New incentive-based infrastructure funding reforms have the potential to boost the nation’s economy, and in turn supplement existing property markets.
The recommendation of reforms to incentivise infrastructure funding by Infrastructure Australia, as described by Ken Morrison, CEO of the Property Council of Australia, can also contribute towards improving housing markets around Australia.
“Australia needs to regain its appetite for nation-building reform if we are to manage the challenges of a rapidly growing population and make the right infrastructure investments that will support our future prosperity,” Mr Morrison said.
“Infrastructure Australia’s proposals for incentives have worked before through National Competition Policy and Asset Recycling, and they can work again if we are prepared to step up to the opportunities and challenges outlined in the report.”
The report targets six areas: introducing road user charging, reforming the urban water sector, reforming the electricity market, reforming land tax and franchising public transport services.
In the land tax section, the report suggests to remove stamp duty and replace it with a broader land tax instead, which it assumes will result in an average of at least 3 per cent total capital productivity gain.
Infrastructure Australia was right to address the replacement of stamp duty in the report, Mr Morrison said.
“Stamp duty is undisputedly a bad tax, but poorly designed reform could lead to even worse outcomes so it needs to be handled carefully,” he said.
“There is no quick fix given the sheer size of stamp duty revenues and their importance to state and territory governments. More work needs to be done on this reform model.”
The Property Council has taken a look at financial incentivising as a means to address housing supply, which would benefit the economy to the tune of $3 billion; this has been taken on board by the government and the opposition.