The Palaszczuk Queensland Government’s second Budget has been handed down with a promise of combined surpluses of $3.2billion over the next four years but also with the state’s total debt tipped to surge to $80 billion by the end of this decade.
State Treasurer Curtis Pitt has branded the budget as a ‘back to work’ budget with a focus on innovation, investment and infrastructure in order to provide a much-needed stimulus to the Queensland economy.
Some of the key components affecting the property industry include:
-The Government’s new 3% transfer duty surcharge for foreign buyers of residential property will commence on 1 October 2016. The Government is expecting $15 million from the surcharge in the first year and $25 million annually to 2019-20. The Treasurer has indicated a 50% foreign owned threshold test will apply.
-$40 million has been committed to increase the First Home Buyers Grant from $15,000 to $20,000 for first home buyers purchasing newly constructed property under $750,000. The $5,000 increase will take effect on 1 July 2016 and apply for 12 months.
–Transfer duty is expected to reach $3.06 billion this financial year, down slightly from last financial year’s record $3.08 billion intake. Budget projects an average annual stamp duty growth rate of 5.2% over the four years to 2019–20.
–Land tax is estimated to grow by 7.3% in 2016-17 to $1.083 billion, with annual growth of 6.5% expected over the forward estimates. Neither the outdated land tax thresholds or the 2009 “temporary” land tax surcharge have been amended in this Budget.
-An additional $1.5 billion has been allocated to the State Infrastructure Fund, taking the total value to $2 billion over five years. $4 billion is being repatriated from the defined benefit superannuation scheme, half of which is being used to retire debt and the other half being used to fund infrastructure.
Two infrastructure highlights include:
-$50 million allocated to the Cross River Rail Delivery Authority, which is leading the Government’s efforts to secure the critical project.
-$40 million in additional funding has been allocated to the North Queensland (Townsville) Sports Stadium, bringing the State’s contribution to the project to $140 million. Both major Federal parties have also pledged $100 million to the project, should they be elected.
-$57 million has been allocated for Better Planning for Queensland to; transition to the new planning system complete the integrated review of the State Planning Policy, the State Development Assessment Provisions and the Planning Regulation produce the draft South East Queensland Regional Plan.
-A $209.1 million capital program has been outlined aimed at modernizing the State’s social housing stock. This investment will involve; the completion of construction of 368 rental units; the purchase of 111 land lots; the commencement of construction of a further 277 rental units; upgrades to existing social housing.
Chris Mountford Queensland Executive Director Property Council of Australia said the Government’s new foreign investment tax is a major gamble.
“Today’s Budget delivers a tax that not only risks investment and jobs in the construction sector, but also risks driving up the cost of housing for Queenslanders across our cities and our suburbs.
“While the Property Council welcomes the Government beefing-up the first home owners grant in the Budget, this positive move will be outweighed by the impost of this new tax on foreign investment – an increasingly critical component to getting residential projects off the ground.
“At a time when the Queensland Government’s resource revenue is being drastically written-down, they are trying to recoup losses from one of the few sectors of the Queensland economy that is currently generating jobs.
“With stamp duty and land tax making up 35% of the State’s tax take (not to mention the considerable contribution our members make to payroll tax) the Government’s strategy is not only full of risk for the economy, but also their own bottom line.”
UDIA (Qld) President, Stephen Harrison had said previously that a new 3 per cent surcharge on transfer duties for residential properties could have a significant impact on investment and jobs in Queensland. While this new tax will apply to residential property only, its impacts will be felt throughout the entire Queensland economy.
“The introduction of a new surcharge, on top of recent APRA changes in relation to foreign buyers, will significantly increase the cost of investing in Queensland,” Mr Harrison said.
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