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The Real Estate Institute of Australia’s president has called out Australia’s “mish-mash” approach to property taxation.
Adrian Kelly was reflecting on the Treasury’s recently released intergenerational report when he said that, as a nation, we’re getting older, less fertile, and more in debt.
He expressed concern that as more Australians do age and near retirement age, “fewer Australians will pay more tax”.
With population growth long considered “a hallmark” of a vibrant and sustainable housing market, Mr Kelly said “there was nothing in the headlines that painted a promising picture for our home buyers and tenants”.
The 2021 Intergenerational Report projects an outlook for the economy and the Australian government’s budget for the next four decades and considers the long-term sustainability of current policies as well as potential trends that could have an impact.
According to Mr Kelly, the opportunity was missed to consider “meaningful reform in a range of areas that affects Australian hip pockets”.
“The year 2000 gave us the GST, which promised to get rid of inefficient state taxes,” he noted.
“It did not — and two decades on, it is time it was addressed.”
He raised the 2009 Henry Review as a “simple, fair land tax system that taxed all players equally”, and highlighted “another glimmer of hope” in the 2020 NSW Review of Federal Financial Relations: Supporting the road to recovery draft report, but said both reviews’ suggestions were put in the too-hard basket.
As a result, “once again, we find ourselves with a mish-mash approach to property taxation, with states and territories going it alone, despite the opportunity the promised COAG reforms offered, even with the Council of Federal Financial Relations allocated responsibility for property”.
The president believes reform in this space “would be electorally popular, particularly if offset by a fairer tax agenda”.
He has highlighted that the released four recent state budgets plan on taxing home owners and investors nearly $35 billion over the coming financial year alone.
In addition, “stamp duties now add an additional 4 per cent on the cost of a home across Australia”.
“There is a substantial win for housing affordability and hip pocket cost right there,” he said.
While suggesting it would be in politicians’ best interests to seriously address this from a national perspective, given current affordability issues, Mr Kelly conceded that “history shows us that finding a better way is frequently shelved”.
That negativity hasn’t stopped the president from expressing the belief that future projections within the Intergenerational Report do uncover a need for “a national conversation in earnest about wholesale tax reform” — and now.
“Or, at the very least, a fairer taxation system that is less punitive on aspiring home owners, home owners and tenants living in private rentals,” he said.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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