The Property Council of Australia is concerned the ACT Budget might not provide the economic recovery the ACT desperately needs.
ACT Executive Director, Adina Cirson said time would tell if the 2021-22 ACT Budget went far enough to ‘turbo charge the economy’ after the COVID pandemic.
“The pandemic is hitting hard on the community, and in particular the ACT business sector,” Ms Cirson said.
“We welcome the focus on job creation and infrastructure investment, but heading in to 2022, we face major housing affordability and land supply issues, coupled with a tightening employment market as our population growth falls through the floor.”
Chief Minister Andrew Barr had said population growth had stagnated in the ACT: whereas Canberra normally grew by 8,000 to 10,000 people a year, it has grown by less than 1,000 in the last year. This impacted on housing demand, he said.
Ms Cirson said the Property Council welcomed the ongoing support the ACT Government provided to sustain the private sector through the pandemic.
“But there is still a lot of uncertainty in the market about the longer-term impacts of the disease, and the share of the load the commercial sector is being asked to bear.
“This is especially notable in the ACT construction sector, which continues to be of great concern as it is faced with supply chain disruption and delays since the beginning of the pandemic.”
Although construction in the ACT resumed mid-September, the industry relied on interstate workers, many of whom could not enter the ACT, Master Builders ACT CEO Michael Hopkins told Canberra Daily a fortnight ago. However, he said this week that the ACT Government’s largest-ever infrastructure pipeline would position the construction industry to lead the Territory’s economic recovery.
But Ms Cirson said her concerns did not end there.
“Now we have a looming crisis of negative net interstate migration predictions and a ‘who knows when’ international migration return,” she said.
“This means you can spend all you like on investing in infrastructure, and rely on the private sector to drive the recovery – but we need a major focus on boosting our population if we have any chance of getting the people we need to build any of it.
“We have lost 25 per cent of the workforce in construction already, largely drawn back interstate, and more needs to be done to ensure we have the right skills for what is needed for right now. The flow-on effect of that, combined with dramatically reduced population growth, indicates that our recovery of the ACT economy could take longer than we think.”
Ms Cirson said the ACT needed a targeted strategy aimed at both population and growth beyond the end of this financial year.
“That means making sure Canberra remains a competitive and attractive place to live, study, work, invest, and do business in,” she said.
“In order to do that, we must make sure that our tax settings are fair and sustainable, that we innovate to attract investment here, and that the infrastructure investment pie – as delivered in this budget – continues to grow.
“Triple taxing the commercial sector through rates hikes – expected to increase 8.4 per cent per annum over the forward estimates, and stamp duty on commercial properties this year higher than ever – means we are hurting – at a time when the commercial sector is doing a lot of the heavy lifting supporting their tenants in a lockdown.
“And whilst a lot of the increased rates and stamp duty is attributed by the government to increased activity, new commercial properties, and conversion between residential and commercial uses – we are then being asked to pay an additional $28 million in Lease Variation Charge as a result. The bottom-line wins, but our sector certainly does not.
“Whether this budget is ‘enough’ remains to be seen,” Ms Cirson said.
“These are uncertain times, and I am not sure this budget will deliver what is needed to be leaders on our economic recovery. We will continue to work with the government as the full impacts on this year’s lockdown becomes clearer to all.”
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