Article from a Perth developer, taken from LinkedIn. Your thoughts? "Almost on a daily basis the media is saturated with statements by economic pundits and theorists telling the nation that with the rapid decline of the mining boom the one thing standing between the Australian economy and recession is the housing industry, so the oxymoronic fiscal policies strangling the industry and gouging the very last living breath out of it with surreptitious and clandestine financial imposts become totally incomprehensible. Let’s examine some typical cases. A typical new development for example in the City of Cockburn WA, is now subjected to the following Local Government charges. It starts with a recently introduced Community Levy which is nothing short of a euphemism for a smash and grab tax of around $340,000 on a 100 unit development with absolutely no rational basis or justification for it. In addition there is a development approval charge of $41,000 as well as a charge for the issue of a simple, previously called Building Licence, now retitled Building Permit (a needless cosmetic change which no doubt came at significant tax payers administrative expense) and which costs an additional $175,000. The right to a simple connection to the existing sewer and water mains with no upgrade needed will cost additionally circa $200,000. Calculated on a base of 100 units these costs alone already represent approximately $8000 per unit excluding the usual charges of rates and other local taxes of course. Not to be outdone Western Power are now charging the ridiculous fee of $175,000 for the removal of a transformer from one of our sites. NBN have put developers on notice that a new connection fee of $400 per unit ($40,000 based on a 100 unit development) will apply from hereon. Stamp duty in WA realistically is around 4 to 5%. The State Government website on stamp duty shows that on a typical investment unit valued at around $600,000 stamp duty will amount to approximately $23,000. What it does not show is the double dipping nature of this tax. Unlike buyers in Victoria for example, in WA a person purchasing an apartment will be subject to stamp duty on the pro-rata value of land and full value of a non-existing building. In Victoria, purchasers contracting to buy apartments off plan and prior to construction are only liable for stamp duty on the proportional value of the land and nothing else as indeed at that point nothing else exists. As construction commences and progresses incoming new purchasers become liable for stamp duty on their proportional value of land and proportional value of the improvements on the date of the contract. In WA buying a single residential block of land and building a house on it only attracts stamp duty on the value of the land and nothing on the value of the building, clearly an anomalous and significant financial disadvantage for apartment purchasers. In addition of course there is land tax which has just been heavily increased in quantum and scope, and clearly having a profound effect on the investment market, plus other incidental charges such as registration of mortgage fee and a charge for anything else which requires the State’s imprimatur. At the Federal level there is of course the ubiquitous GST. The tax which was supposed to replace all other taxes will hit a typical unit purchaser for another $60,000. So on a unit which costs around $600,000 in excess of 15% of the purchase price goes to the various tranches of governments and other opportunistic government owned monopolies. We are only scratching the surface of course as all of the economic units which make up the industry like builders, architects, engineers, sales consultants, advertising media and agents etc are also inevitably caught in the sticky gossamer of various levels of Federal, State and Local Government taxation. For those in authority who wish to listen, this industry is hurting badly and simply cannot go on without serious repercussions. As long as The Reserve Bank restrains significant rises in interest rates the various tranches of government in Australia see the housing industry as politically an easy target (rising prices are directly related to those greedy developers and not politicians so lesser fallout in the popularity stakes) and a soft touch for increased revenue but the law of diminishing returns is now seriously kicking in, particularly in WA, whose economy has been the subject of a severe drubbing from the decline of the mining industry. Developers simply cannot keep passing on these cost increases to purchasers with affordability already a very significant issue in a deteriorating market so the only option for developers is to absorb in part or in total new taxes such as the Community Levy and other such increases. This makes the balance of risk against returns very questionable and at serious risk of falling off a cliff which will result in a significant contraction in the industry. I believe that process is fast incubating with developers shelving projects resulting in fewer developments up for approvals. Against a background of a rising risk profile in negative market sentiment driven mainly by affordability issues developers in WA are either dropping or shelving projects with values in the hundreds of millions of dollars. State and Local Government must come to realise that the simplistic approach of hitting a particular industry hard to raise revenue is not remotely rational and does not invariably work without corresponding significant industry contraction. We understand that in the current tough economic climate and a budget glowing with red ink there are state revenue issues which need to be addressed but killing the apartment development industry serves no reasonable purpose and should not be a viable option. The State has restructured its royalty income stream with some of the struggling iron ore mining companies, in the interests of affordability and keeping the golden goose of housing in barely survivable good health it might be good forward looking policy to address some of the issues mentioned above. Please consider."