Property Australia

How property can power up Tasmania’s economy

Karen Jamal Karen Jamal April 27, 2021

As Tasmanians turn up to the polling booth this Saturday, boosting the first home owners grant should be “top of the next premier’s to-do list,” says Property Council executive director Rebecca Ellston. 

 

  Three key takeaways 

  • Tasmania’s property industry generates $3 billion in economic activity and directly supports more than 24,100 jobs 
  • The Property Council’s election platform, Property: A prosperity pipeline, outlines reform and policy proposals that would boost the property industry and keep Tasmanians in jobs 
  • A $10,000 increase to the first home owners grant, announced last week by the Tasmanian Liberals, was just one of 16 proposals in the Property Council’s platform. 

 

The Property Council has outlined priorities across planning, regulation, taxation, population growth and investment in transport infrastructure to “power up the Tasmanian economy,” Ellston says. 

Rebecca EllstonOne of the key plays is an increase and extension to the first home owners grant, which would “give more Tasmanians the incentive to build their dream home and builders the time to build them,” Ellston says. 

The Tasmanian Liberal Party has already responded to the Property Council’s call, promising to boost the grant from $20,000 to $30,000 until 30 June 2022, if re-elected.  

Ellston applauds the move, arguing that younger Tasmanians, in particular, face significant barriers to entry, as “the median dwelling value in Tasmania has risen by 12.5 per cent over the past 12 months alone”. 

The Tasmanian Liberals have also earmarked $42.15 million to redevelop the Hobart showgrounds which will support the delivery of 450 new homes, Ellston adds. 

Ellston says the incoming government must “urgently finalise” the state-wide planning scheme, which would “fix a number of problems in the patchwork of existing planning rules”. 

The Property Council is also calling for a new ‘one strike’ policy where councils can request further information on applications just once. “This would avoid the current practice where it appears some councils use requests for further information to stall developments,” Ellston explains. 

The Property Council is also calling for an “urgent, thorough review” of Tasmania’s tax system which Ellston says is “out-of-date, not fit-for-purpose and is hurting the state’s economy”. 

The property industry is a major contributor to state tax revenue, with stamp duty and land tax together providing more than $385 million to the state’s coffers in 2020-21. The Property Council wants to see at least half of the recent increase in land tax revenue directed towards initiatives that support the property industry, such as red tape reduction, strategic planning and incentives for affordable housing. 

The Liberal party, meanwhile, has promised to double the threshold at which land tax becomes payable to $50,000. Premier Peter Gutwein announced the top threshold for taxation would increase from $350,000 to $400,000. This would mean 4,000-plus Tasmanians would not pay land tax, and another 70,000 would receive a reduction. 

The Labor Party has said it would cut land taxes on properties valued up to $3 million and impose a surcharge on people with properties worth more than that. Labor leader Rebecca White has said the policy would deliver land tax cuts up to four times greater than those promised by the Liberals. 

However, Ellston notes that Labor’s proposal to increase land tax for landowners with an aggregate land value of more than $3 million will “punish commercial property owners, including mum and dad investors”. It will also “have an adverse impact on jobs and depress investment in the state”.  

“Aggregation is a serious disincentive to investment and distorts the market, as it lowers the effective tax-free threshold for many small investors. It also increases liabilities for owners with more than one property.” 

A foreign investor land tax surcharge proposed by both major parties also came as a shock to local industry, “especially at a time when Tasmania needs more private investment to grow and create jobs,” Ellston explains.  

“While the Liberals have ruled out surcharges on commercial properties and developments, Labor’s proposition to introduce a 2.2 per cent surcharge on foreign landowners could end up costing us vital investment, with people turning away from the opportunities that will grow our state because they don’t want to be slugged with new taxes.” 

Ellston says an increased tax on foreigners will also target projects that rely on pre-sales or project finance, like higher density housing in infill areas – “something Tasmania is already struggling to achieve”. 

“Higher taxes could lead to higher development costs and a subsequent drop in supply of housing and housing affordability. Put simply, a foreign investor tax levied by either party will do nothing to address housing affordability when foreign investment in housing is at an all-time low.” 

Ellston says the property industry is “ready and willing to help the incoming government build back better and stronger with a strategic vision for Tasmania’s growth”. 

Download the Property Council’s election platform, Property: A prosperity pipeline. 

Tags: ADVOCACY