The ‘axis of evil’ and the housing crisis

Sam Hawley: Hi, I’m Sam Hawley, coming to you from Gadigal Land. This is ABC News Daily. The Greens have been accused of forming an ‘axis of evil’ by joining with the Coalition to block the Government’s key housing bill. But are they really the enemy for demanding a rent freeze to try and stop landlords charging tenants whatever they like? Today, Insiders host David Speers on the housing deadlock and why the Government refuses to cap rents.

David Speers, we’re in a housing crisis and when we’re in a crisis it means we need something to change, something needs fixing and it’s a really confronting time because it sort of feels like this problem snuck up on us. We didn’t realise it was coming.

David Speers: Yeah, well, Sam, Australia’s had a housing problem for years, but then about 18 months ago, inflation started climbing and climbing and climbing and we’ve now entered something of a perfect storm…

Reporter: Just about everyone’s feeling the strain as prices continue to spiral upwards…

Reporter: The cost of food, housing and other essentials is still rising quickly…

David Speers: Those near-zero interest rates during COVID, and I guess for those who did have an income, the inability to spend on anything else, it really saw house prices rocket much higher than anyone was expecting during those lockdown periods and beyond…

Reporter: The property market as a whole has risen 29%.

David Speers: They’ve come off a bit since then, but home ownership clearly remains out of reach for many. Then you’ve got the rental market also being impacted by some similar forces. As interest rates started climbing, landlords started hiking their rents….

Reporter: At the same time, rent prices have been steadily rising and since COVID hit, they’ve skyrocketed…

David Speers: …And in the middle of some of our biggest cities like Sydney and Melbourne, rents have gone up up to 40% and in the regions around 10%. Then you’ve got immigration, which stopped during the pandemic. Now we’re starting to see migration rebounding so that demand is rising for housing. So all of this putting incredible stress on the market for mortgage holders, for renters and sadly homelessness too is on the rise. The national stats on that do lag a bit, but all the indicators from the service providers is that more and more people are in need of public and social housing.

Sam Hawley: Yeah okay, so it’s clearly a really troubling time and now taxpayers and residents, I think it’s fair to say, are looking to the government, to policymakers and questioning, how are you going to fix this? It’s their job,right? They’re in government. So how are they going to solve this problem?

David Speers: Yeah. And look, the Albanese Government is well aware this is a huge issue for the electorate right now and it will be judged on what it does. There is a policy and a political imperative for it to fix this. To be fair, the responsibility is shared though between the states and the territories and the Commonwealth. But it’s the Commonwealth that’s under the most pressure right now to come up with solutions. One of those solutions, not the only solution, but one of them is this election promise that Labor made of a Housing Australia Future Fund. The idea is pretty simple – $10 billion fund – invested through the Future Fund to generate an income stream. So the $10 billion itself doesn’t go directly into housing, but the earnings on that money do. The government is promising to spend at least $500 million a year through this fund… That is on top of other programs, but the aim with this one is that you would be able to build 30,000 social and affordable rental homes over five years, including about 4000 directly for women and children facing family and domestic violence.

Sam Hawley: So they have a plan, Speersy, and they took that to the election, of course. But the Greens have teamed up with the Coalition in the Senate to block this going through the Parliament. Why did they do that? Because surely it’s better to have something than nothing.

David Speers: Yeah, well, for the Coalition’s part, they don’t support any more of these off-budget funds. It’s borrowed money, adds to debt. The Greens have a different view; it doesn’t go far enough for them.

Adam Bandt, Greens leader: It is up to Labor to act on soaring rent increases if they want to get their housing legislation through.

David Speers: They want $2.5 billion spent every year through this fund or from the budget. And look, they’re negotiable on that and we did see the prime minister over the weekend announce that he would spend an urgent $2 billion from the budget bottom line separate to this fund.

Anthony Albanese, Prime Minister: Today, I am proud to announce that our government is creating a new $2 billion social housing accelerator.

David Speers: So that that brings us a step towards what the Greens have been asking for. Their main sticking point though, the Greens, is they want a freeze or some sort of cap on rents.

Max Chandler-Mather, Greens housing spokesperson: We don’t think it’s sustainable to basically lock in unlimited rent increases over the next few years in the context of the worst housing crisis we’ve seen in generations.

David Speers: Now this is something that falls within the power of the states and territories, not the Commonwealth. But the Greens want the Federal Government to use its leverage, persuade the states to do this with some sort of financial incentive. The states are doing more to improve renters rights, but look, they’re not keen on freezing or controlling rents. They say the international experience shows it doesn’t work. So that’s where we’re at this week. The Coalition and the Greens, as you say, teamed up and delayed this bill until October 16th.

Helen Polley, Labor Senator: There are women and children fleeing domestic violence that because of you won’t have a house!

Sam Hawley: Yeah, right. Okay. So the Greens are trying to send a message to the government ‘we need to see that you are serious about doing something and doing something quickly about this rent spiral, we need to see, you really are trying to help people and help them now’?

David Speers: Yeah, that’s right. And the Greens have very much renters in their sights politically and we’re talking about a lot of younger people, particularly in inner city seats where the Greens have already had great success. Want to build on that success, want to push Labor out of some of these seats. So they’re really locking in on this rental crisis as a political tool. But what we’re talking about with this housing fund really is a well, slightly different, somewhat overlapping cohort, those who need public and social housing. So that’s where the government is pretty angry that they’re making this push for renters at the expense of those who really need public housing. And we’ve seen quite a strong reaction from the government.

Helen Polley, Labor Senator: Today, it was the Greens and the Opposition delaying once again the build of 30,000 affordable and social housing in this country…

David Speers: The Deputy Senate Leader, Don Farrell, for Labor saying the Greens and the Coalition have been the ‘axis of evil’ on this…

Don Farrell, Labor Senator: Plenty of excitement, and that axis of evil that we saw where the Greens and the Coalition lining up to vote against, vote against $10 billion….

David Speers: Julie Collins says every day of delay here is hurting people desperate for housing. Anthony Albanese – he’s labelled the Greens hypocrites, accused them of prioritising political advantage over those who need public housing.

Anthony Albanese, Prime Minister: …And you can’t say that you support additional funding for housing and then reject a $10 billion fund that’s going to provide just that…

Sam Hawley: A rent freeze, though. It sounds like a pretty good idea. As you say, there are nations overseas that are actually doing this already. The Greens housing spokesman, Max Chandler-Mather, he’s repeatedly cited research from New Jersey in the United States where they do have rent restrictions…

Max Chandler-Mather, Greens housing spokesperson: …New Jersey was a state that introduced rent caps and their research found there was no material impact on the supply of private housing. What we did see, though, was an impact on reducing rents….

Sam Hawley: And so what’s the Government saying about that?

David Speers: Well, it says that even that New Jersey experience, which as you say, is the one that the Greens point to as some sort of international model here – it’s pretty mixed in terms of the outcomes here. The last big study done on that one was back in 2015. It found no significant difference in median rents between cities that had rent freezes in New Jersey and those that did not, and that there are some negative impacts in terms of the quality of the housing stock, the deterioration of stock, landlords bailing out if they can’t charge what they want, and that that impacts on the housing stock. So, look, it’s not as clear cut as it might sound that a freeze on rents is going to be the best solution here. And certainly the states which would have to implement it, they’re not convinced. Chris Minns, the Labor Premier in the biggest state, New South Wales, says no, he’s not interested in this at all. He doesn’t think the international experience backs it up as a good idea…

Chris Minns, NSW Premier: If I thought a rent freeze to be put in place would work, I’d do it, but I don’t think it would.

Sam Hawley: So Speersy, the government argues that a rent freeze would actually destroy supply by basically driving investors out of the market. So it thinks if they did that, it would actually make things worse. So it looks like it’s definitely not going to go there?

David Speers: Yeah, drive investors out of the market, reduce housing stock when we need to increase housing stock, lead to little or no improvements on that housing stock because investors aren’t going to want to spend money on those homes. And if they announce it to take place in a month or 2 or 3 months from now, will they fear that landlords would simply jack up rents so much before it kicks in.

Sam Hawley: Mhm. Okay. So it’s not going to happen at this point in time. So let’s just step back, Speersy, and look again at why we so urgently need something to change, because we basically have a broken housing system in this country. The system is not working anymore, is it?

David Speers: No. Look, at the heart of this is this lack of housing, the lack of supply. We just don’t have enough homes for people to live in. In fact, we’ve had a plunge in new home building to a 10 year low. So not only do we not have enough housing, we’re not bringing enough new housing online. In New South Wales, some leaked departmental government documents suggest the state would need to build 75% more homes than forecast over the next five years to keep up with demand. And you’ve got this big increase in migration rebounding after the COVID absence of migration. We are expecting to see 1.5 million new migrants enter the country over the coming five years. So all of that is going to put more pressure on the market.

Sam Hawley: Okay, so we need something to change and we really need it to change quickly. Political deadlocks, you know, political fights aren’t really going to help us there, are they?

David Speers: No. And now we’ve entered the sort of ‘game of chicken’ phase of this, because what the Senate did this week is being viewed by the government as what’s called a ‘refusal to pass’ the bill.

Don Farrell, Labor Senator: Please listen to this, Senator Hanson-Young and Senator Ruston. If the Senate defers bills to October, the Government will regard this as the Senate failing to pass the bill. And I’m sure you understand the consequences of that….

David Speers: Now that’s the first step in giving the Government a triggerfor an early election, a double dissolution election. A double  dissolution trigger is gained when the Senate fails to pass a bill twice, with a minimum of three months between each go, if you like. Now, the Greens deny this is a failure to pass. They’re saying they’ve just delayed the vote until October. The Government is getting some advice from its Solicitor-General in relation to this. I just spoke this morning to Anne Twomey, a most highly respected constitutional expert. She says her intuition is this could be regarded as a failure to pass. But look, I do think the chances of a double dissolution right now are still pretty slim. But most prime ministers like to have one of those in their back pocket in case it’s a good idea to actually hold an early election. And right now it’s really being used as a as a weapon against the Greens to try and threaten them into backing this bill.

Sam Hawley: Yeah, okay. So it’s all a bit politically messy. And at this point, politics I don’t think, concerns the people who are struggling to make ends meet, struggling to pay the rent, struggling to find somewhere to live. So what? What for them? They just have to suffer through this until politicians come up with a solution?

David Speers: Look more or less. Or make some noise. Write to their MP, express their view one way or another as to who they think should give some ground here. Look, in the meantime, we need to point out it’s not the only public housing program. There are other measures… the $2 billion announced by the PM on the weekend, that’s flowing immediately. There are other housing policies in place. But this is a this is a big one. This was the big election promise. And right now, as I say, we’re still in a game of chicken, and neither side is blinking.

Sam Hawley: David Speers is the host of Insiders. You can watch it on ABC TV on Sunday morning at 9:00. In a joint statement, seven separate housing advocates and industry groups called on the Greens to pass the Government’s housing fund, saying it would not solve the crisis. But it was an important start and Australia can’t afford delay. This episode was produced by Veronica Apap, Flint, Duxfield, David Coady and Sam Dunn, who also did the mix. Our supervising producer is Stephen Smiley. I’m Sam Hawley. To get in touch with the team, please email us on ABC News Daily at abc.net.au. Thanks for listening.