What I would do if I was the Federal Housing Minister
A few years ago, I was asked what I would do if I was the Federal Housing Minister.
This is what I outlined.
So, what would I do if I was the Federal Housing Minister?
At present over 60% of our domestic credit goes to housing-related activities and just over 30% goes to business.
A generation ago these were the opposite.
See chart 1 below.
This is one of the most telling charts on the Australian economy, yet it gets little airplay nor is it regularly updated.
My aim, as housing minister, would be to reverse these proportions over the next 25 years, if not sooner.
That said, here are the ten things I would do.
1. All states/territories to remove stamp duties and federally we will remove the investor capital gains tax discount and negatively gearing tax breaks for resale homes. This would be phased in over a five-year period for investors who currently have negative gear. Also, negative gearing for new homes would only stay in play for five years too.
2. Impose a broad-based land tax on all properties set at between 2.5% and 5% per annum, depending on use, tenure and length of time held. Overseas interests pay a higher rate per annum. Too many land banks.
3. Introduce a capital gains tax on all properties, with the percentage set to decline on the length of time held – under 2 years say 20%, 2 to 5 years 15% …. over 25 years 1% etc. This is to help stop flipping.
4. Stop all first-home buyer grants and related gifts – they just stuff things up by making housing less affordable, distorting the building cycle and resulting in fewer first-home buyers than would otherwise be the case. See chart 2 also below. I would also cancel the Housing Australia Future Fund and other associated largesse. Government get out of the way, you suck at building homes! Embolden private industry to build.
5. You cannot use more than 50% of your SMSF assets to buy an investment dwelling/s.
6. The same set of development and building rules across the country vary only due to climatic conditions.
7. Infrastructure charges per new dwelling are also the same across Australia, set at 5% of the final vacant land or new dwelling sales price (and not a flat fee) and payable on the final settlement.
8. Caveat emptor applies to all buyers – off-plan included and especially high-rise apartments. And developers and builders are responsible for all shonky workmanship, within a specified time frame and with fair caveats, not the general public.
9. No Australian Passport, No Buy – regardless of dwelling type, development status or origin of the purchaser.
10. And this last one is really self-indulgence, and maybe not that important, but a particular bugbear to me. All publicly promoted/exposed housing market-related research, such as price growth predictions, must go through a peer panel review and an equally weighted ‘con’ argument must run alongside the ‘pro’ pitch.
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