Uncertainty Hangs on Victoria’s New Housing Levy

The Australian state of Victoria may abandon a newly proposed housing levy after the Andrews government said the property sector reneged on its promise to support reforms in the industry.

The state government on Feb. 18 announced the new Social and Affordable Housing Contribution, which would impose a 1.75 percent levy on all newly built developments with three dwellings or more from July 2024, to raise funds for constructing thousands of social and affordable homes.

It said that less than 30 pecent of residential planning permits would be subject to the levy, and each year the government could raise more than $800 million (US$578 million) to build around 1,700 new social and affordable homes.

However, many major industry groups immediately raised concerns that buyers would have to bear the brunt of the levy costs, pushing young people further away from the housing market.

Premier Daniel Andrews said there had been discussions on the levy between his government and members of the property sector as part of a broader reform package to speed up planning approvals.

He said that the sector would harvest “massive profits” with the reduction of red tape and had consented to contribute some of the windfalls to provide more social and affordable housing.

Nevertheless, Andrews alleged industry organisations, including the Property Council of Australia, had backed out of their promise to support the levy after striking an agreement with the government.

“It’s fair to say that the future of this bill is very, very uncertain,” he told reporters on Feb. 23.

“I’m not in the business of creating super-profits for developers if they are unwilling to support sharing those profits with those who need more affordable housing.”

The Property Council refuted Andrew’s criticism but pledged to maintain the working relationship with the government.

“This is the 10th new tax this government has introduced, the second in the last ten months,” the organisation said in a statement to AAP.

“All our members are concerned about the flow-on effects of new taxes on housing affordability.”

The Victorian government has yet to introduce the bill in the state parliament, and the premier said the legislation would not move forward without industry consensus, pushing the issue back to the developers.

“It’s now over to the development community,” he said.

David Davis, the opposition shadow treasurer, said the government had misjudged the response of the property sector to the proposed tax and placed doubt on Andrews’ suggestion that the industry had agreed to the levy.

“That is complete and utter rubbish. I have spoken to everyone across that sector … and nobody thought this was a good idea,” he said.

“It came as a complete bolt from the blue.”

The state government later called off a planned briefing with shadow cabinet members on the housing levy and other measures included in the bill.

Victorian Greens party leader Samantha Ratnam announced her party’s support for the bill while calling the property sector’s claims of housing price-hike a “furphy”.

“We see the development community crying poor every time there is a reform to create more affordable housing,” she said.

The Greens party also put forward a private members’ bill in the Victorian Legislative Council on Feb. 23 to compel the government to pass a new law to end homelessness in the state by 2030.