Ambitious cities through ambitious tax reform.

In the lead up to the Federal budget in May and an election sometime later in the year, the Turnbull Government are continuing to consider their options on how to proceed with tax reform. At the same time we are still waiting to see how Malcolm Turnbull’s personal interest in cities and urban policy will play out. Joining these two dots together, there appear to be some substantial opportunities for our built environment if there is sufficient leadership to make some ambitious changes.

Here are some ideas on how taxation reform at both the state and federal levels, could make substantial positive change in our cities and built environment.


Idea 1. Direct action on housing

Public housing across Australia is in crisis. This crisis is most visible in places such as Melbourne’s inner suburbs, where a collection of public housing towers built in the 1960’s and 1970’s are relied upon as homes for some of our most vulnerable citizens. These homes make poor use of their elevation through minimal windows, have terrible thermal properties and in some cases are no longer lockable or secure.

If you have any doubt about how much oppressive architecture can impact an individual, consider how societies around the world treat their criminals. It is a virtually universal punishment technique to use oppressive architecture as one of the most severe punishments via prisons. People are confined to small spaces with limited access to daylight, ventilation or temperature control. They are isolated from wider society and yet also have their personal safety threatened by other inmates. It is an alarming realisation that all of these features of prisons are also common to our most vulnerable people in public housing. We are currently punishing families, grandparents, children, brothers and sisters who are in a daily struggle just to get through life.

Public housing Flemington

This depressing state of neglect has a solution and it is not a difficult one. The Federal government in their wisdom already spends over $8 Billion on housing. This in itself is an acknowledgement of how housing is an important responsibility of government. The problem with this funding is that it is being used as the grossly ineffective tax deduction that is negative gearing.

Whilst many have discussed the negative impacts that this tax policy is having on house prices and rental prices, there is also the massive opportunity of what could be achieved if we collected this revenue and directly invested it back into housing.

With $8 billion of federal funds invested across the country every year, it would give each state and mainland territory $1 billion each and every year to progressively update our housing stock. In Victoria within a decade the towers in North Melbourne, Carlton, Richmond, Fitzroy, South Melbourne, Flemington could all be demolished and replaced with a mix of housing which treats people with respect. In places like the Northern Territory $1 Billion per year could make a meaningful impact into indigenous housing by funding non-profit organisations like Health Habitat and directly investing into struggling communities.

The Federal opposition have announced a policy which would significantly reduce negative gearing without abolishing it all together. Under this scheme it is estimated that an ongoing amount of around $3 Billion could be generated annually. Directly investing this back into housing could achieve similar things if it was given a longer time frame.

Many may question why such a large investment in housing is warranted and what they get for it in return. If spending tax payer money on our most vulnerable citizens is not your cup of tea, consider the following. Firstly there is a direct link between housing and health. If we supply housing that does not overheat in summer, allows natural ventilation and is not in general disrepair than we can expect a reduction in required medical services. If we provide housing that provides occupants with physical security than we should expect a reduction in police call outs. If we combine this with providing housing that enable socialisation we might even see a reduction in mental health issues. Ultimately if we provide environments that are supportive of our most vulnerable citizens than we are more likely to see them reach their full potential rather than being locked into a life of dependency.

In summary, if we stop giving tax breaks to landlords we can help make our cities more equitable and socially inclusive, rather than maintaining the status quo of treating vulnerable people like criminals.


Idea 2. Making money spent on architectural services tax deductible

Credit for this idea must go to Monique Woodward from WOWOWA, who brought up the idea here on The Red+Black Architect in Post 100 last year. The idea is so good that it deserves repeating here.

In order to consider the advantages of making an architect’s services tax deductible, first consider the following. Whilst individuals or businesses may own a building at a particular point in time, in the context of building’s life span this ownership is temporary.

The benefits of a well designed building impact occupants over the life of the building. The people who live and work within these buildings are more likely to be happier, more productive people, further contributing to the return on investment for taxpayers. In addition to this, better designed buildings last longer which means a reduction in environmental waste of demolishing and rebuilding.

So whilst the design cost to make the building as good as it can be is the responsibility of the first ‘owner’, the benefits of that investment are reaped by future occupants and by society over time. This makes the money spent on design an investment for society, not a gift for an individual.

In summary, if we want better cities and better buildings we need to invest in design.


Idea 3. Replacing stamp duty with land tax.

One of the difficulties that individual home owners have is making their home suitable for their needs over time. What might be suitable for a couple in their twenties may not be suitable for a family of four or retired single individual. The solution to this problem is to change housing to match your circumstances. The problem is that with every change a big lump sum of many thousands of dollars is payable to the state in stamp duty.

To avoid stamp duty, some people avoid changing housing, putting up with the frustrations and inconvenience of a house that no longer fits their needs. In the case of home owners who purchased ‘off the plan’ they may be stuck in a poorly designed home that had a nice glossy brochure. By unlocking owners in this situation and allowing them to sell up, the market can more accurately reward good design and discourage bad design.

The second benefit to enabling more mobility in housing is that it could reduce the reliance on our transport networks. If a home owner moves job (or if their job moves elsewhere) they can decide to sell up and live closer to their workplace without taking a massive financial hit.

The transition from stamp duty to an annual land tax would need to be phased in over time to ensure fairness.

In summary, a mobile and flexible population will improve our cities and in how people live and work within them.


A final note

These three ideas are starting points. They don’t have the thorough analysis of the civil service but they do have ambition. An ambition where our tax system treats our most vulnerable with respect by providing them with the basics of a secure healthy home. An ambition that we should recognise, value and invest in the benefits of good design. And an ambition that our cities can be flexible and innovative for the 21st Century. If you agree, tell a politician.


Architecture is for everyone.

About Michael Smith

Architect and Director of Atelier Red + Black based in Melbourne, Australia
This entry was posted in all posts, Government Policy, Uncategorized and tagged , , , , , . Bookmark the permalink.

1 Response to Ambitious cities through ambitious tax reform.

  1. Pingback: Red +Black Discussion with Adam Bandt: Cities, Architecture and the Federal Government – Part 1, | The Red and Black Architect

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