The “half-baked solutions being spouted by the Federal Greens Party on rent controls were unconstitutional economic madness – a one-line panacea rather than a cure for the housing supply and rental price crisis engulfing Australia,” said Tom Forrest, CEO of Urban Taskforce Australia.
Forrest stressed that there is a housing crisis in Australia, but while the problem is most acute in Tasmania and NSW, where both housing prices and rents have spiked, “planning systems across the country have failed their most basic test: to ensure there is a supply of houses to meet demand.”
“There is plenty of capital looking to invest in homes,” he said. “Super funds are desperate to get involved. The issue is the risk associated with planning controls, delays, and uncertain outcomes that are so common. The situation has become so bad that half-baked, unconstitutional solutions like rent control are given serious treatment by media commentators. Limiting the return (freezing rents) on investments in new rental accommodation will simply scare investors away from that asset class, thus exacerbating the current shortages. The solution is more approvals for more new homes in areas of high demand so that an over-supply brings downward pressure on new home and rental prices.”
Forrest said rent controls do not address the underlying reason why rents are rising, namely supply constraints and growing demand, as there are not enough new homes being approved to meet the demand for new homes.
“It may come as a surprise to Max Chandler-Mather, the new Green MHR for Griffith, that the Australian Constitution does not allow the Commonwealth to control prices of anything, let alone rent,” he said.
The Urban Taskforce leader noted that a referendum in May 1948 to amend Section 51 of the Australian Constitution, “Constitution Alteration Rents and Prices,” failed in every state in Australia; while another attempt at establishing a Commonwealth power to control prices in 1973 in the context of the OPEC oil crisis also failed to get support in all states of the country.
“Are the Greens proposing a new referendum?” Forrest said. “Urban Taskforce calls on the federal and state governments to work together to tackle the housing supply crisis, otherwise the nation will be subjected to even more hare-brained ideas from the Greens Party. Policies like rent control and funding for social housing completely fail to address the underlying problem. They are akin to putting a band-aid on a dying dog and hoping the dog will be cured. The problem is housing approvals and housing supply.”
Forrest proposed that the role of NHFIC be expanded “to support investments and infrastructure that boosts all forms of Housing supply.” He also said the National Housing Supply Council should “be immediately established and be holding the states to account for their performance on housing supply.”
