Victorian Treasurer Tim Pallas says next week’s state budget will include tax increases and public sector savings as the government takes the “hard and necessary actions” needed to rebalance the books.
- A premium stamp duty will be introduced for property transactions above $2 million
- Mr Pallas said the changes were about making Victoria’s tax system “fairer and more progressive”
- The cost of fines will begin to rise again from July 1, after a freeze introduced at the start of the pandemic
Mr Pallas said $2.7 billion would be raised by a suite of measures including an increase to land tax for taxable properties worth more than $1.8 million.
The Treasurer said the “modest” increase would only affect a fraction of the 10 per cent of Victorians who pay land tax, which is not paid on owner-occupied homes.
“All up, we invested $49 billion in the last budget to support families and businesses through the pandemic using our balance sheet,” Mr Pallas said.
The changes will see the land tax increase by 0.25 per cent for taxable land holdings between $1.8 million and $3 million, and 0.30 per cent for taxable land holdings in excess of $3 million.
Fines set to rise again after pandemic freeze
A new windfall gains tax will be also introduced for properties whose value is boosted by a council rezoning.
The tax will only apply to properties where the value is boosted by more than $100,000, with a 50 per cent tax on windfalls above $500,000.
Mr Pallas said the move would claw back around $40 million a year from developers and speculators who made huge profits after a local council’s “stroke of a pen” to rezone industrial land for residential use.
“There needs to be a balance between those wanting to buy their first property and large property investors who continue to profit from soaring property values,” he said.
A premium stamp duty will also be introduced, with property transactions above $2 million attracting a $110,000 duty plus 6.5 per cent of the dutiable value in excess of $2 million.
After a freeze during the pandemic, fines and penalties will begin to rise once again.
Mr Pallas said the fine for using a mobile phone while driving would increase by $49 to $545, while the first level speeding fine will rise by $20 to $227.
Public sector facing an overhaul
The government will also revoke land tax concessions for private gender-exclusive clubs such as the Melbourne Club, which has all-male membership.
Mr Pallas said the concessions were intended for not-for-profit societies, rather than “increasingly anachronistic” elite clubs.
“We’re not saying that they’re illegal, we’re simply saying you shouldn’t get the gift of the taxpayer to conduct these bodies and certainly from our point of view the idea of male-only clubs, their time is well and truly passing,” he said.
He said there were not expected to be large savings made in that move, which was more about sending a message to the community.
Mr Pallas also flagged part of the budget would involve measures to cut back-office public sector costs as well as spending on consultants and contractors.
When asked if public sector workers would lose their jobs, he said there would be some “workforce transition” and the government would work closely with the public sector and unions.
“It doesn’t mean a smaller public service but it does mean we will be redirecting the effort of the public service to the areas and priorities that the government sets,” he said.
Government lays out private partnership to boost public housing
The government has also laid out how a private-public partnership will create hundreds of social housing units as part of its $5.3 billion public housing build.
Under the plan, 1,110 new homes will be built on government-owned land in Brighton, Flemington and Prahran — which the government said would replace 445 “outdated” social housing units at the sites which had already been demolished.
The homes will be a mix of 619 social housing dwellings, 126 affordable homes and 365 market rental homes, including 52 specialist disability accommodation dwellings.
The government will put in $50 million while a private consortium will provide $465 million upfront to construct the homes.
The consortium will have a lease on the sites for 40 years, collecting income from the rent and maintaining the properties.
The state government will repay the $465 million to the consortium during that 40-year period.
Planning Minister Richard Wynne said after that time, all the property and homes would return to government hands to become social housing.
“This is the first time that a government has implemented what is called a ground-lease model,” he said.
“It’s a very innovative proposal and one that I think changes the way that we in fact deliver social and public housing.”
Mr Wynne said there would be “full consultation” with local communities on the design and he hoped to have construction underway before the end of the year.
Managing director of the Australian Housing and Urban Research Institute, Michael Fotheringham, said the model was “international best practice for increasing supply of social and affordable housing”.
“This is a really good way to approach large-scale development, mixed-tenure development,” Dr Fotheringham said.
But he said it was important to note that there was still a substantial amount of work required to meet the national demand for social housing.
“We have enormous unmet demand for social housing in this country,” he said.
“Over the next 20 years we need hundreds of thousands of properties, social housing properties, so the Victorian government’s approach is leading the nation at the moment … it’s the sort of investment we need to see across the country, not just over the next four or five years, but for the next 20.”
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