The Housing Minister of New South Wales (NSW), Rose Jackson, has become the first Labor state minister to reject the left-wing Greens’ campaign for rent controls to address the housing crisis in Australia.
On June 27, Max Chandler-Mather, the federal Greens housing spokesperson, reiterated his party’s stance and pointed to San Francisco as an example for Australia to follow. He mentioned that a rent stabilization board in San Francisco determines rent increases, with a current limit of 3.6 percent. Chandler-Mather argued that rent caps, along with investment in public housing and infrastructure, can create affordable housing options, like Vienna.
However, San Francisco is currently facing a significant homelessness crisis, with approximately 38,000 people sleeping rough in the Bay Area on any given night, according to consulting firm McKinsey and Company.
In response, Rose Jackson, representing the NSW Labor government, expressed her focus on policies that prevent Sydney from experiencing a situation similar to San Francisco’s. She highlighted that the government has recently passed rental reforms and is about to appoint a Rental Commissioner. She urged the Greens to stop obstructing funding for social and affordable housing, as rental reform is already being addressed.
This exchange reflects the ongoing conflict between Labor and the Greens, who have faced challenges in negotiations with the federal Labor government over the $10 billion Housing Affordability Future Fund, intended to alleviate housing problems in the country.
Prime Minister Anthony Albanese accused Chandler-Mather of hypocrisy for advocating housing support while opposing similar initiatives in his own electorate and resisting the construction of 30,000 social and affordable housing units, including 4,000 for women and children fleeing domestic violence.
Rent Controls: Popular, But Historically Ineffective
The NSW Labor government has already ruled out direct government intervention in the market, such as introducing rent controls like those implemented by the Labor-Green government in the Australian Capital Territory. Instead, the government prefers to focus on supply-side solutions.
NSW Premier Chris Minns emphasized the importance of increasing housing supply, stating that the private sector needs to play a significant role in providing rental properties. Minns also suggested that Sydney residents should be prepared for higher-density living to address the housing affordability crisis.
Rent controls have faced criticism for their long-term negative impacts on the housing market. For example, Jonathan Madison, a former policy staffer for the U.S. House of Representatives, noted that California experimented with rent controls in the 1990s. However, the lack of exemptions for newly constructed buildings discouraged construction companies from building housing units, resulting in dilapidated properties, an inability to meet demand, and a rise in homelessness.
More recently, the Irish government has been reversing years of intervention, including rent controls, due to the near-collapse of rental supply. This led to a significant decrease in available properties for long-term rent and an increase in investors diverting their funds to other asset classes.