Today’s WA Government budget contains mixed messages for WA business.
Property Council Executive Director, Mr Joe Lenzo, said “The Government has acted in a fiscally responsible manner, by keeping the budget in surplus, but has hit the property industry in the neck.”
Positively, there were:
- Cuts to low priority Government expenditure;
- The expected maintenance of the AAA credit rating; and3
- A budget surplus (although at the expense of WA property investors).
Mr Lenzo said, “From a property perspective, the bitter pill to swallow is a $57 million increase in stamp duty on property conveyancing, on top of the $800 million plus stamp duty take last year.”
A concern is that stamp duty increases will erode the value of Western Australian’s superannuation funds and property investments.
Mr Joe Lenzo, said that 75% of the Perth office market was owned by collective investment funds, including superannuation funds.
“WA has an aging population, and this budget will erode the value of Western Australian’s savings and superannuation funds that they seek during their retirement,” said Mr Lenzo.
“Stamp duty increases will also deter property investment in shopping centres, offices, showrooms and factories, which Western Australians use every day.”
“The Budget sends the wrong message to property investors – a forward thinking Government would be bound to cut stamp duty to encourage the jobs and wealth in WA.”
The Government has ignored the $550 million dollar windfall from above budget stamp duty revenues since 1999 – see table 1.
Mr Lenzo said, “The $550 million stamp duty windfall is further evidence that the stamp duty increase is totally unwarranted.”
“An increase in stamp duty will make it more difficult for WA businesses to succeed. It will make it more difficult for businesses to obtain premises, and the rents will be higher,” said Mr Lenzo.
“The Government is showing disregard for the property owners, pinning its hopes on the resources sector to hide the deterrent to property investment.”
The budget also disregards research by Access Economics which showed that reducing stamp duty would provide economic benefits far in excess of the abolition of other major State taxes (eg payroll tax & stamp duty on residential property).
The Budget also reveals the failure of the Government’s Review of State Business Taxes to deliver a fairer tax system.
“The Government was talking up its business tax review at the last election, but it has failed to deliver any real gains to date.”
The Government has also increased parking levies by 25%, increasing a car park licence fee for Perth from $120 to $150.
Mr Lenzo said, “This is a 110% increase in the Perth parking levy since the Government was elected, from $70 to $150.”
The Property Council anticipated the announcement of stamp duty amendments to free property investments by wholesale investment funds in WA.
“The announcement of the amendments is the result of long running negotiations between the Property Council and the Government to remove an unreasonable restriction on property investors in WA,” said Mr Lenzo.
Joe Lenzo, 08 9426 1200 WA GOVERNMENT STAMP DUTY REVENUE: 4 Year Variation on Budget Comparison Year Stamp Duties Budget Estimate ($m)
2001-2002 656.40 Actual ($m)
2001-2002 812.80 Variation above Budget ($m)
Total windfall gain $559.50 million