- With the Federal Budget looming so close, property advocacy groups are hoping to make their mark
- REIA, PCA and Master Builders Australia have all provided submissions
- Major recommendations aim to help first home buyers and achieve tax reforms
It’s that time of the year again.
Treasurer Josh Frydenberg will deliver The Federal Budget 2021-2022 on Tuesday 11 May.
Exciting stuff for all those politics and economics nerds – who are waiting with bated breath watching a countdown to the release of the budget on the Government’s website.
With a federal election looming over the Prime Minister’s head, it should come as no surprise that the budget looks likely to deliver a spending spree.
Also, record low interest rates mean the government has to pay less on its borrowings.
As always, some sectors of the economy will be happy with the budget (the childcare sector is set to receive a $1.7 billion subsidy boost). Others maybe not so much.
Fiscal conservatives – who typically advocate for cuts in government spending, lower taxes, and deregulation – will likely be pulling their hair out seeing all the government largesse and piling up of debt.
Throughout the nation, think tanks, advocacy groups, industry bodies, commentators, and big businesses have been lobbying for their cause.
This is no different with various property advocacy groups.
Since early February, major property groups, including the Real Estate Institute of Australia, the Property Council, and Master Builders Australia have called on the government to prioritise housing and real estate policy reform.
This should come as no surprise, considering the housing boom driven primarily by easy monetary policy (which is unlikely to tighten until 2023 or 2024).
And with rental stress increasing across the nation, as well as concerns of first home buyers being locked out of the housing market, now seems to be the prime time for property groups to advocate for change.
Real Estate Institute of Australia
The Real Estate Institute of Australia is the federated body of State and Territory Real Estate Institutes representing 85% of Australian real estate agencies.
They have identified 12 priority areas for the Federal Budget.
- Property customers
- Targeted solutions to help those working in sectors taking longer to recover beyond JobKeeper.
- An independent review of all property taxes at the national level through the Council of Federal Financial Relations.
- Calling on the National Cabinet to revisit the blanket eviction moratorium to align with the end of residential mortgage deferrals.
- First home buyers
- Interest rates for first home buyers should be tax-deductible.
- Any voluntary super contributions should be able to be accessed and use for all first home buyers.
- Expand the First Home Loan Deposit Scheme (FHLDS) to be a long term program.
- Calling on the National Housing Finance Investment Corporation (NHFIC) to develop a feasibility study to include transitional lending as part of its mandate.
- Negative gearing and capital gains tax on property investments are retained in their current form.
- Real estate agents should be excluded from the proposed Automatic Manual Recognition (AMR) reforms.
- Calling on National Cabinet to form a long-term policy that allows agency businesses to undertake activities to service customers with household solutions in lockdown (eg. marketing and photoshoots, virtual inspections, etc).
- Assist real estate agents suffering from cash flow problems.
- Specific training packages should be developed to support property qualifications for new entrants and existing employees.
“Wherever you are in the housing market, an agent, tenant, buyer, investor or vendor, there should be support for you in the next Federal Budget to have the confidence to succeed in a COVIDNormal Australia,” said REIA’s President, Adrian Kelly.
Property Council of Australia
Representing some of the biggest property developers in the country, the Property Council of Australia (PCA) has been shaping the direction of public policy for over 80 years.
They have no doubt had a massive influence in past elections, with Scott Morrison – then Treasurer – in 2016 ruling out any changes to negative gearing – the PCA’s most notable area of advocacy.
Throwing down the gauntlet in early March with their pre-budget submission, they have focussed on seven key areas for their cause:
- Restarting population growth
- Setting concrete plans to upsize border processing and quarantining arrangements so that more people can cross the international border.
- Working with universities to allow international students to enter Australia in time for Semester 2 2021.
- Ensure international migration from workers on skilled visas.
- Productivity focussed reform
- Provide incentives to state and territory governments to reform their land-use planning systems.
- Implement a broad-based Federal tax reform agenda designed to enhance productivity.
- Encourage states to retire stamp duties without lifting business taxes.
- Attracting international business
- Provide financial incentives for targeted businesses to locate in Australia to support innovative precincts in conjunction with state and territory governments.
- Harnessing capital flows
- No new taxes or additional regulatory barriers to investment.
- Ensure the nation has a competitive foreign investment framework.
- Ensure superannuation reforms do not penalise or discourage investment in commercial property.
- Investing for the future
- Maintain strong infrastructure spending.
- Ensure this infrastructure prioritises major urban infrastructures such as metro rail, motorways, and freight projects.
- Connect regions to metropolitan centres with faster rail in line with the business cases developed by the National Faster Rail Agency.
- Boosting homeownership
- Strike housing deals with states and territories to ensure housing supply matches demand.
- Support creation of new quality rental housing.
- Incentivise the private sector to create affordable housing and key workers and older people at risk of homelessness.
- Support creation of quality retirement living housing.
- A climate-resilient and net-zero future
- Establish a national plan for zero-emissions buildings by 2050.
- Create a single national rating scheme for home energy performance.
- Provide long-term regulatory certainty for businesses committed to net-zero emissions.
“We now need to pivot towards a growth agenda. Australia has amassed the expertise and has the capacity to reignite the big economic engine of population growth while simultaneously protecting Australians,” said PCA’s Chief Executive, Ken Morrison.
Master Builders Australia
Representing the $200 billion construction industry, Master Builders Australia is another big player in property policy making.
Previously, they strongly opposed the Federal Labor party’s proposal to abolish the Australian Building and Construction Commission, arguing the decision would “unleash union thuggery” and drive up costs of community infrastructure by as much as 30%.
They also were a large voice in the HomeBuilder debate, with CEO Denita Wawn arguing that “It’s been one of the most effective government interventions ever.”
Now the National President, Simon Butt has expressed concern for the commercial property sector, which he claims has continued to suffer and decline in activity.
The association is calling on the Federal Government to:
- Fast track tax deductions for capital works.
- Implement Master Builders’ CommunityBuilder scheme to bring construction and maintenance of social infrastructure and provide incentives for the private sector to deliver more affordable housing.
- Implement policies that allow public population growth to return.
- Reform the industrial relations system.
- Cut red tape massively for small to medium enterprises (SMEs).
- Increase funding for the First Home Loan Deposit Scheme (FHLDS).
- Ensure at least $100 billion is committed to infrastructure in the rolling 10 years.
- Immediately reduce the company tax rate to 25%.
“Every $1 spent on building and construction generates $3 in activity across the wider economy. It is this massive economic multiplier effect that shows why our industry must remain at the forefront of the economic recovery effort,” said Mr Butt.
How influential will their advocacy be?
Although it is unlikely all these recommendations will be implemented by the Federal Government, there is a clear opportunity for reform, particularly in the areas of first home buying and taxation.
The Property Tribune will be following the Federal Budget when it is released, looking to see if the property industry got some of its wishes fulfilled.