Looking at the major parties’ housing announcements, you could conclude that renters don’t vote. Instead, both sides are pitching hard to aspiring first-home buyers, telling them that a vote for Labor or the Coalition will pull the great Australian dream back within reach so they can start paying off their own mortgage instead of someone else’s.
Peter Dutton’s promise to allow interest on mortgage payments to be deducted from income tax for the first five years of a mortgage, and Albanese’s offer to facilitate a mortgage on a 5% deposit, may be alluring. But I suspect voters can see the pitfalls.
What happens in five years, when you must start paying the full mortgage? Perhaps your pay will be higher, but maybe you’ll have a child to support too. And borrowing 95% of the value of your home may get your foot in the door earlier, but it means paying off a bigger debt over a longer period.
Neither measure has been means-tested to any significant extent, nor does it consider whether prospective owners also enjoy financial backing from the parental bank. The first-home buyers who stand to benefit most will be relatively well off, and both proposals will more likely bring forward purchases than bring excluded low- to middle-income earners into the housing market. In fact, they could make things worse for that latter group. As Saul Eslake and other experts warn, such sweeteners will likely drive up property prices and hasten the long-term decline in home ownership rates.
Around 30% of Australian households rent, mostly from private landlords. The Coalition has so far offered nothing to this significant cohort unless they can take on a mortgage. For Dutton, a renter is simply a homeowner in waiting.
Labor’s $10 billion campaign pledge to build 100,000 new homes reserved for first-time buyers treats renters in the same way. At least Labor can draw on its record of support for renters since it took office in 2022 — Labor increased Commonwealth Rent Assistance in its 2023 and 2024 budgets. Together with indexation, this boosted the top payment rate by 45%, helped around 1 million households, and brought the rate of rental stress below 40%.
However, more than 200,000 people receiving rent assistance continue to shell out over half their income on rent, and the government ignored calls from its economic inclusion advisory committee to lift rates further in this year’s budget. There are lots of struggling, low-wage renters who don’t qualify for any rent assistance at all.
In the dying days of the last Parliament, Labor secured tax changes to facilitate more Build To Rent apartment projects. While pitched at the higher end of the market, at least 10% of Build To Rent units must be affordable, and adding supply, even if it’s pricey, helps bring down rents overall. Corporate landlords are also likely to offer more secure tenancies than small-scale investors.
Labor also reconvened regular national gatherings of housing ministers, something that hadn’t happened for five years under the Coalition (for much of its time in office, the party didn’t even have a housing minister). The Labor government has used this forum to seek “a better deal for renters” through tenancy reform in the states and territories, though progress has been patchy on putting an end to no-fault evictions, setting minimal rental standards and restricting rent rises to once a year.
Labor has also refused to countenance shielding low-income tenants from unconscionable rent hikes. It may be true that the Greens’ blunt approach of a two-year rent freeze would do more harm than good, but work by the Centre for Equitable Housing shows that in other countries, more nuanced regulation helps moderate increases. Even the ACT has a system for keeping a lid on rents.
Arguably, Labor’s biggest achievement is the $10 billion Housing Australia Future Fund (HAFF) to build 30,000 social and affordable homes over five years.
Sometimes the government gives the impression that returns from the HAFF will finance additional new homes beyond this time. In February, for example, the ABC reported Housing Minister Clare O’Neil as saying the HAFF will “provide a consistent and secure stream of revenue” to fund the construction of social and affordable homes “in perpetuity”.
But all proceeds will be fully committed after five years to help social housing providers bridge the gap between their costs and the low rents paid by their tenants. Without an injection of additional capital, new building will cease in 2030.
The Greens blocked the HAFF in the Senate for months, but without their intransigence, it seems unlikely Labor would have found an extra $3 billion to spend on social housing. And along with other crossbenchers like David Pocock, the Greens convinced Labor to guarantee and index a minimum annual spend of $500 million in HAFF proceeds (something that looks more significant now that Donald Trump has trashed global sharemarkets).
Labor offers more to renters than the Coalition, but whether it has done enough to win back inner-urban residents who cast ballots for the Greens in 2022 remains to be seen. And at this election, there will be a new cohort of first-time voters who are struggling to pay the landlord.
Written by Peter Mares, originally published in Crikey.