21 May 2024
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Yes, Minister, here’s why we have a housing crisis

Peter Switzer
10 May 2024

The Property Council of Australia has virtually accused NSW politicians of being nincompoops who have a goal to create more housing but have two new taxes that undermine what they say they want. But the accusations can really be hurled at all state politicians and whoever the Federal Minister is for Housing!

In the 1990s, we had an unemployment crisis and the Minister for Employment, Amanda Vanstone, was always on TV talking about what she was doing to get employers to employ.

Given it’s the dream of most Australians to own a home and we have a housing crisis, wouldn’t you think the so-called national leader for housing would be really well-known? For the record, it’s Julie Collins. In November last year, this is what she said: “We recognise Australia is facing housing challenges, which is why we're taking immediate action with our $2 billion Social Housing Accelerator ‑ including $610 million for New South Wales.”

Collins is an OK Minister but has to get more involved and needs to stick it to her state counterparts, who are gross disappointments.

This is what was planned for this financial year: “SHAF Tranche 1 (FY 23/24) - $40.4 million have been allocated to fund 11 approved projects from an approved project pipeline. These projects will deliver a total of 124 new properties (118 Social housing and 6 Affordable housing).”

All that fanfare, wait for it, for 124 properties! We don’t just have a housing crisis, we have a politician crisis, as these people neither understand the problem nor do they know how to fix it.

Did I say we have a nincompoop problem?

By the way, if you need any more proof that our politicians don’t get it, know this, from the ABS: “In 2022-23, the number of migrant arrivals increased to 737,000, up from 427,000 the year before. This equates to an annual increase of 73 per cent. In 2020-21, there was an annual decrease of 71 per cent, due to the travel restrictions during the pandemic. With the travel restrictions now lifted, the number of migrant arrivals has surpassed annual numbers recorded pre-pandemic”.

Now look at how many homes we build each year.

“To meet the target, Australia needs to build 240,000 homes every year. However, we're currently falling short, completing only about 170,000 new homes in the year to March 2023, well below what's needed,” a report from PropTrack reveals.

So, to date, not only has the problem not been fixed by politicians, their immigration policy progressively makes it worse!

Thankfully, the Budget next week will reveal a lot of changes to help improve the supply of homes. The stated goal is 1.2 million new homes by 2029. This is a good idea. Creating more apprentices is another. But also making life easier for developers and builders, who take the risk of creating properties for people to live in, has to be important too and that’s where today’s dumb politicians story comes into play.

A press release from the Property Council of Australia (PCA) tells us the NSW Government’s newest property taxes are killing Sydney’s housing dream! “A new report has revealed two new property taxes recently imposed by the NSW Government will render major housing developments in Sydney’s west financially unviable, with projected rates of return too low for banks to fund and developers to build desperately needed homes,” the PCA argues. The Release the Pressure Report by the Property Council of Australia and global real estate company Savills, shows how two fresh property taxes imposed on new housing are in fact working against the government’s own ambitious housing agenda.”

The NSW Government is up for a promise to make 377,000 new homes under the National Housing Accord. But if its tax hits are maintained, we’d have to tell Premier Chris Minns that “he’s dreamin’” and killing the dreams of Australians owning a home in the process.

The new tax slugs on developers are for what’s called the Sydney Water DSP and HPC charges. These are straight out of the TV program Yes Minister! The Government needed money, so developers and builders were identified as easy targets, who probably don’t vote for them, and they slugged them. But these guys can’t make the profit numbers work. Profit is important when you’re using your own money, rather than a government that uses taxpayers’ money!

The Development Services Plan (DSP) levy is for drinking water and waste services, while the Housing and Productivity Contribution (HPC) charge sounds important but who knows what it’s for.

On top of 13 other taxes and charges, the PCA says modelling shows that these additional charges make many developments unfeasible. That’s a real turn off to businesspeople in the real world. Funny that!

And this is something developers and builders in the real world have to cope with, which underlines how governments contribute to a lack of homes in this country. “The charges are just two of 15 separate levies and taxes imposed on new housing in NSW. The Report shows by 2026, those 15 different taxes and charges will make up more than a third (33.3. per cent) of the cost of a new home in the Western Parkland City. In the Central River City, taxes and charges will make up more than a quarter (26.5 per cent) of the cost of every home.”

But it’s not all bad news, with the Property Council NSW Executive Director Katie Stevenson indicating that “…if the NSW Government suspends these two new charges and also introduces faster approvals, the industry could deliver an additional 190,000 new homes in Sydney over the next five years.”

This won’t surprise anyone who has to cope with the snail pace of local council’s building approval process. The PCA says: “It is often taking longer to get a new apartment or greenfield project approved than it takes to build it”.

I wish we had politicians who really want to solve these problems!

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