COVID-19 and why a rent strike is the wrong tactic

Lisbeth Latham

In the face of the economic havoc caused by the COVID-19 pandemic, it is not enough to call for a rent strike and moratorium on mortgage repayments. At best, it simply displaces the lack of income into other parts of the economy and, at worst, it could deepen the impact of the economic crisis on working people.

Despite widespread concern over housing affordability, as a stand-alone tactic such calls are insufficient. Instead, progressives should be campaigning for secure incomes for all working people, something that would not only allow them to pay rent and mortgages, but equally importantly it would allow them to eat.

As the pandemic deepens, many more industries and companies will close. That will mean many working people, although technically employed, will be without incomes.

Even with treasurer Josh Frydenberg’s announcement that job seekers will have their payments doubled for six months — a huge relief for the unemployed — for many this will fall far short of meeting their financial needs and obligations.

There are a number of immediate risks if people were to stop paying rent.

First, they risk being evicted from their home. While this may not happen immediately, it is a struggle that they may not be in a position to win.

Secondly, a rent strike runs a serious risk of displacing the income crisis to another part of the economy.

While many people will have limited sympathy for the plight of landlords, and many could wear a reduction in income, this is not going to be the case for all landlords, especially retirees, whose superannuation is tied up in a rental property and for whom the non-payment of rents could lead to their immiseration.

If there was to be a rent or mortgage strike, it should be limited to those whose incomes have been significantly reduced. Those who remain working, or whose employers continue to pay them during periods of shutdown, should continue to pay rent.

Doing so will help ensure the circulation of cash and allow those services that remain in operation to be paid for the goods and services being provided. Additionally, the payment of rents and mortgages will have a counter inflationary effect.

The key question should be how can we collectively maintain incomes in this unprecedented COVID-19 emergency. Governments should mandate employers to continue to pay the wages of all their employees, regardless of their contract status.

If this is no longer possible, the government should directly subsidise wages – rather than the Morrison government’s current plan to refund tax payments and underwrite loans.

By doing this, large corporations such as Qantas, should be partially or totally taken back either through formal nationalisation or via a share transfer. No worker should lose their job or income in the current crisis.

Right now, governments must fund jobs and incomes by creating more money to be released into the economy. By subsidising wages, the government would be able to position the economy not just for a more rapid recovery in the wake of the pandemic.

It would also be in a position to prioritise the expansion of sectors, such as manufacturing, which are necessary to boost sustainable energy to transform the country’s power supply to meet the equally vital challenge of climate change.

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