Queensland State Budget is a Winner

Queensland State Budget is a Winner

ADC congratulates the Queensland State Government on their second budget. The decision to refrain from raising property taxes plus the retention of the $15,000 “Great Start Grant” for first home buyers should be congratulated. The social and economic benefits of these two initiatives alone are good for all Queenslanders.

Other stand out announcements are:

  • $3 billion for State roads- Opening up Queensland for investment and development
  • $2 billion for new public transport infrastructure – Servicing population growth, social and environmental sustainability
  • $59 million to reform Queensland’s Planning System – To encourage investment and economic development

If you would like to read more property related impacts of the budget see below the UDIA’S Member Alert on the Queensland State Budget 2014-15.

 

Queensland State Budget 2014-15 

Today the UDIA (Qld) attended the Queensland State Budget ‘lock-up’ and received an industry briefing from the Government on the contents of the 2014-15 State Budget.

Key Points of note for the property development industry include:

  • Continuation of the $15,000 Great Start Grant and no increases in property related taxes and charges
  • Allocation of 25% of the proceeds from proposed future asset sales ( $8.6bn) over six years to a Strong Choices Investment Program that includes the follow components of relevance to the property development sector:
    • $1.5bn to a Rural and Regional Roads Funds
    • $1.5bn to an SEQ Roads Fund
    • $1bn to a Public Transport Rail Infrastructure Fund
    • $700m to a Rural and Regional Economic Development Fund
    • $500m to a Local Government Co-investment Fund (see discussion below)
    • New State Funding of $321m over five years for the construction of the Toowoomba Second Range Crossing ($30.4m in 2014-15) with the Australian Government also committing $1.285bn over four years.
    • A budget of $59m in 2014-15 for ‘Reforming Queensland’s Planning System’, up 14.3% from an expected spend of $51.6m in 2013-14.

The institute welcomes the principle of proposed asset sales as the strongest choice for reducing debt and investing in much needed infrastructure, particularly urban projects that will assist in boosting productivity and unlocking development and housing supply. The State Government will now embark on a period of consultation until September 2014 to determine what projects should receive funding from the proposed Strong Choices Investment Program.

In light of the Strong Choices campaign and survey, the institute also welcomes the decision to refrain from raising property taxes and retain the $15,000 Great Start Grant. The Great Start Grant is important for stimulating new housing supply and making new housing an affordable choice for young Queenslanders. During the Strong Choices campaign the Institute reiterated the economic and social value of the Grant and the economic arguments to not raise property taxes. We congratulate the Government for recognising these points.

In our pre-budget submission, the UDIA (Qld) made four recommendations, designed to ensure the positive benefits of planning reform are maximised including:

  1. Increased funding to assist in the implementation of the State’s planning reform program at the local government level.
  2. The provision of funding for catalytic planning  and infrastructure
  3. The introduction of off-the-plan transfer duty concessions
  4. Lower infrastructure charges

While there is some new funding that partially deliver on points 1, 2 and 4 above, there has been no change to transfer duties for off-the-plan sales (point 3). We will continue to advocate for sensible tax reforms designed to grow the property and construction sector and deliver affordable housing for Queenslanders; however we recognise this Budget has been presented in challenging fiscal times.

The UDIA(Qld) welcomes the announcement that the State Government will establish a $500m Local Government Co-investment Fund. This is how the Budget papers describe the fund:

  1. The fund is fully contestable.
  2. Local governments can apply for co-investment to upgrade, renew, build and construct infrastructure that supports growth and economic development (i.e. catalyst urban infrastructure).
  3. The fund will co-invest with local government and seek a return for the investment so that the fund can be rolled over multiple times in future years, as an ongoing source of investment.
  4. Local government must levy infrastructure charges at a level below the ‘fair value schedule of charges’ to be eligible to participate. Fair value charges for residential development are approximately 10% below the current legislated maximum charge.

The institute welcomes the State’s commitment to investing in catalyst urban infrastructure, however we have some concerns about the design and operation of Co-investment fund and will continue to engage with the Government on this matter. Although infrastructure charging reforms are due to begin on 1 July 2014, it is not clear from the Budget papers whether any new funding has been allocated for co-investment in the 2014-15 financial year. The Institute will be seeking clarification on this matter as it is critical that local governments are properly incentivised to lower their infrastructure charges as soon as possible.

Credit : UDIA, Member Alert, Queensland State Budget 2014-15, 3rd June 2014