‘Vested interests’ protest against housing tax changes
Rival predictions that the government’s tax changes will have dire consequences for tenants are rejected by Labor as the work of “vested interests”.
Health Secretary Mark Butler said it was little surprise that the property lobby was defending the status quo after property industry groups published modeling claiming the impact of the tax package on rental prices and housing supply would be worse than Treasury forecasts.
Modeling carried out by economic consultancies Qaive and Tulipwood and published jointly by the Real Estate Institute, Master Builders and the Property Council showed the budget would result in 8,700 fewer new homes being built over the next four years.
The analysis found that rents would be $9 a week higher, the Australian economy would be $864 million smaller and construction jobs would be 3800 fewer than they otherwise would be.
The modeling also took into account changes in negative endowment and the capital gains tax cut, as well as $2 billion to activate infrastructure and increase construction efficiency included in the budget.
Modeling has confirmed that suppressing housing supply in the housing crisis was a deliberate design feature of the Labor budget, according to Opposition housing spokesman Andrew Bragg.
The results were much more pessimistic than Treasury modelling, which predicted rents would rise by just $2 a week and housing supply would rise by a further 30,000 over a decade.
Much of the variance can be explained by different assumptions about infrastructure funding, which modeling of the property sector revealed would result in just 5,300 new homes over four years, compared to the Treasury’s expectation of 26,000 new homes.
Mr Butler said the government would support modeling publicly employed Treasury officials to work in the public interest “rather than in the interest of vested interests”.
“I’m not sure people will be particularly surprised that, for example, the property industry is very happy with the status quo,” he told Seven’s Sunrise program on Friday.
“How surprising that they have modeling that shows the government should do absolutely nothing.”
Mr Butler cited forecasts from independent think tank the Grattan Institute, which predicted the changes would result in an increase in average rents of just $1 a week.
Mr Butler said negative regulatory provisions would apply to existing investors, meaning there was no basis for them to increase rents.
In her post-budget speech on Thursday, Treasury Secretary Jenny Wilkinson said the reforms would reverse a decade of declines in homeownership rates.
“It’s predicted that over the next decade, property owners will own around 75,000 more homes than they otherwise would,” he told the Australian Business Economists’ luncheon in Sydney.
“The reallocation of housing stock, which increases opportunities for first home buyers, is a result of reduced investor demand in the existing housing market.”
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