Tax change to help renters cut energy bills backed by independents

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A $50 million tax concession for landlords would turbocharge the move to electrical appliances in the nation’s rental properties, saving tenants up to $1594 a year, under a proposal by independent crossbenchers.

The group of MPs and senators has called on the Albanese government to back their idea, which would help landlords replace thousands of gas-fired stove tops, heating and air conditioning units in a bid to reduce the country’s greenhouse gas emissions.

Independent MP Allegra Spender says for a small cost, the government would help reduce emissions and cut power bills for renters.Credit: Rhett Wyman

Governments around the world are looking at policies to help electrify homes. Households are responsible for a quarter of Australia’s overall electricity use and more than 10 per cent of carbon emissions. This year, the Victorian government revealed plans to prevent new homes being connected to the state’s domestic gas network.

According to the independents, including Kate Chaney, Zoe Daniel, Dai Lee, Monique Ryan, Sophie Scamps, Kylea Tink and ACT senator David Pocock, enabling landlords to instantly write off for tax purposes upgrades to their rental property appliances would be a cost-effective way to cut emissions and reduce the costs facing tenants.

Based on analysis by the independent Parliamentary Budget Office, the move would cost about $50 million in annual forgone federal tax revenue.

But according to the MPs, it would increase the number of hot water heat pumps, induction cooktops and reverse-cycle space heaters by 10,000 a year.

The new appliances would reduce energy bills by between $514 and $1594 each year annually. Landlords would save $422 over five years for a heat pump, $189 for an induction cooktop and between $293 and $1422 on reverse-cycle space heating.

The budget office estimated the policy change could boost the number of rental gas appliances replaced with electric ones by 23 per cent. This would be driven by a 35 per cent lift in hot water systems and a 59 per cent increase in cooktops.

Sydney independent Allegra Spender said helping households move away from expensive gas appliances to those powered by renewable electricity was central to dealing with the nation’s cost-of-living and climate problems.

“For too long, government policy has neglected renters and people living in apartments, who are being hit hardest by the current cost-of-living crisis and face the highest barriers to accessing cheaper renewable energy,” she said.

“Incentivising landlords to switch from expensive gas to cheaper electrical appliances would help tens of thousands of renters save hundreds of dollars each year on their power bills and reduce our carbon emissions at the same time.”

The proposal was first put forward in June by the centralist think tank, the Grattan Institute, in an analysis of ways to reduce the country’s use of natural gas.

Spender said the tax break should be strictly time-limited and then be followed by the introduction of minimum energy performance standards for rental properties.

The budget office noted that while the policy would lift the rate of gas-to-electric appliance change, it would also deliver tax deductions to landlords who would have updated their rental properties without the plan.

This week, the Organisation for Economic Co-operation and Development used its annual Going for Growth report to encourage the Albanese government to broaden its safeguard mechanism, which covers emissions from the nation’s 215 largest emitters, to other parts of the economy.

It said Australia would need deeper cuts in emissions if it were to reach its promised 43 per cent by 2030 reduction on the way to net zero by 2050.

Climate Change and Energy Minister Chris Bowen has been contacted for comment.

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