THURSDAY, 30 APRIL 2020
SUBJECTS: Eviction moratorium, decline in residential construction
TOM CONNELL, PRESENTER: Well this of course is just another impact on the coronavirus situation. It’s going to have a particularly big impact on housing. It might not be felt right now, but that could well be coming down the pipeline. Joining me now for more on this is Jason Clare, the Shadow Minister for Housing and Homelessness. Thanks very much for joining us.
JASON CLARE: Thanks very much Tom.
CONNELL: It’s interesting to note you’ve got the banks taking a bit of a hit. That means that people are not defaulting on loans. That means that of course these landlords are not getting money and as a result, people are not being affected. So it’s a bit of a stop gap solution. But is it working for now?
CLARE: Well, banks have done the right thing. They’ve offered people a holiday on their mortgage and that’s important. If you’ve just been sacked, if you’ve been made redundant, if you’ve lost your job, you can’t pay the mortgage. So the work that banks and building societies have done is really important in saying that you don’t have to pay your mortgage for the moment. If you’re renting it’s a bit harder. You can’t just say ‘I’m not going to pay the rent’ and the last thing you need in a pandemic is the people to be kicked out onto the street. It’s not good for the renter, it’s not good for the landlord and not good for the country. We’ve got to keep people in their homes to protect them. That’s why I called for a freeze on evictions last month. The PM backed that and the States have now put in place laws to make sure that happens. We’ve got to watch now over the next few weeks to make sure that’s implemented properly.
The key in all of this is making sure that landlords and tenants sit down and work this out. There are incentives that are being built into it in different models that the States have put forward. In some States, for example, if you cut the rent for the tenant you’ll get a cut in your land tax bill. In other places, like in the ACT, they’ve said if you cut the rent for the tenant then we will cut the rates. Now those kinds of incentives help to encourage landlords and tenants to sit down and find a way through to make sure that people don’t get kicked out of their home now, landlords don’t end up out of pocket and also so you don’t have tenants with a massive bill that they’re going to have to pay in a couple of months’ time.
CONNELL: Yeah, and that’s the thing though, unless there are real incentives for the landlord they end up picking up the bill. Now maybe in some situations they’re in the best position to, but they may be in a situation where they have retired and that’s their only income and they’re really not. So your call seems to be based around all of the relief from state governments then? It’s up to them to come to the party on relief for Landlord?
CLARE: We’ve got to look after tenants and landlords. It’s an ecosystem. We’ve got to look after both. I’ll give you an example here in New South Wales. They’ve said if you cut the rent, we will give you a cut in land tax. Now that’s a good thing but the problem here in New South Wales is that not many landlords pay land tax. Only about 16 per cent of landlords pay land tax. That means there is little incentive for landlords here in New South Wales to actually cut your rent. In other States, it’s very different. Most landlords do pay land tax so there’s a better chance that they’re going to sit down and say I’ll cut the rent because the government cut my tax. So I guess what I’m saying is that the different state governments need to look at the legislation they’re putting in place to see how it works and the ultimate test is the landlord and tenant working out a solution here that helps to make sure that people stay in their homes, that people are still able to pay the rent and we don’t have landlord’s massively out of pocket at the end of this and tenants with big bills.
CONNELL: This is the part of the situation, and it’s just beginning in housing so we’ll keep an eye on that and keep talking to you throughout crisis, Jason Clare. I just wanted to ask as well, so you’ve spoken about a big downturn in houses we could see prices come lay of, we could see that impact in construction as well, obviously. Is now not the time to be talking about any sort of changes around negative gearing?
CLARE: Think about this - you’ve got people at the moment who might have been talking about building a new house or buying their first house over the last few months. Then coronavirus hits, you lose your job or you watch the TV and you see the pandemic hitting the whole world. Confidence is down. You’re less likely to buy a house. That’s exactly what’s happening now. The housing industry says people aren’t signing contracts. The impact of that is that fewer houses are going to be built this year than were originally predicted. Originally the industry thought about 160,000 homes would be built this year. Now it could be as low as 100,000. That means a lot of tradies could lose their jobs. It’s an industry that employs about one million people - everything from carpenters and bricklayers and plumbers and electricians through to the companies that produce the cement, timber, plasterboard etcetera.
So what I’ve said, what Albo and I have said, is that the National Cabinet, the Prime Minister and the Premiers need to sit down and develop a plan here to make sure we don’t have hundreds of thousands of tradies losing their jobs over the next few months. The last thing we need, as Australia hopefully goes back to work over the next few months, is a lot of tradies out of work because there are no homes to build. We won’t have ‘snap back’ if that happens. The PM talks about ‘snap back’ but the economy is not going to ‘snap back’ if you’ve got all of those mum and dad businesses, those small family businesses involved in building homes, snap in the next few months.
CONNELL: So yeah, fair enough. When you talk about, as well, the impact on landlords and how slow moving this could be in terms of the economic impact, does that mean any changes around negative gearing, given how big of a relief that is for some people? You know, they’re facing a loss of rent and they say, ‘Well, I can just write that off’, but any changes to that, and you’ve spoken about keeping some sort of policy on this, that this might have to be on the back burner for a while?
CLARE: What we’ve said is that with all of the policies we took to the last election we’ll go back and review those on a blank canvas. At the moment in the middle of a crisis, our focus is not on what policies will take it to the next election. Our focus is what are the policies that we need that is going to keep Aussies working and keep people safe. And now the JobKeeper package: we backed that. We actually called for it. But keep in mind, Tommy, it runs from March till September. Now, in September when all of those wage subsidies stop, we’re going to have a lot of tradies out of work because the pipeline of construction activity in the housing industry is drying up. If you don’t sign a contract today, there won’t be concrete being poured on a slab somewhere in Western Sydney in August or September or October. So this is coming at us and what I’m saying is it’s up to the government now to think about this problem that’s coming at us in a couple of months’ time and make sure that we don’t end up with a lot of tradies unemployed at the same time that Australia is going back to work.
CONNELL: Well, exactly. It’s going to be a problem and the government has spoken about addressing it. We will talk about what solutions come up and are proposed in the future. Jason Clare, thank you.
CLARE: Good on you mate. Thank you.