Double tax burden
Parochial policy reforms that double-tax interstate property investors will only exacerbate Queensland’s housing crisis. By Amanda Stoker.
Last week the Queensland Labor government announced a housing summit to tackle a growing crisis in housing supply and affordability. Yet, just days before, it made changes to land tax that would reduce investment in housing.
Premier Annastacia Palaszczuk and her team are either completely ignorant of economics, or they are so politically craven as to say one thing while doing the opposite.
Until the recent changes, the liability of an investor for land tax for property in Queensland was calculated on the basis of the value of that property. The recent changes mean that from next July 1 onwards the total value of all Australian property held by the investor will be taken into account in determining two critical matters: whether the tax-free threshold has been exceeded, and what rate of land tax should apply.
And in parochial economic policy to rival the pandemic-era cruelty of denying urgent healthcare to those in northern NSW towns because Queensland’s hospitals are “for our people only”, none of these land tax changes apply to people who hold property only in Queensland.
What it means in substance is higher land tax bills for interstate investors, but no impact on those who will pass judgment on the government at the ballot box.
Politically canny perhaps, but this policy is yet another disincentive for investment in Queensland, which translates into fewer rental properties and higher rents, as those who need to do so compete for limited supply.
It is already seeing an exodus of interstate capital, which means more women sleeping in cars, and more blokes crashing on couches, as they struggle to find a place to rent.
Deputy Premier Steven Miles blames it on interstate migration – yet another dog whistle to blame the southerners for Queensland’s problems. And while it is true that interstate migration to Queensland rose to 30,939 in the year to June 30, 2021, that can be accounted for by the delay of usual migration patterns because of COVID-19 lockdowns in the southern states, rather than necessarily showing a new normal.
Labor will characterise its decision to impose discriminatory tax policies on non-Queenslanders as “putting Queenslanders first”. Putting aside the repugnancy of efforts to tribalise Queenslanders and demonise Australians from other states as blameworthy for every Labor policy failing, the fact is these policies harm Queenslanders, making it more difficult and expensive to get a roof over their heads.
They also punish tourism towns, especially on the Gold and Sunshine coasts, where interstate investment in a holiday place is key to ensuring rental supply for other tourists and locking in a baseline number of regular visitors.
After the impact of heavy-handed and inflexible restrictions during the COVID-19 period, this is the last thing the tourism industry needs as it seeks to secure its viability. Of course, when tourism suffers, so do the restaurant, hotel and service sector workers who depend upon it.
This is not the first Labor policy that makes it more expensive to get into a home. It is reflective of a pattern.
In the fiscal year ending June 30, 2019, Queensland Labor cut per capita spending on social housing, even as the waiting list grew. By March this year the waiting list had blown out to 30,922. Over the past four years there has been a 78 per cent increase in the length of the waiting list as a whole, yet the number of properties in the pool has grown by just 1 per cent.
When one considers that there are often multiple people to be housed in each application, the number of people in limbo is likely to be more than double that figure.
At the same time, under-occupation rates in public housing are at 15 per cent, with the government refusing to take steps to more efficiently allocate housing stock.
By way of comparison, when the Liberal National Party was last in government in Queensland, albeit briefly, then-housing minister Tim Mander got the public housing waiting list down to about 7000.
The crisis is made worse by the fact that Labor has, with an ideological bent against the community housing sector, refused to build the capacity of not-for-profits to develop affordable housing in Queensland. The consequence is that, while NSW and Victoria have obtained National Housing Finance and Investment Corporation support for community housing projects of about $500 million and $300 million respectively, Queensland has languished at around $5 million. It’s no surprise that after seven years of this, the short supply of affordable housing has reached crisis point.
Queensland is also pushing for the inflexible application of changes to construction standards that will make housing more expensive across the board, and leave small builders with massive expenses associated with updating their drawings and contracts.
At the same time, Labor’s Left refuses to countenance more generously releasing land for residential development and has forced changes to tenancy laws that reduce the rights of landlords to deal with their investment.
No wonder capital is fleeing the state. Queensland’s land tax changes are “a great way of reallocating capital down to the southern states”, as Dexus chief executive Darren Steinberg said at The Australian Financial Review Property Summit on Monday.
After seven years of policies that make it harder for Queenslanders to get into a home, my expectation is that the state government’s housing summit is to be a mere pantomime – though for people trying to get into a rental property or buy into the market, the impact is anything but funny.
Amanda Stoker is a Distinguished Fellow of the Menzies Research Centre and a former senator for Queensland. This article first appeared in The Australian Financial Review.