Economic Development Chair, Chris Wheeler, and Executive Director, Romilly Madew, attended the government budget lock up today. Following is a summary of highlights relevant to the property and development industry.
The Property Council has had a number of wins in this budget
- No introduction of a vendor stamp duty
- Cutting red tape and
- Planning reform
- Studies into housing in Molonglo Valley and East BasinWest Civic revitalization – transformation of Childers St precinct
- Housing Affordability initiatives
- No provision for a dam but the government has not ruled out future borrowings for any dam.
- Budget surplus $7.9m in 2004-05
- No new taxes
- No new borrowings for general government
- No new major asset sales
- Planned surplus of $93m for 2003/04.
- This was originally a deficit of $8m. The Property Council ponders where the money came from? Was their deliberate under-spending by the government?
- Provision for new capital works commitment of $330m for 2004/05 up from a figure for 2003/04 of $127m. This includes $110m for the new Jail and $40m for the Convention Centre refurbishment. The Property Council has concerns about whether the government has the capacity to spend this money as we understand there is approximately $30m under spent from 2003/04. Further, if the approval times are taken into account this could be delayed even further.
- Soft landing instead of a fall
- Rental market remains tight, yields remain high relative to other markets
- Low vacancy rates
- Therefore this can support ongoing investor cash flows
Implementation of the Canberra Spatial Plan ($1m) – studies for housing at Molonglo and East Basin.
- The planning studies will identify where, within Molonglo Valley and the East basin Urban Renewal Project site, it is feasible to place urban development and refine how many new houses could be built. This will set the framework for future subdivision planning and consultation.
- Molonglo Valley area is expected to accommodate between 12,000 and 20,000 new dwellings.
- ACTPLA will investigate the feasibility of developing the area between Kingston and east Fyshwick, could provide some 2,000 – 4,000 dwellings.
- The Property Council supports ACTPLA’s vision for planning reform and will be seeking bi-partisan support from all sides of politics to implement the worthwhile and overdue reforms.
- During the next two years the government will focus on
- Providing an incentive based planning system
- Providing clearer and simpler guidance about design expectations for new development
- Exploring with the National Capital Authority ways in which any unnecessary overlaps in process between Commonwealth and ACT planning can be removed
- Simplifying the process for routine and technical Territory Plan variations
- Reducing the need for full scale planning assessment of individual developments in Greenfield areas
- Examining what the ACT can adopt from proposals for alternative development assessment models
- Implementing a revised framework for granting and administering concessional leases
- Additional funding of $250,000 for 2004/05 has been committed to initiate these reforms.
- The Property Council has concerns whether this $250,000 is enough to support a significant reform in planning and the proposed additional $100,000 for 2005/06 seems insufficient to implement the process.
West Civic revitalization kick start
- $600,000 will be invested to design the transformation of Childers Street precinct in City West with better roads, streetscapes and a new park.
Housing Affordability Initiatives
- The Treasurer’s announcement last week on Housing Affordability Measures, Stamp Duty Concessions and Land Tax Rates is welcomed by the Property Council. The Government initiatives are measured and responsible. The ACT Government was smart to reject NSW-style vendor stamp duty more
- The Property Council has championed effective Housing Affordability measures since the escalation of house prices.
- The Treasurer should be congratulated for introducing the first home buyers’ stamp duty concession scheme. For too long the market has locked out first home buyers. The Property Council also commends the Treasurer on introducing the changes to the Land Tax threshold to accommodate bracket creep.
- The net effect is a reduction in land tax for the majority of home owners in the ACT.
- Further, the Property Council commends the Government for rejecting a NSW style Vendor Stamp Duty.
- Stamp duty is Australia’s most inefficient tax.
- The challenge is now for the ACT to further reduce the levels of primary stamp duty – still the highest in Australia at 6.75%. The Property Council will continue to campaign against the current over-reliance on the property industry as a source of Government revenue. The Property Council will be working with ACT Treasury and the Revenue Office to ensure the implementation of the package is as smooth as possible.