Australia has a red tape crisis. And it’s the red tape you can’t see that’s making the problem worse.
Kurt Wallace’s new report exposes Regulatory Dark Matter in Australia.
Australia has a red tape crisis. And it’s the red tape you can’t see that’s making the problem worse.
Kurt Wallace’s new report exposes Regulatory Dark Matter in Australia.
Article by Andrew Hough courtesy of the Daily Telegraph.
Magnate pushes to adopt US-style tax cuts
AUSTRALIA’S richest person has implored the Prime Minister to introduce the economic policies favoured by US President Donald Trump.
Billionaire mining magnate Gina Rinehart was yesterday among the 250 high-powered guests at the Australian Embassy in Washington for a garden party celebrating Scott Morrison’s state visit.
The Hancock Prospecting executive chairwoman – believed to be worth more than $15.1 billion – was also among the guests at the White House state dinner the day before.
Ms Rinehart, a staunch supporter of Mr Trump, wants the PM to follow his policies.
“Please, Mr Prime Minister bring more of those successful economic policies such as cutting tax (and) cutting (red) tape.” she told The Daily Telegraph at the Garden Party.
Ms Rinehart - whose business interests including the former S. Kidman and Co empire across The Outback, is keen for business costs and “government tape” to be cut.
Her intervention came as guests, who included many of Washington’s and Australia’s elite, enjoyed the hospitality of outgoing Australian ambassador Joe Hockey.
During the festivities, he planted a White House tree on the embassy’s grounds that was an offspring of the famous Jackson magnolia planted at the White House by President Andrew Jackson nearly 200 years ago.
Other guests included billionaires Andrew “Twiggy” Forrest and Kerry Stokes, members of Mr Trump’s cabinet as well as other senior politicians and diplomats.
Following his Oval Office meeting with Mr Trump, Mr Morrison yesterday called for calm amid mounting tensions in the Middle East.
It came just hours after Mr Trump used the meeting to boast about his nuclear arsenal being in “tippy top shape” and “tippy top”.
But the PM commended the President’s “natural instinct” of restraint being a sign of strength.
“It was good to have the opportunity to confirm that again in the course of our discussions,” he said after attending garden party in the capital.
“So I think that should provide some assurance.
“I mean Australia will make its decisions in our national interest.” Mr Morrison also said he was confident the trade war with China would resolve.
It follow’s Mr Trump’s comment that China was a “threat to the world” as the two sat side-by-side in what has been dubbed an “awkward moment” for the Australian PM.
Article by Andrew Hough, courtesy of the Weekly Times, Group image by Adam Taylor.
Donald Trump, Scott Morrison spruik mission to the moon and beyond
Donald Trump and Scott Morrison believe they’ve hammered out a deal that will see the Adelaide-based Australian Space Agency work to send the US back to the moon. And then to Mars.
“There was crabgrass growing on the runways. And now they’re vital and, you know, we’re doing, we’re going to Mars. We’re stopping at the moon. The moon is actually a launching pad. That’s why we’re stopping at the moon.
“I said, hey, we’ve already done the moon. That’s not so exciting. They said, no, sir, it’s a launching pad for Mars. So we’ll be doing the moon but we’ll really be doing Mars and we’ll be, we’re making tremendous progress.”
He said the US was happy to rent out sites for private rockets to space, such as those being touted by tech businessman Elon Musk.
The federal government will today announce a $150 million boost into local businesses and new technologies that will support NASA on its “inspirational campaign to return to the Moon and travel to Mars”.
Guests sat at a mix of round and rectangular tables draped in alternating yellow and green tablecloths in tribute to Australia’s national colours and dine on sunchoke ravioli, Dover sole and apple tart a la mode. Temporary flooring was laid over the grass.
Dinner centrepieces featured more than 2,500 yellow California roses and Australia’s national flower, the golden wattle, while the garden itself will be decorated with white and yellow roses.
In reference to former president George W. Bush’s “man of steel” label for John Howard — the last Australian leader bestowed a state visit — Mr Trump upped his metals when asked to describe Mr Morrison.
“I would say a man of titanium — titanium is much tougher than steel, he is a man of titanium,” he told reporters.
“I think he is a nice guy. OK. A man of real real strength and a great guy.”
Despite the pair downplaying any military conflict with Iran, which has been accused of blowing up Saudi Arabian oilfields and has detained three Australians, Mr Trump boasted about his nuclear arsenal — which he later described as “tippy top shape” and “tippy top”.
The US has announced tough new sanctions against Tehran and its national bank — described as the “highest ever”. — before announcing it would send military forces to the Gulf following attacks that has threatened oil supplies and petrol prices.
While Mr Trump said he was happy for a coalition, and said restraint was a sign of strength, he said the US was “in a class by itself”.
Australian Prime Minister Scott Morrison with US President Donald Trump. Picture: Adam Taylor
He said: “We have the most powerful military in the world, by far. There’s nobody close.
“As you know, we’ve spent tremendous and hopefully, and we pray to God, we never have to use it, but we’ve totally renovated and bought new nuclear.
“And the rest of our military is all brand-new. The nuclear, now, is at a level that it’s never been before. And I can only tell you because I know, I know the problems of nuclear, I know the damages that, I know what happens.
“And I want to tell you, we all hope and Scott hopes we all pray that we never have to use nuclear. But there’s nobody that has anywhere close to what we have.”
“I think the United State has taken a very measured, calibrated approach to date,” Mr Morrison said.
TRUMP, MORRISON ON CHINA
They also talked about the ongoing trade tensions with China, during which the President descried the economic power as a threat to the world in a sense because they’re building a military faster than anybody — and frankly, they’re using U.S. money”. He said would only sign a trade deal in the US interests.
After the Morrisons watched a spectacular welcome on the White House South Lawns, Mr Trump said he wanted to travel to Australia later in the year for official business and some golf.
“Love to do it. Nothing more exciting than having it in Australia,” he said.
The day also included meetings at the State Department and Pentagon.
It’s a plan drawn up by Australia’s best and brightest to fulfil the grand vision of opening new food bowls in the Top End by tapping the great rivers of the far north.
But a year on since the CSIRO spent $15 million developing detailed blueprints for new dams and other water infrastructure in Queensland, the Northern Territory, and Western Australia, none of those jurisdictions shows any real interest in making it happen.
When The Australian put the question, not one of those governments could identify a single project it was prepared to fund or had a timetable to build — not even a pipe and a pump to a little “turkey nest” waterhole on a farm.
To Bob Katter, it’s part of a bigger problem of billions being spent on research projects to identify and assess new options for dams, but no governments having the guts to make them happen.
Katter, the inimitable veteran crossbench MP who holds the huge northern Queensland seat of Kennedy, says it reflects a fundamental lack of leadership and decisiveness when it comes to nation-building.
“They don’t want to build anything, they just go onto Google Maps,” Katter tells The Australian.
The CSIRO proposed water infrastructure projects for the Fitzroy River catchment in Western Australia, the Darwin River regional catchments in the Northern Territory, and the Mitchell River catchment in Queensland.
They are part of a continuing federal government program to identify new agricultural and economic development opportunities in Australia’s north.
Called the Northern Australia Water Resource Assessment, the program has conducted extensive feasibility studies and identified really big opportunities to create massive new greenfield irrigation zones, or vastly expand existing ones.
It’s a thorough job: the CSIRO has identified and evaluated surface and groundwater capture-and-storage options, provided detailed information on land suitability, identified and tested the commercial viability of agriculture and aquaculture, and assessed potential environmental, social, indigenous and economic impacts and risks.
“We asked, where is the land, where are the water sources?” the CSIRO’s research leader for northern Australia, Chris Chilcott, tells The Australian.
What they found were three ambitious regional projects of excellent potential, involving 128 specific development opportunities.
“We went through looking at the financial viability of each particular option,” Chilcott says.
“You could build some pretty big dams, but you would need to invest in big, downstream agriculture.”
If taken up, the projects would create a huge number of jobs, and draw both Australian and migrant workers to a new frontier of national development.
“Some of these catchments have less than 1500 people living in them,” Chilcott says.
“You would have to bring another 1500 people in.”
The Fitzroy, Darwin and Mitchell catchments differ a lot in terms of their physical, social and demographic characteristics, and the CSIRO proposes different infrastructure in each case.
But they would all involve multi-billion-dollar investments for multibillion dollar new agriculture over time.
The Mitchell vision in northern Queensland would build the grand old classic: big in-stream dams, in this case four of them, on the Mitchell River itself and its tributaries.
That, the CSIRO says, could support 140,000ha for year-round agricultural development, including sugar cane.
Alternatively, just taking water off the river through pumps and pipes could irrigate 200,000ha of a single dry-season crop such as cotton.
On top of all that, there are 235,000ha of coastal land suitable for lined aquaculture ponds, offering high returns from black tiger prawns or barramundi.
The Darwin catchments proposal envisages a variety of projects, including two big dams on the Adelaide River, but also off-stream water harvesting from other rivers and putting down bores to pump up groundwater.
It could, the CSIRO says, support 90,000ha of irrigated dry-season horticulture and mango trees. Another 420,000ha of coastal land is suitable for lined aquaculture ponds.
The CSIRO’s plan for the Fitzroy River in Western Australia involves a different strategy — not big in-river dams, but 425 tiny on-farm ones technically known as ring tanks, but colloquially called turkey nests.
By pumping from the Fitzroy into the turkey nests, the plan could support 160,000ha of a single irrigated dry-season crop, probably sugar cane or cotton.
By tapping groundwater, farmers could grow another 30,000ha of hay production. As well, 55,000ha of coastal land could host aquaculture ponds.
The National Farmers Federation loves the CSIRO proposals.
It regards them as more realistic and achievable than more grandiose concepts such as the 1930s scheme developed by engineer John Bradfield, which aimed to channel northern rivers huge distances south, in one version to the Murray-Darling. In contrast with Bradfield, says the NFF’s general manager for natural resource management, Warwick Ragg, the Fitzroy, Darwin and Mitchell plans would use the water right where it is, involving far less transmission costs and loss.
“The best place to use water is close to where it’s stored,” Ragg says.
A second reason the NFF supports the CSIRO plan is that it fits with the forecasts of the effects of global warming: the predictions, and recent experience, are that while Australia will get hotter pretty much throughout, the north will retain as much, or maybe get more, rainfall.
The current drought, which has crippled the Murray-Darling system, is an example, Ragg says.
“It seems to be getting hotter and drier in the southern part of the continent.”
In addition, the geography of the north favoured new export markets.
“If we are going to continue to be the food bowl of Asia, then being closer helps us, at least in a horticultural sense,” Ragg says.
A further reason for going for the CSIRO projects, Ragg says, is precisely because they have been thoroughly assessed by an independent organisation with some of the best teams of experts in the field.
“It would seem to be logical that the first projects for assessment would be those that have had the CSIRO primary analysis,” he adds.
Deputy Prime Minister Michael McCormack, who holds the water infrastructure portfolio, is keen for the Fitzroy, Mitchell, and Darwin projects, describing them as having the sort of ambition for nation-building as Bradfield.
But the problem, McCormack tells The Australian, is that no matter how much the federal government pushes them, under the Constitution dam building is a state responsibility.
“We can’t do these projects without state inputs, without state buy-in,” McCormack says.
So far at least, that seems to be where the Fitzroy, Darwin and Mitchell concepts are stuck.
The Australian went to the responsible ministers of the three governments involved, asking whether they supported the CSIRO proposals, and whether they could identify any specific physical infrastructure project under them which they were funding, and for which they could provide a start and completion date.
The reaction was fairly uniform: the ministers were polite about the CSIRO’s work, saying it was a useful resource, but implied that as a federally funded initiative it did not really have much to do with them and their plans.
Not one of the three governments would identify a specific infrastructure project within the CSIRO proposals it planned to get a start on.
Northern Territory Minister for Environment and Natural Resources Eva Lawler’s office made a point of the fact that the territory government “did not provide funding for this CSIRO study on water resources”.
“There are vigorous environmental assessment processes in place in the Northern Territory to enable developments that involve native vegetation clearing, water extraction and other impacts on the landscape, to be assessed.”
A spokeswoman for Western Australia Water Minister Dave Kelly says what the state government wants to do, and what the CSIRO proposes, are “two very separate things”.
“Our government made election commitments to not dam the Fitzroy and to create the Fitzroy RiverNational Park,” she says.
“As part of delivering on these election commitments we are also developing a water allocation plan.”
Queensland Minister for Natural Resources Anthony Lynham says his government is “not shutting its door on the project but is conscious that considerable work still needs to be done before any proposals can be realistically examined”.
Asked about any commitment to any specific CSIRO-proposed infrastructure project, Lynham’s spokesman says “no commitment at this time”.
Chilcott remains sanguine about his team’s development brainchilds for the Fitzroy, Darwin and Mitchell.
“It is a slow process, but a considered one,” he says. “The water is still there, so it’s not a lost opportunity.”
Chilcott points out that some of the specific projects, particularly for the Fitzroy, envisage private-sector investment decisions on whether to proceed on small-scale infrastructure such as pumping water off the rivers to on-farm turkey nests. The state government would in that case not have to build in-stream dams on the Fitzroy, but would have to grant permission for irrigation to take place and establish an allocation regime.
“It will be incremental,” Chilcott says. “I think we will see people making reasonable-sized investments to see if they can make it work, and see how much it improves their viability.”
To make some overall development projects viable, Chilcott says, it might require investment — either by government or a big agribusiness company with deep pockets — in not just water infrastructure, but regional agricultural processing infrastructure.
In the Fitzroy, he says, that might be a cotton gin.
As for Chilcott himself, he’s moving on with full enthusiasm to the next challenge. This week he will assemble his first team meeting to assess yet another catchment, the Roper River in the Northern Territory.
Families and investors are having to fork out up to half the cost of new house-and-land packages on surging taxes and red-tape costs, as the construction industry battles with a slowdown exacerbated by tough credit restrictions and low consumer confidence.
The nation’s peak housing and building bodies will today release reports highlighting the tax and red-tape burdens holding back house and apartment construction in the major capital cities, warning that “consumer and builder confidence” is crucial to reignite the sector.
A Centre for International Economics report, commissioned by the Housing Industry Association, lists levies, stamp duty, GST, council rates and land tax as key factors driving up the cost to build new homes.
The report cautions that the majority of the tax burden is being transferred to households, with 14 per cent of GST revenue raised from the housing sector, in addition to 10 per cent of all revenue raised across three tiers of government.
In its biannual forecast to be released today, Master Builders Australia predicts the new home building slump will bottom out during 2020-21, recording a 28.3 per cent drop since 2015-16. It attributes the slowdown to tougher financial regulations, tighter credit conditions and “heavy stamp duty surcharges on foreign buyers” by state governments.
The HIA data shows the average cost of red tape and tax incurred in the construction of a house and land package as a percentage of the purchase price is 50 per cent in Sydney, 37 per cent in Melbourne and between 29 per cent and 33 per cent in Brisbane, Perth and Adelaide. Other factors driving up costs to build a new home include red tape, consultant and inspection reports, council charges and insurance costs.
Housing Minister Michael Sukkar said state and territory governments were adding “enormous costs and delays to the construction of new housing” because of their “truncated, uncertain and slow planning and regulatory regimes”.
“It is unacceptable that the red tape and tax incurred in the construction of a ‘house and land’ package as a percentage of the purchase price is 50 per cent in Sydney and 37 per cent in Melbourne, as outlined in this report,” Mr Sukkar said.
“It is also unacceptable that the supply of new housing is so badly constrained by state and territory planning and regulatory bottlenecks.”
HIA executive director NSW David Bare said the “current tax imposts on housing have constrained housing supply and driven the escalating house prices over recent decades, leading to higher rents and unnecessary fin ancial pressure on all Australians”.
Mr Bare said having to pay $417,000 on taxes and regulatory costs on an average home was too much. “Housing is one of the most heavily taxed sectors of the economy, alongside the ‘vice taxes’ applied to cigarettes and alcohol,” he said.
The HIA says Australians are now being charged for a range of costly regulatory hurdles, in cluding soil testing, native vegetation protection, contamin ation reports, heritage assess ments, bushfire assessments, traffic management fees, site inspection fees, building levies, connection fees, flood assessments and other layers of red tape.
Master Builders Australia chief economist Shane Garrett said there was “no immediate end in sight to the new home building slump” but predicted a recovery was on the horizon.
“Over the past decade, new home building in Australia hit record highs thanks to the unique combination of record inward migration and remarkably low interest rates.
“The surge in new apartment and unit building was especially pronounced,” Mr Garrett said.
“The recent slowdown in new home building is largely down to micro-economic factors: tighter credit conditions, tougher financial regulations and the imposition of heavy stamp duty surcharges on foreign buyers by a number of state governments.
“Underlying demand for new housing is still very strong, with large numbers of new jobs still being created and interest rates now even lower than before.
“The pace of population growth remains brisk.”
The MBA pinpoints “consumer and builder confidence” as a critical factor to boost the sector, and predicts it will take time for confidence to return, with house prices falling in most markets.
Mr Garrett said MBA’s prediction was that new home building commencements would “bottom out by 2020-21 at 167,444, a drop on the 233,872 peak in 2015-16.
“From there, we expect that the strong market fundamentals will drive new home building higher,” he said.
“By the end of our forecast horizon in 2023-24, new home starts are anticipated to recover to 187,658, an 11.9 per cent increase on the low point of the cycle expected in 2020-21.
“For home renovations work, a record volume of detached houses approaching their 30th birthdays is good news, not to mention the availability of very low borrowing costs. Our forecasts envisage that the market for major home renovations will grow from $8.97 billion in 2018-19 to $9.38bn in 2023-24, a gain of 4.6 per cent.”
Mr Sukkar said the commonwealth was implementing its Reducing Pressure on Housing Affordability package and making $1bn available through the National Housing Finance and Investment Corporation to “help unlock housing supply”.
The government’s First Home Loan Deposit scheme will commence on January 1.
Mr Sukkar said the federal government was also increasing housing supply and “setting an example for state and territory governments, by accelerating the divestment of surplus commonwealth land for housing projects”.
“Over the 10 years it takes to produce a house and land package, there is a long and cascading list of red tape and taxes that account for half of the cost of the new house and land package.
“Stamp duty on the land and the house, GST, land tax, council rates, payroll, income and company taxes combine to raise almost $180,000 in taxes on a typical new house and land package. This does not include the additional $40,000 in development charges or the $220,000 incurred in red tape.”
Landscaper Ash Carter said business had slowed because buyers were concerned about the number of regulations, and he was forced to spend more money gaining approvals. “There are so many certificates and rules. Building a house is stressful enough and it doesn’t help either the builders or buyers to spend that extra time and patience with all these hoops.”
He said by the time landscapers were involved in the process, “we find people don’t want to do much”. He called for a “more centralised base” to cut red tape.
“You spend a lot more money on getting the certificates than the work you’re doing,” he said. “We need to go to five or six departments for these certificates. Having a single place to go to would be much better.”
The MBA forecasts suggest a softer commercial building sector in the next few years. Mr Garrett said commercial building had been “a bit of a dark horse” in recent years, growing steadily to reach a record high. “Demand for commercial building projects has been whetted by the environment of exceptionally low interest rates,” he said.Article by Geoff Chambers, courtesy of The Australian