The Miles government delivers a pre-election budget focused on household cost-of-living relief, health and education funding, all against a backdrop of big-ticket spending through the state’s Big Build program and the Queensland Energy and Jobs Plan.
Cost of living relief measures include a 20% reduction in vehicle registration costs over the next 12 months, the capping of Translink public transport fares at 50 cents over the next six months, and a $1,000 energy rebate for Queensland households and small businesses over 2024-25. Combined with the recent Federal Budget rebate, this brings a total $1,300 in electricity bill support for Queenslanders. This energy rebate alone accounts for $2.965 billion of the $3.739 billion of new and expanded cost-of-living targeted concessions. While these measures will certainly bring relief to households in the short term, these measures have defined expiration dates and will not alleviate long-term household bill stress. With credit card debt increasing nationally, it is likely that Queenslanders’ savings from these measures will be reallocated towards paying off debts and spending on other essentials.
The cost of housing in Queensland has outpaced that of Victoria and New South Wales since the previous budget and so housing is a key investment area for the government over the coming year. $3.1 billion has been allocated to respond to housing pressures through the Homes for Queenslanders plan. The plan includes $350 million to encourage infill development, $160 million in renter’s relief, and will set a target of 53,000 new social houses by 2046. The plan also includes a new state facilitated development team to streamline decisions and resolve planning and infrastructure issues. Given that Queensland is experiencing record population growth, underpinned by elevated levels of interstate migration from New South Wales and Victoria, it is critical to ensure that housing supply is facilitated through the delivery of enabling infrastructure, housing supply, and options throughout various sectors of the market. The plan has also allocated funding towards the construction of six hundred modular homes, which is welcomed from both a housing delivery and innovation perspective, allowing for the development of the sector.
The Budget also provides additional assistance for first home buyers through an extension of the First Home concession to houses valued up to $700,000, (up from $500,000 currently), with partial concession for properties valued up to $800,000, and up to $500,000 in the case of vacant land. This measure will be impactful as surging housing costs rendered the previous threshold ineffective with limited supply at that price point. At the same time, however, there is a risk that the inability to keep up with supply levels to match this increase in demand will only cause inflationary pressure.
Queensland is cementing itself as an emerging hub for Australia’s energy transition with $26 billion in funding over the next four years slated for the Queensland Energy and Jobs Plan. This package aims to support the energy transition across wind, solar, battery storage, and transmission line projects and will be catalytic in delivering the required infrastructure to decarbonise the Queensland grid.
$4.393 billion is committed to address demand and cost pressures on Queensland Health, including $222.4 million on health workforce attraction and retention, $209.9 million in new funding for closing the First Nations health gap, and $95.9 million in new funding for youth vaccination has also been allocated. With a growing and ageing population, addressing the capacity of the health sector is critical. Funding for youth and First Nations health is also critical to the success of this system. Also, given that restricted access to the health workforce is one of the major handbrakes on health service provision and investment, the budget allocation of $270 million over four years for recruitment of ambulance operatives and specialists is a positive initiative.
The infrastructure investment and commitments from the government highlight a focus on sustainability and enabling growth via better connectivity and public transportation. Question marks on where and how Queensland will house the workers to these projects remains, with a tight labour and lacklustre housing productivity.
From a revenue perspective, the Budget aims to raise an additional $420 million through tax increases on foreign entities. If passed, the proposed measures will increase the land tax surcharge on foreign companies from 2% to 3%. Our Ratings and Taxation team have estimated that this is equivalent to a 50% increase on tax payable for foreign-owned entities between FY24 and FY25. Similarly, the Foreign Acquirer Duty on international purchasers of residential property is expected to rise from 7% to 8%, with exceptions available for Australia-based foreign entities that contribute significantly to housing supply. These tax increases pose some level of risk towards the investment decisions of these foreign entities, in an environment where feasibility across all asset classes is already marginal across Australia.
While affecting all asset classes, both measures combined will have a marked impact on Queensland’s purpose-built student accommodation (PBSA) sector, which remains dominated by foreign owners such a UniLodge and Scape Student Living. Given the Federal Government’s recent announcement on capping international students unless universities provide PBSA, this measure disincentivises investment in Australia.
Overall, the 2024-25 Queensland budget has a clear focus on helping its constituents in the here and now. We look forward to tracking the impact of the various housing delivery-related initiatives and whether learnings can be applied nationally. It is important to see the increased allocations towards health and infrastructure presented in the 2024-25 budget by the Miles government as Queensland continues to see significant population growth. At the same time, however, we are cautious of the implications that the proposed tax measures will have on the property industry.