing. This dislocates people from their communities where they may have work, school, carers, families and friends. It is heartbreaking. It is not how we build thriving communities and keep people connected to the areas they love and the people they care about.

The argument against capping rents on the basis of inefficient allocation of rentals also assumes that housing is currently optimally allocated, with everyone living in housing that is the right size and location to meet their needs, and that prices help to drive this efficient allocation. However, the type and location of a property that someone rents are largely a function of their ability to pay and what is actually available, not their needs. Housing is generally not a discretionary spend. Importantly, it fails to put a value on stability and security of housing, something that is worth so much for people but has been completely overlooked in the economic arguments that have been put forward by all sides today. It is something that rent controls can provide. Rent controls have widespread community support. Different forms and names have been used to argue for their use, including a fairness test, rent stabilisation measures and rent caps, but the core concept is the same: that it is reasonable to place a limit on how much rents can rise by. This rental crisis is solvable, and we have tools at our disposal right now to help better protect renters and those most at risk of homelessness. We can and we must act now.

Ryan BATCHELOR (Southern Metropolitan) (11:44): I am very pleased to rise and contribute to the debate today on a really significant topic that it is fitting that this chamber is debating. It is obviously a topic, the state of the rental market, that is of great concern to many people, to those in our communities, particularly in my community across Southern Metropolitan Melbourne, who are renting. More broadly, the issues affecting the rental system are symptomatic and part of a bigger problem that exists right across our housing system. There is no doubt that not only is there a rental crisis but there is a housing crisis in our community. What is beholden upon us as members of Parliament is that we both acknowledge that and take action to address it, and that is exactly what the Labor government is doing – taking action to do what we can to fix the housing crisis in our community.

One of the most significant policy documents that the state government has released in recent times is our landmark housing statement, which was released by the former Premier just before he announced his retirement from that job. We will set an agenda for housing reform that will fundamentally, hopefully, improve the way housing works across the state, obviously doing what we can as a state government with the levers that are at our disposal to help address these issues. There are many policy elements to that housing statement that will help address the housing crisis. We as a state government do not control all of those levers, but the ones that we do we are trying to use and to pull.

What I want to do in today’s contribution, particularly in relation to the private members bill that has been introduced, is to focus on our rental system, what is required in that area to make changes that will benefit renters and what we can do as a state government with the tools at our disposal to fix the rental crisis and to fix the housing crisis. In making that kind of assessment about what is available to us and looking at the vast amount of literature, of evidence, that is before us I am not convinced that the measures articulated in this private members bill are the ones that we need to be putting in place right now to both fix the rental crisis and fix the housing crisis. This has become a wicked policy problem, but I think there are more sensible solutions that we can address than the ones proposed today, because we do need to have a suite of reforms that fundamentally improve the way our rental system operates.

We need solutions, not slogans, to help fix the rental crisis here in Victoria. We know that in 2023 the reality is that more and more Australians are unable to afford to buy their own home and therefore the share of households that are in the private rental market for longer continues to grow, so we need to make sure that the rental laws that we have and the structure of our rental system are designed to accommodate their needs and protect their interests not for what occurred perhaps more in the past, for a shorter period of time, but increasingly for what is a longer period of time.

One of the issues that we have got is that the nature and structure of the landlord sector are not as professionalised and at scale as they are in other jurisdictions – I will come to that – and the importance of getting more institutional landlords into the renting sector. I want to refer to what I think is quite an exceptional piece of analysis by Per Capita. In 2023 their report from the Centre for Equitable Housing found that the instability and insecurity of Australia’s residential rental market is in part, and I think in substantial part, caused by the way that Commonwealth tax incentives work and particularly the way that the capital gains tax discount as it applies to residential property interacts with the negative gearing regime to create systems that, for investment in residential property, encourage investors to invest in rental properties in the pursuit of medium-term concessionally taxed capital gains as opposed to what would be a reasonable rate of return over a longer period of time. One of the things that this means is that some landlords, because of the small nature of their investment base and their capital base, really do not have access to the funds that they need to be able to do the work to keep the rental properties that they own up to important standards. It is the pursuit of capital gain over short to medium time frames rather than a long-term investment in quality homes that can be rented out for long periods of time that I think is one of the real drivers of what not only is a crisis of cost in rental properties, in our rental system, but also amounts to a crisis of quality. I think both of those elements are things that we need to be thinking about when looking at our analysis of what it is that we need to do to fix the rental crisis here. In saying that, however, we do understand that it is a complex area of public policy and there are a variety of causal linkages that apply between different policy levers that we could employ and different policy settings that exist at a Commonwealth and a state level.

We know that 71 per cent of landlords in Australia just own a single rental property, largely non-professional investors taking advantage of elements of tax concessions to achieve returns on their investment. What that means is that there is a lack of appropriate professionalising as a landlord, that there is an over-reliance on day-to-day property managers, many of whom do not have and do not exhibit the necessary skills, I suppose is a nice way of putting it, to be thinking about how we ensure that the properties that we are renting out are at a standard that we think is acceptable for people to live in and that will be sustainable over a longer period of time. That partly comes down to an assessment of how people assess and view the properties that they have, whether they view them as a short-term investment that they are trying to realise a short-term capital gain from or whether they are trying to have a longer term secure investment with tenants that are in properties for five, 10 or more years. That element of how landlords operate and the ways that agents and property managers operate is a significant driver. Both the incentives that they are trying to pursue and the kind of care that they are providing are real reasons why we have got this crisis of both cost and quality in our rental market.

One of the things that we can do as a government to try and fix that problem, noting that as a state we do not have control of those Commonwealth tax concession levers, is increase the amount of buildings that are purposely being built to rent so that more rental housing is coming into the rental system that is specifically designed and owned to enhance and improve rental security for tenants, the quality and livability of the dwellings that are available, but also that incentivises both long-term leases being offered to those tenants and professional institutional landlords to maintain those properties over time so that they are as good in year 15 of ownership as they were in year 1 of ownership. This gives a better quality experience for the tenants, and with security and longevity of tenancy things like rental churn and the impact of rental churn on price rises are diminished, offset and subdued. What it allows tenants to do through longer term leases in these kinds of developments is to put down roots and connect and have a greater sense of community. There is a great example of this in Southern Metropolitan Region in Caulfield. A build-to-rent apartment building opened its doors last November. It has a range of properties available for long-term tenancies, from studios to three bedrooms across the eight-level building, and it is bringing together a mix of people who are interested in security of tenure but also variety of dwelling sites. We have got young singles, families and couples in their 80s all living together in a long-term build-to-rent tenancy.

These sorts of new developments are the things that will help shift the dial on the nature and structure of the rental system because they are changing the available rental stock. They are putting better rental stock into the renting system and giving people greater choice and more options, which should mean that people are not forced into places that are really not fit for them and are not forced into accepting and paying higher and higher rents.

But to protect those renters who are in that circumstance the Labor government has introduced around 130 reforms to make renting fairer in this state. One of the key things that that reform package is seeking to do is improve the minimum standards that exist in all rental properties here. It both empowers tenants to make changes to make their rentals more like a home – with minor modifications et cetera – and gives them more security, like removing no-reason notices to vacate. The new set of laws also looks at limiting the ability to increase rents after notices to vacate are issued. We have also got Consumer Affairs Victoria as a watchdog that can do more, should do more and is doing more to investigate landlords who engage in systematic or deliberate breaches of these standards, to take action where appropriate and also to take action against property agents who are essentially putting up images of rental properties that do not reflect the actual condition of the properties.

Those are the sorts of things that the government is doing to protect renters rights. It is an exceptionally comprehensive package of measures that we legislated in 2021, leading the nation, and then took further with our package of renters rights here in Victoria to improve the quality of those homes and security for the tenants who are in them and also to do what we can to reduce exploitation in the market and ensure that renters are not left facing no choice but to pay more. Providing them with more support and more choices should put downward pressure on the rental market. That is my contribution today.

Lee TARLAMIS (South-Eastern Metropolitan) (11:59): I move:

That debate on this bill be adjourned until later this day.

Motion agreed to and debate adjourned until later this day.

Business interrupted pursuant to sessional orders.