PwC report shows importance of development
A PwC report commissioned by the Urban Development Institute of Australia (UDIA) NSW has revealed the economic cost of the State Government’s proposed tax increase on housing.
The report shows a 10 percent drop in housing supply over 5 years would lead to a loss of:
- 190,000 jobs,
- $25 billion in gross state product,
- $22 billion in household consumption
- $2 billion in industry value added, and
- $2 billion in tax revenue.
The figures come at an important time, as approvals in NSW fell 9.8 percent between in the 12 months to March 2018.
UDIA NSW chief executive, Steve Mann, said the report shows the importance of new housing supply.
“NSW’s very healthy economic state is closely linked to the increase in housing supply, which the Government should be proud of,” said Mr Mann.
Last year the Government increased the tax on new homes after removing a subsidy paid to councils for local infrastructure, which will lead to an extra $50,000 per home by July 2020.
Furthermore, new ‘Special Infrastructure Contribution’ (SIC) zones involving a flat fee per dwelling or hectare of land were announced. In the Parramatta-Olympic Peninsula area, SICs are levied at $20,000 per home.
“The economic health has been achieved while the amount of tax on a new home was 25 percent of the sale price. The Government has since taken the opposite direction on housing affordability by announcing significant increases to taxes on new homes, to around 35 percent by the year 2020.
“The PwC report shows the announced tax hike on homes may harm the NSW economy.
“We are calling on the State Government to ramp up the flow of new housing, but that can only happen if taxes are not increased, or even reduced.
“Reforming NSW’s broken planning system and keeping taxes under control will reap enormous economic rewards for the state’s economy.