• UDIA National member alert: Labor reply to the Federal Budget 2019

    2019-04-05

    UDIA National member alert: Labor reply to the Federal Budget 2019

    Last night, the Opposition Leader Bill Shorten delivered the Opposition’s response to the Coalition’s 2019-20 Federal Budget. While Labor focused on primarily on health and education, there were some noteworthy elements related to the development industry.
     
    Headline Tax Reform

    • Labor claims that its tax reforms will be fairer for everyone – Australians earning between $48,000 and $126,000 will get the same tax break
    • Labor will ensure a ‘liveable wage’ for almost 3 million Australians earning less than $40,000 a year
    • Labor vows to push ahead with its proposed changes to Negative Gearing / Capital Gains Tax and Franking Credit refunds
    • A 2% “Deficit Levy”, indicatively to 2023, will be imposed on those with taxable annual incomes above $180,000 
    Late last year, UDIA launched its National Policy Priorities under six key pillars.  Outlined below is a summary of Labor’s Budget response under our six focus areas:
     
    Pillar 1 – Get Population Settings Right
     
    UDIA is disappointed that Labor is planning to support the Coalition’s migration cap of 160,000 new entrants for 2019-20.  Skilled migrants offset Australia’s ageing population, improve labour force participation and productivity, and help businesses source the labour skills they need to support their activities. 
     
    Without healthy migration levels supporting household consumption and underpinning our working tax base, Australia’s economic prosperity and standards of living will be under threat.
     
    Pillar 2 - Urban Infrastructure Delivery
     
    Labor has promised a package of infrastructure spending in each capital city across Australia in its first year of government:
    • Cross River Rail in Brisbane;
    • Western Sydney Metro;
    • Suburban Rail Loop in Melbourne;
    • The Bridgewater Bridge in Tasmania;
    • South Road in South Australia;
    • METRONET in Perth;
    • Upgrading the roads around Kakadu; and
    • Phase 2 of the ACT light rail

     
    UDIA has long been calling for an “Infrastructure Accord” between the major political parties, to insulate infrastructure decision-making from bipartisan politics.  Pleasingly Labour is proposing, if it wins government, to co-operate with the future opposition in a bi-partisan approach to Board appointments to Infrastructure Australia. 
     
    Whilst this is a relatively minor proposal, it is nevertheless an important first step in achieving a more cross-party approach to delivering Australia’s future infrastructure.
     
    Pillar 3 - Housing Supply and Affordability
     
    Labor has failed to holistically address the need for increased housing supply in its Budget reply. UDIA will continue to advocate for mechanisms to provide greater certainty for the industry, unlock new supply and provide more affordable housing for Australians.
     
    Labor’s main plan for housing affordability is a commitment to deliver 250,000 new homes in an affordable housing package.  Whilst this is laudable, efforts should be made to improve housing affordability more generally, not just as part of a one-off “package”.
     
    UDIA supports Labor’s commitment to establish ‘Build-to-Rent’ housing as a viable asset class in Australia. Build-to-Rent operates as a successful housing model internationally - whilst the model typically generates a lower yield than alternative asset classes, it has the potential to be attractive for developers and investors in Australia… but only with the right policy settings.
     
    Pillar 4 - Reform Taxes and Changes
     
    UDIA remains opposed to Labor’s proposed changes to negative gearing and capital gains tax – as National President Darren Cooper has repeatedly said, “This is the wrong solution to a problem that no longer exists”. 
     
    Numerous studies have now found Labor’s proposed changes will almost certainly further dampen investor demand and therefore building activity.  This has the potential to lead to significant industry job losses, creating a completely opposite suite of effects to what Labor says it is trying to achieve.
     
    Up to 68% of property investors are mums and dads who currently earn less than $85,000 a year, with the vast majority owning only one investment property. Labor’s counter-intuitive measures will mostly impact the very hard-working Australian “battlers” which Labor claims to represent, and will prevent them from accessing a popular savings mechanism to provide for their own retirement and lessen the potential burden on government.

    Pillars 5 & 6 – Improving Clarity & Certainty, and Future-Proof our Cities
     
    UDIA believes coordinated transport, infrastructure, environment, housing, finance, education, health and social services are all required to future-proof our cities and to manage the population growth to sustain economic growth.  A Cities Ministry within Inner Cabinet would be a good start.
     
    Unfortunately, neither the Coalition Government nor the Labor Opposition have proposed much in this space, and our country still wants for a comprehensive vision for our nation, supported by clear plans, strategies, targets and implementation frameworks across all levels of government.
     
    As a nation, we need all sides of government to face the challenge to make our cities more globally competitive and more liveable, and UDIA will continue to advocate strongly with each party to build a more liveable future for all Australians.
     
    Our campaign Building a Liveable Future for all Australians, is raising the above issues with all sides of politics to develop a more efficient and equitable Australia.