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Low income renters can expect to keep paying higher bills and suffer the consequences as bill is defeated

There are many logical and economic reasons to support better energy efficiency in housing especially for low income housing where standards sometimes verge on the appalling, but no, the government says no again. Pay up, you lowly renters. It’s status quo at the coal mine.

The Coalition has yet again shown that energy efficiency for low income households is far from down its priority list with its rejection of a bill to create tax concessions for energy efficiency measure in rental properties.

The proposal was that properties rented for $300 a week or less would quality for tax deduction of up to $2000 if the rent is $300 or less. 

It was supported by a wide range of community and housing advocates, the Property Council of Australia, CRC for Low Carbon Living, Energy Efficiency Council and the Public Interest Advocacy Centre.

The Treasury Laws Amendment (Improving the Energy Efficiency of Rental Properties) Bill 2018 was proposed by Independent South Australian senator Tim Storer last year and a after a second reading was referred to the Environment and Communications Legislation Committee’s inquiry committee, which rejected the proposal.

The committee, however, supported the broad aims of the bill and acknowledged that improved dwelling performance would lead to lower energy bills and also health and wellbeing benefits for tenants.

In its final report, released this week, it also acknowledged there are “serious inadequacies of the energy efficiency of rental properties”. 

Politics interfered with outcomes

But handsitting and grandstanding appear to have got in the way of the bill being passed. 

The Coalition position is that its National Energy market policies will help solve issues around energy costs for low-income households by reducing prices and guaranteeing a reliable supply. 

Labor senators in their dissenting report said that Labor’s suite of proposed housing policies to address affordability, renewable energy investment plans and other measures are the superior solution.

The Greens supported the bill in the context of the party’s wider plan for a national energy efficiency policy, yet to be announced in detail.  

“It is disappointing that, despite that positive agreement, overwhelming evidence as well the modest, conservative cost estimated by the Parliamentary Budget Office at $21-29 million, the conclusion of the Coalition and Labor was to not support the bill,” Mr Storer said. 

“It is important to note what the recommendation of the report –  that the bill not be passed – will mean for those who would have otherwise been helped by the bill. 

“People who rent are more vulnerable to extremes in temperature, which will only become more frequent with climate change. These effects are real and ongoing, as we saw in Adelaide, for example, in late January, where extreme heat resulted in more than 220 South Australians being treated by paramedics.”

Mr Storer called on the major parties to back the evidence submitted to the inquiry of the multiple benefits of improved rental property energy performance and commit to “substantial energy efficiency investment.”

His own dissenting report addressed some of the concerns raised by submissions to the inquiry, which included the threshold being potentially too low, the amount of the offset being potentially too low, and that there could be an unintended consequence of landlords raising rents if properties are more energy-efficient.

He proposed amending the bill to raise the weekly rental threshold to $500 per week or lower, among other refinements.

The report brings together many of the issues and themes that of concern within the affordable housing, energy-efficiency and sustainability sectors and research-backed data that should have rung alarm bells for both major parties.

And the evidence of benefits was strong

A submission by RMIT and University of Adelaide Researchers said that more than 450,000 private renter households and almost 195,000 public renter households are living in housing classified as poor quality or even derelict, and this housing is typically energy- inefficient.

Submissions also provided the committee with bottom-line evidence of the benefits.

Environment Victoria, for example, found that raising an existing home from a 2-star to 5-star rating can result in a 54 per cent reduction in energy or up to $600 in savings a year.

A windfall of average energy bill savings of $570 per year per tenant would be expected from the retrofitting of 1400 community housing developments across Sydney by St George Community Housing. Across the entire portfolio of properties, the savings could be in the realm of $800,000 per year.

The community housing sector submissions noted that the bill as proposed would be of particular benefit to social housing landlords, where rents are well below market rate.

Another issue raised by some submissions was the need for mandatory minimum performance standards for rental housing.

In NZ and the UK some homes are not rentable

Some submissions pointed to New Zealand and the UK where the worst performing homes are not rentable.

The possibility raised by some submissions that any improvement in home performance might then spur landlords on to increase rents was discussed. The report noted that properties with improved energy efficiency may be perceived to have a higher value in the market, and therefore landlords would use the offset enabled activities as a justification for increases, thereby making homes less affordable for low income households.

Landlords won’t raise the rent if all houses are more energy efficient

Better Renting in its submission disputed this conclusion, stating that should energy-efficient rental homes no longer be a scarce commodity, there would be no market advantage to justify upping the rent.

Other submissions, and Mr Storer’s dissenting report, pointed out there are state based tenancy legal mechanisms that can be brought into play to prevent unfair rent increases following property upgrades.

While he is disappointed in the response of both major parties, Mr Storer was positive about the effect of proposing the bill and the subsequent inquiry process. 

“The bill successfully raised awareness of the considerable benefits energy efficiency could bring to the everyday lives of Australians who rent, and generated debate on how to ramp-up and improve Australia’s energy efficiency investment more generally through a national energy efficiency strategy and national energy efficiency target,” he said.

“I look forward to the major parties detailing their commitments on a national energy efficiency strategy and target so voters can be confident the next government will act to fill this serious gap in policy.”

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