Andrews pulls $800m property tax bill, says industry happy with deal

In a statement, the Property Council confirmed that it had been confidentially briefed by the government on the proposed tax.

“Both before and after the government announcement, we have not received any further documentation, modeling, legislation or any other government analysis of the [tax policy]“, reads the press release.

The group’s statement confirms that it has been consulted on the tax but does not appear to confirm Mr Andrews’ claim of an “agreement”.

“We are committed to working closely with governments at all levels to achieve these results, including with the Government of Victoria on its current proposal.”

The other two main industry bodies – the Housing Industry Association and the Urban Development Institute of Australia – said they were taken aback by the announcement of the new tax last week.

Housing Industry Association executive director Fiona Nield said her organization, the peak body for homebuilders, had not been consulted.

“It was an unexpected tax… We weren’t notified,” she said. “It should never have been offered without a proper assessment of the impact it would have on house prices.”

The property and construction industries warned last week that the levy could add nearly $20,000 to the cost of a typical Melbourne home.

In 2019, the Real Estate Council, the Urban Development Institute and the Housing Industry Association were all consulted by a Ministerial Advisory Group set up to “provide advice to the Minister for Planning on possible models and options to facilitate the provision of affordable housing”.

The general idea of ​​developers contributing to social housing was raised during the meetings of this group, which concluded at the end of 2019.

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But Matthew Kandelaars, Victorian chief executive of the Urban Development Institute, said the industry had never received any indication that the policies – streamlined planning permits that benefit developers and a new tax on those same developers – were linked. He said there had been no discussion of industry contributions since 2019.

“This matter was not raised with me in principle and no formal agreement was sought,” he said. “If it had to be increased, we could not have accepted it because, we explained, the imposition of a tax on a new dwelling will always impact the cost of a dwelling.”

Shadow Treasurer David Davis said the Prime Minister was ‘loose with the truth’ and claimed the Government had shelved the Bill to avoid turning housing affordability into an election issue.

It is understood that the Department of Treasury and Finance and consultancy firm Deloitte have reviewed the net impact of a 2.5% and 2% tax, with the rate lowered to 1.75% after consultation.

The opposition had pledged to oppose the bill and it was unclear whether the government would have won the five upper house votes it might have needed to pass the legislation.

The planned change also drew criticism from councils, including the City of Melbourne, who said councils would be starved of revenue because one of the changes included exempting social housing from paying council rates.

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