Australia: Half the cost of a new home is state and local government charges

Australia: Half the cost of a new home is state and local government charges. By Robert Gottliebsen.

The chairman of the parliamentary inquiry into housing affordability and supply, Jason Falinski, made a stunning revelation this week that about half the cost of a home and land package comprises state and local government charges. …

Those charges are added to the price of dwellings and that means that about half of new home bank lending in Australia is required to pay for local and state government bureaucracies and their taxes. …

Before detailing this tragedy, I need to acknowledge that the Falinski figure comes from the lobbyists, Housing industry Australia, and many people challenge it. Due to the component complexities of the 50 per cent estimate, there will always be controversy. But my check of builders and developers of both apartments and house-land packages indicates that average figures around the 40 to 50 per cent mark are about right. …

First world bureaucratic quagmire:

The charges that are most often quoted are GST and stamp duty, but in many ways they are not the biggest problem. …

State and local governments, particularly those in NSW and Victoria, employ vast armies of bureaucrats to delay approvals by setting complex rules and conflicting jurisdictions.

The experienced developer/builders know what’s ahead and add the estimated costs on to the dwelling price. Sometimes a developer is lucky and there is a smooth ride. On other occasions, it’s horrendous.

In Victoria, there is a tax on each permit and sometimes, scheming public servants make sure the permit process is repeated two or three times to boost revenue. In extreme cases, delays of up to 10 years can take place. …

The respite from immigration — due to covid — is about to end:

At the moment, migration is at a standstill, few students are arriving and the economy is slowing under Omicron. Yet, the amount of dwellings available for rent has fallen to a historic low. Once migration resumes and students return, we’re going to see big rises in rents because the properties are not there to rent.

Banks and bureaucrats win, house buyers lose. Corruption can’t be far behind.

It’s not as if Australia has a shortage of land (25 million people in a country the size of the USA, Brazil, or China), raw materials, or builders. It’s the bureaucrats.