Released 31 May 2012



By Tim McKibbin - REINSW CEO

REINSW CEO Tim McKibbin discusses REINSW's proposal to cut stamp duty in order to increase government revenues.

The number of property dealings in New South Wales has decreased in recent times despite an increase in population.

When you compare NSW Land and Property Information records from 2011 with those from 2003, you can see a decline of 289,000.

These figures make it clear that something must be done to stimulate the property market.

The Reserve Bank’s decision to cut interest rates by 50 basis points in May further confirms that the economy is in need of support.

In order to give the property market the boost it requires, we believe the NSW Government should follow in the RBA’s footsteps. 


REINSW’s plan

At REINSW, we believe that the solution lies in part with a cut to the stamp duty levied on property transfers. This will not just increase property transactional activity, but will also increase government revenues. A stamp duty cut of as little as 0.5% could act to boost state revenues by hundreds of millions of dollars.

Our plan is based on focused research on reductions in stamp duties in Western Australia and the Northern Territory, as well as the effect the vendor duty had on the NSW property market.

Between 2003 and 2006, Western Australia cut its stamp duty by 0.9 per cent. This cut saw related revenues increase by more than $709 million over the same three-year period.

Similarly in the Northern Territory, stamp duty was cut by 0.45 per cent, which resulted in an increase of more than $22 million in related revenue.

In NSW, the vendor duty cost the government over $1 billion dollars in stamp duty in the only full year it was operative.

REINSW’s plan to cut stamp duty is a proven model and will protect government funding sources – and at the same time, it will light the badly needed spark to get the property market moving again. 


Be courageous and daring

The evidence is clear: stimulation of the property market through an easing of stamp duty, will be the incentive buyers need and the increase in activity will improve related revenue streams for government.

The Reserve Bank's decisive action to cut interest rates by 50 basis points needs to be reinforced by additional and wide ranging property taxation policy responses such as our Stamp Duty Plan. This plan includes the introduction of a ‘Pay as You Go’ stamp duty scheme for first homebuyers.

Let there be no mistake, the engine room of our economy is our property market and when it is sluggish the entire economy feels the effects.

Is this plan we are putting to government courageous and daring? We believe the answer is YES. But we also believe it is more dangerous to sit on the sidelines and do nothing and simply hope things get better.

I think that this plan is good for homebuyers, good for investors, good for agents, good for the broader economy and good for the government.