Building a better Australia
Get population settings right
Population policy, analysis and data is core to the integrity and robustness of subsequent choices on
infrastructure, land use, development patterns and funding priorities.
STATE OF PLAY
Immigration has been an essential and valued element of the modern Australian story, adding to the collective prosperity of the nation. Migrants have helped drive our population growth, bringing with them skills, enhanced workforce capability, wages, tax
revenue, diversity and improvements to productivity.
There will always be a dialogue at the margins around the precise level of immigration, but Australia’s standing as a net importer of capital – financial and human – will remain constant.
The debate around immigration levels and settlement patterns needs to be part of a larger assessment of Australia’s population policy, trajectory and geographic spread.
Population policy has rarely been explored in depth; it has often been confined to an element of work that informed larger pieces such as the Intergenerational Reports, or Infrastructure Australia’s agenda.
There are positive signs of change with the Commonwealth’s Planning for Australia’s Future Population having, as a centrepiece, the creation of a dedicated home for this important issue - the Centre for Population.
The Centre for Population will serve as a central, consistent and expert hub for perspective on Australia’s population growth – informing policy choices, as well as educating the community on the trajectory and consequences of change.
The Centre’s work should be tied to development of a National Strategic Population Plan and have a mandate that includes:
Establishing one, three and five-year population forecasts that are updated on a rolling annual basis and embedded in a National Strategic Population Plan
Better mapping the interaction between the Government’s visa program, settlement patterns and workforce requirements
Collaborating with the States and Territories to ensure the geographic spread of population is devised in partnership
Using the population forecasts to better inform strategic land use and infrastructure plans – National, State and Local
Clearly charting the base level of services expected for key elements of liveability, including housing, transport, social infrastructure and the environment documented in the National Strategic Population Plan
Opening a dialogue with the community on the economic and social benefits of population growth.
Introduce an Infrastructure Accord
We remove politics from the planning and delivery of infrastructure – and remove the risk of unsettling strategic land use plans and housing investment based on shifting priorities.
STATE OF PLAY
Infrastructure is the backbone of our economic success and essential to the creation of liveable and productive cities.
The provision of key urban infrastructure has failed to keep pace with the strong population growth of our major cities, and in doing so, added to congestion, squeezed economic productivity and undermined good land use and housing delivery.
However, too often infrastructure priorities are subject to political cycles, or antagonism between the priorities of the Commonwealth and State Governments. The funding of fine grain infrastructure that knits together local communities and precincts is also contested by Local Governments.
There have been attempts to overcome the inconsistency of infrastructure planning, funding and delivery – with the creation of Infrastructure Australia and implementation of City Deals among the positives.
We need to go further in lifting infrastructure above the political fray and ensure the durability of decisions around priorities and funding are entrenched in a way that gives comfort to investors – both in projects, but also the land use and housing supply that follows.
UDIA National recommends development of an “Infrastructure Accord” to remove partisan politics and deliver long-term certainty in planning and delivery.
An “Infrastructure Accord” would see both major parties commit to:
Permanently insulating the identification, funding and delivery of significant infrastructure projects from partisan politics
Using the Priority List established by Infrastructure Australia as the baseline for decisions on prioritisation
Allowing additions to the pipeline of projects, but only when they had been subject to full business case analysis by Infrastructure Australia
Ensuring the business case for all projects subject to the Accord include analysis of associated land use and housing opportunities to maximise the benefits of investment
Assessing the trunk infrastructure that is required to unlock housing opportunities identified off the back of major transport projects
A minimum pipeline of nominated City Deals – backed by real funding that ties Federal, State and Local Governments to agreed performance outcomes.
We can lift the economic productivity,
liveability and sustainability of our cities and regions by better aligning the delivery of land release and infrastructure – and in doing so, curb community concerns over congestion.
STATE OF PLAY
Infrastructure – large and small – underpins the liveability and economic fortunes of our cities.
Good infrastructure helps connect markets, move people to and from work more efficiently, enables essential services, and improves urban amenity. There is also a direct link between the timely and efficient delivery of precinct-level infrastructure and the supply and quality of new housing.
The policy consensus that has emerged on the value of a collaborative relationship
between the Commonwealth, States and Territories is a clear plus. This includes leveraging the balance sheet of the Federal Government to unlock important projects.
Game-changing investments – such as projects to be triggered under the $10 billion National Rail Program for capital cities – through to smaller, targeted initiatives all add to the impetus.
However, we need to continue to remove the disconnect between strategic, long-term land use and infrastructure planning to maximise the benefits and get a better return on taxpayer investments.
Infrastructure Australia will soon commence its next Australian Infrastructure Audit – last undertaken in 2015. The recommendations of the last Audit should point us in the direction of priorities that improve outcomes including:
Investing in quality urban infrastructure by aligning investment to future growth corridors needed to meet stated housing targets
Identifying and securing long-term infrastructure corridors informed by strategic land use plans that incorporate more robust population planning
Auditing all current infrastructure projects – and future projects being proposed by the States and Territories – to test whether land use opportunities are being unlocked, particularly mixed use
Providing financial incentives to the States to fund key infrastructure, including via asset recycling and broadening the tax base, that can unlock housing supply
Increase focus on local-scale infrastructure which can also create significant improvements at a fraction of the cost of the large-scale transport model
Link infrastructure investment to local regions prepared to accept their fair share of population growth matching future employment opportunities.
Boost housing supply and diversity
Overhauling planning systems to eliminate barriers to housing supply and diversifying housing options to meet
changing demographic demands means the market can address imbalances between demand and supply.
STATE OF PLAY
Housing supply pipelines remain out of sync with long-term forecasts for population growth and demand, and the mix of housing is falling short of changing demographic and lifestyle demands.
Even during the rise in construction activity in recent years, supply forecasts only briefly touched anticipated demand levels before quickly falling away again. Housing supply is heavily constrained by restrictive land release and zoning practices, inefficient planning systems, excessive taxation and the constrained availability of finance to fund new projects.
It has created a self-fulfilling cycle that has seen the cost of land explode, established house prices follow and a widening cohort of Australians excluded from the market due to the gap between incomes and house prices. We risk freezing a generation of young Australians out of the housing market – when in fact Australia has the land, redevelopment opportunities, expertise, capital and capacity to create one of the world’s most efficient and equitable housing markets.
Commonwealth, State and Local Governments need to re-orient housing policies to create a diverse mix of housing choices for people – including platforms for renters and seniors.
A revised mandate for the National Housing Finance and Investment Corporation – alongside the newly created First Home Loan Deposit Scheme – has the potential to serve as a circuit breaker.
The brief to bring new research and analytical rigour to understanding housing supply, demand and affordability is welcomed. Priorities should include:
Welcoming industry leadership and dialogue to the table, given the prior and well-regarded National Housing Supply Council benefitted from private sector leaders being appointed
Aligning the population data created at the new Centre for Population with binding quotas on the States for new housing and land releases
Introducing financial incentives that link to State and Local performance on planning reform and meeting housing supply targets
Identifying and recommending removal of inefficient red and green tape, as well as statutory charges, that act as both a handbrake and a cost impost on the delivery of new housing
Facilitating the development of Build to Rent, mixed housing and right-sizing options for seniors
Refining the income thresholds attached to the First Home Loan Deposit Scheme to ensure they are appropriate for entry-level house prices in different cities and regions.
Reform taxes imposed on new housing
Cutting the cost of new
housing will open the
market to more entry level
STATE OF PLAY
Taxes and charges account for approximately 20 percent of the cost of new housing. Stamp duty, infrastructure charges and levies, “value capture” mechanisms and a range of other taxes and charges collectively raise the barrier to entry for new home buyers.
UDIA National understands the need for funding the infrastructure and services on which communities depend – but the balance is now askew and continues to fall most heavily on people who can least afford it.
We also appreciate the current dependence that Government balance sheets have on property taxes and that any shift in the mix will be gradual, requiring a leading role from the Commonwealth but collaboration with State and Local Government.
However, there is a compelling case to map the glide path to reform and to begin taking steps now that can ease the burden of costs being “baked in” to new housing prices.
The National Housing Finance and Investment Corporation has been granted $25 million to conduct research into housing supply, demand and affordability.
A specific element of NHIFC’s expanded mandate should include:
Mapping the current mix of taxes, charges and levies which are imposed on new housing
Assessing the relative efficiency (or inefficiency) and equity (or inequity) of each tax, charge and levy with a particular focus on stamp duties
Establishing a league table of taxes, charges and levies on new housing in each State and Territory, down to individual Local Government level
Identifying ‘nuisance’ taxes which should be prioritised for immediate removal
Charting short, medium and long-term paths for eliminating taxes which are better captured through more equitable and broad-based revenue measures.
Streamline environmental planning practices
Adopting a one-stop shop approach to
strategic assessments can reduce the time and cost of land development – and in doing so, ultimately reduce the cost of new housing.
STATE OF PLAY
All industries require clarity and the development industry is no exception.
Environmental protections are an inevitable part of land development and assessments are best undertaken at a strategic level.
Unfortunately, the current intersection of Federal, State and Local environmental assessments is complex, inefficient and often contradictory.
The double handling of assessments adds needlessly to the time and cost of assessment, and leaves capital sitting idle. It can also lead communities to contest the outcomes.
Environmental assessments are best undertaken by Federal and State Governments in collaboration at a strategic, landscape scale.
Developers actively work with Local Government to design good neighbourhoods, and provide a mix of local conservation, active and passive open space and respect local environmental values.
But too often, the process is used by Local Governments to challenge the outcomes of higher-order strategic assessments.
This capacity should be stripped from the assessment process.
The Environment Protection & Biodiversity Conservation Act 1999 is now due for its 10-yearly review – presenting an opportunity to fulfil its promise of streamlined, single assessment and approvals processes.
UDIA is keen to engage directly with the process to ensure its efficient operation and application in a way that benefits both the environment and development industry.
We would recommend that the review:
Has a clear mandate that Part 10 of the Act be refined to ensure Strategic Assessments undertaken between State and Territory Governments and the Commonwealth are legally robust, well structured and provide an appropriate balance of certainty and flexibility
Results in completion of all bilateral assessment and approval agreements between the Commonwealth and State and Territory Governments to strip out duplication
Explores other opportunities to reduce the cost of compliance and regulatory costs associated with the EPBC Act.