PROPERTY COUNCIL OF AUSTRALIA
2012-13 PRE BUDGET SUBMISSION
1. The property industry is the third largest employer in the ACT, the key driver of the ACT’s economic growth and the largest contributor to ACT tax revenue.
2. Tax on the property industry is 6 times greater than the average in the ACT.
3. Budget processes and outcomes can be improved with more effective engagement with the property industry.
4. The Government is living beyond its means. The deteriorating budget outlook is revealed in large negative fiscal balances which accumulate to almost $2 billion over the four years 2010-11 to 2012-13. That money is no longer available to the rest of the ACT community.
The Government is urged to remove taxes which inhibit economic growth, broaden the tax base and reduce spending, especially in areas of lower priority.
5. Across-the-board budget ‘efficiency dividends’ result in no efficiency and no dividend. They should be dropped because they perpetuate the status quo between all areas of expenditure. Budget cuts should be applied to expenditure of lower priority and all expenditure proposals pass rigorous ‘public interest’ test.
6. Stamp duty is a bad tax. It is costly to both industry and the economy. It should be abolished but, in the event that it remains in place for a while, the Property Council proposes some landholder harmonisation and corporate rationalisation exemption models.
7. The Lease Variation Charge is a failure on all counts and should be scrapped. It is contrary to sound taxation principles; it is arbitrary, complex, inefficient and inequitable; it contradicts the Government’s own objectives for redevelopment in established areas because it penalises investors who want to do what the Government wants; and it leads to more expensive houses/units, less of them, but more in the wrong locations.
8. Fire and emergency services should be funded by all who benefit or are likely to benefit. Therefore they should be funded from general revenue, not just a tax on property owners.
9. Developers face penalties for not commencing or completing construction in the time allowed under a Crown Lease, but sometimes the inadvertent delay is due to factors totally outside their control. The penalty is unreasonable and should be abolished.
10. The shortfall in infrastructure investment can be made up by long term borrowings financed over the life of the asset instead of funding in full direct from the budget.
11. Better use of vacant office buildings would result from removing barriers to investment such as fees, stamp duty and the lease variation charge.