‘We need new revenue sources’: Greens’ $13b answer to state housing crisis

The Victorian Greens are urging the Andrews government to reintroduce its dumped social housing levy and tax developers between 2 and 3 per cent on new developments, in a move the party says could raise up to $13 billion over a decade.

The minor party wants the government to revisit its controversial social housing package that Treasurer Tim Pallas ditched in February, less than two weeks after announcing it following fierce resistance from the property sector.

The Victorian Greens say introducing a 2 to 3 per cent levy on new developments would raise up to $13 billion over a decade. Credit:Photo: Paul Rovere

The state government wanted to impose a 1.75 per cent levy on building projects with more than three dwellings to raise about $800 million a year to fund 1700 social housing units. In return, the package would have included streamlined planning approvals Pallas argued would create $7 billion of economic uplift over a decade.

But with Victoria’s budget deficit expected to blow out to $19.5 billion this financial year, debt to rise to $162 billion in net terms by 2025, and the state a laggard in social housing, the Greens want the government to relitigate its Social and Affordable Housing Contribution package.

“Victoria is currently staring down the barrel of an unprecedented housing crisis that will only get worse without urgent action,” Greens leader Samantha Ratnam said.

“A social housing levy would help raise billions that could be used to build more public housing in Victoria. Yet this government scrapped that opportunity when it caved to pressure from property developers and axed its proposed levy earlier this year.

“This is what happens when you let the property industry write your housing policy. It creates a housing system that puts the interests of developers over the community."

A Parliamentary Budget Office analysis for the Greens shows imposing a 2 per cent levy on new developments would rake in $8.2 billion over the next decade, while a 3 per cent levy would improve the budget bottom line by $12.4 billion.

Pallas will hand down his eighth budget on Tuesday and is expected to reveal debt as a proportion of the state economy stabilising over the next four years, with the government predicting a strong bounceback from the pandemic.

Despite rising debt, it will be an election year budget with sweeteners.

The Treasurer will most likely spend huge sums of money on fixing the healthcare crisis, including elective surgery waiting lists, triple zero delays and ambulance ramping, ahead of Victorians heading to the polls in November, and the Coalition expected to ramp up its attacks on the government’s handling of the healthcare system.

“With the state budget likely to reveal major debt and deficit, Victoria will need to find new revenue sources to meet the challenges we face,” Ratnam said.

“The Greens want to see this levy reintroduced at 2 to 3 per cent as a way of developers paying their fair share to help to build the tens of thousands of public homes we desperately need.”

Last month, Pallas said the social housing tax was “done, dusted and finished” even if Labor is re-elected, fearing a major scare campaign on housing affordability.

A government spokesman said its position had not changed since March when it dumped the package of reforms.

“We are focused on delivering 12,000 social homes to Victorians in need through our historic $5.3 billion Big Housing Build,” they said.

The Property Council wanted a tax rate closer to 1 per cent, while other groups, including the Housing Industry Association and Urban Development Institute of Australia, did not support the tax and said they were blindsided by it. The membership of the HIA and the UDIA are most affected by the levy because their members are residential builders to whom the tax applies.

The Victorian government was contacted for comment.

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