Cost of living issues are front and centre in the lead-up to the March state election.
Yesterday the State Government began sending out letters to 169,000 South Australian households inviting them to take up a deal they have negotiated with Origin Energy offering an 18% discount on supply and usage, plus no exit fee.
We believe this is a worthwhile deal. At the same time, all parties will need to take further steps to help alleviate the pressure on low-income households and must pay particular attention to the needs of renters.
In South Australia, over a quarter of the population are renters. On average, renter households earn $267 per week less than others and their cost of living has been escalating. According to ABS data, the percentage of renters on low incomes who spend more than 30 per cent of their income on rent has increased from 26% in 2007-08 to 43% in 2015-16.
Over the same period, CPI for electricity has increased by a whopping 140% compared to the Adelaide general inflation rate of 25%, while the average weekly spend on water has nearly doubled.
We recognise that the Government did the right thing in creating the Cost of Living Concession but the evidence shows that renters continue to face particular challenges with utilities costs.
In 2014, the law was amended to make tenants responsible for paying all water supply and usage charges, in the absence of an agreement with the landlord. South Australia is the only state in Australia where the costs of water supply are charged to the tenant.
It’s not clear from reading the Hansard why this drastic change was brought about. The expectation that tenants will be able to negotiate an agreement with their landlord for payment of water supply charges on an equal basis, is unrealistic and unfair.
Tight competition in the rental market and insecure tenure places tenants in an unequal bargaining position, inhibiting them in any negotiation with their landlord. The 2014 amendments were unfair and have added to cost of living for renters and that’s why we believe that the landlord should once again hold default responsibility for the water supply charge.
Renters are also hit hard by energy costs. Low-income renters find it harder to afford energy efficient technologies which would help to lower household energy bills. And even if they could afford this technology, there are additional barriers to investing in it, including short-term rental tenures and difficulties gaining approval to alter the rental property. Further, with energy costs being borne by renters, there is very little incentive for landlords to invest in energy-saving technologies.
The tax system should be used to provide incentives for energy-saving investments. As landlords pay annual land tax on investment properties, providing a land tax concession for residential landlords who invest in approved energy efficient activities is likely to be well received.
Putting the onus for paying water supply charges back on landlords would save a rental household $292 per year. Providing a land tax concession for energy efficiency investment will help lower renters’ energy bills. Combined, these measures will bring some much-needed relief for renters who are currently doing it tough.
Ross Womersley is CEO of the South Australian Council of Social Service.
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