Daniel Andrews backflips on ‘nasty’ Victorian housing tax

The Victorian government has backflipped on a mega $800m housing tax it only announced two weeks ago.

A controversial public housing tax will be dumped by the Victorian government after it received widespread backlash from the property industry.

The government confirmed the $800m tax, initially planned to funnel money from developers into social housing, would be scrapped.

Under the plan, all newly built developments with three or more dwellings or lot subdivisions would hand over 1.75 per cent of the expected project value, with the cash used to fund an extra 1700 social and affordable homes each year.

The plan was announced less than two weeks ago.

Despite major negotiations, industry refused to accept the proposal, leading to an embarrassing backflip by the government.

Amid the storm, the Victorian government on Tuesday said the package would be off the table for good.

“The property and development sector has chosen an extraordinary position against supporting these sensible reforms, and the dual benefits for planning and vital public infrastructure,” Housing Minister Richard Wynne said.

“This would have delivered thousands of more roofs over the heads of Victorians in need, providing them with the dignity of housing.”

The government scrapped the controversial tax on Tuesday. Photo: Brett Wortman / Sunshine Coast Daily

The tax was expected to bring in about $800m a year, but the property and building industries warned it could add almost $20,000 to the cost of a typical house.

The Urban Development Industry Association (UDIA) and Housing Industry Association this week came out against the proposal, calling for changes.

The proposal was also condemned by the Property Council.

Multiple local councils were also critical of the proposed changes to social housing, including making them exempt from rates.

Local governments raised concerns homeowners would have been hit with higher rates bills, while parking fines and other council fees could also have been increased.

Victorian Treasurer Tim Pallas hit out at the property sector on Tuesday, telling reporters the government would not create super profits for the industry. Picture: NCA NewsWire / David Crosling

Victorian Treasurer Tim Pallas on Tuesday hit back at the sector, saying despite the government delivering the package industry had called for, it was unwilling to share the benefits of the reforms with the broader community.

“This package would have delivered massive benefits for the development sector while ensuring a modest and reasonable contribution was returned to social and affordable housing for Victorians,” Mr Pallas said.

“We won’t create super profits for a sector that will not share a portion of the profits with Victorians.”

The tax was only announced less than two weeks earlier. Picture: NCA NewsWire / David Crosling

In a statement UDIA welcomed the news, saying it was a relief for homebuyers.

But its CEO Matthew Kandelaars said he was disappointed the government’s planning reforms had also been scrapped.

“Today’s decision comes after Victorian homebuyers expressed their shock and anger at the government’s proposal to tax those who are chasing the home ownership dream, scrapping this tax was the only sensible thing to do,” he said.

“We have always supported the broadbased contribution to fund social and affordable housing, through which the burden is shared across the whole community.

“We remain available to government to discuss how such a mechanism could be implemented.”