UDIA WA WRAPS UP THE 2024-25 STATE BUDGET

EVERYTHING OUR MEMBERS NEED TO KNOW ABOUT TODAY’S BUDGET ANNOUNCEMENTS

UDIA WA CEO Tanya Steinbeck and Executive Director of Strategy & Policy Sarah Macaulay attended the State Budget Lockup this morning to get all the details about how the State Government is responding to the housing and skills crisis facing Western Australia.

The Treasurer handed down the key inclusions as part of the Cook Government’s first budget, stating that it was centred around five key themes:

• Cost of living relief
• Housing
• Health
• Infrastructure
• Economic growth

While UDIA WA welcomes the focus on housing supply in the Budget, we caution that more will need to be done to make a dent in a forecast 30,000 housing shortfall over the next five years. 

There is a continued focus on increasing social and affordable housing that will largely be delivered by government and the community housing sector in priority locations such as METRONET precincts.  The Government’s $42.2 billion infrastructure program over 2024-25 to 2027-28 (including a record $12.1 billion investment for 2024-25) includes some welcome investment in water, wastewater, and power infrastructure but it will continue to challenge residential construction sector capacity, even with the welcome $85 million boost to fund 150 more apprentices.

With significant increases in house prices expected due to dwindling stock levels, housing affordability and availability will get worse before it gets better – contrary to some of the messaging weaving through the Budget documents.

There are certainly positives in the Budget but the lack of crucially needed support boost the viability of medium and higher-density infill projects and prioritisation of key items of catalyst infrastructure for identified growth areas are considered missed opportunities.  We will continue our advocacy on crucial priorities for Government in leveraging industry to deliver the diverse homes we urgently need, faster. 

BUDGET WINS FOR HOUSING SUPPLY & CHOICE 

Aligned with UDIA WA’s 2024-25 pre-Budget Submission (here), policy priorities and broader ongoing advocacy efforts, the following items were confirmed in the Budget:

Environmental Assessment and Approvals reform

• $36.4 million to slash green tape and speed up approvals
• The new package includes $14.1 million to establish cross-sector triage teams within regulatory agencies which will provide immediate review and rapid upfront assessment of applications received (including $4.4 million for DWER and $9.6 million for a new team to coordinate approvals reform across Government)
• $9.6m to boost staffing to accelerate approvals reforms
• $10.6 million investment in WA Government’s Environment Online System for a single system for approvals across Government
• $3.1 million to continue implementation of the Native Vegetation Policy
• Additional $665,000 in 2024-25 by DPLH to meet the cost of four FTE to finalise the development of the environmental offsets bank model to make State land available as environmental offsets for Government priority projects.  This is a good step but there is an urgent need to progress a strategic plan and fund for offsets to provide greater certainty for industry and enhanced environmental outcomes associated with private sector development not just government projects.

Infrastructure funding

• Additional $320 million to upgrade vital Water Corporation infrastructure through a water and wastewater pipeline renewals program, including $156.8 million to relocate and augment water and wastewater networks across the metro area
• $502 million for WA’s cleaner, affordable and reliable energy future
• $324 million to support expansion of the State’s main electricity network for commencement of planning and scoping work on long-lead commitments and undertaking procurement processes for early transmission network investment required to meet industry growth forecast for the South West Interconnected System

Construction Workforce Attraction and Retention

• $195 million in new spending to build the State’s skilled workforce and help more Western Australians into jobs
• $85 million to boost the capacity of our residential construction workforce, including:
• $21 million for an additional 150 places to subsidise wages for new apprentices and trainees for Group Training Organisations
• $37 million to provide incentives to apprentices for four-year apprenticeship program, including tool allowances and milestone payments through CTF
• A further $4.3 million to continue the Construction Migration Office throughout 2026, to attract skilled migrants to support WA’s building and construction sector
• $8 million top-up for Fee Free TAFE program

Further investment in social and affordable housing, and homelessness

• $1.1 billion in new funding for initiatives to boost housing and land supply, improve affordability and bolster support services
• Stamp duty exemption and concessions threshold has been lifted for purchasers of established properties to $450,000 and $600,000 respectively for first homebuyers. 
• $400 million to expand the Social and Affordable Housing Investment Fund – this is seeking to ensure WA receives its fair share of the Federal Australia Future Fund and includes completion of the Government’s previous commitments:
• $276.9 million for the Department of Communities to support continued investment in new social housing ($140 million), grants for regional community housing providers ($60 million) and a National Rental Affordability Scheme purchase program ($56.2 million)
• $3.5 million in recurrent spending by DPLH to facilitate delivery of the Housing Diversity Pipeline
• $92.2 million additional to support more than 120 homelessness services and boost case management and support for people experiencing homelessness
• $50.1 million boost for Government Regional Officer Housing (GROH)and continued freeze on GROH rents for key government workers in regional WA for 2024-25
• $5 million to provide a $5,000 incentive to owners of currently vacant properties who offer them on the long-term rental market
• $292 million spending increase by DevelopmentWA, largely to acquire and develop strategic and general industrial land across the State ($180 million), develop apartments and townhouses, including social housing, in the Burt Street Fremantle project ($39 million), and deliver development-ready residential lots in the Goldfields, Pilbara and Kimberley ($33 million)

MISSED OPPORTUNITIES TO BOOST SUPPLY ACROSS THE CONTINUUM

Several key asks in UDIA WA’s pre-Budget Submission will continue to be an advocacy focus in the lead up to the State Election in March 2025, including:

Expansion of the Infrastructure Development Fund

To continue the Department’s existing Infrastructure Development Fund team for another year (out to 2027-28) and to engage expert and technical advice to support the assessment of funding applications, DPLH will spend an additional $1.2 million over 2025-26 to 2027-28.

While the announcement in March 2024 regarding the expansion of the eligible areas for the Infrastructure Development Fund was welcomed, it is disappointing to see that the funding period has not been extended, nor has it been expanded to include other statutory fees and charges imposed on infill development. UDIA WA believes this is a missed opportunity to support medium and higher density infill projects, and much needed diverse housing supply.

Transfer Duty Concession for off-the-plan and under construction

The stamp duty exemption and concessions threshold has been lifted for purchasers of established properties to $450,000 and $600,000 respectively for first homebuyers. 

For agreements entered into from 9 May 2024, first home buyers of established properties will receive a full transfer duty exemption for purchases up to $450,000 (up from $430,000) and a concessional rate of duty for purchases up to $600,000 (up from $530,000).  The new arrangements are expected to be implemented by 1 July 2024, following required legislation and systems changes.

The existing thresholds for purchases of vacant land by first home buyers (a full duty exemption up to $300,000 with a concessional rate of duty for purchases up to $400,000) remain unchanged.

While this will not support increased housing supply through house and land packages, positively it is understood from Treasury officials that eligible purchasers of applicable new apartments would at least benefit, in addition to the off-the-plan transfer duty concession.

However, it is disappointing to see the off the plan duty concession for new apartments (pre-construction and under construction) has not been extended beyond 30 June 2025.

To support the viability of higher density infill projects we need to seek to further level the playing field on taxation, and avoid further layering of regulation, policy, taxes or charges inadversely impacting feasibility and the affordability of the supply of new housing, rightsizing to release capacity, and investment to increase rental availability.

Strategic infrastructure coordination and enabling infrastructure packages

While the Budget includes record funding for utilities at $13.431 million over 2024-25 to 2027-28 (31% of the Asset Investment Program), there is a crucial need to shift from a ‘just in time’ to an ‘at the right time’ approach to infrastructure planning, coordination, and funding.

In our pre-Budget Submission we set out specific infrastructure items required to unlock development to enable the commencement of thousands of new homes in identified growth areas, as well as a mechanism for enhanced strategic infrastructure coordination.  We will continue to engage with the Treasurer, Minister for Housing, and the Housing Supply Unit to secure funding commitments.

HEADLINE FIGURES FOR THE 2024-2025 STATE BUDGET INCLUDED:

• Economic growth at 4.7% in 2023, more than twice the growth of the national economy
• More than 300,000 jobs created since coming to office, with the unemployment rate at 3.4%, the same as in previous State Budget and the lowest in the nation – this sustained low is the second longest period in recorded history
• $3.2 billion operating surplus forecast in 2023-24 and a projected at $2.6 billion in 2024-25 (with operating surpluses over the forward estimates period)
• Net debt $28.6 billion at 30 June 2024, more than $15 billion lower than projected when WA Labor came to office
• $1.1 billion to boost housing supply and affordability, including $400 million for social and affordable housing
• A record $12.1 billion infrastructure investment
• $1.8 billion investment in supporting diversification and energy transition
• Record $3.2 billion investment in health and mental health

HOUSING MARKET OVERVIEW

The budget papers note that while the median house price is forecast to grow by 12.4% in 2023-24, after a 4.7% increase in 2022-23.  Prices are forecast to rise at a more moderate rate of 4.5% in 2024-25 as overseas migration is anticipated to ease from current record highs and the overall supply of homes in WA increases with new homes under construction progressively being completed.

UDIA WA has serious concerns regarding the Government’s underestimation of house price growth, overall demand for residential property and the capacity constraints that will continue to impact diverse supply in the coming years.

TAXES ON PROPERY

Taxes on property include transfer duty (the State’s second largest tax after payroll tax), landholder duty, the foreign buyer duty surcharge, land tax, the Metropolitan Region Improvement Tax (MRIT), the Emergency Services Levy, loan guarantee fees, the Perth Parking Levy, and the Building and Construction Industry Training Fund Levy.

Yet again, transfer duty on property forms the second largest tax after payroll tax in the State.  Residential property transactions are the largest contributor to total transfer duty.

Taxes on property include transfer duty, landholder duty, the foreign buyer duty surcharge, land tax, the Metropolitan Region Improvement Tax (MRIT), the Emergency Services Levy (ESL), loan guarantee fees, the Perth Parking Levy, and the Building and Construction Industry Training Fund Levy.

Total Transfer Duty

Total transfer duty is estimated to grow by 15.3% ($376 million) to $2.8 billion in 2023-24, reflecting the significant increase in residential property prices. For 2024-25, it is forecast to decline by 8.8% (or $249 million) primarily driven by revenue collection from high value commercial property transactions expected to return to decade average levels.  Government is also anticipating revenue from residential transactions will ease in 2024-25 with an expected moderation of population growth and progressively increasing housing supply.

Total transfer duty is forecast to remain broadly stable across the remaining estimates period, underpinned by modest increases in median house prices largely offset by a lower number of transfers including as the rate of turnover of housing slows.

Total Land Tax

Total land tax collections are forecast to increase by $58.2 million (or 6.3%) to $987 million in 2024-25, consistent with a lift in unimproved. This follows an estimated increase of 6.4% in 2023-24 (up from 4.3% forecast in the previous budget).

In the outyears, total land tax collections are forecast to grow by an average of 1.8% per annum aligned with the expectation that the property market will stabilise across the State.

Other Taxes on Property

Other taxes on property comprise revenue from the Perth Parking Levy, the Emergency Services Levy (ESL), Loan Guarantee Fees, and the Building and Construction Industry Training Fund Levy.

These other taxes on property are forecast to remain broadly steady in 2023-24, increasing by only 0.5% (or by $3.1 million), and to grow by 3.1% ($20.1 million) in 2024-25 mainly due to the decision to increase ESL residential charges by 5% (partially offset by a reduction in revenue from the Building and Construction Industry Training Fund Levy).

In 2025-26 and beyond, other taxes on property are projected to grow by an average of 5.6% per annum.

OTHER POINTS OF NOTE

Planning Reform

The Budget papers reiterate the Government’s intent to continue working with the Western Australian Planning Commission to implement the planning reform agenda.

DPLH will spend an additional $7.7 million over the forward estimates to continue implementing initiatives approved as part of Planning Reform Phase Two. This includes the centralised assessment of Development Contributions Plans, implementing Development Assessment Panel Reforms and the establishment of a permanent determination pathway for State and regionally significant developments.

Aboriginal Heritage Act 1972

Due to increased Aboriginal cultural heritage related service delivery (such as heritage place assessments, Aboriginal heritage surveys and regional consultation with landowners and native title parties) under the amended Aboriginal Heritage Act 1972, DPLH will spend an additional $13.3 million over 2023-24 to 2027-28.

Metronet and transport infrastructure update

Road, rail and transport infrastructure totals $11.8 billion over the next four years, with annual spending tapering off over the outyears as major transport projects currently under construction become operational.  New spending in the Budget includes $120.9 million to support the new METRONET lines (Byford, Armadale and Morley-Ellenbrook) becoming operational.

In 2024-25, $2.7 billion will be spent on the METRONET program of works, with ten projects underway or in planning.

The Budget contains additional capital spending (jointly funded by the State and Commonwealth Governments) on METRONET projects, including the new rail lines, the railcar acquisition and replacement program and the High Capacity Signalling program of works. Investment in METRONET projects over the forward estimates period totals $4.8 billion, including $2.9 billion in funding from the Commonwealth.

A total of $13.4 billion will be invested on the State’s roads over the next four years, to deliver new infrastructure, upgrade and maintain existing roads, manage the network and undertake future planning. This will include $4.5 billion of investment in regional WA. Additional funding has also been allocated to address unavoidable cost increases for labour, equipment and key materials.

Major projects currently being delivered across the State include:

• Bunbury Outer Ring Road;
• Albany Ring Road;
• Causeway Pedestrian and Cyclist Bridges;
• sealing of the Tanami Road; and
• Mandurah Estuary Bridge Duplication.

Precincts Project Team

The Department’s Precincts Project Team supports the delivery of the METRONET Program, housing initiatives and other major projects. The Department will spend an additional $5.6 million over the forward estimates to continue this team and undertake precinct and project planning.

Housing Diversity Pipeline and METRONET Housing Delivery Program

To facilitate and manage the Housing Diversity Pipeline and METRONET Housing Delivery Program, the Government has approved spending of $3.5 million over 2024-25 to 2025-26, to deliver social and affordable housing in priority locations. The cost of this initiative will be met through the Social and Affordable Housing Investment Fund.