The May 2019 election saw the Coalition returned to power for a third term. Industry eyes are now turning to what policies are set to be delivered and what their impact will be on the property sector.
Cities, housing, infrastructure and population have all been identified as areas for particular ministerial responsibility. The new ministry appointed by Prime Minister Scott Morrison highlights an important focus on the policy areas that matter for our industry.
The population, cities and urban infrastructure portfolio has been retained by Alan Tudge and now sits within the group of Treasury ministers led by Josh Frydenberg. Signalling the importance of Housing, Michael Sukkar has been appointed as Housing Minister. It is the first time a Coalition Government has appointed a Housing Minister.
The election result has lifted the cloud of uncertainty over issues such as negative gearing and capital gains tax changes – but what else is in store and what opportunities will it bring for the property industry?
Coalition promised better transport infrastructure
The Coalition stated it will invest $100 billion in transport infrastructure with a 10 year plan to reduce congestion and boost the economy. $1.6 billion will be allocated over the next four years to the Urban Congestion Fund which aims to alleviate congestion in urban areas. A further $6.7 billion was promised towards programs to upgrade regional road corridors and new road safety packages. The national Roads of Strategic Importance program is set to receive $4.5 billion to upgrade regional road corridors and $42.2 billion is to be allocated for new road safety packages.
The Coalition promised projects totalling $7.1 billion in Western Sydney including $3.6 billion for road and transport connections to the Badgerys Creek airport and $3.5 billion towards the North-South rail link. Commitments to a $1.6 billion extension of the M1 Pacific Motorway to Raymond Terrace, and $500 million towards the Princes Highway between Nowra and Batemans Bay were also made.
The Federal funding coincides with a record $93 billion infrastructure spend by the NSW Coalition government in the 2019-2020 budget. This investment will be spread across multiple portfolios over the next four years, including $55.6 billion for road and rail projects, $10 billion for health facilities and $6.8 billion for new and upgraded schools and after school care facilities. The road and rail spending includes $6.4 billion for the new Sydney Metro West, with the NSW treasurer expected to ask the Morrison Government for an addition $3 billion dollars in support of the project. Other big ticket items include funding for a Sydney Trains Operations Centre, the Northern Beaches Tunnel, Western Sydney Airport rail line, transport accessibility programs and the flood-proofing of the Newell Highway.
The Coalition made a $4 billion pledge towards Melbourne’s East West Link, a project that aims to connect the Eastern Freeway to the City Link via a tunnel underneath Melbourne’s congested northern suburbs. The Coalition aims to leverage $3 billion from the private sector for this project.
The Coalition Government also committed $2 billion towards a fast rail project between Melbourne and Geelong. The funding for this project is not expected to commence until 2021-22 with the majority of the funding to be delivered beyond 2023-24. The Coalition funding this fast rail project is dependent on receiving matching funding from the Victorian Government.
A major investment of $100 million has been promised by the Coalition government to improve infrastructure projects throughout Queensland. The projects include the Brisbane Metro, Gold Coast Light Rail and North Coast Rail.
The Coalition has committed $1.6 billion to new infrastructure projects in Western Australia. The commitment is to be directed towards new roads, the removal of level crossings, and the replacement of the Fremantle Traffic Bridge.
The Coalition promised more than $60 million to upgrade a road in Tasmania’s north.
At the recent PCA Future Cities Summit in NSW Minister Alan Tudge said that managed growth required investment in infrastructure, population decentralisation and City Deals that bring three tiers of government together in a collaborative process with private industry to build better cities and places for people. The policy imperative underlying City Deals is that the three levels of government work co-operatively to maintain the pace of growth, while ensuring that liveability is maintained at the same time.
The critical driver behind City Deals is aligning planning, investment and governance to accelerate growth, stimulate urban renewal and drive infrastructure building to enhance the productivity and liveability of Australian Cities. City Deals also require meaningful funding commitments for city-shaping projects.
Prior to the election the Coalition had highlighted the City Deals as a key exemplar of its innovative approach to ensuring all levels of government work together, with investment co-ordinated to benefit taxpayers.
City Deals are now in place in Western Sydney, Townsville, Launceston, Darwin, Hobart, Geelong and Adelaide. The Coalition has also stated it is actively engaging with the Western Australian Government on a Perth City Deal, and that all City Deals would progress, irrespective of the outcome of the Federal election in May.
Ten days after the election, a $1.2 billion deal to secure the infrastructure needs of two priority development areas over the next 45 years has been made between Queensland Government, Logan City Council and nine property developers.
The Coalition has also extended the framework regionally, having adopted the City Deal framework by piloting Regional Deals in the Barkly Region of the NT, the Hinkler (Bundaberg and Hervey Bay) region in Queensland, and Albury-Wodonga on the New South Wales and Victorian border.
It will be interesting to see if the City Deals manage to empower councils to engage meaningfully with the vision of State and Federal Governments. If successful, City Deals can provide a welcome boost to the private sector in the form of increased certainty and consistency between government agencies. City Deals will drive unparalleled interaction with the private sector, and it will be important to understand how public sector governance and procurement frameworks can keep pace with the agility and ingenuity that the private sector can provide. Ultimately, these deals are a powerful tool for councils to deliver large-scale property infrastructure in an innovative, efficient and transparent framework.
In addition to the appointment of a Housing Minister, the Coalition government will maintain the National Housing Finance and Investment Corporation and continue with the review of the National Regulatory System for Community Housing.
The budget’s infrastructure program, including fast urban rail, is likely to have implications for housing accessibility and affordability. The post-election announcement of the Logan City Council City Deal also sent a positive message about housing and growth with that deal slated to deliver a substantial portion of new housing in south-east Queensland over the next three-to-four decades.
Beyond continuing existing policy directions, nothing has been expressly added to the Coalition’s 2019-22 offer on housing. It isn’t proposing any action on the tax settings that fuel housing market price growth, nor has it released any policy to boost affordable housing supply directly. Additionally, the budget offered no new housing affordability initiatives.
For the first home buyers' market, Scott Morrison made promised that a re-elected Coalition government would provide a guarantee to help them bridge the deposit gap for their first home. The Coalition will guarantee the loans of first home buyers who have saved at least a 5% deposit. The plan, which would start on January 1, would be directed to first home buyers earning up to A$125,000 a year, or $200,000 for couples. The program is limited to 10,000 recipients, so that may limit its impact. It seems that, for the moment, the Bank of Mum and Dad will retain its title as the country's top non-AFSL guarantors.
Overall, the levers of the residential market appear to remain firmly in the hands of quasi-independent government agencies, with APRA deciding to remove its 7% serviceability buffer and the RBA cutting interest rates to 1.25%. Without any indications of major policy change in the immediate post-election period, those looking to see whether Government will take a more active role in the sector would be wise to follow closely the communications from Ministers Tudge and Sukkar.
It is encouraging to see these policy areas at the heart of decision-making in Government. Clearly, managing growth in our cities and suburbs will be a major focus for all policy-makers; this will require all levels of government to work in close partnership with industry and the community.