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Federal Inquiry on First Home Ownership - March 2004
In March 2004 the Federal Treasurer Mr Peter Costello announced the establishment of a public
inquiry to evaluate the affordability and availability of housing for first home buyers.
The inquiry is being undertaken by the Commonwealth Productivity Commission, established
pursuant to the Productivity Commission Act 1998 (Cth).
In his press release announcing the inquiry and its terms of reference, Treasurer Costello
stated the following:
Recognising that home ownership is very highly valued by families and individuals, and is
central to social and family stability, for the purposes of this evaluation the Commission should:
- Identify and analyse all components of the cost and price of housing, including new and
existing housing for those endeavouring to become first home owners;
- Identify mechanisms to improve the efficiency of the supply of housing and associated infrastructure;
and
- Identify any impediments to first home ownership, and assess the feasibility and implications
of reducing or removing such impediments.
Particular attention should be given to the following matters as they affect the cost and
availability of residential land and housing in both metropolitan and rural areas:
- the identification, release and development of land and the provision of basic related infrastructure;
- the efficiency and transparency of different planning and approval processes for residential
land;
- the efficiency and transparency of taxes, levies and charges imposed at all stages of the
housing supply chain;
- the efficiency, structure and role of the land development industry and its relationship
with the dwelling construction industry and how this may be affected by government regulations;
- the effect of standards, specifications, approval and title requirements on costs and choice
in new dwelling construction; and
- the operation of the total housing market, with specific reference to the availability of
a range of public and private housing types, the demand for housing, and the efficiency of use
of the existing residential housing stock.
The inquiry will also identify and examine mechanisms available to improve the ability of
households, particularly low income households, to benefit from owner-occupied housing. This
will include an assessment of rent and direct ownership subsidies, loan guarantees and shared
equity initiatives.
In undertaking the inquiry, the Commission is to invite public submissions, consult with
key interest groups and affected parties, issue a draft report, and produce a final report of
its findings by 31 March 2004.
The Commissioners conducting the inquiry are the Commission Chairman Gary Banks (Presiding
Commissioner), David Robertson (Commissioner) and Dr. Ed Shann, who has been appointed an Associate
Commissioner for this inquiry.
Recommendations of the Commission are not binding on state or territory governments but are
generally considered in the formulation of policy and do generate public debate on the issues
raised.
DLS prepared a submission to the Inquiry (and a supplementary submission) dealing with the land
tax regime and its implications for first home ownership.
Other submissions, notably by property investor Mr Sam Spitzer, also looked at the land tax
implications on first home ownership.
The main thrust of the DLS submission is as follows.
- Replace the current stamp duty on land transfers in favour of a land tax on all land in
NSW.
- Land tax would be payable by all land owners, much the same way as council rates are payable
by all land owners at present.
- All exemptions and concessions relating to payment of council rates would also apply to
the payment of land tax.
- The tax payable by individual land owners would differ according to the size, location and
use of the land – much the same way as council rates are determined by local councils
at present.
- Land tax would be collected by local councils at the same time as collection of council
rates. Councils would receive an agreed fee for collecting and accounting for land tax to the
NSW Government.
- The proposal would not affect current government revenue (as one tax would be replaced by
the land tax). As further development occurred the tax base would increase accordingly.
- The above proposal is a highly efficient, transparent and equitable method of taxation.
- Implicitly, the above proposal would remove the inequities and anomalies in the current
land tax system. It would also lead to the abolition of the NSW Land Tax Office.
A submission along similar lines was handed to the Legislative Council Inquiry into Land
Tax in 1998 (known as the "Nile Inquiry") and subsequently to the State Government
for consideration.
The government is yet to publish a detailed response on the merits of the proposal.
The proposal is further considered in this section.
To view the initial DLS submission click
here (PDF document).
To view the supplementary submission click
here (PDF document).
To view the submission of Mr Sam Spitzer click
here (PDF document).
View the Commonwealth Productivity
Commission Web site.
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