Amy MacMahon MP, Member for South Brisbane - 18 November 2022
Community Support and Services Committee
28 Nov 2022
Correspondence
22-11-18 Written response to issues raised by submitters to the rent freeze bill

18 November 2022

Community Support and Services Committee

Parliament House

George Street

BRISBANE QLD 4000

Response to issues raised in submissions to the Residential Tenancies and Rooming Accommodation (Rent

Freeze) Amendment Bill 2022

Dear Community Support and Services Committee,

I am writing to thank you for your work in conducting an inquiry into the Residential Tenancies and Rooming

Accommodation (Rent Freeze) Amendment Bill 2022 (the bill), that I introduced to Queensland parliament in

August 2022. I am also grateful for this opportunity to respond to issues raised in the submissions to this

inquiry.

About the bill

The Bill will enact a two-year freeze on residential rents in Queensland, in order to stop the rampant rent rises

that are currently occurring in Queensland.

Queensland’s housing crisis is well-documented. Brisbane has seen the steepest annual rent rises on record,

and the regions have near-zero vacancy rates. Working families are sleeping in cars and tents. Meanwhile,

developers are hoarding properties, driving up rents and stopping everyday Queenslanders from finding a

secure, affordable home.

Queensland is in a housing emergency, and we need an emergency response.

The Bill achieves its policy objectives by enacting a rent freeze that ensures no landlord can increase the weekly

quantum of rent with respect to a rental property, effective from the date of commencement of the bill for two

years.

Rents will be frozen at no more than the amount agreed by a lessor and lessee, or publicly advertised by a

lessor, on or before 1 August 2022. Failure to observe this will make a lessor liable for a fine of 50 penalty units.

This fine will also apply for lessors who move a property from the private rental market to the short-term

accommodation market during the rent freeze period.

a\ Amy MacMahon MP ~ Member for South Brisbane

For properties which have not been rented for over 12 months, rent will be set as the median rent for

properties in that postcode which are comparable with respect to number of bedrooms and bathrooms, floor

space and condition. This includes newly built properties.

After the two-year rent freeze period, rental increases will be capped at no greater than 2% every two years.

Nonetheless, legislation which complements this bill by enacting a potentially more nuanced rent cap should be

legislated before the expiry of the rent freeze period. Failure to observe rent caps will make a lessor liable for a

fine of 50 penalty units.

This Bill requires the Residential Tenancies Authority (the RTA) to maintain a register of rents applicable to

corresponding properties, as informed by the rental bond lodgement form which it already administers.

Where there has not been a rental bond lodged with the RTA, it will have the power to compel lessors to

provide information about the amount of rent payable with respect to a residential tenancy agreement. Failure

to provide this information will make a lessor liable for a fine of 50 penalty units.

Issues raised by submitters to this inquiry

The impact of out-of-control rental increases on people’s lives

Many submitters told the inquiry about the impact of out-of-control rental increases on their lives. When

governments allow landlords to charge renters whatever quantum of rent that they want to, this will always

make people vulnerable to rental increases which have no regard to their personal circumstances, and are not

supported by the actual costs of property investment.

One submitter in my electorate of South Brisbane said:

‘When our rent renewal c[a]me around late last year, our owner wanted to put the rent up $100 a

week. We negotiated a lower price, but we are terrified that at our next rent renewal we will not have

that luxury due to the inflated rental prices and will be forced out of our rental. Our children go to BSHS,

we absolutely love the school and for the children to remain at the school we have to remain in the

catchment for the duration of their schooling. However, we are not sure with the current inflated rental

prices if we will be able to afford to stay in catchment.’1

1 Submission 135: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000135.pd f.

Amy MacMahon MP www.amymacmahon.com

1/90 Vulture Street West End Qld, 4101

(07) 3724 9100 south.brisbane@parliament.qld.gov.au fb.com/AmyMacSouthBris

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Where property investors can decide on a whim whether their tenants’ children will be able to enjoy continuity

of schooling, there has been a failure of government policy. To fix this, the government needs to regulate rental

increases, starting with a two-year freeze on rents as proposed by this bill.

A submitter in the electorate of Greenslopes said:

‘My husband and I are expecting a baby in November. As the main income earner that will be going on

maternity leave with ½ pay, I am extremely nervous about any rent increase that I know are likely to

happen when our lease is due to be renewed in December. Things will already be financially tight for us,

but with the added pressure of a rent increase, this will certainly lead to us not being able to afford

health insurance (which we both need as we have chronic conditions.’

The solution is clear. A submitter in the electorate of Murrumba said:

‘A rent freeze would mean I can afford to live, feed my family and [build] my house before more costs

come at me, and it would mean that thousands of other Queenslanders, including my friends and

family, could sleep easier knowing the roof over their head won’t be taken out from under them

because of greedy landlords and property rental agents.’2

The Council on the Ageing Queensland (COTA) submission said that this bill should be given careful

consideration.3 They said there is clear evidence that many older people are currently in uncertain housing

situations. A third of Queensland households are in housing stress, and COTA submitted that nearly a third of

these are aged 75 or older. Importantly, they pointed out that ‘[t]he number of older women who are becoming

homeless or in precarious housing situations is of particular concern.’

TASC National, a provider of frontline legal and social justice services in Ipswich and South West Queensland,

supported this bill.4 They stated that ‘[r]ental law changes effective from October 2021 ha[ve] given little

protection to “inevitable evictees” from unreasonable rental increases, seemingly driven by a property market

overseen by real estate agents and property management services, who benefit the most from an over-inflated

rental market.’

4 Submission 116: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000116.pd f.

3 Submission 117: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000117.pd f.

2 Submission 129: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000129.pd f.

Amy MacMahon MP www.amymacmahon.com

1/90 Vulture Street West End Qld, 4101

(07) 3724 9100 south.brisbane@parliament.qld.gov.au fb.com/AmyMacSouthBris

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Tenants Queensland stated that tenancy law must be urgently changed, to stabilise rents in Queensland.5 As

Carers Queensland stated in its submission, ‘[t]he government has an ethical and moral obligation to act upon

the rental crisis.’6

Rental increases do not reflect a commensurate increase in the costs of property investment

Submitters spoke of how wealthy property investors have increased rents well past what Queenslanders can

afford, with increases of over 20% in Brisbane and over 30% in some regions, which are far higher than interest

rates rises and inflation.7

The evidence is clear. At a time when property investment costs have been at a historic low, with interest rates

lower since 2020 than they have been in well over a decade, rents have soared.

Mortgage interest is overwhelmingly the largest cost of property investment, and the Australian taxation system

provides an enormous incentive for landlords to hoard property by making this cost a tax deduction. Usually, this

costs the federal government billions of dollars per year: at its peak, negative gearing cost taxpayers $9 billion in

2007-08 when interest rates were high.8 This fell to $166.5 million in 2019–20, the smallest amount in two

decades, showing how low the costs of property ownership plunged in the wake of COVID.

The fact that this has coincided with massive surges in rental costs show that in an unregulated rental market,

landlords will charge the absolute maximum possible based on supply and demand in the rental market. With

vacancy rates being extremely low, as a direct result of Queensland government policy decisions encouraging

interstate investors to buy up existing stock, and its refusal to build public housing in any meaningful amount,

this has helped drive surges in rental costs.

The impacts of treating housing as a commodity, not a human need

For decades, successive Labor and conservative Queensland governments have treated housing as a commodity.

Houses are treated as an investment for the government to secure and protect, rather than as homes for

people.

8

https://www.smh.com.au/property/news/why-the-cost-of-negative-gearing-tax-breaks-is-likely-to-rise-2022 0810-p5b8qh.html

7 Submission 134: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000134.pd f.

6 Submission 88: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000088.pd f.

5 Submission 63: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000063.pd f.

Amy MacMahon MP www.amymacmahon.com

1/90 Vulture Street West End Qld, 4101

(07) 3724 9100 south.brisbane@parliament.qld.gov.au fb.com/AmyMacSouthBris

4

As long as we have a housing system that prioritises the profits of investors rather than everyday renters, we will

continue to see this housing crisis worsen, with families evicted into homelessness and kids growing up in

caravan parks.

The role of the real estate industry in this crisis needs to be named. One submitter mentioned how property

managers will not consider applicants for rents that exceed 30% of their take-home salary.9 As rents arbitrarily

soar, people on lower incomes are left without housing, at the whim of landlords and real estate agents.

Uncontrolled rental increases add to the already huge expense of being a renter

While our state and federal governments make it easier for people to buy their fourth property than to buy their

first, thousands of Queenslanders are locked into a lifetime of renting. High rents in addition to other costs

associated with renting make it impossible for many to ever save for a housing deposit.

One submitter said:

‘Rising rents mean I will have to move again for the 5th time in 3 years. I earn a good wage and pay all

my bills but the relentless rises make it very difficult to maintain housing costs below 30%.‘10

Research shows that it costs the average tenant thousands of dollars each time they have to move house.11 In

2015, a survey by Fair Go Finance found the average tenant was paying $3402 to move homes. This includes the

bond, cleaning to the impossibly high standard set by the real estate industry, moving furniture, canceling

utilities bills, extra food expenses because of the disruption to normal household operations and missed work

due to the time involved in finding a new home.

All of these costs have increased since 2015 - in a squeezed rental industry where property investors and real

estate agents hold a huge amount of power over tenants, even costs like a bond clean have soared to over

$1100 for a 3-bedroom home.12

The submission by Tenants Queensland to the inquiry on the Housing Legislation Amendment Bill 2021 cites

research by Deloitte Access Economics which shows the higher housing costs experienced by renting

households. It shows that private renters spend more in both dollar terms per week, as well as a proportion of

12 Quote obtained from Oh My Cleaning in October 2022. 11 https://www.savings.com.au/home-loans/buying-first-home/what-does-it-cost-to-move-rental-properties.

10 Submission 123: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000123.pd f.

9 Submission 124: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000124.pd f.

Amy MacMahon MP www.amymacmahon.com

1/90 Vulture Street West End Qld, 4101

(07) 3724 9100 south.brisbane@parliament.qld.gov.au fb.com/AmyMacSouthBris

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disposable income in rent, than owner-occupiers. Further, using 2017/18 data, Tenants Queensland notes this

research shows that over half of Queensland’s renting households are low-income - in the bottom 40th

percentile of incomes.13 By maintaining this incredibly unfair system of housing, the government is ensuring that

those who can least afford it are paying the most just for somewhere to live. This is a policy of deepening

inequality in Queensland.

Impact on housing supply

Submitters such as the REIQ, the Property Council and the Property Owners’ Association of Queensland claim

that a rent freeze would drastically reduce the supply of residential property in Queensland.14 This is not

supported by evidence.

In fact, research commissioned by Tenants Queensland in 2018 found:

‘Very little research has focused specifically on the impacts of tenancy regulation on the performance of

private rental markets, or, more specifically, on rental property investor behaviour in Australia or

elsewhere. Those who have considered this question conclude that neither tightening nor easing of

tenancy regulation has any significant impact on investor behavior or overall patterns of expansion in

the PRS.’ 15

This could be because despite regulation to make housing more fair and equitable, housing markets still remain

appealing to investors due to the peculiarities of the housing market disproportionately benefitting landlords at

the expense of renters compared to consumers and firms in traditional markets. Taken as a whole, there is some

understandable ambiguity in the literature on the effects of rent controls due to its susceptibility to political bias

(including from interest groups such as property-owner and real estate lobby groups) and the variety of

methodologies used to implement rent controls as well as the economic circumstances in which rent controls

have been implemented.

While some studies identify potential distortive side effects of rent controls that policy makers should be aware

of, it is important that these are contrasted with the present housing crisis. The present housing crisis is an

15 Tenants Queensland submission to the parliamentary inquiry on the Housing Legislation Amendment Bill 2021: https://documents.parliament.qld.gov.au/com/CSSC-0A12/HLAB2021-37A9/submissions/00000723.pdf.

14 Submissions 94: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000094.pd f, 97: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000097.pd f and 33: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000033.pd f respectively.

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https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000063.pd f.

Amy MacMahon MP www.amymacmahon.com

1/90 Vulture Street West End Qld, 4101

(07) 3724 9100 south.brisbane@parliament.qld.gov.au fb.com/AmyMacSouthBris

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abject failure of the market: Brisbane, as an example, has seen a 25% increase in rent over 12 months and has

0.4% rental availability at present, with similar figures across the state.16 It is against this crisis that any potential

risks of rent control need to be contrasted with. The Greens have long advocated for more nuanced rent

controls, but the policy shift to a rent freeze/reversion to rates as at August 2022 is an emergency response to a

crisis. The risk of market failures predicted by doomsayers amongst the landlord and investor groups are not

particularly manifest when the market is already failing, especially when it is these groups that are benefitting

from a failed market.

Much of the risks associated with rent controls are only apparent when rent controls are confined to certain

areas or confined to rental agreements that began during a certain period. For example, undesirable reduction

in housing mobility arises because of the aversion of renters to move from a lease under rent control to one

which is not due to increased price and instability. This wouldn’t be an issue within Queensland if rent control,

like the one under inquiry, is broad acting, covering the whole of Queensland, and all rental properties.

Regarding predictions of a loss of supply, a price cap impacting supply makes intuitive sense in markets with

incremental cost increases to output because the marginal cost of production invariably rises above the price

cap. For a number of reasons, landlords and the housing market don’t operate like typical firms in a goods or

service market. Rent controls do not reduce supply unless they reduce rents below the marginal cost of

tenanting a property compared to leaving it vacant. This would not occur in the case of existing rental properties

where existing rental rates, especially after recent price hikes, are well above the marginal cost of tenanting

compared to leaving a property vacant.

The literature is ambiguous as to the effect of rent controls on construction in the long run, with the effect

varying between the different instances of rent control introduction around the world. It is not necessarily the

case that rent controls diminish the supply of new housing. Well designed rent controls do not result in a

reduction in existing or new supply. A 2007 study of 76 New Jersey cities with rent stabilisation found there was

little-to-no statistically significant effect of rent control on new construction after controlling for population,

racial demographics, population change, income, the percentage of units that were renter-occupied, vacancy

rates and unit age.17 Similarly, rent controls in Catalonia had no impact on rental supply despite lowering rental

prices.18

Where rent controls do impact the supply of rentals, due to landlords removing rent-controlled property from

the market, this results in lower property prices, and any loss in supply is coincided with an equivalent reduction

in demand as renters transition to owner-occupier status due to increased opportunity for renters to buy. This

wouldn’t be the case with the model proposed in this bill, under which the rent cap would apply to all rental

properties.

18 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4159469 17 https://dornsife.usc.edu/assets/sites/242/docs/Rent_Matters_PERE_Report_Web.pdf. 16 https://sqmresearch.com.au/weekly-rents.php?region=qld%3A%3ABrisbane&type=c&t=1

Amy MacMahon MP www.amymacmahon.com

1/90 Vulture Street West End Qld, 4101

(07) 3724 9100 south.brisbane@parliament.qld.gov.au fb.com/AmyMacSouthBris

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In addition, a critical shortage of housing is already manifest, irrespective of any implementation of rent

controls. The market, and current policy settings, are already catastrophically failing Queenslanders. It is because

of this, and not the exaggerated pessimism of those profiteering from the present crisis, that boosting supply

alongside rent controls should be an important consideration. A sustainable solution requires tackling the rental

supply problem at the same time we tackle price-gouging and bargaining power asymmetry.

To that end, it’s worth considering why rental availability is already so low. Until the most recent supply shocks,

construction costs relative to household income have been falling for decades. Despite this, less and less houses

have been built relative to the need. The biggest barrier to housing construction is the value of land, which is

over-inflated due to speculative investment in the land and housing markets, and investor incentives driving up

demand and prices. This is because incentives, such as negative gearing, apply to land and existing stock, instead

of being targeted just at construction or new builds. Speculative investment for capital gains also partially

contributes to long-term vacant properties being taken off the market and land going unused. In fact, there are

an estimated 87,000 long-term vacant properties going unused in Queensland. Over-inflated land costs also lead

to higher mortgages, the cost of which are passed on to renters, and locks people out of ownership. Thousands

of homes have also been taken off the rental market and turned into short stays which are advertised on sites

such as Airbnb.

This is why the sitting week after I introduced this bill, I introduced another bill to enact an Empty Homes Levy

on residential land in Queensland. The levy would be applied to long-term vacant properties, empty land, and

homes used solely as short stays, which would otherwise be suitable for use as residential properties. This bill

could bring an estimated 24,000 of the 87,000 long term vacant properties in Queensland back onto the rental

market. Thousands of short-stay rentals would have also been returned to use by long-term tenants. Because

the levy is also applied to empty land suitable for new homes, it would also lower the cost barrier to new

constructions on empty land, and incentivise new constructions. Furthermore, the levy would have had a

deflationary effect on the investment bubble which is driving higher land, housing and mortgages prices.

An Empty Homes Levy should also be combined with a reversal of the government’s policy to sell off public

housing and a revitalisation of public housing generally to drastically boost supply.

Some submitters stated it is unfair to impose rules on benevolent property investors

Some property investors submitted to say that rent rises only occur in extreme cases, and that they have always

treated tenants fairly.19 Unfortunately, the claim that rental increases aren’t common is completely unsupported

by the data about rental increases in Queensland. Further, while it is heartening to hear of landlords who have

concern about their tenants’ welfare, unfortunately when rental increases are not regulated, we see landlords

overwhelmingly charging the rent they can, not the rent they should. In a system where the government permits

19 Submission 121: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000121.pd f

Amy MacMahon MP www.amymacmahon.com

1/90 Vulture Street West End Qld, 4101

(07) 3724 9100 south.brisbane@parliament.qld.gov.au fb.com/AmyMacSouthBris

8

this, this is an economically rational thing to do. We need the government to step in to ensure tenants’ rights,

not individual landlords by exception.

Summary of competing interests

Of the 409 individual submissions published by The Committee, 330 of these, more than 80%, were supportive

of rent controls in some form or another, in addition to other proposals to address the housing crisis. Five of

the twelve stakeholder groups which made submissions also voiced support.

Those that were unsupportive were, by and large, landlords and investor lobby groups such Real Estate Institute

Queensland. Supporters of the bill were typically renters and groups such as Council on the Ageing (COTA

Queensland) and Carers Queensland, who represent vulnerable people who are already suffering the effects of

the housing crisis and at risk of a worsening crisis.

When weighing up the interests of these two groups, consideration must be given to the disparity in their

existing positions, the vulnerability of renters to a worsening of this crisis and the consequences of such, and

how the existing status quo, which disproportionately benefits investors, has contributed to the present housing

crisis.

There is an obvious gap in the present economic standing and welfare of investors compared to renters. Investor

incentives and governments which act to ensure investors are guaranteed returns irrespective of the prevailing

economic conditions, not only generates further inequality but results in less new housing builds, supply

shortages, increased costs to renters, declining rates of home ownership, and redirection of investment from

other parts of the economy into a housing bubble. Much of the value of contemporary mortgages is not tied to

the use value or cost of creating the asset, but is artificial value created by speculative demand, and is economic

deadweight. This investment bubble distorts the market and contributes to an overvaluation of housing assets,

prevents construction of new housing. Overvalued land presents a barrier to new builds, while the overvaluation

of existing stock means higher mortgages which puts owner-occupiers in stress, as well as renters when these

costs are invariably passed on by landlords.

The housing bubble is also driven by the exploitative nature of the housing market. The bargaining asymmetry

between renters and investors is much greater than in typical markets. Renters who cannot outbid investors

have no alternative to renting. Increases in rents can mean renters become displaced from their places of work,

education, and communities, if not homelessness. In a tight market with next to zero rental availability, landlords

can set rents well above the marginal cost of providing housing, as we have seen occur across Queensland. This

means that those with the existing wealth to outbid renters for available housing can then charge rent above

what it costs to maintain housing, such that renters are paying for the investor’s over-valued mortgage or

passive income. Instead of working peoples’ incomes contributing to their own cost of living and home

ownership, the wealth inequality and bargaining asymmetry inherent in our housing system means they will

Amy MacMahon MP www.amymacmahon.com

1/90 Vulture Street West End Qld, 4101

(07) 3724 9100 south.brisbane@parliament.qld.gov.au fb.com/AmyMacSouthBris

9

have their income siphoned into someone else’s nest egg or vacation fund. By virtue of having less existing

wealth, working people are locked out of the housing market and are economically coerced into paying more for

housing than it costs to provide. This system disproportionately benefits those with existing wealth and assets,

and the banks. In addition to government incentives for investors, the peculiarities of the housing market, which

disproportionately benefit investors compared to consumers and firms in typical markets, drives up investor

demand, leading to further overvaluation and inflation of the housing bubble, exacerbating existing bargaining

asymmetry as higher prices lock more and more workers and families out of home ownership.

Numerous landlords made submissions that a rent freeze might mean some landlords cannot make repayments

on their mortgages. When rental income is above the cost of maintaining housing such that it goes towards

landlords’ mortgage repayments, renters are effectively paying for someone else to own the asset. It is renters

who provide landlords housing, not the other way round. That a rent freeze might mean that some landlords

could have to sell-up, while disappointing to those investors, will mean a greater supply of housing for sale. This

will have a deflationary effect on the housing bubble and provide more opportunities for renters to transition to

home owners. This will have a cooling effect on the value of future mortgages such that they are more

sustainable for both investors and renters than they otherwise would be. Furthermore, these investors are much

more capable of enduring the cost-of-living crunch and rate rises. Investors who cannot pay for the mortgages

on their property portfolios without exploiting the incomes of working people, pensioners, and families, have

the ability to sell their assets. Conversely, the outcomes are much more disastrous for those who are not able to

afford record high rental increases.

Numerous landlords made submissions that a rent freeze would jeopardize their lifestyles or retirements which

were dependent on the passive income provided by tenants. This only highlights the issue with the present

system. If rents are above the cost of maintaining housing such that landlords are earning passive income, this

exemplifies how bargaining asymmetry and wealth inequality baked into the housing system funnels money

from renters to those with existing wealth and assets. Landlords who earn a passive income from tenants are

effectively living off the backs of hard working people, pensioners and families, and converting renters’ incomes

into landlords’ nest egg. Landlords do not have a right to these exploitative gains, and nor does the government

have a duty to allow exploitative and economically irrational markets to remain unregulated. As one landlord,

sympathetic to the position of renters despite his own interests, said

‘I would be happy for my rent to be frozen. We have done well with property price rises and those

renting are doing it tough currently. The well off should not get even better off at the expense of the

battlers.’20

20 Submission 11: https://documents.parliament.qld.gov.au/com/CSSC-0A12/RTRARFAB20-6200/submissions/00000011.pd f

Amy MacMahon MP www.amymacmahon.com

1/90 Vulture Street West End Qld, 4101

(07) 3724 9100 south.brisbane@parliament.qld.gov.au fb.com/AmyMacSouthBris

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Again, I thank you for your work on this inquiry, and for this opportunity to respond to the issues raised in

submissions. Please do not hesitate to contact my office on 3724 9100 if you would like to discuss this matter in

more detail.

Kind regards,

Amy MacMahon

Member for South Brisbane

Amy MacMahon MP www.amymacmahon.com

1/90 Vulture Street West End Qld, 4101

(07) 3724 9100 south.brisbane@parliament.qld.gov.au fb.com/AmyMacSouthBris

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