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Cutting Power Bills for Renters

Australian renters would reap the benefits of a 23% shift from expensive gas, to cheaper and healthier electric appliances, under tax changes proposed by members of the House and Senate crossbench.

Parliamentary Budget Office modelling commissioned by Allegra Spender MP, independent Member for Wentworth, shows that over 10,000 additional hot water heat-pumps, induction cooktops, and energy-efficient reverse-cycle space heating would be installed if landlords could instantly write-off the cost of the upgrades against tax. When combined, these upgrades reduce energy bills by between $514 and $1,594 each year.

Crossbench members have today written to Minister Bowen, Assistant Minister McAllister, and the Treasurer to urge the government to adopt the proposals. The joint letter is co-signed by the members for Curtin, Goldstein, Indi, Fowler, Kooyong, Mackellar, Warringah, North Sydney and Senator Pocock – many of whom represent communities with significant numbers of renters.

The change, recommended by The Grattan Institute in their Getting Off Gas report, is an essential step in easing cost-of-living pressures facing the one-third of Australians who rent, as well as reducing greenhouse gas emissions from household gas.

Renters are dependent on their landlord to install cheaper and more efficient electrical appliances, but landlords do not currently benefit from the savings generated, or receive the health benefits associated with getting off gas. As a result, many renters have been locked out of lower power bills – and are instead doing it tough due to the rising price of gas and coal.

This tax break would substantially change the financial incentives facing landlords and ensure that tens of thousands switch their properties to cheaper, greener, and healthier electrical appliances when old gas appliances need replacing.

The change would save the average landlord $422 over five years when buying a heat pump, $189 on an induction cooktop, and $293-$1,422 on energy-efficient reverse-cycle space heating.[3] The savings are comparable to existing state-based rebate schemes, but easier to access and administer through the ATO and more directly targeted at cohorts that have difficulty electrifying.

Ms Spender has proposed that the tax break be available for a limited time, prior to the introduction of minimum energy performance standards for rental properties.

The change would cost the budget less than $50 million each year initially, then decline over time.

The Parliamentary Budget Office’s analysis also showed that a small change to tax rules could significantly reduce the administrative barriers facing apartment owners looking to reduce their power bills with rooftop solar. Ms Spender’s proposal would see body corporates pay tax on the income generated when solar is exported to the grid, removing the need for every participant in a strata scheme to record their share of export income on their own tax return.

Together, these common-sense changes would support renters and people in apartments reduce their power bills and their emissions.

You can view more coverage here: 

The Guardian: Energy consumer lobby calls for Australia-wide ban on gas connections in new homes.

[3] A saving of between 9% and 15%.