Why we should increase Rent Assistance

• Published date: 01 June 2023
• Author: Bruce Bradbury
• Date: 01 June 2023
• DOI: http://doi.org/10.1111/1467-8462.12519

The Australian Economic Review, vol. 56, no. 2, pp. 249–254 DOI: 10.1111/1467-8462.12519

Why we should increase Rent Assistance

Bruce Bradbury*

Abstract

While the 2023–24 Budget saw the first real

increase in rent assistance in Australia since

1990, this was small compared to the growth

in real incomes over the three decades. Rapid

increases in advertised rents, and expecta-

tions that these will flow through to average

rents, make an increase in this payment all the

more urgent. This article reviews the argu-

ments for and against providing rent assis-

tance to income support recipients in

Australia and argues for a serious considera-

tion of the 2010 recommendations of the

Report into Australia's Future Tax System for

a substantial increase in this payment.

1. Introduction

In the face of rapid rises in advertised rents,

the 2023–24 Budget saw the first real increase

in rent assistance since 1990. Yet many,

including the 2010 Report into Australia's

Future Tax System (the 2010 Report) (Henry

et al. 2010), have argued for much more

substantial increases.

This article examines the potential role for

an expansion of rent assistance in Australia.

How do we reconcile the difference between

trends in advertised rents with the (slower)

increase in the Consumer Price Index (CPI)

rental index? Is an increase in rent assistance

a suitable response to rising rents? Why

might an increase in rent assistance be a

better anti‐poverty response than a general

increase in income support payments? Will

an increase in rent assistance simply lead to

higher rents?

The article concludes with a discussion of

the 2010 Report recommendations and the

implications of adopting their proposed

linkage of assistance to rent levels.

2. Rent Increases

In the last three years, Australia has seen some

dramatic increases in some, but not all,

measures of rent prices. Three alternative

indicators of rent inflation are shown in the

figure below, with each measure indexed to

100 at the start of 2020, just prior to the start

of the COVID‐19 crisis.

Across the nation, advertised rents have

increased rapidly since the start of 2020.

According to SQM Research they are now

* Social Policy Research Centre, UNSW, Sydney, NSW

2052, Australia; email <b.bradbury@unsw.edu.au>.

© 2023 The Authors. The Australian Economic Review published by John Wiley & Sons Australia, Ltd on behalf of The University of

Melbourne, Melbourne Institute: Applied Economic & Social Research, Faculty of Business and Economics.

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