The Queensland State Budget released today has reinforced just how critical the property industry is to the Queensland economy, and in doing so, underscores the major gamble the Treasurer is taking by introducing a foreign investment tax.
Queensland Executive Director of the Property Council, Chris Mountford, said that the Treasurer is expecting stamp duty to grow by 5.6% and land tax to grow by 7.3% in 2016-17.
“Clearly the Treasurer’s budget bottom line has been strengthened by activity and growth in the property sector over the past 12 months, and he is banking on it continuing,” Mr Mountford said.
“This is the role the property industry wants to play in the Queensland economy – generating jobs, affordable housing and prosperity for Queenslanders.
“We know that over the past 18 months much of this has been driven by strong residential development activity, particularly in apartments in South East Queensland.
“And this is the part of the market where foreign investment has played such a powerful role in providing funding certainty and the presales required to get projects out of the ground.
“This is also the part of the market which is already cooling, and will continue to do so over the next couple of years as this additional supply moderates further demand.
“It beggars belief that the Government is willing to risk making it even more difficult for the apartment market by slugging it with an additional stamp duty surcharge.
“It also appears likely that many developers – including house and land developers – are likely to be slugged with this tax as the Treasurer has indicated a 50% foreign owned threshold test.
“In reality tax is a cost like any other in the development process. It’s no different to concrete, bricks or drainage – it has to be passed on the end consumer if the project is going to stack up and proceed.
“So today’s budget delivers a tax that not only risks investment and jobs in the construction sector, but also risks driving up the cost of housing for Queenslanders across our cities and our suburbs.
“While the first home owners grant increase also included in the Budget is a positive step, it potentially will be undone for many first home buyers as they will need to dig into their pockets to pay this tax as part of the cost of building their new home.
“The Treasurer has certainly rolled the dice in this State Budget,” Mr Mountford said.