ACT housing strategy avoids tax issues

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The Australian Capital Territory (ACT) Government’s new ACT Housing Strategy was positively received by the Housing Industry Association (HIA) although they noted that the plan lacked a good way to address with  taxation.

HIA Executive Director for the ACT and Southern New South Wales Greg Weller said that the strategy has sparked the work and consultation among the government and other concerned sectors. At the same time, it presented many housing related issues in ACT.

Part of the approach was a new goal of allotting 15% of all government land releases for public, community and affordable housing, including both infill development in urban areas and developments in new suburbs. It is envisioned that this will increase the number of additional homes delivered each year to about 630.

Commenting on the totality of the strategy, Weller underscored that more complex problems were overlooked.

 “Equally, it provides a number of options to address some of the problems. However, it does fail to acknowledge the ‘elephant in room’ when it comes to housing affordability, which is the level of taxation,” he said.

Referencing a study, it was revealed that the level of taxation on a new home in a greenfield estate in a capital city can be as high as 44%. “One of the biggest contributors is Stamp Duty, and although the ACT government has commendably embarked on a path of phasing out the tax, the reality is that while the rate being charged falls, the amount collected by government continues to rise due to the high cost of homes,” Weller explained.

It was further pointed out that the government is reassessing the Lease Variation Charge, which has potentially made a number of projects unsuccessful and is affecting the type of development that the city should be supporting.

Apart from emphasizing that industry needs strong commitments on select plans rather than promises of consultations, HIA noted that repealing or reducing this tax should be top of mind.

 “HIA does welcome the strong commitment in the Strategy to maintaining a healthy land and development pipeline, rightly recognising that there is a real link between supply and affordability,” Weller concluded.

“This commitment is well supported by the publishing by the government of the ACT Land and Property Report.”

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