Incentive payments a vital ingredient in tackling housing affordability

The speech by Treasurer Scott Morrison recognises that addressing housing affordability is a vital task for all levels of government.

“Tackling housing affordability is a social challenge, an economic challenge and vital if we are to continue to be one of the most egalitarian nations in the world”, said Ken Morrison, Chief Executive of the Property Council of Australia.

The Property Council has welcomed the announcement by the Treasurer that the Government will work with the States and Territories to develop incentive payments that encourage the states to modernise their planning regimes. 

Earlier this year, the Property Council released a report undertaken by Deloitte Access Economics “A Federal Incentives Model for Housing Supply” that detailed how the Commonwealth and the States and Territories can work together to increase supply and ease housing stress. The work was led by Professor Ian Harper (then at Deloitte Access Economics) who also chaired the Government’s Competition Policy Review.

“The research shows that incentive payments could unlock $3 billion in economic benefits and ease the pressure on housing prices.

“For the incentive payments to work, the system developed with the states and territories will need to set targets, make someone responsible, model the benefits, link payments to action and involve all levels of government.

“We are pleased that the Treasurer has embraced the call for incentive payments to the States to fix their planning systems. Like job creating ‘city deals’ which we have also advocated, competition payments require greater co-operation between federal, state and local governments than ever before.

“This announcement is about making systemic changes to planning systems that are not coping with the demands of our growing modern cities – and the people who are bearing the brunt of this are those who do not already own property.

“All too often clunky planning systems strangle projects in excessive red tape and delays and in turn, hinder economic growth and housing supply.

“Like the Treasurer, we do not believe that changing negative gearing will have any impact on housing affordability. 

“The Opposition’s negative gearing policy is a $30 billion tax increase masquerading as a housing affordability initiative. Even supporters of the Opposition’s policy concede it will do little to lower house prices. The McKell Institute argues it will curtail prices by a modest 0.49 per cent a year and the Grattan Institute argues a 2 per cent fall in the price of housing.

“Australia’s housing supply gap stands at more than 200,000 homes and today’s announcement is a first step in addressing this gap.

“In the past, the Federal Government has used ‘competition payments’ to great effect and we believe it can do so again and alleviate the difficult challenge of housing affordability.”

Media contact:  Paul Ritchie |  E pritchie@propertycouncil.com.au