Housing density around transport hubs in major cities would increase while the federal government would pay the states and local councils to boost supply under contentious proposals aimed at taking pressure off the nation’s property market.
In a wide-ranging report focused on supply issues, a federal parliamentary committee headed by Liberal MP Jason Falinski also backed the replacement of stamp duties by land taxes and an overhaul of build-to-rent laws while forcing councils to reform their broad use of developer fees.
And despite warnings from the Reserve Bank and other experts, the committee supported a plan to enable first home buyers to use their superannuation as collateral to buy a property.
Property prices across the country have soared through the coronavirus recession, with median house prices in Sydney, Melbourne and Canberra now above $1 million. Data this week from the Australian Bureau of Statistics showed prices nationally rose by 23.7 per cent through 2021, the fastest rate on record.
Record low interest rates and COVID-related stimulus have driven the sharp price increases, which have also been reflected in regional areas.
But Mr Falinski’s committee found house prices had out-stripped wage growth across the country for the past 30 years, making the country’s property some of the most expensive and least affordable in the developed world.
He said the federal government faced a “Gordian knot” of regulation, central planning, “officious” big state regulation and high taxes and charges imposed on new home buyers when dealing with the property market.
Finding ways for the community to support higher density housing around key transport hubs would be a major step to taking pressure out of the market while making better use of transport networks in the country’s biggest cities.
“The federal government needs to incentivise state and local governments to empower communities to make their own choices and trade-offs, while offering real benefits for those who bear the costs,” he said.
Under the committee’s recommendations, local communities would negotiate for higher densities in return for better infrastructure, improved local amenities and protections for surrounding areas guaranteed in law.
‘The federal government needs to incentivise state and local governments to empower communities to make their own choices and trade-offs.’
The federal government would also directly pay the states to encourage better planning laws. This could include turning current infrastructure contributions made by developers into value capture arrangements for new developments.
The payments would be similar to the National Competition Policy payments made by the federal government to the states and territories in the 1990s and early 2000s that encouraged the use of productivity-enhancing policy reform.
Other proposals include encouraging states and territories to axe stamp duty, as the ACT is doing and which NSW is considering, replacing the lost revenue with land taxes. Most states have ruled out moving to land taxes.
The committee found the RBA should not follow the lead of its counterpart in New Zealand, which now must take into account the impact of interest rate settings on the local property market.
It found superannuation assets should be used as collateral by first home buyers so they could enter the market. This would proceed only if the federal government made assistance payments to the states to boost supply, conceding that without an increase in available housing the policy would actually drive up prices.
Labor members of the committee, however, criticised the overall report, saying that in some areas it was contradictory while others completely ignored expert evidence.
Important views from the states were absent apart from one, Queensland, which gave evidence to the inquiry.
“Most recommendations are for tweaking the status quo. Those that do recommend something new are poorly thought through and badly explained,” the Labor members said.
Source : The Sudney Herald