• UDIA National member alert: Federal Budget 2019

    2019-04-03

    UDIA National member alert: Federal Budget 2019

    Last night the Treasurer delivered the 2019-20 Federal Budget which has been heralded as ‘a budget for the taxpayer, complete with congestion busting measures that will future proof Australia’ for generations to come.  The decade of deficits is set to end with the Government budgeting for a modest surplus in the 2019-20 financial year.

    UDIA welcomes the sustained focus on supercharging infrastructure with the $100 billion national infrastructure package and congestion reduction measures. However, the UDIA is disappointed the Budget did not follow up on last year’s housing affordability initiative, with more funding for catalyst infrastructure to deliver housing through NHFIC.

    Nevertheless, investment in infrastructure remains important for the country and our industry, and we will continue to support the government’s plan for a stronger economy, which has delivered more than 1.25 million jobs in the last five years and reduced unemployment 4.9 per cent – its lowest level in a decade.
    The Budget’s $6 billion spending stimulus is expected to add 0.4 percentage points to GDP and a budget surplus of $7.1 billion for the 2019-20 financial year.
    The forecast for continued positive real GDP growth, manageable CPI levels and low unemployment rates provides a positive impetus for the medium-term outlook for the Australian economy.

    Measure 2018-19 2019-20 2020-21
    Real GDP 2.25% 2.75% 2.75%
    Employment 2% 1.75% 1.75%
    Unemployment Rate 5% 5% 5%
    CPI 1.5% 2.15% 2.5%
     
     
    Late last year, UDIA launched its National Policy Priorities under six key pillars. We will continue to advocate strongly with the Federal Government in continuing to progress these key issues. Outlined below is a summary of tonight’s Budget under our six focus areas.
    UDIA Policy Pillars and Budget Announcements

    Pillar 1 - Population Settings
    The Federal Government’s Population Plan – Planning for Australia’s future Population – is aimed at reducing congestion in the country’s capitals and to address and improve productivity in the regions.
    Migration is a key driver of GDP growth for the country and whilst the government will introduce a cap of 160,000 new entrants for 2019-20, the proposed population plan to distribute migrants and some international students more broadly is expected to support economic growth in smaller capital cities and regional areas.
    Currently there are four working aged Australians to every single person over the age of 65. Without a continued focus on strong migration levels, this number could fall significantly. UDIA supports a carefully considered migration strategy focussing on skilled migration, which will reduce the economic strain to the economy from the ageing Australian population.

    The Budget includes $23.4 million for a new Centre for Population which will drive analysis to underpin the National Population and Planning Framework set up in December 2018.
    As part of its national policy agenda, UDIA will continue to advocate for a well-coordinated population and settlement strategy, backed by strong skilled migration levels linked to the appropriate funding and delivery of catalytic infrastructure.  Over the last 12 months nearly 70% of migrants to Australia were skilled and of working age, which is key to supporting our economy and a crucial offset to our ageing population and diminishing tax base.

    Pillar 2 - Urban Infrastructure Delivery
    The budget contains new funding commitments of around $23 billion towards major infrastructure projects in 2019-20 and $100 billion over the next 10 years. Much of this funding was already budgeted, but not committed to specific projects. We will remain vocal about the need for infrastructure as a key component to creating “better functioning and more liveable cities” and for unlocking much needed housing supply.
    The Population Plan includes measures to increase infrastructure funding and fast rail plans to link our regional cities and support decentralisation. The cost of congestion in our capital cities is estimated to rise from an estimated current cost of $16.5 billion, to $40 billion by 2030 if nothing is done to address it.
    The Government aims to deliver infrastructure, ease congestion and decentralise with its three- pronged attack, across roads, fast rail and congestion busting measures.
    1. Through its continued 10-year, $100 billion road, rail and air infrastructure plan with $23 billion in new investment.
    • $2.2 billion road safety package complete with $550 million Black Spot Program, $1.1 billion for maintenance and repair and a newly announced National Office of Road Safety Office.
    • $730 million injection for a north Queensland Roads Plan
    • $254 million package for Sydney and NSW Central Coast congestion busting road upgrades.
    • $100 million for regional airports
    • $1 billion to improve freight routs and access to ports
    • At least seven freight corridors across Queensland, Victoria, NSW and Tasmania will benefit from a major $1 billion provision, aimed at reducing congestion.
    • The Budget has not disappointed WA with a $1.6 billion commitment for major road and rail infrastructure projects.
    1. The Budget will address local pinch points through the previously announced $1 billion Urban Congestion Fund aimed at reducing average commute times and the strain on public transport systems as the population continues to grow.
    2. The government will invest in Fast Rail over a 20- year period.
    • $40 million towards five new detailed assessments including; Sydney to Wollongong, Sydney to Parks, Melbourne to Albury Wodonga, Melbourne to Traralgon and Brisbane to the Sunshine Coast.
    • $2 billion has been committed toward fast rail to connect Melbourne and Geelong, with construction expected to start in the next 2 years.
    • An additional $5 billion will be used to deliver the Melbourne Airport Rail.

    This funding will directly benefit the announced City Deals for Adelaide, Hobart, Townsville, Launceston, Western Sydney, Darwin, Geelong, South East Queensland and Perth.
    Regional Deals have also been announced with Barkly in the Norther Territory benefiting from a proposed $45 million investment to address overcrowding and housing supply, boost industry and support Aboriginal leadership.  Albury Wodonga Regional Deal will also be investigated and the Hinkler Regional Deal, in Queensland, will look at developing a plan for economic development and attracting new business to the region.
    These projects will be developed and implemented as part of the Faster Rail Plan, which will be managed by a new National Faster Rail Agency and supported by an Expert Panel.  UDIA welcomes increased funding for urban infrastructure and will continue to advocate for funding to be tied to urban infrastructure, improvements in the planning system and delivery of stated housing supply levels.
     
    Pillar 3 - Housing Supply and Affordability
    The Government’s failure to directly address the need for increased housing supply in the Budget is a concern and we will continue to advocate for mechanisms to provide greater certainly for the industry, unlock new supply and promote more affordable housing for Australians.
    Housing supply remains a key tenet of UDIA’s advocacy objective, with a view that supply is intrinsically linked to improving housing affordability.  There is currently a significant shortfall of dwellings across Australia which needs to be addressed to ensure every day Australians and our future generations have access to affordable homes.

    The UDIA State of the Land Report released at UDIA National Congress last week revealed further shortfalls in supply due to marked increases of deferred and abandoned multiunit dwellings in the past 12 months.
    Housing affordability will be improved in remote Northern Territory communities with $550 million provided through the reversal of a federal funding freeze.
    We will continue to advocate for initiatives to incentivise development, including rezoning land for higher density housing around railway stations or areas of high jobs growth, promote greater housing diversity delivery and instigate a national process for the establishment of a viable build-to-rent asset class.
    We also urge for build-to-rent assets to be made eligible for the 15 percent managed investment trusts (MIT) withholding tax rates.
     
    Pillar 4 - Tax Reform and Changes
    The tax cuts announced are expected to benefit about 3.4 million businesses employing 7.1 million Australians. This is welcome relief for Australian businesses and a step to continue economic prosperity and low unemployment.
    UDIA believes the tax cuts will improve Australian’s ability to enter into home ownership,  however further measures will be required to provide sustained relief to households and resolve the underlying supply side issues, if housing affordability improvements are to be delivered in the medium term.
     
    Pillar 5 - Improve Clarity and Certainty in Urban Development
    The Government’s commitment to invest in vital transport infrastructure will reduce congestion and boost the economy.
    UDIA strongly advocates for City Deals which eventuate in improved liveability and more productive “30-minute cities”.
    UDIA maintains its position that infrastructure funding, particularly through City Deals should be tied to improvements in planning systems from state and local governments to improve affordability.
     
    Pillar 6 - Future Proofing our Cities
    UDIA believes coordinated transport, infrastructure, environment, housing, finance, education, health and social services are required to future proof our cities and to manage the population growth to sustain economic growth.

    UDIA believes these measures should be underpinned by a Cities Ministry within Inner Cabinet to lead on key issues of cities, urban infrastructure and population.
    We need Government to rise to the challenge to make our cities more globally competitive, more liveable, and the industry more sustainable if we are to continue to enjoy the significant economic and community building multipliers from the development industry

    Our campaign Building a Liveable Future for all Australians, is raising the above issues with Government to develop a more efficient and equitable Australia.