Andrews government bogged down as troops show signs of fatigue
The tax was to raise $800 million a year, with the money used to pay for 1,700 additional social and affordable housing units each year, starting in July 2024.
This infuriated the property and development sector, which complained that the increase amounted to a stamp duty hike that would add up to $20,000 to the cost of a new median home in Melbourne.
You might think that was a predictable response. According to Danni Hunter of the Property Council, this was the 10th new property tax the Andrews government had introduced. The $800 million a year tax represented a sizeable redistribution from developers – and by extension homebuyers – to the government.
Similarly, the government has angered local councils with a plan to exempt social housing properties from paying tariffs, thereby siphoning local government revenue into state government coffers.
Then, just four days after announcing the tax hike, Prime Minister Daniel Andrews shelved it. For a man who has already shown a tendency to screw up with controversial decisions, this was a curious about-face.
According to Andrews, the reason was that the real estate industry reneged on a deal that would bring them “massive windfall profits” through faster approval rules, if they agreed to the new levy.
“I’m not in the business of creating super profits for developers if they’re not willing to support the sharing of those profits,” he said when entering parliament on Tuesday.
The problem is that the state’s building and real estate industry groups – including the Property Council, the Urban Development Institute and the Housing Industry Association – are adamant that there was never a deal or agreement.
Clearly, the government has decided it would rather put the whole package on hold than risk a damaging scare campaign over tax and housing affordability ahead of the election.
The tragedy is that the purpose of the policy, which took years to develop, was good: to provide a much-needed source of revenue to help fill a gaping public housing shortage. The problem was the implementation.
But the council tax debacle isn’t the only recent mess the government has been forced to sweep up. Late last year Victoria was almost left without legislation to control the COVID19 pandemic after former labor minister Adem Somyurek (who moved the cross bench following allegations of branch staking ) swore to oppose it.
That left the government scrambling to find another vote in the upper house before the state of emergency expires. Ultimately thanks to MP Rod Barton of Transport Matters. But the saga was unnecessarily messy, giving the impression that the government barely controlled parliament.
Now the numbers in the upper house are even more tenuous, after upper house MP Kaushaliya Vaghera moved to the cross bench after voting for a motion to send Labor back to the mediator over the so-called shirt scandal Reds, having also accused Andrews of failing to address the bullying allegations.
Add revelations in The Age this week confirming that the Victorian Anti-Corruption Commission spent more than two years investigating ‘alleged corrupt conduct’ involving relations between the firefighters’ union and the state government, and the situation for government is starting to loom, well, swampy.
And that’s before we even get into the dire state of the budget following the pandemic. Labor’s third term could indeed become very complicated.