A strong building industry is a crucial driver of a strong economy.
It creates jobs, trains apprentices, drives wider economic growth and builds better communities
Australia needs a strong building industry as we continue the transition from the resources boom. But this will only be possible if we to get the basic economic settings right.
Addressing Australia’s structural budget deficit and adjusting economic policy settings to create a business-friendly economic environment will help restore confidence to investors and consumers.
What are the problems?
We need a tax system that is simple, efficient, fair and competitive. The problem isn't simply paying too many taxes which need to come down: it's the compliance burdens associated with these tax payments creating a ‘double whammy’ for businesses in the building industry.
The heavy tax burden adds to the costs of training apprentices, building affordable homes, schools, hospitals and other vital community infrastructure.
Numerous inquiries have shown that Australia’s tax system is fundamentally flawed, the tax rate is globally uncompetitive, inefficient, overly complex and burdened with compliance obligations. This distorts investment decisions, discourages entrepreneurship and innovation, and reduces business investment and jobs growth.
More investment is needed in houses, offices, sporting facilities and community facilities such as schools, hospitals, roads, rail and ports. Greater investment will create job opportunities, stimulate the economy and help build more liveable communities.
Our nation must become more productive and this means unleashing our performance which is held back by barriers in key policy areas, like tax, industrial relations and other similar regulation. Addressing our economic challenges is the key to a strong building industry, a strong economy and a more prosperous Australia.
How can we fix them?
- A clear pathway to a budget surplus must be developed and delivered. This must involve eliminating waste and inefficiency in public spending, and ensuring fiscal settings have a neutral impact on interest rates.
- Reducing the company tax rate to 25 per cent.
- Closing the gap between the company tax rate and the higher marginal personal income tax rates to help improve tax compliance productivity and workforce participation.
- Reducing the capital gains tax burden through the introduction of a reducing stepped rate of tax on capital gains to encourage longer-term investment decisions and discourage speculative investments.
- Abolishing stamp duty on business conveyances, as promised in the 1999 Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations. This must be followed by careful consideration of the potential benefits of abolishing stamp duty on sales of residential property.
- Eliminating the cumulative impact of the Goods and Services Tax (GST). The application of the GST to stamp duties amounts to ‘a tax on a tax’, which cannot have been the intention of the Federal Government when the GST originally came into effect.
- Unnecessary compliance costs and business regulations, such as ‘red’ and ‘green’ tape must be eliminated.
- Improving access to affordable housing and stimulating activity in the residential building sector. This means removing unnecessary supply constraints, and abolishing or reducing inefficient taxes and charges. Negative gearing must stay.
- Developing innovative funding arrangements and more effective public infrastructure investment policies to boost construction activity and improve economic and community wellbeing.
- Ensuring an adequate and flexible skilled workforce for the future, focusing on apprenticeship training, up-skilling of the existing construction workforce and targeted skilled migration.
- Reforming developer (or infrastructure) charges. In their current form these charges add to the construction cost of new homes, raise rents and contribute to Australia’s housing under-supply problem.