Property Australia

Budget Breakdown

PROPERTY AUSTRALIA November 17, 2020

The pandemic has taken its toll on budget bottom lines, but Australian governments are responding with spending programs to reboot the economy. We take a look at the highlights from recent announcements.

 

New South Wales: Bold plan for reform

A centrepiece of the NSW budget is a bold plan to reform property taxation with a new property tax proposed to replace stamp duty and land tax. The plan is set out in a consultation paper ‘Buying in NSW, Building a Future’.

The NSW Treasurer, Dominic Perrottet said: “The community will be asked if they want the stamp duty system overhauled to allow buyers to opt out of stamp duty and instead choose a smaller annual property tax.

The current stamp duty system was centuries old and one of the biggest barriers to home ownership, the Treasurer added.

The Property Council’s NSW executive director, Jane Fitzgerald, welcomed the NSW Government’s intention to phase out stamp duty.

“The reform model proposed by the Government has many strengths and avoids mistakes of other jurisdictions.

“The Property Council looks forward to working with the NSW Government on this initiative and appreciates the government’s commitment to consultation on this very important reform.“

The NSW Budget forecasts a deficit of $16 billion in 2020-21 before returning to surplus in 2023/25

Job creation is front and centre for the Budget with payroll tax relief and an infrastructure spend of $107 billion over four years.

There is also further funding for planning reforms, with major funding for key projects such as the Planning Reform Action Plan, Planning Delivery Unit and ePlanning.

The Office of the Building Commissioner will receive $27 million over for four years top carry out its work, including increasing the number of dedicated compliance officers.

Funding is also being provided to support the remediation of multi-unit residential properties affected by flammable cladding, including the provision of no interest loans to enable rectification work to be carried out.

More information on the NSW Budget is available at www.budget.nsw.gov.au

 

Victoria: Big housing build

Although the Victorian state budget won’t be handed down until next Tuesday, the Andrews Government has already unveiled an historic $5.3 billion investment in social housing as one of its centrepieces as Victoria rebuilds from the impact of COVID-19.

The funding will enable the construction and delivery of more than 12,000 new social and affordable housing dwellings, with 25 per cent of these in regional Victoria. About 10,000 jobs a year in construction will be supported and the new dwellings will meet 7-star energy efficiency standards.

Victorian interim executive director, Matthew Kandelaars, says the Property Council’s pre-budget submission advocates for government and the private sector to work in partnership to deliver more social and affordable housing assets.

A new government agency, Homes Victoria, is being created to deliver the Big Housing Build program across government, industry and the community housing sector. The first six tenders for delivery of the new dwellings will be issued before the end of the month.

The Victorian Government has also announced $2.2 billion in funding for early works on the Suburban Rail Loop project with six new stations in south-eastern Melbourne to be delivered in the first stage of the project.

 

South Australia: Hard hats and steel caps

The Property Council’s SA executive director, Daniel Gannon, has hailed the SA state budget for its almost $17 billion spend on infrastructure projects – without any punitive new taxes to offset the good news.

Schools, hospitals, housing, cultural and tourism facilities, community and sporting infrastructure are core features of the plan handed down by treasurer Rob Lucas.

Like other states and territories, COVID-19 has eaten into SA’s GST revenue forecasts with a $3.8 billion reduction between FY20 and FY23. The budget will be $2.6 billion in deficit for FY21 before returning to a $406 million surplus in FY24.

“When it comes to costs and taxes, this is a budget that is more carrot than stick with long overdue reforms to land tax, payroll tax and water and sewerage bills,” Gannon says.

It includes $233 million in payroll tax relief, significant savings in water and sewerage costs, $106 million in land tax relief in FY21 and $82 million in small business grants.

 

Northern Territory: No big surprises

The first budget handed down by the re-elected Labor Government of chief minister Michael Gunner didn’t contain any big surprises according to the Property Council’s NT executive director, Ruth Palmer.

On the upside, there are initiatives to boost jobs, small business and first home buyers. There is also a welcome initiative to fully digitise standard business approvals and replace paper-based and in-person processes for food and retail approval applications.

The budget papers also forecast that the Territory’s population will slowly grow by 5,000 people over the next five years in sharp contrast to the federal budget’s prediction of a 7,000 person decline in population.

Sixty per cent of the Territory’s $1.75 billion infrastructure spend will go into regional and remote communities. Almost $600 million is being provided for new and refurbished housing in cities, regional centres and remote communities.

Palmer says the Property Council is disappointed to see budgeted revenue of $2 million for the Property Activation levy for vacant sites.

“We have on several occasions called for this tax to be axed, and believe we should be encouraging and not discouraging business investment as we recover from COVID-19.”

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