Rental help boost biggest in 30 years but supply woes linger

Labor will deliver the largest increase to the rent assistance rate in three decades, which will help more than one million vulnerable Australians.

Hopeful Sydney-siders checking out the Sydney rental market in the Eastern Suburbs. Picture: NCA NewsWire / Jeremy Piper

Labor will deliver the largest increase to the rent assistance rate in more than 30 years, but cries for significant further funding and reform to address the housing supply shortfall have not been heeded.

As the nation grapples with a housing crises amid an influx of migrants, Jim Chalmers moved to ease the pressure on vulnerable households, spending $2.7bn over the forward estimates to increase the maximum rate of the Commonwealth Rent Assistance by 15 per cent.

Providing up to $31 extra per fortnight for those renting in the private market, the rise was heralded by the government as delivering critical cost-of-living relief for more than one million vulnerable Australians, at a cost of $540m per annum.

“For too long, secure affordable housing has been out of reach for too many Australians,” the Treasurer said in his budget speech.

The rise will partially offset the steep increase in rental prices over the past year.

The budget papers said national vacancy rates were languishing at near record lows of around 1 per cent, noting advertised rents had grown at over 10 per cent as of April. Prices in capital cities – including Brisbane, Sydney and Adelaide – increased by nearly 20 per cent over 2022.

The National Housing Finance and Investment Corporation has warned constraints on construction will create a 106,000 dwelling over the five years to 2027. The drag on housing supply was noted in the budget papers, stating material and labour constraints were impairing the capacity of the residential construction sector keep pace with growing demand.

Despite the glaring issues, the government appeared to lean heavily on announcements made in the October budget.

Conversely, funding to support the provision of remote housing for Indigenous communities in the Northern Territory was slashed by nearly a third, reduced from $324m in the 2023-23 financial year to just $112m.

Measures to increase supply by encouraging investment and construction in the build-to-rent sector included cutting the managed investment trust withholding tax in half to 15 per cent and lifting the depreciation rate from 2.5 per cent to 4 per cent for eligible new projects. The measures were forecast to deliver a net decrease in tax receipts by $25.7m over the next five years.

An additional $67.5m was provided in 2023-24 to support the National Housing and Homelessness Agreement.

Already announced measures were included, such as providing an additional $2bn in cheap finance to support the construction of social and affordable homes

Housing Minister Julie Collins said these would work to complement existing government measures, including the $10bn Housing Australia Future Fund to create 30,000 homes over five years, now locked in negotiations with the Greens to pass through the Senate. The measure was announced in the October budget, as was the National Housing Accord, which aims to work with state and local governments to deliver one million homes by 2030.