On what planet does higher tax equal affordability?

Ken Morrison | Wednesday, 11 March 2009 6:00 AM | Add Comment

It seems March is ‘tax thy neighbour’ month, with new proposals for affordable housing levies coming thick and fast.

The idea that you make housing more affordable by taxing it more has always been a bizarre one. In the current economic times and with continued weakness in new housing construction, it’s downright dangerous.

Last week the NSW Government and Opposition took the sensible approach and voted down a Greens Bill which would have allowed councils to mandate up to 25 per cent (yes you read it right – 25 per cent) of dwellings in a development be set aside as affordable housing.

This week, the City of Sydney Council approved for public exhibition its own plan to mandate that four per cent of every new development’s dwellings be affordable, or pay a levy of $185.77 per square metre of the project’s GFA. This policy would apply to both residential and non-residential projects, with the flat tax applying equally to warehouse sheds and new premium high rises.

The NSW Government has also briefly flirted with such proposals in the past, but has always seen sense in time.

Housing affordability is a significant problem in Australia’s cities. The Property Council, through our Residential Development Council, has played a key role in putting this issue on the national agenda.

Targeted incentives to help create key worker housing are a good idea and the Federal Government’s National Rental Affordability Scheme is sensible.

But the key affordability responsibility for state and local governments is to facilitate an adequate supply of new housing free of excessive taxes and levies, and without ridiculous requirements on unit mixes and sizes which also drive up costs. This is the point the Property Council made to the City’s Planning Committee on Monday night.

Last month’s NSW Jobs Summit expressed strong support for a cut through approach to housing supply. We’ve seen a new Coordinator General appointed to push through federal stimulus package spending, supported by streamlined planning. But where is the accompanying arrangements for private sector investment in housing around transport nodes?

More supply means lower prices. Less taxes on the supply of housing mean cheaper housing. No affordability own goals please.


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Ken Morrison | Wednesday, 11 March 2009 6:00 AM | Add Comment

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