Australia Simply Riding a Commodity Boom

Preliminary budget “leaks” and announcements contain no joy for the property development or tourism industries in Queensland or Australia.

The property investment industry, particularly residential investment has recently seen a cutback in the NRAS scheme (National Rental Affordability Scheme,) which has not worked because the incentives to developers were not there. There needs to be tax benefits available for developers of rental accommodation under a certain value, say $400,000.

Tourism is being strangled by the high Australian dollar and needs more funding for promotion overseas, but we have the car industry being rewarded for inefficiency instead. The car industry nationally employs 150,000 people compared to 500,000 in the tourism industry.

The Government is basking under the low unemployment numbers, but the savior has been the mining industry which has soaked up many workers from the building industry. This has been the result of unsustainable commodity prices, rather than structural economic drivers to sustain and create employment opportunities.

Australia is simply riding a commodity boom, which inevitably ends abruptly and without notice.

Tough banking killing 'spec home' market

See today's Gold Coast Bulletin article on our latest Prodap Report figures for Gold Coast vacant land and new packaged housing supply and demand here.

New QLD Land Value Act is Discriminatory

The Queensland Government will on 30 June 2011 enact a new method for valuing residential land within the state based on “site value”. This replaces the system used since 1944 where the land valuation was based on “unimproved value”, where the raw land value was calculated without any improvements, such as land fill, drainage, revetment walls or retaining walls. The new system applies only to residential land, not to commercial, industrial or retail land.

The new “site value” system is not a blanket increase in values as the Gold Coast Mayor, Ron Clarke, suggests, but a selective increase if you happen to own canal-front, lake-front or steep residential land that has been filled and/or revetted. I doubt whether Council will be applying varying rates in the dollar to compensate such property owners. This is a typical State Labor move without an election mandate to alter the “unimproved” land valuation system to increase taxation, but the cost of administering the new system could well offset the additional revenue.

Valuers employed within the State Government’s Environment and Resource Management Department will need to obtain engineering advice to determine the value added to any block of land. This will require individual assessment of properties “en masse”, particularly in the Gold Coast where canal and lake-front properties are most common.

Local councils do not have to roll over and accept this change from the State Government. In fact, councils are not compelled to use the State Government’s valuations. Councils could just index last year’s valuations by say 3% (or CPI) across the board.

We have until 30 June to stop this. What was wrong with the old system which has stood the test of time for 67 years?