Treasurer Jim Chalmers announces $2 billion for housing infrastructure to help build 65,000 new homes
Local councils, electricity providers and water utilities will share $2 billion from the federal budget on Tuesday to build critical infrastructure that the Albanian government says will support the construction of up to 65,000 homes across the country.
As this imprint revealed on Saturday, this week’s budget will focus heavily on housing, including changes to tax treatment for investors and incentives to build new property.
The $2 billion to be spent over four years is aimed at “activating the infrastructure” required for housing construction. It covers roads, water, electricity and sewerage, and the cash will be distributed among local councils and utility providers.
A quarter of the $2 billion will be allocated to regional areas. The government estimates that up to 65,000 additional homes will be built over the next decade thanks to infrastructure funded by the programme.
The funding includes $3.1 billion to support the construction of 100,000 properties for first-time buyers and $1.2 billion in separate financial assistance to states and territories for housing infrastructure.
Finance Minister Jim Chalmers said building more homes will be a key element of Tuesday’s budget.
“With this budget we’re investing billions of dollars to build more homes for Australians,” he said.
“It’s very difficult for many Australians to get into their own home right now and that’s why we’re investing in supply. Our housing plan is pro-aspiration and pro-investment.”
The policy is similar to then-Liberal leader Peter Dutton’s promise ahead of last year’s federal election to pour $5 billion into road and water infrastructure, which he claimed would help support the construction of 500,000 properties.
But the government is also preparing to use the budget to unveil changes to property tax cuts, which the Coalition has already vowed to oppose.
Chalmers is expected to announce that the current 50 per cent capital gains tax concession will be reverted to its pre-1999 form, where the value of assets is adjusted for actual inflation, and the tax will only apply to “real” capital gains.
It is also expected to announce restrictions on negative gearing, the process real estate investors can use to reduce losses on their rental properties to reduce their entire taxable income.
Shadow treasurer Tim Wilson has warned that changes to the CGT concession will “bring to the knees” young Australians putting down their first home deposit savings.
In a sign of the political fight facing the government over any changes to property tax concessions, the Coalition has set up a website to collect stories from people about what yet-to-be-announced reforms could do to the housing market.
Wilson said young people were “angry” that although their savings were tax-free if kept at home, a 47 per cent risk was put at risk if they were invested elsewhere. The top income tax rate of 45 percent plus the 2 percent Medicare tax applies to incomes over $190,000.
“Young Australians are putting down their home savings to boost savings and boost homeownership, but the treasury has been promised that their taxes could be doubled and homeownership brought to its knees,” Wilson said.
The budget will also include an efficiency package that will include specific initiatives for the housing sector.
It plans to cut the time it takes for migrant tradesmen to enter the workforce by six months after a report by former senior civil servant Martin Parkinson revealed that many skilled people in the country were effectively banned from using their skills in the construction industry.
Like This imprint appeared last yearTradesmen, including builders, plumbers and electricians, often face charges of up to $1600 to access mandatory Australian standards for everything from solar panel installation to electrical wiring. These standards will now be free of charge to construction, occupational health and safety and product safety companies.
The current $20,000 instant asset write-off for small businesses will be made permanent.
The government estimates that the efficiency package, among other reforms, will reduce bureaucracy costs by $10 billion a year and increase GDP by $13 billion annually.
Jocelyn Martin, chief executive of the Housing Industry Association, said the package was a significant step towards addressing declining productivity in the housebuilding sector.
“Free access to Australian Standards alone will eliminate large and unnecessary costs on builders, tradespeople and small businesses, while also improving compliance, safety and consistency across the industry,” he said.
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Shane Wright is senior economic correspondent for The Sydney Morning Herald and The Age.Connect with: X or email.
