Bran Black interview with ABC AM

21 October 2024

Event: BCA Chief Executive Bran Black interview with ABC AM

Speakers: ABC AM Host Sabra Lane; Business Council of Australia Chief Executive Bran Black

Topics: Housing, supply, economics, planning approvals, industrial relations, cost of living, migration

E&OE

Sabra Lane Host, ABC AM: Bran Black, thanks for joining AM. This $10 billion fund, what do you want this money to do?

Bran Black Chief Executive, Business Council: Well, thanks so much for having me. It's a really good question. The $10 billion fund is modelled on an approach that was taken across the country in the late 90s and early 2000s when the Federal Government incentivised states to undertake important productivity enhancing reforms in a competition space, and what that $5 billion investment delivered was a $60 billion uplift to our GDP each and every year. So, what we're saying here is that we’ve got a whole series of initiatives that we need to try and deliver, steps that we can take around zoning approvals and so forth. And if we can incentivise states to help undertake some of these important measures, then we should expect to see not only housing supply improve, but productivity uplift as well.

Sabra: All right, where's this money going to come from?

Bran: What we would suggest is that this is the type of fund that ultimately has productivity enhancing benefits. And the consequence of that is that you see the uplift come across the economy over the course of many years. And as I said, we've got $5 billion invested as a basis through the competition payments that the Commonwealth made in the 90s and the early 2000s. You see that productivity uplift and that's what we would expect to see over the course of the coming decades, if we undertook these types of reforms now.

Sabra: So, sorry to be clear, the money you want it to be taxpayer money?

Bran: Well, we would say this is the kind of thing that you would consider funding in terms of debt because you see that productivity uplift. Now that's important. There is a challenge when you're taking out debt in order to fund initiatives that are not going to deliver the type of productivity uplift that we would associate with this type of reform. But when you are going to undertake reform that delivers productivity benefits across the economy, then we think that that is an appropriate approach to take.

Sabra: The Federal Government already has a target and billions to spend on building 1.2 million homes in five years, but the council says the government cannot meet that target currently. Why and how short is it of that target?

Bran: What we need to be doing is delivering about nine homes for every 1000 people in Australia each and every year over the course of the next five years. Now, at the moment, we're on track to deliver about six homes for every 1000 people. So, there's a gap. We need to take measures in order to try and address that gap. And that's what our report goes to, a whole series of initiatives which we consider are well placed to try and help us deliver that supply.

Sabra: Respected housing economist, Ben Philips, points out that Australia already builds a lot of homes when measured with other comparable nations, that this is a story about population growth and migration.

Bran: Well, I think what we have seen is that there are a whole series of factors that go to why we're in the situation that we're in now, in terms of needing additional supply. Even if you just look at the demographics between the 1980s and right now, the average dwelling size had 2.8 people in it back in the 1980s, it's now got about 2.5, that 0.3 difference equates to about 1.2 million homes. We also know that for home builders, there are a whole series of factors that are affecting their decisions to invest right now. It largely comes down to cost, but cost associated with the price of debt, the availability of labour, the availability of supplies. Now to your point in terms of labour, we do think it's important to have a significant conversation in relation to the role of migration in terms of addressing supply, and that's why one of the recommendations that we put forward is to back in the idea that we should be prioritising bringing in skills into the country in circumstances where we're just not producing them in sufficient quantities here at home. That should always be our priority, producing the skills here at home. But where we can't do that, we have to look at migration opportunities.

Sabra: You also say it's a no brainer to eliminate stamp duty, that governments should be doing this as a way of sort of helping people buy homes. Why don't governments do that? We've heard that message for more than a decade.

Bran: Look, it's a hard reform and one of the key matters that stands out in terms of considerations by states and territories is of course the cost because for a state jurisdiction you're replacing a large upfront payment that it's receiving with a smaller and incrementally paid payment that's, as I say, incremental, so it's paid out over time. So, there is a revenue gap, and that makes it very difficult. But what is absolutely clear is that stamp duty is an inefficient tax, moreover, and just to put it bluntly, it's a tax on mobility. And what we'd like to see is the replacement of stamp duty, even incrementally, with a broad-based land tax. We've already seen some useful steps forward in this regard, in terms of what the Victorians and South Australians have done, no stamp duty on commercial and industrial properties. But we think we need to go further. We know that if we can broadly lead to a replacement of stamp duty with land tax, we will see more mobility in the economy. So, downsizers, parents who have kids that have moved out of home, they'll be in a position to think to themselves, you know, what? I could buy something a little bit smaller, and I won't be slugged with that huge upfront cost. That is a good thing, because it means that that large home that they previously occupied can be freed up for a young family.

Sabra: Mr Black, thanks for your time.

Bran: Thanks so much for having me.

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