Brokers outline what they want to see from economic reform roundtable

Over 29 hours of discussion, with 327 different contributions and more than 900 submissions unpacked, the closed-door roundtable focused on taxation reform, AI regulation and potential changes to building codes, as the government falls further behind its target to build 1.2 million new dwellings by 2029.

Speaking following the three-day event on Thursday evening, Chalmers confirmed that the government would be working towards 10 longer-term reform priorities (though details are yet to come):

• Building homes more quickly by simplifying the National Construction Code (Prime Minister Anthony Albanese and Chalmers had earlier hinted at regulatory changes to boost planning approvals).
  
• Making AI a national priority.
  
• Attracting capital and deploying investments.
  
• Building a skilled and adaptable workforce.
  
• Building a better tax system, including "intergenerational equity terms" to make it more equitable for younger workers.
  
• Modernising government services.
• Progress toward a single national market to improve the federation.
  
• Simplifying trade and reforming "nuisance" tariffs.
  
• Streamlining regulation by reducing unnecessary red tape.
  
• Speeding up approvals in national priority areas.

He said: "In every part of every session, the working people of this country, the community more broadly, was front and centre because we know that the whole purpose of economic reform is to deliver for the people who send us here to work so hard on their behalf.”

However, mortgage brokers have told The Adviser that they would most like to see stamp duty reforms, stronger support for first-time buyers, and a lower serviceability buffer at the top of the wishlist.

Brokers call for key reforms

Speaking to The Adviser about what reforms he would most like to see come from the roundtable, Scott Beattie, the founder of Queensland-based brokerage Cube Home Loans, urged changes to stamp duty for downsizers to encourage older people to move and free up larger homes.

Beattie listed several issues he thought were overlooked that policymakers should focus on.

“We need to go back to innovation to assist buyers – for example, capping of lenders’ mortgage insurance (LMI), which lenders are thankfully starting to creep back into.

“In a lot of cases, serviceability isn’t the issue; it’s getting the deposit together. The Home Guarantee Scheme has been a great help for buyers to enter the market,” he said.

He stressed that policies to support retirees and first-time buyers should also be considered.

“Exit strategies for older buyers, which could consist of longer loan terms or mortgages that are less than current rental payments for the same home in that area, make sense even after retirement,” he said.

“I like the Help to Buy Scheme, but without a lender on board, the scheme is useless unless you are a cash buyer.”

Ben Kingsley, chair of the Property Investors Council of Australia (PICA) and managing director of brokerage and financial advisory firm Empower Wealth, agreed that more support was needed for first-time buyers.

“First home buyers are at a lending disadvantage compared to investors, who can include rental income to increase their borrowing power,” Kingsley said.

In his role at Empower Wealth, Kingsley said he would like to see changes to the Australian Prudential Regulation Authority’s (APRA) 3 per cent serviceability buffer.

“If they [the government] want to level the playing field, potentially they should keep the buffer rate at 3 per cent for investors and reduce it to one or 1.5 per cent for owner-occupiers.

“More ‘home loan approved’ buyers will see increased housing supply, as a portion of these buyers will purchase new dwellings,” he said.

First home buyer schemes under the spotlight

Balpreet Bal, director and finance broker at Loan Market Bal and Associates in Western Australia, told The Adviser that he would most like to see changes to the eligibility thresholds for first home buyer schemes.

In Perth, the threshold for the First Home Buyer Guarantee Scheme (where applicants only need to save a minimum deposit of 5 per cent) is $600,000.

“That’s not practical,” Bal said. “The median house price in Perth at the moment is over $870,000.”

“I’d recommend that officials raise the First Home Buyer Guarantee price threshold from $600,000 to $800,000,” he added, pointing to the high cost of living in Western Australia, challenges of saving for a deposit, and the need to support workers in critical jobs not in the well-paid mining sector.

“The stamp-duty concession threshold for first home buyers also needs to be reviewed,” he added.

“In WA, there’s no stamp duty on properties priced up to $450,000 – that’s just not a realistic price point.”

In his role as PICA chair, Kingsley said he would like to see changes to CGT exemptions.

He warned this was needed to address an “increasing trend in housing speculation by a growing number of property investors, who are seeing residential property as a trading commodity to make quick capital gains, instead of a longer-term private rental accommodation business.

“Stopping speculation or the trading of cheap properties to artificially increase their prices in the short term to make quick profits doesn’t bode well for a sustainable and affordable property market,” he said.

Kingsley recommended changing the current 50 per cent concession after 12 months to a scaled-up concession of 10 per cent after each 12-month period, leading up to 50 per cent after five years of ownership.

“This would deter trading or speculating of property for quick profits in the short term and reduce the level of speculative demand by some ‘get-rich-quick’ investors,” he said.

Canberra Coachella or chance for change?

The Albanese government is framing the roundtable as a springboard to boost productivity and consider reforms for the next three federal budgets.

More than 900 businesses and bodies, including CBA, the Mortgage and Finance Association of Australia (MFAA), and the Housing Industry Association (HIA), have made public submissions urging for change to alleviate housing pressures.

However, despite the huge number of suggested reforms, brokers are divided on whether the three-day summit will fix the housing crisis.

Despite the roundtable’s efforts to address housing concerns, Bal believes short-term changes will not be able to fix longer-term supply problems.

“We have a housing shortage in Australia and part of that is due to the cost of finding tradies and builders,” he said.

“I have clients who have given up buying an established home because there simply isn’t enough stock on the market and what they have found doesn’t suit their needs.

“They’ve instead chosen to buy land and build, but it can take six months for the land to be titled and then another 12 to 18 months until the builder hands over the keys. That can mean the client is spending the better part of two years renting while paying interest-only on their loans.”

Bal pointed to broader supply-side initiatives needed alongside tax reform.

“We need to increase the number of people in construction and skilled trades in Australia to help with our supply issue,” he said.

Beattie also queried whether the roundtable would remedy the core problems underpinning the housing crisis.

“Unfortunately, I expect this to be a talk fest with not much action coming from it, but I hope that I am wrong,” he said.

[Related: PM hints at planning approvals reform as roundtable looms]