• Bold reforms lacking in WA Budget

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    Bold Reforms Lacking in 2019-20 WA Budget|REIWA Budget Response

    WA Treasurer Ben Wyatt has announced Western Australia’s first surplus in five years of $553 million and a $4.1 billion reduction in state debt.

    REIWA congratulates the WA Government on bringing the budget back to surplus, but given WA’s improving economic conditions, REIWA is disappointed that once again there were few initiatives included in the budget to help address housing affordability and aid the property sector in its recovery.

    REIWA President Damian Collins said while the Institute was pleased the McGowan Government had resisted temptation to increase property taxes, the allocation of the 2019-20 WA Budget was mostly uninspired.

    “Treasurer Ben Wyatt has considerably revised the state’s economic position due to WA’s increased share of the GST and the surge in commodity prices. This influx of funds should go towards reducing state taxes, particularly stamp duty, and helping first home buyers get into the market through the reintroduction of the First Home Owners Grant for established properties.

    “With the coffers fuller than we could have imagined just a few years ago, now is the time for the WA Government to step up and lead not only the state but the country and remove the single greatest barrier to housing affordability, stamp duty,” Mr Collins said.

    In its pre-budget submission, REIWA put forward six key recommendations aimed at helping create a fair, sustainable and prosperous local property market.

    The recommendations were:

    1. No increases to transfer duty rates and no changes to thresholds.
    2. Maintain the stamp duty exemption for first home buyers at $430,000 and re-introduce a $7,000 First Home Owner Grant for purchases of existing dwellings.
    3. Introduce a $10,000 concession on stamp duty for seniors over the age of 65 to enable them to right-size into more suitable accommodation.
    4. No further changes to rates or thresholds for land tax.
    5. Revoke the introduction of foreign owner duty surcharge to keep WA property competitive.
    6. Undertake a state tax review to assess the viability of and financial implications on the community of a shift to a broad-based land tax system that ultimately removes transfer duty.

    “The woes of the WA property market are now an all too familiar tale for West Australians. It’s time bold reforms were introduced to help our local market and economy recover,” Mr Collins said.

    “REIWA is disappointed the McGowan Government have doubled down on their seven per cent Foreign Owner Duty Surcharge (FODS) in this budget, despite the new tax having negatively affected building and off-the-plan sales since it was implemented in January 2019 and raised less than 10 per cent of the last year’s estimations.

    “In the 2018-19 Budget, the WA Government forecast the FODS would bring in $123 million worth of revenue for the state over three and a half years, but in the first five months a measly $2 million has been raised, with another $1.8 million yet to be collected. All that this new tax has accomplished is further stifling WA’s struggling property market.”

    However, there was a glimmer of hope as the Treasurer told industry groups that a stamp duty concession for seniors was on the Government’s radar and would be considered as WA’s economy improves.

    “REIWA is very hopeful that the concession for seniors will be included in the next state budget. Our industry has been crying out for an initiative to kick-start transactions and giving seniors a helping hand will have positive ramifications for everyone as it frees up valuable housing stock for young families.

    “While the recent changes to the Keystart lending eligibility will help a small number of home buyers, it is still tinkering at the edges, when a more substantive policy is needed to get the property market back on track.”

    REIWA continues to call on the WA Government to implement real, long-lasting change that will benefit every West Australian, by phasing out stamp duty in favour of a broad-based land tax that is paid in smaller annual amounts, rather than as an upfront payment.

    Find out more about REIWA’s budget response.