Builders want Treasurer Jim Chalmers to push tax and planning reform to lift productivity

Tax incentives should be given to builders who meet industry standards to help raise competition and investment, drive productivity and reduce the cost of building, says the MBA.

Master Builders Australia chief executive Denita Wawn. ‘Master Builders has consistently sought action from the ­federal government around support­ing business investment, re­moving unnecessary red tape and simplifying the regulatory environment,’ she has told the Productivity Commission.

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Australia’s peak home building body is challenging Jim Chalmers to enact tax reform and hold state governments more accountable on planning approvals in its first major submission to the Productivity Commission ahead of a roundtable to be held in August.

The country’s 60-year low in productivity is “nowhere more evident” than in housing, where supply shortages are acute and the average cost of building a home has risen 44 per cent in four years, Master Builders Australia chief executive Denita Wawn said in the submission.

Tax incentives should be given to builders who meet industry standards in an effort to lift competition and investment, drive productivity, improve industry culture and reduce the cost of building 1.2 million new homes targeted by the Albanese ­government.

“Master Builders has consistently sought action from the ­federal government around support­ing business investment, re­moving unnecessary red tape and simplifying the regulatory environment,” Ms Wawn said in the submission to the Productivity Commission, which releases its own draft report to the Treasurer in August.

“More should be done through the tax system to offset regulatory reform costs” and any tax change for business “incentivises early adoption of key reforms”.

Ms Wawn likened tax incentives for builders who met industry standards and reforms to insurance customers getting a reduction on their premiums for meeting certain requirements.

“Insurance is becoming more and more market data driven, so why can’t governance?”

“This is not just a tax settings issue and a reward for best practice – it’s also about getting a cultural change,” she told The Australian.

“Our sector has been rife with bad actors, and I’ll talk about bad actors, not bad unions, because we know it’s throughout the supply chain. There’s an opportunity for looking at competition law reform, as opposed to industrial relations law reform, when it comes to holding those bad actors to ­account.”

The peak body wants a reduction in tax rates for small business, an expansion and ­per­m­an­ency of the Instant Asset Write Off, the removal or reduction in foreign investment taxes and a review of land and construction taxes.

Master Builders, which represent 33,000 members and oversees an industry with 450,000 businesses, said current investment incentives such as negative gearing and capital gains tax discounts should remain unchanged until supply-side targets had been met.

Dr Chalmers, who has stated he would not accept all the recommendations of the Productivity Commission, on Tuesday said he was open to wholesale tax reform ideas from across the country.

“I expect, I anticipate, I welcome tax being an important part of the conversation,” he said.

“The ideas that people raise at the roundtable in the second half of August, I think it would be hard to come at these sorts of issues, sustainability, resilience and productivity, without people raising their ideas when it comes to tax,” he said.

Nicholas Moore, the former Macquarie chief executive and chairman of the Centre for Independent Studies, told The Australian last week that he suspected tax reform would not get the same attention as housing and working with states on cutting red tape.

“I think at a roundtable there will be as many different views on tax as there are people in the room. The difficulty with tax is that there are fundamental dis­agreements with what the best policy outcomes are,” he said.

The Master Builders wishlist for productivity included removal and simplification of red tape, fast-tracked planning reforms, a boost in infrastructure funding, the unlocking of more build-ready land and caution over regulating artificial intelligence.

Ms Wawn also had a firm warning for the Treasurer that the federal government needed to turn the screws on states to ensure they met targets on planning reforms. “While the federal government continues to drive co-ordinated planning reform across state and local governments, more needs to be done. The federal government has not used their federal funding for infrastructure as effectively as they should have,” she said.

“They have not been holding states to account for decades.”

“When the feds turn over money for projects in a state, the intent by the ministers is always there but the execution of the funding agreements is not. There is not a great enough accountability going to the states at a bureaucratic level.”

The so-called Planning Reform Blueprint should continue to track and report on jurisdictional planning reform efforts, promote the reforms that are boosting construction supply outcomes, and identify new approaches.

The Master Builders argues that its recommendations are key because the industry’s output represents one of the strongest multipliers in the Australian economy, with $1m worth of building activity supporting around $3m in activity across the economy.

The latest submission follows major accounting firm KPMG warning in its submission last week that Australia was missing out on productivity gains because political tension between state and federal governments prevented proper tax reforms.