The building bonus scheme has missed the mark, with property investors being potential losers, a property group has suggested.
According to the REIWA, the scheme could better address the property sector by targeting stamp duty, with the vast majority missing out under the current plan.
REIWA president Damian Collins said the institute understands that this scheme is aimed at providing short-term jobs at a crucial time. However, both the federal and state governments have missed an ideal opportunity to undertake critical tax reform.
“While the scheme will create short-term jobs and help people get into homes in WA, the remaining 99 per cent of Western Australians who won’t get to utilise the scheme are still potentially lumbered with stamp duty if they want to buy a property,” Mr Collins said.
REIWA believes the $444 million state package targeted at first home buyers, who will receive up to $70,000 for new builds, is a better policy.
Western Australians could receive up to $45,000 in grants for building a home, with the state government announcing a $20,000 bonus for new residential builds on top of the $25,000 already offered by Mr Morrison’s national policy.
“Yesterday’s state package was better than the federal scheme as it is available to more people, but it does not address the barriers to moving that many people encounter,” Mr Collins said
Numerous studies have shown that removal of stamp duty creates significant economic activity and the benefit to the WA economy could be as much as $1 billion per annum.
“While the scheme will have a short-term boost to the economy, post 31 December 2020 we will be back in the same position, with stamp duty blocking upwards of a billion dollars of activity and thousands of jobs annually,” Mr Collins said.
He also highlighted how states are currently debating whether or not to remove stamp duty.
“With Victoria and New South Wales focused on getting rid of stamp duty, there has never been a better time for WA to also consider its removal to help boost jobs and the economy.
While the proposal is designed to help give the economy a quick boost as well as keep construction workers in a job, without stimulating house prices, critics of the scheme believe it will simply make the rich a little richer.
The Grattan Institute housing finance program director Brendan Coates has also criticised the scheme, believing that it won’t help the construction sector.
“Giveaways to home buyers are widely popular. And who wouldn’t want their house renovated on the public dime? The trouble is it’s bad economics,” he said.
“The new grants will also encourage the in-demand tradies to raise their prices.”
“They’ll add up to a lot of spending for a few jobs saved,” Mr Coates concluded.