The economic circumstances now are not greatly different to what they were when the 2015‑16 Budget was delivered: growth is still below trend; unemployment threatens to increase; and business and consumer confidence are still low despite over a year of record low interest rates.

For a number of years now, as Australia’s economy transitions from resource investment driven growth to other drivers of growth and economic activity, significant differences in economic performance across industries and regions have been a distinctive feature of the economy. Whilst it is expected that the weakening Australian dollar will provide a much needed stimulus to a number of sectors the impact of this is still some time away. 

Australia’s property industry is emerging as the main driver of economic growth and increased employment in the transition away from a decade-long reliance on mining. Importantly, dwelling investment supported by historically low interest rates has been a significant contributor to growth in the Australian economy since 2013-14.

Whilst investor activity in housing has increased with a supply response from the building sector contributing to economic growth, this has been at the cost of first home buyers and affordability. The number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 14.9 per cent in November and is the lowest since June 2004.

Exacerbating the situation for first home buyers, interest rates on interest only loans were increased following a clamp down by the Australian Prudential Regulation Authority and the announcement that Australian Securities and Investment Commission (ASIC) would review interest-only loans. This has shut many first home buyers out of the market. It is against this backdrop that REIA has prepared its pre-budget Submission.

With regard to addressing housing affordability, REIA has asked the Commonwealth Government to consider the following:

• That the Government establishes a mechanism to ensure the availability of reliable data on housing demand and supply in order to formulate appropriate policies and to monitor their effectiveness

• That the Government ensures that data on first home buyers is reliable

• That the Federal Government takes a leadership role in urging all states and territories to take the same approach to the provision of assistance to first home buyers regardless of whether the dwelling is new or established

• That the Government establishes a scheme to encourage young Australians to have access to their superannuation for the purpose of raising a deposit for a first home

• An improvement in the supply of housing for social housing tenants transitioning to private rental by utilising private investment.

As part of a package of taxation reform, REIA has asked the Commonwealth Government to consider the following:

• That the Government take a leadership role in abolishing stamp duties and seek to have an agreed timing across all states and territories

• That negative gearing be retained in its current form for the purpose of property investment.

• That capital gains tax on property investments is not increased.

And finally, REIA has asked the Commonwealth Government to:

• Ensure that funding of the Industry Skills Fund is adequate to meet all skills shortages.