Victorian State Budget
Treasurer Tim Pallas handed down the 2015-16 State Budget on Tuesday. Speaking on ABC News Breakfast on Wednesday, CEO Kate Roffey noted that it was a "workman-like" budget that focused on delivery of election promises, as expected. There were no real surprises on budget day, which is understandable given the majority of the 'announceables' had been gradually released over the previous two weeks. The $1.2 million projected surplus, although down from previous projections, was about par for the course given the additional spend in honouring election commitments around pay adjustments in some sectors. The budget announcements also noted a $22 billion spend on infrastructure, however, only around $1.8 billion of that funding will be spent in the coming year with the majority back-ended into 2018 projections. This leaves open the question of where the additional funding for the much needed Metro Rail project will come from. In the business space, $508 million has been committed to achieving Labor’s election promise of creating 100,000 jobs which will be a very closely monitored critical deliverable for this government. Committee for Melbourne - Budget at a glance.
Dr Fanta Aw
On Tuesday Dr Fanta Aw, President and Chair of the NAFSA (the world’s largest professional association for international educators), joined Committee for Melbourne members to discuss developments in the US higher education sector with a focus on issues around the growth and development of the international student sector. Hosted by RMIT, the session provided some fascinating insights into the US higher education system and the strategies their providers are implementing to improve their offering. These included some innovative concepts like stackable degrees, competency-based learning and Public Private Partnership models. Dr Aw also noted that contrary to popular belief, the US higher education system is not unaffordable. In fact, with 4,000 higher education institutions across the country and a very strong emphasis on scholarships, there is an affordable education option for every citizen. One of the most interesting takeaways from the discussion was the realisation that the US is focused on answering the very same question we are grappling with here in Australia – is the current model for delivery of higher education sustainable for the future?
Foreign investor tax
One of the few surprises to come from Tuesday's Victorian Budget was the government's plan to increase stamp duty and land tax for foreign investors. From July 1, non-permanent residents will pay a 3 per cent surcharge on stamp duty in Victoria, and absentee property owners an additional 0.5 per cent land tax surcharge. The aim of the tax is to raise additional revenue – projected to be around $330 million over the term of the government – and help address housing affordability concerns. Although the Andrews government has indicated the aim is not to tax Australian resident companies and individuals, there are major concerns some domestic companies such as Mirvac and Stockland will be inadvertently caught up in the initiative due to their high levels of foreign debt sourced funding. In the Financial Review, Stockland’s Mark Steinert noted that given Victoria's stamp duty was already high the developer could restrict its future investment in the state if an appropriate exemption was not reached. This highlights the importance of ensuring we get the details of this initiative right.
When we think of resilience in a city context, we tend to immediately think of their capacity to deal with unexpected shocks such as floods, fires, droughts – the so called Bible catastrophes. They hit quickly, they hit hard, and in Australia we respond incredibly efficiently and effectively to these unpredictable events. The real test of the strength of a city however, has to be focused not just on its capacity to respond in crisis, but on its ability and willingness to look to address the long-term stressors. It is the latter which quietly, yet consistently, erode the base one pebble at time until the foundation collapses. Speaking at an AECOM Resilient Cities event this week, CEO Kate Roffey spoke of the need to refocus our thinking on resilience to include dealing with these long-term stressors that impact the economic strength and liveability of our city. Jobs creation, housing affordability, urban sprawl, connectivity between places of work and residential areas are all becoming significant concerns for us. These issues tend to creep up on us over time rather than hit hard and fast but left unaddressed until we reach crisis level, their impact will be no less devastating.
Prefab buildings bridging auto industry jobs gap?
According to academics at Curtin University, while traditional manufacturing may be on the decline, the prefabricated building sector is waiting in the wings to bridge the employment gap for workers about to lose their jobs from sectors such as automotive manufacturing. In 2012, output from the prefabricated building industry globally was estimated to be more than US$90 billion, up from $60 billion in 2011. At 3 per cent, Australia’s global share is still comparatively small and prefab buildings make up only 3 per cent of the domestic residential housing market. However, the Australian industry aims to grow its share of the housing market to ten per cent by 2020, an achievable target given 50 per cent of residential housing is prefabricated in Finland, a figure which rises to 74 per cent in Sweden. Domestically Melbourne-based company Hickory Group is leading the way as the only Australian modular builder making multi-storey dwellings and many of the 150-plus employees working at Hickory came from the car manufacturing sector. It may be a small start, but this is a good example of how we can transition our manufacturing industry into jobs of the future, and potentially deal with some of our housing affordability issues at the same time.