One third of us rent, and Australians no longer see a guaranteed pathway to home ownership.
We’ve all been hit by the cost of living, but renters have extra burdens – rent increases are at their highest level since 2009, and renters are trapped by costs they can’t escape – including power bills.
Wholesale power costs are being driven down by the surge in solar and wind, but households power prices are still being driven by a system that depends on expensive gas and unreliable coal.
Rental homes are the least energy efficient – too cold in the winter and too hot in the upcoming El Nino summer.Rental homes are much less likely to have rooftop solar – the cheapest form of energy available. Households could saveup to $2000 with solar panels and batteries, data shows.
So renters are paying nearly 10% more on their power bills.
They are among the hardest hit by Australia’s dependence on fossil fuels and they can’t escape because it’s all in the hands of their landlord.
The fastest way to reduce power bills is to move away from expensive and inefficient gas appliances to modern electrical alternatives, and power your home with rooftop solar, buttressed by better insulation.
But that’s not an easy option for renters, because landlords foot the bill for these upgrades – and they don’t see the benefits.
This is not a new problem, yet the major parties aren’t even trying to solve it.
On the Labor side, we’ve seen some important announcements on social housing, but not a lot to help renters in the private market permanently lower their power bills.
The Coalition have been completely M-I-A, choosing to focus on culture wars and unicorn technologies, rather than cost-of-living solutions that work.
Increasing power bills have been driven by global spikes in the price of coal and gas, but Peter Dutton’s energy policy has flapped between doubling-down on expensive gas, and risking the energy transition on nuclear technology that doesn’t even work properly.
I can guarantee that no renter thinks a small modular reactor that may (or may not) be built in a decade’s time is going to help reduce their power bills this summer.
To permanently reduce power bills for renters, government needs to provide specific support that helps electrify and insulate rental properties – using technologies that can deliver today.
We need a policy that includes both carrots and sticks.
In September, I and other members of the crossbench put forward a fully costed proposal to government that would incentivise landlords to replace expensive gas appliances with more efficient electrical alternatives.
Backed by Grattan Institute, Better Renting, Smart Energy Council, and many others, the proposal allows landlords to instantly write-off the cost of installing heat pumps, induction cooktops and energy-efficient reverse cycle space heating. When combined, these upgrades can save a household up to $1,600 per year.
According to the Parliamentary Budget Office this change would drive a 23% increase in rentals switching from gas to electric at budget cost of less than $50 million per year.
It's a smart and cost-effective policy that would make a real difference to renters. And it could easily be extended to other value-for-money home energy improvements like insulation and rooftop solar.
But carrots alone are insufficient.
Whilst the European Union has had disclosure on the energy efficiency of rental properties for two decades, most Australian renters sign binding lease agreements without any idea of the home’s energy performance. That’s just not fair.
Mandatory disclosure must be accompanied by minimum energy performance standards to ensure that landlords progressively retrofit and electrify their properties.
These requirements can be phased-in over time – with financial incentives to support those who want to retrofit earlier. New Zealand already has these in place – and Victoria and ACT have taken some positives steps – but we’re yet to see meaningful nationwide action across Australia, beyond the vague commitments made by National Cabinet in August.
And if we are incentivising and asking landlords to do more, we need to provide them with better information.
A one-stop-shop for electrification and energy performance information and incentives – coupled with proper research on how to deal with the challenges of apartments and high-density living is an essential third pillar.
These reforms would make a real difference in the cost-of-living crisis facing renters. And they’re also great for climate action and the energy transition – reducing the need for transmission infrastructure.
The States also have a role to play, particularly when it comes to burdensome strata laws that weren’t designed for the age of distributed energy.
Energy Ministers will meet in Western Australia this month. Reducing power bills for renters must be top of the agenda.