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 addressing the housing & skills crisis facing Western Australia.
The Treasurer handed down the key inclusions as part of the McGowan Government’s seventh budget, claiming it aligned with WA Labor Government values of socially progressive, fiscally responsible and economically successful.
Advocacy Win – $33 million to extend the Off-the-Plan Transfer Duty Rebate Scheme to 30 June 2025, with key changes to criteria
In response to UDIA WA’s request to extend the off-the-plan duty rebate scheme, the Treasurer today confirmed the rebate will be extended another two years, converting the rebate to a legislated duty concession and increasing the thresholds to:
- A 100 per cent duty concession for properties valued up to $650,000 (formerly $500,000); and
- Phasing down to a 50 per cent duty concession for properties valued over $750,000 (formerly $600,000).
Making the rebate a legislated duty concession means that purchasers will have their stamp duty concession recognised at the contract stage rather than paying the duty and then claiming the rebate upon settlement.
This recognises UDIA WA concerns around original rebate settings which meant that purchasers still had to finance the rebate reducing their borrowing capacity. The legislation is expected to be passed around September and will be backdated to today.
Purchasers that have already received the off-the-plan transfer duty rebate will not be eligible to receive the off-the-plan transfer duty concession.
Unfortunately, the State Government has not committed to extend the rebate to apartments under construction, however remain open to reviewing the uptake of the rebate moving forward under the revised settings.
A full breakdown of the numbers for both domestic and foreign buyers is summarised later in this update.
BUDGET WINS FOR HOUSING SUPPLY & CHOICE
In response to UDIA WA’s State Budget Submission, the following initiatives were confirmed today:
Creating capacity – Boosting housing supply by extending support for built form development
- $33 million to extend and expand the off-the-plan transfer duty rebate, providing additional benefits to foreign buyers
- Amendments to Keystart’s Urban Connect Program to include one-bedroom apartments and off-the-plan properties
- $48 million to facilitate medium-high density urban infill development in Bentley
- $55 million for upgrades to water infrastructure to unlock housing development
Develop a Construction Workforce Attraction Strategy
- $11 million for visa subsidies of up to $10,000 to attract up to 1,100 skilled migrants to the building & construction sector
- $26.9 million to increase the Base Employer Grant for all third and fourth year apprentices by 20%
Further investment in social housing & homelessness
- $450 million top-up for the Social Housing Investment Fund, adding another 700 new social homes and refurbishment of existing assets
- $5.8 million to extend homelessness services and for a dedicated Office of Homelessness
As with last year’s State Budget, the Treasurer again highlighted the significant focus on cost of living with a $715 million cost of living package, including another $400 electricity credit for every household plus additional support for those most in need.
Headline figures for the 2023-2024 State Budget included:
- Economic growth at 4.25% in 2022-23, the strongest in nine years
- Unemployment rate of 3.4%, the same as in the previous State Budget
- $3.3 billion surplus in 2023-24
- Net debt of $27.9 billion at 30 June 2023
- A record $39 billion infrastructure spend
- $463 million investment to diversify the economy
- $2.7 billion in health and mental health
- $3 billion to take action on climate change, including $2.8 billion to decarbonise the grid and replace coal-fired power with renewables by 2030.
- $2.5 billion in road and rail infrastructure
Amendment to the Off-the-Plan Transfer Duty Rebate Scheme
It is pleasing to see the off-the-plan duty rebate extended to 30 June 2025, the property price thresholds increased for eligible contracts and the rebate being converted to a legislated transfer duty concession from 31 August 2023.
The latter change will reduce transfer duty revenue by an estimated $48.5 million across the forward estimates period, with a corresponding reduction in general government expenditure of $48.5 million. Purchasers that have already received an off-the-plan transfer duty rebate will not be eligible to receive the off-the-plan transfer duty concession.
From today (11 May 2023), this will see eligible purchasers of properties valued up to $650,000 receive transfer duty assistance (including any Foreign Transfer Duty) equal to 100% of the duty payable, phasing down to a 50% concession for properties valued over $750,000 (capped at $50,000).
The combined impact of these changes will reduce transfer duty revenue by an estimated $81.7 million across the forward estimates period, and increase net debt by $33.2 million.
However, it is disappointing that our recommendations to make it permanent or at least to extend it across the forward estimates, and to expand it to include projects under construction, have not been fully adopted.
Keystart changes
Amendments will be made to Keystart’s pilot Urban Connect program, which boosts housing at the affordable end of the market and supports infill development. A new Keystart Loan Program will also be introduced to enable customers to secure pre-sale off-the-plan properties. Aligned with UDIA WA’s recommendation, one-bedroom apartments will be eligible for the Urban Connect program.
UDIA WA would have liked to see a lift to the cap on home values for the standard Keystart loan products with indexing against increases in median house prices and we will continue to advocate for those changes, as outlined in our State Budget submission.
Filling the skills gap
According to the budget projections, population is expected to grow 2% (56,000 people) in 2022-23, above the long-run average growth of 1.7%.
Additional funding seeking to address the shortage in WA’s skilled workforce has been included in the form of $26.9 million in increased support for employers of apprentices and trainees through a 20% increase in the base employer grant from the Construction Industry Fund to $12,000 per eligible apprentice. In addition, $4.2m has been allocated to encourage completion of apprenticeships and traineeships with a $2,000 completion payment and a $500 tool allowance.
The Government has also sought to increase skilled migrants into the residential and commercial construction industry through an $11.5 million investment in 2023-24 to provide 1,100 visa subsidies of up to $10,000 per eligible migrant.
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 $24.4 million over 2022-23 to 2026-27 to implement 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 Cultural Heritage Act 2021
Additional expenditure of $77 million has been approved over the forward estimates period for the ongoing operational costs associated with the Act and to fund Local Aboriginal Cultural Heritage Services.
Land Supply and Social Housing
The Department of Communities will spend an additional $444.1 million between 2023-24 and 2026-27 to boost housing stock in the State’s social housing program, comprising:
- $208.7 million for construction of new social housing dwellings.
- $200.2 million for the acquisition of additional social housing dwellings through spot purchasing.
- $35.2 million to deliver dwellings through industry partnership projects.
This investment will be funded from the Social Housing Investment Fund (SHIF), which has been allocated a further $450 million in this Budget. In total, this investment will enable the delivery of an additional 700 dwellings, bringing the Government’s commitment to 4,000 additional social housing dwellings by 2026-27.
As we know, the DPLH is leading a joint project with the Departments of the Premier and Cabinet, Communities and DevelopmentWA to deliver more social housing on Government owned land across the State through the Housing Diversity Pipeline.
DPLH will spend $7.5 million in 2023-24 to facilitate and manage Tranches One and Two of the Housing Diversity Pipeline (with $5.5 million funded from the Social Housing Investment Fund), which is intended to support the Government’s delivery of its target of 4,000 additional social housing dwellings.
During the Budget lock up, the UDIA WA CEO raised with the Premier and Treasurer the need for increased focus on key worker accommodation, affordable housing and rental, and diverse supply to support people transitioning through the continuum, helping to relieve pressure on social housing. This will continue to be a key focus of UDIA WA’s advocacy.
City revitalisation and key social and community infrastructure
Key project spend over the forward estimates includes:
- $49 million to support the establishment of an Inner City Campus by Edith Cowan University
- $127.8 million to transform the State Hockey Centre
- $97.9 million towards the Perth Concert Hall redevelopment
- $79.7 million for the WACA ground improvement project and aquatic facility
Housing Market Overview
The budget papers note that while the median house price is estimated to grow by 2.3% in 2023-24 (compared to 2.4% in 2022-23 and 3.6% in 2021-22) as new homes under construction are completed, modest growth of 2.1% is expected in 2024-25 (2.9% in 2025-26 and only 0.2% in 2026-27) due to increased demand from population growth.
UDIA WA has serious concerns regarding the Government’s underestimation of house price growth and overall demand for residential property in the coming years.
Taxes on Property
Once 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.
Positively this year, the Budget includes extension and expansion of the Off the Plan Duty Rebate Scheme and a Foreign Buyer Rebate / Concession.
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 decline by 12.3% ($324 million) to $2.3 billion in 2022-23 (compared to $2.6 billion in 2021-22 when underlying duty largely from residential property reached a record level), with a further 14% ($324 million) decline expected in 2023-24. In both years this reflects the impact of higher interest rates on residential property market activity and in the case of 2023-24 it also reflects a return to more typical levels of revenue from high value commercial property transactions.
Total transfer duty is forecast to stabilise in 2024-25 and grow in the last two outyears, underpinned by increased demand associated with the State’s population grows.
Total Land Tax
Total land tax collections are forecast to increase by $62 million (or 7.1%) to $939 million in 2023-24, consistent with a lift in unimproved land values across several property sectors, including residential land. This follows an estimated increase of 4.3% in 2022-23 and 0.7% in 2021-22.
In the outyears, despite last year’s Budget forecasting total land tax collections would remain relatively flat (growing by an average 0.6% per annum), they are forecast to grow by an average of 1.1% per annum in line with the outlook for unimproved land values 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.
Other taxes on property are forecast to increase by only 0.4% (or by $2.8 million) in 2023-24 mainly due to the decision to maintain the ESL at an affordable level for households and businesses, following a 7% increase in 2022-23 due largely to higher revenue from the ESL.
In 2023-24 and beyond, other taxes on property are projected to grow by an average of 4.3% per annum.
An update on METRONET and transport infrastructure
Road, rail and transport infrastructure totals $13.6 billion over the next four years, with $5.9 billion on METRONET projects, $6.7 billion on metropolitan and regional roads, and $200 million (and a further $50 million in 2027-28) to deliver around 130 new electric buses, depot upgrades and charging infrastructure.
With the opening of the METRONET Airport Line in October 2022, five projects have now been completed with a sixth, Lakelands Station, set to open in June 2023.
In 2023-24, a total of $3.1 billion will be spent on the METRONET program of works, with 12 further projects underway. The further investment in the Morley-Ellenbrook Line, Yanchep Rail Extension, Thornlie-Cockburn Link and Bayswater Station projects reflects escalating costs and supply chain constraints continue to affect the construction industry.
High Wycombe Community Hub
This Budget includes a provision of $60 million over 2022-23 to 2025-26 for the establishment of the High Wycombe Community Hub, with $30 million provided by both the State and Commonwealth Governments. The Hub will provide community infrastructure to activate and improve public amenity in the High Wycombe Station Precinct, which forms part of the METRONET East redevelopment area. Funds are to be released from the provision on approval of funding agreements and an updated business case.
Bayswater Station
The new Bayswater Station project will see the replacement of the existing station and rail bridge with two new elevated rail bridges over King William Street. Each rail bridge will have its own station concourse, with the southern platform to service the existing Midland and Airport Lines and the northern platform to service the Morley-Ellenbrook Line. In 2023-24, construction of the southern platform will be completed, and it will be entered into passenger service. A total of $82.8 million will be spent in 2023-24 and a further $20.9 million in 2024-25.
Byford Rail Extension
The Armadale Line will be extended by 7.8 kilometres from Armadale Station to Byford, this project will involve the removal of seven level crossings and delivery of a new elevated station at Armadale and an at-grade station at Byford. Following the commencement of the 18-month closure of the Armadale Line in late 2023, elevated main viaduct construction will commence with major precast concrete beam production to get underway, along with the construction of both the Byford precinct and Armadale Station. $332.5 million has been allocated in 2023-24 and $320.9 million in 2024-25.
Canning Bridge Bus Interchange
The Canning Bridge Bus Interchange will be relocated to an elevated platform above the freeway and train station, which will increase capacity, improve the safety of commuters and provide greater road capacity along Canning Highway. In 2023-24 and 2024-25, $2 million will be spent each year on continued project development, ramping up to $50 million in 2025-26 and $112.6 million in 2026-27.
Lakelands Station
A new station will be built at Lakelands on the Mandurah Line, which includes a car park and bus-rail interchange facilities. Entry into passenger service is expected in June this year. In 2023-24, $20.3 million will be spent on post-completion works and project close-out.
Midland Station
A new Midland Station will be constructed between Helena and Cale Streets. The new station will provide better integration with the town centre, with much closer connections to the Midland Gate Shopping Centre and Midland Health Campus. The main construction works are expected to commence in mid-2023, with $116.6 million will be spent in 2023-24, and $72.5 million committed in 2024-25 and $4.5 million in 2025-26.
Morley Ellenbrook Line
Five new stations will be built at Morley, Noranda, Malaga, Whiteman Park and Ellenbrook as part of the 21 km Morley-Ellenbrook Line from Bayswater Station to Ellenbrook. Construction remains on schedule, with track laying underway, and the project is set for completion at the end of 2024.
Thornlie-Cockburn Line
The Thornlie-Cockburn Line will be extended to Cockburn Station on the Mandurah Line and will include the construction of two new stations at Nicholson Road and Ranford Road, with park and ride facilities and bus interchanges to be provided. Works at Cockburn Station will be completed in late 2023, with construction on the Canning River Rail Bridge expected to be finished in mid-2024.
Yanchep Rail Extension
The Joondalup Line will be extended by 14.5 km from Butler to Yanchep. Three new stations will be provided at Yanchep, Eglinton and Alkimos, with bus interchanges and park and ride facilities. In 2023-24, with $318.5 million being spent, the bridge and station construction will be completed, and passenger services will begin.
Mid-tier transport planning
In 2023-24, $3.6 million has been committed for continued planning activities for mid-tier transport. No funding has been committed in the outyears.