Budget - Chief Executive's response to individual initiatives
The response of the Property Council of Australia to individual Budget initiatives is as follows. All responses are attributable to Ken Morrison, Chief Executive of the Property Council of Australia.
HOUSING SUPPLY MEASURES
New National Housing and Homelessness Agreement
We support the decision of the government to develop a new National Housing and Homelessness Agreement which requires states and territories to deliver concrete outcomes. By linking the agreement to housing supply targets, the reform of planning systems and innovative use of their own land banks, the new agreement can be a driver of new housing supply.
Incentives for housing supply
The Property Council has championed the use of national competition style housing incentives to encourage state government to unblock housing supply. Research by Deloitte Access Economics estimates that this could also boost the economy by $3 billion per annum.
We welcome the fact that the Government has adopted this concept for the Western Sydney City Deal, which is expected to be a pilot approach for subsequent deals.
We continue to urge the government to go faster and harder to ensure that we can make significant progress in Western Sydney and elsewhere.
National Housing Infrastructure Facility
This is a welcome measure although not much detail is provided in the Budget papers.
Often very large developments can be held up because of relatively modest infrastructure gaps. If this fund can address these, it will be a very welcome measure.
We look forward to working with the Government on the details of the new National Housing Infrastructure Facility to ensure it is effective and the $1 billion is well spent.
Support for downsizing
There are few incentives for older Australians to downsize. All too often, we see older people living in four and five bedroom houses that no longer suit their lifestyle because there are financial disincentives to downsize.
The fear of losing age pension entitlements and transaction costs are two of the biggest barriers to downsizing, contributing to tens of thousands of near empty family homes in suburbs across Australia.
We welcome the superannuation-linked budget incentive, but this needs to be extended to deal with the barrier of the pension assets test to deliver maximum impact.
Online registry of government land holdings
The online registry of government land holdings is a good idea. If this is backed by a concerted effort to recycle redundant government land, then this would be very welcome.
Our hope is that state, territory and local governments populate this register so that we can have meaningful conversations about government lands.
MIT affordable housing changes
We applaud the Government’s intent to remove blockages to encourage long term investment into affordable housing.
We have seen the UK Government foster the establishment of a new Build to Rent asset class, including affordable rental supply.
The changes to MIT arrangements on their own won’t deliver this outcome.
We look forward to working with the Government and non-government groups to evolve this framework to deliver new rental supply at market and below-market levels.
National Housing Finance and Investment Corporation (NHFIC)
The NHFIC reflects one of the ten housing solutions we proposed in our Fixing Housing Affordability plan. The bond aggregator model is a sensible way for government to act as an intermediary and to encourage the supply of additional affordable rental accommodation.
CGT discount and affordable housing
Full marks to the government for creating an incentive for affordable rental housing rather than a disincentive. For too long, state and local governments have made ‘affordable housing’ a cost for new housing supply.
This change could represent a change of thinking in government and we hope it works.
BRIDGING THE DEPOSIT GAP
First Home Saver Super Scheme
We are supportive of non-inflationary measures to help people bridge the deposit gap. This scheme appears to do it.
Importantly, it rejects the idea of allowing savers to access their baseline superannuation.
This capped scheme allows savers to park salary sacrifice payments (above the 9.5 per cent superannuation guarantee levy) of up to $30,000 for single people and $60,000 for couples and to park that saving in their superannuation accounts.
CITIES AND INFRASTRUCTURE
We are pleased to see the government flag that South East Queensland will potentially be next cab off the rank under the roll out of City Deals to rev up reform and the right choices around infrastructure to deliver growth.
It’s also a plus to see planning and housing supply improvements being hard-wired into the Western Sydney City Deal.
Getting our cities working better is also fundamental to the productivity of our cities. That is why the decision of the Commonwealth to back-in metro rail lines in our cities is the right one, but we note that most of the promised $10 billion funding falls outside of the forward estimates.
Negative gearing – integrity measures
The Government has made the right decision to resist calls for wholesale changes to negative gearing. Negative gearing has been in place for over 100 years and is not responsible for our affordability challenges.
The changes to negative gearing appear to be legitimate integrity measures.
It appears the cost of ‘travel’ to inspect investment properties is in excess of $160 million a year and we are supportive of the tightening.
Additional charges and restrictions for foreign owners
The government is proposing additional FIRB, CGT and land charges for vacant property owned by foreigners.
The purpose of these charges is to perpetuate the myth that foreigners are driving up the price of housing. We do not accept that argument.
Similarly, the decision to impose a 50 per cent cap on foreign ownership in new developments will achieve little. It is rare to go above the cap – but where it does it brings new stock online that cycles back through the market for everyone to access.
These measures are tax changes in pursuit of a good headline – they will raise little and have no impact on house prices.
GST – integrity measures
We support a GST system where all people pay the tax they are legally required to pay – and support all legitimate integrity measures.
According to the Budget papers, the additional revenue gained from paying GST on property direct to the ATO and not builders is $650 million over the forward estimates.
This seems an extraordinary figure and we will be seeking additional information from the ATO about how these changes will work.
This will impact the cash flow of thousands of builders and we want to see more details from the ATO.
Media contact: Paul Ritchie | E [email protected]