The sensible stamp duty thought-bubble buried in a budget reply

As they clumsily tie themselves in knots trying simultaneously to be both YIMBYs and NIMBYs, the NSW Liberals managed to bury a sound housing policy idea deep into their response to Treasurer Daniel Mookhey’s second budget.

Their budget reply speech, as is customary for oppositions, was an extended swipe at the government. Delivered two days after Mookhey’s big day, Opposition Leader Mark Speakman trotted out the expected barbs.

NSW Opposition Leader Mark Speakman proposed a stamp duty exemption for downsizers. Credit: AAP

“This is a bad budget, from a bad government,” Speakman began. “The government hides behind smoke and mirrors – taking no responsibility and blaming everyone but themselves.” And the ultimate insult? “This is a Labor budget through and through.” (Which Labor, no doubt, took as a compliment rather than a slur).

But once he got past the slogans, Speakman, who never looks completely comfortable in political battle, waded back into familiar Coalition territory and reignited the stamp duty debate. He proposed “stamp duty exemptions for older people looking to downsize, to free up larger homes for families”.

Sparing the grey-haired from stamp duty would not be a silver bullet for Sydney’s housing crisis, but it could at least free up some housing stock that upsizing families are desperate to get their hands on. Offering empty-nesters an incentive to move seems far more reasonable and constructive than simply ripping up Labor’s housing density policy, which has been the Coalition’s main contribution to the debate thus far.

Amid crippling construction and increased financing costs, Premier Chris Minns has already cast doubt on whether the state can meet its hugely ambitious housing targets of building 75,000 homes a year for the next five years. There must be a suite of other options.

The short-term rental accommodation market is one problem the government must tackle. The number of NSW properties listed on platforms such as Airbnb and Stayz has hit 50,000 – an increase of 10 per cent in just one year. The government is considering a cap on the number of days a property can be listed and a potential levy which would be invested into social and affordable housing.

Another conundrum is finding ways to ensure a property matches its occupants’ needs. Speakman’s idea to axe the hugely unpopular and ineffective transfer tax for downsizers is worth considering. I know first hand that the prohibitive costs of stamp duty when buying another property is stopping Baby Boomers from selling up.

Since my father died last year, my mother has been rattling around by herself in our two-storey family home with more rooms than she knows what to do with. Aside from one room being used to store clothes that I will never wear again (Exhibit A: year 10 formal dress), the bedrooms are display-only and mum remains in a home that is totally unsuitable for someone her age.

Yes, she is sitting on a considerable asset, but paying the state government a significant amount of money to move to a smaller home makes her balk when we discuss it. But her home is meant for a young family and contributes to the estimated 13 million spare bedrooms across the country.

Former chief economist at ANZ, Saul Eslake, has long argued that stamp duty should be replaced with a broad-based land tax. Piecemeal solutions, such as Speakman’s, are far from ideal but Eslake still sees merit in scrapping it for older people.

“I think some older people might resent having to pay in order to move, and I don’t doubt stamp duty would be an obstacle for some,” Eslake says. He makes the point that elderly people remaining in oversized homes have other financial implications for governments. “Older folk are at great risk of needing aged-care packages if they stay in homes which are unsuitable to them.”

Stamp duty reform is a good issue for the Liberals to pursue. Former Liberal premier Dominic Perrottet made it his goal when he was treasurer to scrap the tax. But without financial support from the federal government, such as expanding the GST base, or bipartisan backing from Labor, Perrottet ultimately ended up with another first-home buyer program. NSW Labor promised to axe his land tax option for first-home buyers, and it was gone within months of Chris Minns’ election win.

Chris Martin, from UNSW’s City Futures Research Centre, is not as convinced by the stamp duty idea. “Personally, I’m sceptical about spare bedrooms as a potential source of housing supply,” he says. I’m inclined to think most people with spare bedrooms value them as spaces for friends and family to stay, or work from home, hobbies etc, and I’m not sure stamp duty changes will budge many of them.”

Eslake’s ultimate take on Speakman’s idea? “It falls short of the desirable, but we shouldn’t let the perfect stand in the way of the good.”

Perhaps the Liberals should adopt that same logic, end their politicised attacks on the housing crisis and instead prosecute a policy that could make a difference, albeit small, to the most difficult challenge of our generation.

Alexandra Smith is state political editor.