- NSW Budget 2020-21 Update
- Proposed Changes to Stamp Duty and Land Tax in NSW
- Final Report – Review of Federal Financial Relations
- Update on Draft Design and Building Practitioners Regulation
NSW Budget 2020-21 Update
The NSW Budget 2020-21 delivered by the NSW Treasurer, Dominic Perrottet has responded to the significant shocks to the economy that have been delivered by COVID-19, last summer’s bushfires and a long period of drought.
The Budget focuses on delivering a strong infrastructure program, job creation and a targeted stimulus package to continue supporting the economic recovery of the state.
A deficit of $16 billion is expected in 2020-21, with forecast revenues down $25 billion over the next four years, which should then see a surplus return in 2024/25 with key measures put into place to support a strong economic recovery over the next five years.
Some of the features of the NSW Budget include:
- A proposal to phase out stamp duty in favour of a new annual property tax levied on the unimproved value of the land. More information on this below.
- The Code of Conduct for commercial leases will end on 31 December 2020.
- Total Infrastructure spend will be $107.1 billion over 4 years to support jobs and growth.
- The Budget locks in funding for a suite of planning reforms that have already been announced by the Government during 2020 as relief and recovery measures in response to the COVID-19 pandemic including the Planning Reform Action Plan, Planning Delivery Unit, ePlanning and the review of Infrastructure Contributions by the Productivity Commissioner.
- $23m ($139m over 3 years) for an assurance program to project manage the remediation of process for the removal of high-risk cladding in residential apartment buildings.
- $6.7m (27m over 4 years) for Construct NSW Transformation Program to support the Building Commissioner restore confidence in the NSW building and construction industry.
Read more information on the NSW Budget and further detail on investment in the regions here.
NSW Property Tax Proposal – Changes to Stamp Duty and Property Land Tax
The NSW Budget 2020/21 saw the NSW Treasurer announce plans to introduce changes to stamp duty and property land tax. The proposal would see residential and commercial property purchasers opt to either pay stamp duty or to switch over to the new property tax system.
The Government has outlined the key parameters of the proposed property tax:
- There would be four categories of property – owner occupied residential, investment residential, primary production and commercial
- The rates for each category would be different with a fixed amount plus a rate applied to the unimproved value of the land
- Whether to pay an upfront stamp duty and land tax or to pay an annual property tax instead would be the choice of the buyer
- The annual tax would replace stamp duty and land tax
- The property would remain a ‘property tax property’ once it has been paid once
- Existing stamp duty concessions would be replaced with a grant of up to $25,000.
The NSW Treasurer’s reform model intends to phase out stamp duty in a way that avoids the big mistakes made in the ACT. Critically, it is a revenue neutral reform and embeds the element of choice, which is a critical and central principle.
This was not the case in the ACT as there was no choice, and it was not revenue neutral. Nine years into a reform plan to abolish stamp duty, the ACT Government received more stamp duty revenue last year than it did at the start of the process.
The Property Council has a seat at the table in the consultation process with the NSW Government and we will be ensuring the interests of all our members across the residential and commercial sectors are effectively represented in the final design of the reform measure.
A Consultation Paper has been released by the NSW Government ‘Buying in NSW, Building a Future’ which will be on exhibition until March 2021. We look forward to furthering conversations and consultation on the proposed policy framework for the reforms with the NSW Government.
Final Report – Review of Federal Financial Relations
The NSW Government has released the Final Report of the NSW Review of Federal Financial Relations which can be accessed here.
The NSW Review of Federal Financial Relations Report makes a number of recommendations that would have a significant impact on the property industry if they were to be implemented. Of most concern for the property sector is the recommendation regarding the replacement of transfer duty with a broad-based land tax (Recommendation 7).
The Final Report builds on the Draft Report and gives detailed options for the implementation of its recommendations. Central to the Report is the question of GST reform, or changing the rate or base of the GST. The Property Council has long maintained that government should stick to the comprehensive 1999 Commonwealth-State agreement on financial relations and fund the abolition of non-residential stamp duty through the GST.
As mentioned above, the Property Council is in the box seat when it comes to advocating our position to Government, and we are continuing to work closely with the NSW Government on these critical matters.
Update on Draft Design and Building Practitioners Regulation
The draft Design and Building Practitioners Regulation has been published and is now available on the Department’s website for comment here.
The Property Council has convened a Taskforce of industry experts to inform our position on the matter and ensure that the voice of industry is heard by Government.
We have had several private meetings with the Department, as well as several roundtables related to the development of the regulation.
The regulation gives greater clarity to some of the significant changes that have been brought about by the Design and Building Practitioners Act 2020 (which itself passed in June 2020, further information here).
The changes will require:
- design and building practitioners to declare their work complies with the Building Code of Australia
- engineers to register to provide professional engineering work
- all practitioners to meet continuing professional development and code of practice requirements.
We encourage members to engage in the process by reading the Regulatory Impact Statement here and the regulation itself here.
If you have any questions in relation to any of the above, please contact Senior Policy Adviser Sean Conway at [email protected]