Peter Verwer |
Wednesday, 4 June 2008 6:00 AM |
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For the first time in many years, this was a budget that talked a lot about the built environment and cities as a means of leveraging higher economic growth and improved community prosperity.
It would be easy to criticise the funds allocated to many of the property-related programs, but at least a start has been made. It also means that in future years we can push to top up these funds.
Amongst the swag of initiatives directed to the property sector, here are the highlights.
Nation building
The Budget established the Building Australia Fund, with a kitty of $20 billion.
It also maintains previous programs such as Auslink. Indeed, we added up close to $50 billion in infrastructure spending over the next four years, much of which will seed additional funds from the states and the private sector.
The promised major cities program remains in the policy incubator. However, the proposed $75 million for urban transport programs is a start.
The government’s major cities unit, which will flesh out an urban strategy for Australia, has been established.
Housing
There are three big programs:
- $1.2 billion for First Home Savers Accounts, which will help bridge ever-growing deposit gaps
- $623 million for the National Rental Affordability Scheme (NRAS), which is a first step to forging an investment asset class for rental housing
- And the $500 million Housing Affordability Fund (HAF), which targets cuts in developer levies and red tape. $30 million of HAF money has already been allocated to fast-track the online development assessment systems nation-wide.
It’s no secret that industry believes NRAS and HAF are financially undercooked. However, all three programs reverse the Australian Government’s neglect of the housing space.
NRAS and HAF also show the Rudd Government understands that supply-side solutions are as important as programs that pump demand.
Climate change and the environment
The $90 million Green Building Fund finally acknowledges the role retro-fitted buildings can play in combating climate change.
The Fund only meets $200,000 in expenses per building, which won’t deliver the quantum leap in eco-efficiency that would attach gears to the coming emissions trading scheme.
The Property Council will argue for the reintroduction in next year’s Budget of accelerated depreciation for existing buildings that are upgraded to a high environmental standard – green depreciation.
Treasury boffins are sceptical of accelerated depreciation and so plenty of policy IVF will be required over the coming months.
Tax Reform
The decision to slash international withholding tax from 30 percent to 7.5 percent is a huge win for the property sector.
Instead of penalising the world for investing with Australian fund managers, we can now become a financial hub for the fastest growing regions on the globe.
The Budget also confirmed the Rudd Government’s commitment to a ‘root and branch’ review of the tax system.
The Property Council, as a member of the Business Coalition for Tax Reform, has already commissioned the Centre for International Economics to develop an alternative to our outmoded Federal-State-Local taxing frameworks.
The Government has also recognised that Australia’s collective investment vehicle regime urgently deserves modernisation and has committed to a staged review of managed investments rules.
And then there’s the sting. Treasury has gutted the GST margin scheme in those cases where land held by a GST-exempt vendor is ‘improved’ before it is sold to a developer.
We’ll be fighting this measure, which is likely to increase housing costs.
All in all, this was a Budget that built foundations for firmer engagement between the government, the property sector and the community.
The countdown to the 2009 Budget has begun.
Peter Verwer |
Wednesday, 4 June 2008 6:00 AM |
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