Sam Tarascio lashes Andrews government windfall levy

The billionaire property developer says there haven’t been mega profits in the sector, and consumers will have to pay for the new taxes being introduced in Victoria.

Sam and Christine Tarascio at their Pt Leo Camp named Chabad. Picture: Ian Currie

Property developers are struggling to find builders who can finish projects and cost increases levied by governments will force consumers to pay more and have the potential to “kill the industry”, according to billionaire property magnate Sam Tarascio.

The founding director and former chairman of Salta Property Group, which is developing more than $5bn worth of industrial, commercial and residential projects, said the group’s biggest current challenge was to employ a builder who could “actually get to the end” of a project.

The construction industry has been reeling from supply chain disruptions, labour shortages, skyrocketing materials costs, logistics problems and extreme weather.

This perfect storm has seen the collapse of building firms such as Probuild, Privium, BA Murphy, Condev and Pivotal Homes.

Metricon, one of the country’s largest home builders, also revealed last week it would slash almost 10 per cent of its staff to counter the headwinds plaguing the sector after reaching a rescue deal with its lender, the Commonwealth Bank, in May.

“As a developer, our biggest challenge now is making sure that we can get a builder who can actually get to the end. Because there are a lot of problems out there. Look at what Probuild went through, you’ll find that there’s a lot of other builders that are on the cusp. They are really neither here nor there,” Mr Tarascio said.

“As a developer, if I have a project that is only halfway through, I’ve got real problems. I’ve got to get out back out to tender. Once that happens, the people that are tendering know I’m in strife and the price goes up even further.”

But Mr Tarascio, whose family is worth $1.78bn on The List – Australia’s Richest 250, said his greater concern was the “incredible” increase in government levies on developers.

From July 2023, Victorians whose land is rezoned will face the prospect of paying a significant new tax to the State Revenue Office in the form of the windfall gains tax. The WGT will be a new tax that is triggered when there is an uplift of more than $100,000 in the value of land due to a rezoning.

The bill is targeted primarily at property developers, with residential land of less than two hectares exempt. “What resonates with the consumer is, ‘These damn developers are making too much money’,” Mr Tarascio said.

“But then when you start to consider that you’ve got land tax, and now you’ve got this insidious windfall tax – which is absolutely diabolical – then you’ve got increases in stamp duty, all of these costs are feeding into the system.

“But we still have to produce a product that is able to be sold in the marketplace. We’ve got to make a margin and we’ve got to allow the builder to make a margin. A lot of these costs have to flow through.”

He disputed claims that developers had made windfall profits following an explosion in developments in the aftermath of the pandemic. “Just have a look at what’s happening in the building industry … Eventually, the consumer has to pay and if the government doesn’t wake up to itself, it will kill the industry,” Mr Tarascio said.