Master Builders push home ownership for low income earners

Master Builders push home ownership for low income earners
Master Builders push home ownership for low income earners

Master Builders Australia enforced the importance of affordable housing for lower income earners in its submission to the House of Representatives Standing Committee on Economics Inquiry into Home Ownership in Australia.

"Social housing provides a roof-over-the-head for more than 397,000 – or about 4% of - Australian households. 

"National Affordable Housing Agreement (NAHA) is a key mechanism for providing housing assistance to those in genuine housing need, and an important instrument of social policy in Australia. 

"The better approach for NAHA (and/or its successors) must be to clear the roadblocks to improved housing affordability (especially those imposed by State, Territory and Local Governments), which will help to increase the supply and reduce the cost of housing, rather than providing government subsidies and other forms of assistance to try to offset unwarranted cost pressures on the supply and the price of housing."

Master Builders Australia is pleased that the Federal Government recognizes the issue of unaffordable housing in all capital cities in Australia. According to the submission, a few points contributed to the problem.

"Shortages of available land and inefficient land release strategies; infrastructure costs being loaded onto developers and in turn passed on to home owners; excessive infrastructure specifications in subdivisions; excessive development levies, taxes and charges imposed by State and Territory governments; excessive planning and building requirements; regulatory creep pushing codes and standards higher than required; and, un-coordinated local and state government environmental regulations. 

"Master Builders estimates the national housing supply shortfall (supply falling behind demand) has risen to more than 107,000 dwellings, which in turn contributes to housing affordability pressures."

Master Builders calls on the Federal Government to commit to, and deliver upon its National Housing Affordability Agenda key elements.  

"Tangible outcomes in improving the efficiency, and the supply-side efficiency in particular, of the Australian housing market. Annual publication by the Federal Department of Industry on its website of a rigorous and transparent stocktake of approaches to developer/infrastructure charges by all local governments in Australia.

"Streamlined and simplified development approvals processes, achieved through, inter alia, greater reliance on code-based assessment, identification of best practice development approval procedures amongst State, Territory and local governments, as well as expanded use of performance monitoring and benchmarking.

"Local governments to develop and promulgate individual realisable Land Release Plans for their own jurisdictions over a ten year rolling time horizon.

"The realisation of a genuine, rigorous, enforceable and uniform building code and regulatory system to ensure the development and continuation of an efficient and competitive building industry."

Efficient Housing Market

"An efficient housing market would have a number of features, including: a supply-side which is responsive to changes in demand-side drivers; one not burdened by distortions to market prices (the principal method by which housing demand signals are transmitted to housing suppliers); regulatory, as well as subsidy and taxation interventions, which distort and reduce the efficient operation of the housing market, are minimal, transparent and based on sound economic principles. 

"Where governments and other regulators wish to achieve social and other policy objectives in the housing sector, these outcomes be pursued through directly relevant policy instruments and in a manner which has the least possible distortion impact on the housing market."

Investor-Supplied Housing 

"Investor housing plays an important role in the supply of new residential dwellings in Australia. Investor housing likely accounted for more than 30 per cent of spending on new residential construction, on average, annually between 1985 and 2012. 

"Investors in ‘negatively geared’ dwellings likely accounted for just over 1.9 million residential dwellings, accommodating some 4.8 million people. 

"Absent the housing stock provided by housing investors, it is not clear where these people would find residential dwellings to live in – public- and social- housing almost certainly could not meet such demand." 

"As can be seen in Graph 8.1, some 40%of Australian taxpayers claiming negative net income from rental properties in the 2010/11 financial year fell into the ‘middle income’ bracket of between $37,001 and $80,000 per annum, with another 23 per cent being the lower-middle income bracket of between $6,001 to $37,000 per annum. 

"By contrast, a mere 5% of taxpayers claiming negative net income from rental properties in that financial year fell into the ‘high income’ bracket – that is, persons earning more than $180,000 per annum. 

"As such, any ill-considered action to wind-back, let alone eliminate, ‘negative gearing’ would amount to an ‘assault on the frugal middle class Australian’, rather than the ‘rich’ as some may claim. 


"The building and construction sector is one of the most intensely taxed in Australia, and bears a direct and indirect tax burden from all levels of government — Federal, State and Territory, and Local."

More taxation attracts less investments and employment opportunities reducing housing affordability.

"Master Builders’ high level tax reform priorities call for a comprehensive review of the narrow GST base.

"Any increase in the GST rate must not be undertaken without first effecting comprehensive tax reform; reducing the company tax rate to 25 per cent; reducing the differential between the higher marginal personal income tax rates and the company tax rate; simplifying tax compliance; retaining the tax exempt status of home ownership and negative gearing; providing incentives for the removal of inefficient state taxes including infrastructure taxes, charges and levies; and, introducing a reducing, stepped rate of capital gains tax."

Housing Affordability building


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