Stamp duty, councils and big business’s $10b shot at the housing crisis

The nation’s peak business group will propose a $10 billion federal plan to build more homes and slash the cost of construction in an ambitious bid to revive a reform template from the 1990s to fix the housing crisis that takes aim at stamp duty and obstructionist local councils.

The Business Council of Australia will forecast a boost to housing supply and a jump in economic growth from the plan to offer a financial reward to states and territories if they remove barriers to new housing projects.

Labor has signalled more housing policies before the election because of the scale of the crisis.Credit: Natalie Boog

But the proposal, to be unveiled on Monday, requires the federal government to set up a new fund to offer the financial incentives when Prime Minister Anthony Albanese and his colleagues are focused on $32 billion in other housing measures.

The business council will unveil the plan with a claim that it could repeat the gains Australia made from national competition reforms in the 1990s, which were estimated to add tens of billions of dollars to the economy when Canberra and the states agreed on big reforms.

In a sign the proposal might find support within the government, Treasurer Jim Chalmers has talked in recent weeks about the need to “revitalise” national competition policy to help Australians with the cost of living.

The government has played down the prospect of changing the rules on investment properties by overhauling negative gearing and capital gains tax, but has also signalled more housing policies before the election because of the scale of the crisis.

BCA chief executive Bran Black said states and territories were already making headway but would need to do much more if the federal government was to meet its stated target of adding 1.2 million homes over five years.

“Our prosperity is being held back because many Australians can’t buy a home or are paying too much rent, and fixing this issue means putting hard but important policy changes on the table,” he said.

For example, the council says the Commonwealth would receive $19 billion more in tax revenue over a decade if the states and territories replaced stamp duty with a land tax. An annual land tax would add to economic growth, it says, and the federal government could share those gains with the states and territories to help cover the cost of the change.

“Stamp duty is a horrible tax that stops Australians getting into a home,” said Black, ahead of the release of the council’s report, It’s Time to Say Yes to Housing.

The council wants more investment in apprentices, a bigger intake of skilled foreign workers with construction skills, and a judicial inquiry into corruption in the building industry – a key problem revealed in the Building Bad reports in this masthead.

It is also calling for tougher oversight of local councils so new homes are given priority, taking decisions out of their hands if they obstruct necessary projects.

The proposal is based in part on federal policies from three decades ago when Canberra set up a $5 billion fund to pay the states and territories to embark on reforms that would expand the economy.

Chalmers is working with state treasurers on national competition policy but has emphasised recent work on merger law reform and the power of the Australian Competition and Consumer Commission to investigate supermarket pricing.

The business council proposal comes at a time when Chalmers and others are playing down the possibility that Labor will change tax rules as part of its next housing policies, following reports by this masthead that Treasury was looking at options on negative gearing.

Deputy Prime Minister Richard Marles appeared to rule out change to the property investment rules on Thursday.

“No doors have been opened here. We’re not doing negative gearing,” he told Sky News.

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