Reform needed to curb home ownership difficulty: HIA

Australia's home ownership and affordability issue is likely to escalate unless governments at all levels start working in a coordinated manner, according to the Housing Industry Association.

In the submission to the House of Representatives Standing Committee on Economics, HIA observed that reforms in tax, planning, construction infrastructure and land supply could improve the home ownership difficulty that Australia is facing.

"A number of the taxes imposed on the housing sector, and on new housing in particular, are inefficient. The Australia’s Future Tax System report, commonly referred to as the ‘Henry Tax Review’ found that among the vast array of taxes paid by the housing sector, about half of them were highly inefficient. In particular, the Henry Tax Review highlighted: 

• stamp duties; the existing land taxes; 
• the effects of zoning on raw land prices; 
• excessive requirements in the building code; 
• the effects of planning delays and uncertainties in planning on risk premiums and finance charges of developers; and, 
• inefficient and excessive costs within infrastructure charges. 

"One prominent example is stamp duty on property conveyances. Stamp duty on residential property conveyances generated an estimated $9 billion in revenue in 2013/14. Research undertaken for the HIA by Independent Economicsdemonstrates that stamp duty is the most inefficient tax in Australia’s entire taxation system. 

"As a tax on moving, stamp duty on conveyances discourages households from moving home when this decision may better suit their needs in terms of size, location or other amenities. Thus, households do not get the best use out of the available housing stock." 

HIA argued that governments should support infrastructure funding and delivery, including access roads, sewerage systems, water pipes, electricity lines, telecommunications links and community facilities to provide a better environment for new developments.

"Currently, much of the infrastructure for new housing is paid for upfront by developers, with the costs being passed on to builders and ultimately new home buyers. This results in very detrimental effects on the affordability of both new and existing homes. 

"Many infrastructure charges are set by local government, often with little transparency around how the charges are calculated and a lack of clarity from local government in terms of what they deliver in return for the charges.

"The development assessment (planning approval) process in Australia is not harmonised and remains fragmented across the states and territories. 

"Whilst there is a degree of consistency in approach, there is a vast difference between jurisdictions, and more crucially between more than 500 local governments, with respect to which residential buildings require detailed assessments and which may be authorised using a single technical building approval. 

"Significant variations also exist in the administrative processes which support the regulatory requirements for planning assessments. These variations see builders managing layers of red tape and costs to prepare applications and the associated time delays that go with preparing this information."

It is important government maintain land supplies in order to improve housing affordability. HIA has called on governments to create a body responsible for collecting and reporting on land information in an efficient timely manner.

"Australian continues to fail to develop a national reporting scheme for land supply which allows direct comparison of the pipeline for new housing. 

"While some jurisdictions currently report information on land that has been ‘zoned’, land that has approval for subdivision and land that has been completed and is ready for sale, there is no holistic data collection, analysis and reporting mechanism to track and advise our nation’s land supply pipeline. 

"Further, there are six key stages in the land supply pipeline and these should all be collected, analysed and reported. 

"Rezoning of land within areas identified for urban development under metropolitan or regional strategies needs to be more streamlined, including significantly improved coordination of external agencies such as environmental approvals, bushfire management restrictions and the like, which local governments are not well resourced to manage."

Australia supports a national building code, with all state and territory jurisdictions adopting this through their respective regulations. But the way in which this code is adopted provides scope for local government to intervene through their planning approval processes.

"The Australian Building Codes Board has been seeking reforms in this area. However, there appears to be limited appetite by state jurisdictions to make significant changes that would effectively prohibit this conduct by local government."