He says the problem in Australia’s five major cities is the “missing middle”, or lack of adequate supply of medium-density townhouses or low-rise apartments, in highly desirable inner-city suburbs close to the CBDs. The blockage here is the Nimbyism of existing single-dwelling property-owners, backed by costly and potentially corrupt local government zoning and planning restrictions and red tape that stop developers from securing land for, and timely approval of, medium-density projects.
Potential political clash
Talk of modernising Australian cities to be more vibrant, like the higher-density cities of Europe, sounds appealing. Yet the idea that housing a bigger Australia requires a big-stick stripping of local councils’ zoning and planning powers, or using a broad-based land tax to drive more intensive use of land and existing public infrastructure, sets up a political clash with the understandable desire of residents to maintain the existing amenity of their suburbs.
The challenges are underlined by the new NSW Labor government’s retrograde reversal of former premier Dominic Perrottet’s welcome plan to let first home buyers choose between stamp duty and land tax. By reneging on the promise to abolish stamp duty, the ACT government has also turned its land tax changes into just a tax grab.
Meanwhile, spendthrift state Labor governments are cherry-picking land tax cash cows, as shown by Queensland’s aborted attempt to remove land tax concessions for “rich” interstate property investors, and by Victoria’s “class war” land tax slug in last week’s budget on those who own a holiday home or an investment home.
More efficient and greater taxation of land is a worthy objective. But this needs to form part of a comprehensive incentive-sharpening tax plan that lowers taxes on income and profits, rather than be seen as just trying to tax Australians into living in flats.
Australia needs to grow bigger, and to build homes for a larger population. But in a country with virtually unlimited amounts of land, the opportunity to own a stand-alone house has been integral to the Australian dream of home ownership, and part of Australia’s attraction for generations of migrants who leave cramped quarters at home to seek more space to raise their families here.
The solutions for Australia housing problems should continue to include developing traditional outer-suburban housing estates. The infrastructure and population challenge for state governments should also include making sure their budgets prioritise building faster and more convenient road and public transport links, to shrink the tyranny of distance and allow people to more easily combine living in regional centres such as Wollongong and Newcastle, or Ballarat and Bendigo, with working in Sydney or Melbourne.