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Chief Executive | The Budget story

  • May 11, 2023
  • by Mike Zorbas
Chief Executive Mike Zorbas giving commentary on the Budget.

The first surplus in 15 years has arrived courtesy of global commodity upsides and the healthiest jobs market in four decades. Against the backdrop of high inflation around $15 billion in incentives and welfare will enter the economy as part of the government’s approach to addressing cost-of-living issues.

The real story of this budget, and the next few years of Australian political debate, is the five-year net overseas migration (NOM) total of almost 1.5 million people out to 2027 in a time of housing supply deficits.

This is the largest five-year running NOM total in the past 30 years and very welcome. Skilled migrants are essential across most sectors of our economy and a strong influx will benefit the property industry and underpin our attractiveness as a global investment destination.  

At the same time, these are large numbers of new people we need to accommodate. As we have communicated through national news outlets over the past few days, without proper state housing targets, improved planning systems and well-located housing choices for students, retirees and renters we will see the national housing deficit blow out further. We need a redoubling of national and state commitments to better planning and housing delivery starting now.

On that topic, with timing adjustments and allowances for existing projects, the government’s decision to level the tax playing field for build-to-rent projects is a significant one. This will allow a welcome new asset class to grow into its full potential across Australia, unlocking up to 150,000 new homes and relieving pressure in the rental market over the next decade. A powerful win for good public policy after our many patient years of advocacy.

The government’s significant commitments on climate are also welcome with a major investment of $1.3 billion for energy performance upgrades of Australian homes.

One for the road. Structural deficits of around $30 billion and only modest growth will return over the forward estimates. For a government that will struggle to contain spending, these baked-in future deficits means a higher-taxing future looms. As previously described here, there are plenty of smarter Federal taxes to pursue than those that add to the expense, and reduce the supply, of property and new homes.