Rent cut proposal ‘repeats a Rudd dud’

Josh Frydenberg says Bill Shorten’s $6.6 billion plan to fix housing affordability is a ‘re-run’ of a failed Kevin Rudd scheme.

Treasurer Josh Frydenberg said the Labor policy was an admission its negative gearing policy would adversely affect housing affordability and supply. Picture: Kym Smith

Treasurer Josh Frydenberg has hit out at Bill Shorten’s $6.6 billion proposal to fix housing affordability by lowering rents for middle- and low-income earners, branding it a shameless “rerun” of a Kevin Rudd scheme that failed.

The Opposition Leader detailed at the ALP’s national conference yesterday an election policy he said would “turbo-charge” investment in 250,000 new homes over 10 years.

Labor would help renters by giving landlords who built new dwellings annual payments of $8500 a year — provided these homes were let out at 20 per cent below market rates.

According to Labor’s estimates, families paying the national average rent of $462 a week would save $92 a week. Mr Shorten said Labor was committed to the building of 20,000 homes and apartments during its first term, if elected, at a cost of $102 million.

Mr Frydenberg said the Labor policy was an admission its other big proposed intervention in the housing market — ending negative gearing for future purchases of investment properties — would adversely affect housing affordability and supply.

The Treasurer said a similar scheme introduced by the Rudd government in 2008 — also based on lowering rentals to 20 per cent below market rates — was strongly criticised by the Australian National Audit Office in two reviews that found dwelling targets were not met and the assessment process was ineffective.

Properties were built regardless of size and areas of need, the rights of investors and tenants were not protected and the scheme was exploited by scammers.

According to Mr Frydenberg, the incoming Coalition government was left with the job in 2013 of fixing these flaws in Mr Rudd’s National Rental Affordability Scheme.

“It did not work then and it will not work now,” Mr Frydenberg said. “Labor has clearly learned nothing from its past failures.”

While the condition for landlords to receive Shorten-Labor’s proposed $8500 payments is a re-run of lowering rents to 20 per cent below market rates, the policy unveiled yesterday seeks to avoid a repeat of some past weaknesses.

Focusing on help for families battling in the existing market, Labor’s new scheme would exclude overseas students, temporary foreign workers and other non-residents from eligibility as tenants in new homes.

Mr Shorten said homes would be built where they were needed most — not for “foreign investors” or “international students”.

The Opposition Leader said many Australians faced a “hidden struggle” because they could not afford to live near where they worked yet still spent a third of their pay on rent.

“Rental affordability is a national challenge and it demands national leadership,” he said.

The Australian Housing and Urban Research Institute last month estimated a rental property shortage of 525,000 dwellings, suggesting Labor’s proposal would be only a part solution.

The Minister for Families and Social Services, Paul Fletcher, said Labor’s investment of $102m for 20,000 homes in its first term, if elected, would barely touch the problem.

By contrast, Mr Fletcher said the Morrison government would spend $30bn over the next five years to deliver affordable homes in the form of rental assistance, and to fight homelessness.