This article is from the Australian Property Journal archive
THE Victorian government is introducing a new Social and Affordable Housing Contribution (SAHC), as well as making social housing exempt from paying rates, however the property industry said a new tax is wrong way.
In addition to its $5.3 billion Big Housing Build initiative, from July of 2024 the state government will see all new built developments with three of more dwellings or subdivisions will add 1.75% of the as-if-complete project value to the Social Housing Growth Fund.
“Our landmark Big Housing Build is changing lives, putting a roof over the head of people in need and creating jobs – but we’ll need to continue building more homes beyond 2024 and these reforms deliver exactly that,” said Richard Wynne, minister for Housing.
While this investment will impact less than 30% of all residential planning permits, it will add to the state’s supply of new homes, as well as boosting jobs and training opportunities in the construction sector, to the sum of an average of more than 7,200 direct and indirect jobs in each year of the investment’s first 10.
“We’re establishing a stable funding stream to provide the dignity of housing to thousands more Victorians now and into the future, while locking in social and economic benefits for years to come,” added Wynne.
The SAHC is expected to pull in around $800 million per annum in its first decade, providing the funding for as many as 1,700 new social and affordable homes each year.
Additionally, making social housing properties exempt from rates, which will be passed in over a four year period from July 2023, pulls the asset in line with other public assets that add crucial value to the community, such as public schools and hospitals.
The government has also committed to reinvesting the $54 million being spent on public housing rates back into public housing maintenance and upgrade works.
This reinvestment will be focused on delivering kitchen and bathroom upgrades to public housing, as well as into creating better open spaces.
Community housing providers will also reinvest $11 million back into their services.
“Access to safe, affordable and energy efficient social housing benefits all Victorians – these changes will add further momentum to the delivery of social housing across the state,” said Tim Pallas, treasurer.
These changes will apply to all of metropolitan Melbourne, Greater Geelong, Ballarat and Greater Bendigo. While other regional councils will determine individually how they institute the rate reform.
Meanwhile the Urban Taskforce CEO Tom Forrest said the new tax will flow directly onto the price of the new home, hitting those that can least afford in – first home buyers.
“Worse, this new tax is due to be introduced at about the same time that the Reserve Bank of Australia (and everyone else) is forecasting the lifting of interest rates – in July 2024.
“Put simply, you don’t create affordable housing by adding additional charges to the production of new homes. If anything, that reduces the number of new homes produced, thus exacerbating the shortage in supply and worsening the miss-match between demand for new homes and supply.
“It sounds politically popular to say you are hitting developers with a new tax – but the reality is that this flows on to the cost of the new home – so in reality, these types of taxes (or affordable housing levies) are paid by new home buyers.” Forrest said.
“Social Housing is a social good – correcting a market failure created by over regulation and a lack of timely housing approvals in places where there is strong demand. We need more affordable housing in our cities for key workers including teachers, police, nurses, fire fighters, cleaners etc. But these should be funded through general tax revenue as all of society benefits from this investment – not new home buyers.
“It is high-time the penny dropped with Governments across Australia – it is the drought of planning approvals that has caused this housing affordability crisis and urgent policy reform is needed. While the Victorian reforms are well meaning, today’s announcement is a step in the wrong direction.” Forrest said.
