Remove productivity barriers and no more new taxes

GOVERNMENTS are being warned to “focus on the factors holding back productivity” in order to reverse the growing housing crisis.

And the Housing Industry Association says proposed changes to the taxation of discretionary trusts risk making it harder for small builders to invest, employ and deliver new homes.

Jocelyn Martin, HIA managing director, said residential builders from across Australia have taken their concerns directly to Parliament House in Canberra for an industry roundtable hosted by the opposition leader Angus Taylor, shadow treasurer Tim Wilson and shadow minister for small business Jacinta Price.

“HIA brought a number of small and medium-sized residential builders from around the country to Canberra to share their first hand experience of the challenges facing the industry and the reforms needed to boost housing supply,” Martin said.

“Australia cannot address housing affordability and supply shortages without improving productivity across the residential building sector.

“The Productivity Commission has rightly identified that housing productivity should be measured by how quickly and at what cost governments can turn land, labour and capital into a completed home.

“Builders continue to invest in better technology, training and construction methods but the biggest barriers to productivity now sit outside the construction site.

“As the Productivity Commission has observed, the next major productivity gains in housing need to come from outside the building site.”

Martin said a builder cannot compensate for months lost waiting for planning approvals, serviced land, infrastructure delivery or navigating ever-growing layers of regulation.

“Australia is completing around half as many homes per hour worked as it did in the mid-1990s, despite improvements in onsite building practices and technology,” Martin said.

“Productivity gains onsite cannot offset the cumulative impact of taxes, charges and regulatory requirements that have steadily increased the cost and complexity of delivering new homes.

“That is why HIA is deeply concerned by proposed changes to the taxation of discretionary trusts.”

Martin said more than 60 per cent of HIA members operate through a family trust structure.

“Residential building is overwhelmingly an industry of small, family-run businesses,” she added.

“These are the builders employing apprentices, engaging local trades and building homes in communities across Australia.

“Family trusts are a legitimate and longstanding business structure that help builders manage the significant financial, contractual and legal risks associated with running a building business.

“HIA opposes changes that would increase the tax burden and add another layer of complexity for these businesses.”

Martin said builders are already dealing with high construction costs, skills shortages, increasing regulation and tight margins.

“This is the wrong time to introduce measures that would discourage investment and growth,” she said.

“If governments are serious about increasing housing supply, every policy proposal should be assessed against a simple test: does it increase the supply of new homes?

“Measures that reduce business investment, increase costs or make it harder for builders to operate move us further away from achieving our housing targets.

“The message from builders is simple: if Australia wants more homes, governments must focus on removing barriers to productivity and avoid introducing new costs for the businesses responsible for delivering them.”