State Budget

The State Budget had three major pillars, the first being a repeat of last year’s easy target, an increase in land tax rates and some changes to the thresholds, which is expected to raise an additional $182 million in 2015-16 and a total of $826 million over the next four years.

From 2015/16, the land tax scale will be revised to:

• apply a flat dollar amount of $300 to taxable land with an improved value above the exemption threshold of $300,000 and up to $420,000
• increase land tax rates (expect the top rate, which will remain unchanged at 2.76%); and
• adjust some of the property value thresholds

The additional land tax revenues will assist in underwriting the large revenue shortfalls predicted in 2015-16.

 The second was the removal of the $3,000 First Home Owners Grant for established homes, whilst maintaining the existing $10,000 grant for new homes. This drive towards the new constructions will have a positive impact on the building market, but can be seen to run contrary to the Government’s policy of encouraging infill development. The combination of the grant being directed at new builds and the transfer duty exemption for vacant land valued at up to $300,000 is likely to push first home buyers to build in newly released outer suburbs as opposed to infill development in established suburbs.

The final pillar is the asset privatisation or sell off, with Fremantle Port, the TAB and electricity generation assets marked for disposal. These reforms will help free up the balance sheet but it is questionable whether this will be seen in revenue generation as the interest savings will be balanced by the revenue streams given up.

No Tax increases for Foreign Investors

The Western Australia (WA) Treasurer has announced that WA will not go down the path taken by Victoria in imposing additional transfer duty for property acquisitions made by Foreign Investors. This move signals recognition in the role foreign investment plays in building much needed housing infrastructure in the state.

Local planning reform

A recent report card on Development Assessment found WA to be making significant leaps forward in reforms to its planning system and frameworks, however, the failure of the local government reform was a big setback. Recommendations for further reform included:

• WA Planning Commission to assist local government to deliver their core planning functions and strategic plans more effectively, and ensure local council consistency in planning schemes and development codes
• implementation of a specific, economy focused planning strategy, which underpins housing and employment delivery for the state; and
• implementation of an Infrastructure Delivery Plan to outline government priorities and available funding and timing of provision