<a href="https://www.apartments.com.au/developers/consolidated-properties">Consolidated Properties Group</a> (CPG) is approaching the launch of its latest Brisbane riverfront development, Castile, on the dress circle Skyring Terrace in Newstead.

VIP buyers are now being engaged, with a full public sales launch coming later this year.

Positioned as the final opportunity to secure a new absolute riverfront residence on the East bank of Newstead, Teneriffe or New Farm, Castile at 47 Skyring Terrace has been designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> as a timeless addition to the Brisbane skyline.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371113]

The name Castile draws on themes of permanence, sophistication and legacy, reflecting a broader vision centred on enduring architecture and timelessness in the rarest of riverfront positions.&nbsp;

CPG Chairman and CEO Don O’Rorke said the project had been envisioned as a future Brisbane icon.&nbsp;

“With 47 metres of direct river frontage and never to be built out views, 47 Skyring Terrace is the definitive address on the Brisbane River,” O’Rorke said.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371114]

“Rather than following trend-based apartment design, Castile draws inspiration from Brisbane’s great heritage buildings, reinterpreting classical architecture into a contemporary riverfront landmark designed to stand proudly for the next 100 years,” he said.&nbsp;

The approved development will comprise 227 apartments across a 25-storey tower alongside a boutique six-storey riverfront building of just 12 residences.&nbsp;

Construction is scheduled to commence in September 2026.

[smartcode_project_cta:default project_id=150489]

Joel Robinson

CPG unveils Castile Newstead ahead of upcoming sales launch

Australia’s online shopping habits have shifted dramatically over the last decade. As eCommerce volumes surged, so too did the frustrations that came with traditional parcel delivery: missed deliveries, long Post Office queues, parcel theft and the challenge of being home during business hours.

Australia Post’s Parcel Lockers emerged as one of the more practical responses to that changing consumer behaviour.

What started as a relatively niche delivery option has evolved into a nationwide network of more than 1,400 self-service Parcel Lockers positioned at train stations, shopping centres, supermarkets and Post Offices across the country. The system allows Australians to send, collect and return parcels 24 hours a day, fundamentally changing how many people interact with deliveries.

The appeal is relatively straightforward: flexibility.

Instead of waiting at home for a delivery driver or rushing to a Post Office before closing time, users can direct eligible parcels to a Parcel Locker location of their choice. Once the parcel arrives, Australia Post sends a notification with a collection code or QR access through the AusPost app, allowing customers to retrieve their package at any time within the collection window.

For apartment residents in particular, the system has become increasingly valuable.

Higher-density living has created logistical challenges around deliveries, especially in buildings without concierge services or secure parcel rooms. Missed deliveries are common, while parcel theft has become an increasing concern as online shopping volumes continue to rise.

Australia Post itself has repeatedly highlighted the growing issue of “porch pirates” during peak shopping periods, encouraging customers to use Parcel Lockers as a safer alternative to unattended home deliveries.

That security aspect is one of the key reasons the Australia Post Parcel Locker network has grown so rapidly.

Parcel Lockers are positioned as secure, monitored collection points that reduce the risk of theft while also improving delivery efficiency for Australia Post. Instead of multiple redelivery attempts, parcels can be consolidated into a single secure destination.

The Parcel Lockers themselves are free to use through a MyPost account and support a range of parcel sizes up to 16 kilograms and dimensions of approximately 35 x 44 x 61 centimetres.

Beyond receiving parcels, the system has increasingly become integrated into the broader eCommerce ecosystem.

Customers can now use Parcel Lockers to return online purchases, while retailers have embraced the model as a way to improve delivery success rates and reduce friction in the shopping process. Australia Post has actively expanded partnerships with major retailers and promoted Parcel Lockers as part of a broader out-of-home strategy.

The timing of that expansion aligns with broader changes in Australian shopping behaviour.

The acceleration of online retail during and after the pandemic placed enormous pressure on delivery infrastructure. Parcel volumes reached record highs, particularly during Black Friday and Christmas periods, with Australia Post delivering more than 100 million parcels during peak festive seasons.

That growth forced logistics providers to rethink the “last mile” of delivery, widely regarded as the most expensive and operationally difficult stage of the process.

Parcel Locker systems have increasingly been viewed as part of the long-term solution.

The concept itself is not unique to Australia. Parcel Locker networks have become common globally, particularly across Europe and Asia, where dense urban environments and apartment living create similar logistical challenges. But Australia’s geography and suburban sprawl made adoption slower initially.

Now, however, the convenience factor is driving mainstream usage.

For commuters, Parcel Lockers near train stations allow parcels to be collected on the way home from work. For apartment dwellers, they remove the uncertainty around access and missed deliveries.

The rise of the AusPost app has also streamlined the experience, centralising notifications, tracking and Parcel Locker access into a single platform. Australia Post has increasingly pushed customers toward app-based delivery management, partly as a way to combat phishing scams and fake delivery notifications, which have become more sophisticated in recent years.

The Parcel Locker model is also beginning to influence property development itself.

Parcel management has become a growing consideration in apartment building design, particularly as online shopping becomes embedded in everyday life. Many new residential developments are now incorporating dedicated parcel rooms or Parcel Locker systems into foyers and communal spaces.

For developers, parcel management is increasingly viewed as part of the broader resident amenity offering, alongside gyms, wellness spaces and communal work areas.

That reflects a wider evolution in how residential buildings are designed.

Apartment buyers are placing greater emphasis on convenience, security and operational functionality, particularly in higher-density urban environments. Parcel delivery, once considered a minor operational detail, has become an increasingly important part of that equation.

Australia Post’s Parcel Locker network sits at the centre of that behavioural shift.

What began as a simple alternative delivery option has evolved into a key piece of infrastructure supporting Australia’s growing eCommerce economy and changing urban lifestyles.

And as online shopping continues to expand, the role of Parcel Lockers is likely to become even more embedded in how Australians live, shop and receive goods.

How Australia Post Parcel Lockers changed parcel delivery convenience in Australia

Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Policy

<html><body>
GUEST OBSERVATION
This month, yet another policy agreement on housing between the Commonwealth and state and territory governments came into effect. The National Housing and Homelessness Agreement is the latest version of a 73-year-long series of such intergovernmental pacts to ensure affordable housing for lower-income Australians and to fund services for the homeless.
It replaces the ten-year National Affordable Housing Agreement and a series of partnerships since 2008 to tackle homelessness – the National Partnership Agreement on Homelessness. The latest agreement has more achievable performance indicators than its predecessors. It also requires the states to report on their annual financial contributions – a worthy step up for transparency.
But, at a time of growing population and enduring housing stress, the Commonwealth’s latest budget promise to maintain its current funding contribution of A$1.3 billion for the housing agreement means there has been no increase in real funding. Keeping it at what it has been isn’t enough to cover the costs of current services, let alone increase them.
So, there is a disconnect between the lofty goal of improving access to affordable, safe and sustainable housing and the funding capable of supporting it. Until this funding shortfall is addressed, any new national housing and homelessness agreements will continue to be essentially different in name only.
What’s new this time?
Compared to recent former agreements, three matters stand out as new or refreshed.
First is the policy breadth. Unlike its predecessors, the new agreement aspires to improve access to housing “across the housing spectrum”. This refers to the full suite of housing tenures – from crisis housing to home ownership. Within this spectrum the Commonwealth has set several immediate priorities:
<ul>
<li>achieving an efficient, responsive and well-managed social housing system</li>
<li>support for community housing and affordable housing models that can viably increase housing supply</li>
<li>tenancy reform that encourages security of tenure in the private rental market</li>
<li>strategies to promote market supply and efficiency, including planning system reforms, land-release initiatives and support for home ownership.</li>
</ul>
This broadened coverage is generally welcome, but it falls short of satisfying the calls for a national housing strategy. This means many national policies with major impacts on housing demand and cost – such as taxes on housing investment, immigration levels and income support for renters – remain outside the influence of the agreement. Such policies also strongly influence the prospects of reducing housing stress.
The second, and arguably biggest, set of changes concerns accountability. This includes an expanded list of performance measures, the Commonwealth leading a standardised approach to data measures, and a formal independent Productivity Commission review of the agreement to be conducted within four years.
The new performance indicators replace the targets from 2008, which were never achieved. The failed measures were quantitative in nature, while the new ones simply adopt a requirement for progress (an increase or a decrease, as appropriate), which can be more readily achieved.
For example, the Rudd government’s pledge to halve the rate of homelessness by 2020 has shifted to “decreases in people experiencing homelessness and repeat homelessness”. Similarly, the 2008 commitment to reduce the proportion of low-income renter households experiencing rental stress by 10% has been replaced by a commitment to simply reduce the proportion of such households.
A third feature is a requirement for states and territories to annually publish housing strategies. Stakeholders will be able to judge and compare the merit of these published blueprints. These will come after a new set of high-level bilateral agreements negotiated between each state and territory and the Commonwealth.
This highlights differences in housing conditions between jurisdictions and incorporates state-level priorities in addition to those of the Commonwealth. Those published so far vary considerably in ambition and specificity.
The elephant in the room
While there are positive directions in the new agreement, the funding deficit remains an issue. Despite not increasing its funding, the Commonwealth hopes the states and territories will increase theirs.
The Commonwealth, however, has failed to extend or replace other large housing programs that operated in the past decade. These included the now closed National Rental Affordability Scheme, which resulted in over 36,000 new affordable rental houses, and a A$5 billion national partnership to improve housing supply and conditions in remote (largely Indigenous) communities.
As a result there is now less federal funding for new social and affordable housing than at any time over the last decade.
<img src="https://counter.theconversation.com/content/99936/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">With so much detailed by so many about the manifest inadequacy in funding required to meet housing need in Australia, we can regrettably predict that the new agreement will not contribute much at all to an increased supply of social and affordable housing. Indeed, this is tacitly acknowledged – the agreement’s carefully crafted performance indicators include no such measure.
Vivienne Milligan, Visiting Senior Fellow - City Futures Research Centre, Housing Policy and Practice, UNSW
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/the-new-national-housing-agreement-wont-achieve-its-goals-without-enough-funding-99936" target="_blank">original article</a>.
</body></html>

j.ballantyne1990-6AQqhLzZaK

The new national housing agreement won't achieve its goals without enough funding

<html><body>
GUEST OBSERVATION
Last Friday, the Australian government released its first report on our progress towards meeting the United Nations’ Sustainable Development Goals by 2030.
These 17 goals are a call to action to ensure economic prosperity and social inclusion, while protecting the planet. They cover issues ranging from health to reducing inequalities and clean energy.
According to the report, Australia has made some steady progress towards most of our goals.
However, to achieve the goals in just 12 years from now, we need transformative actions. These are missing in the report. Without a strong vision and new models of partnership between government, industry and communities, we will not meet the 2030 deadline.
What the report says
In 2015, most of the world’s nations signed up to the United Nation’s 2030 Agenda. In July this year, Australia will present its first voluntary review of progress towards the goals at the UN. These reviews are a crucial component of accountability.
Australia’s Voluntary National Review (for which I facilitated a consultation workshop to give input from the university sector) is a showcase of policies, actions and initiatives from across different sectors that are, in the report’s language, “relevant” to achieving the goals.
The report highlights that Australia is a prosperous and generally healthy country. But it also acknowledges significant challenges, such as improving the health and prosperity of Australia’s Aboriginal and Torres Strait Islander peoples, and helping workers in the resources or manufacturing sectors who are facing technological and industrial transitions.
The report highlights that local councils, statutory authorities, businesses and universities are taking actions that are explicitly aligned with the global goals. For example, a number of Australian universities have signed a commitment to the goals and are including the 2030 Agenda in their curricula.
However, no sector has fundamentally changed its practices in response to the Sustainable Development Goals, nor embedded the goals into its core business.
At the national level, there has been limited specific engagement with the goals. Most of the national policies outlined in the report were developed for other reasons, and some have been around for years or decades. Examples are the National Disability Strategy, which dates back to pre-2010, or the National Drought Policy, which began in 1992. In other words, at the national level, the report emphasises what we have already been doing – not new initiatives explicitly related to the goals.
Notwithstanding success stories from across different sectors, the reality is that we will not be able to meet the goals in just 12 years on a business-as-usual trajectory. Instead, we need transformative plans across all sectors.
What is transformative change?
Sustainable development, as opposed to conventional development, involves big systemic transformations. Let’s use the example of clean energy.
Taking carbon out of our energy system is not simply about using wind and solar instead of coal. It involves big changes in how we consume energy, in manufacturing technologies and in the ways governments help (or hinder) the adoption of new technologies and practices. It requires systemic transformation, rather than incremental improvements.
Research into systemic transformation has identified a range of factors for making change happen. Two critical factors are creative decision-making and strong partnerships across disciplines and sectors. If we are serious about achieving the Sustainable Development Goals by 2030, we need to act now.
Transformative decision-making
Conventional decision-making favours the status quo and is largely risk-averse. It can cope with small incremental changes, but not big ones. In transport, for instance, we often tend to augment or replicate existing infrastructure – building another highway, for example – rather than innovating by trying to get people out of their cars.
Conventional decision-making also prefers to react: we often wait for a crisis situation and then quickly respond. This almost always favours short-term over long-term benefits.
Transformative decision-making, on the other hand, is proactive and takes deliberate actions to shape a desired future. It works toward a long-term vision and doesn’t shy away from uncertainty and complexity along the way.
As Australia’s review correctly acknowledges, the Sustainable Development Goals are all about “longstanding, complex policy challenges with no simple solutions”. Solving complex problems requires a great deal of innovation and experimentation. We need governments, businesses and communities to be willing to try new things, even if they occasionally fail.
Developing partnerships
Improving the lives of people and the planet requires myriad skills, tapping into various networks and reaching out to all segments of society.
Universities, for instance, often play a key role in analysing problems, developing new solutions and providing the evidence base that a solution actually works. But it is only through partnering with communities, businesses and policy organisations that they can put these solutions into practice.
The Voluntary National Review has highlighted the role of cross-sectoral partnerships. What is missing is a plan for fostering the partnerships that can enable substantial change in just 12 years.
<img src="https://counter.theconversation.com/content/98457/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">As Australia prepares to present our progress report at the 2018 UN High Level Political Forum in July, we need more critical assessment of our performance. How can we start doing things differently to be able to celebrate achieving these ambitious global goals in 2030?
Shirin Malekpour, Research Leader in Strategic Planning and Futures Studies, Monash Sustainable Development Institute, Monash University
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/australia-must-embrace-transformation-for-a-sustainable-future-98457" target="_blank">original article</a>.
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Australia must embrace transformation for a sustainable future

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On the 1st of June, the amendments to Victoria's Planning &amp; Environment Act 1987 came into force which, among other things, provide a definition of affordable housing in the state.

In essence, the new legislative amendments that are now in force provide a definition for what very low, low and moderate income households are and the act now states that affordable housing is housing for households who fit within the income brackets now outlined.

The definition of affordable housing, as described in law, for Victoria is:

<blockquote>
...affordable housing is housing, including social housing, that is appropriate for the housing needs of any of the following-- (a) very low income households; (b) low income households; (c) moderate income households.
<a href="http://classic.austlii.edu.au/au/legis/vic/bill/pablaaaomb2017755/"><cite>Housing Affordability and Other Matters Bill 2017</cite></a>
</blockquote>

Very low income, low income and moderate income households are defined by income ranges that apply to people living in Melbourne or outside of Melbourne.  On the advice of the Planning Minister, the Lieutenant-Governor of Victoria sets &amp; amends the income ranges.

For Melbourne, the household income brackets for very low, low and moderate income households are:

<table border="1" cellpadding="1" cellspacing="1" style="width:100%;">
<thead><tr>
<th scope="col"> </th>
			<th scope="col">Very low income range (annual)</th>
			<th scope="col">Low income range (annual)</th>
			<th scope="col">Moderate income range (annual)</th>
		</tr></thead>
<tbody>
<tr>
<td>Single adult</td>
			<td>Up to $25,220</td>
			<td>$22,221 - $40,340</td>
			<td>$40,341 - $60,510</td>
		</tr>
<tr>
<td>Couple, no dependents</td>
			<td>Up to $37,820</td>
			<td>$37,821 - $60,520</td>
			<td>$60,521 - $90,770</td>
		</tr>
<tr>
<td>Family (one or two parents and dependent children)</td>
			<td>Up to $52,940</td>
			<td>$52,941 - $84,720</td>
			<td>$84,721 - $127,080</td>
		</tr>
</tbody>
</table>
For the rest of Victoria, the income brackets are as follows:

<table border="1" cellpadding="1" cellspacing="1" style="width:100%;">
<thead><tr>
<th scope="col"> </th>
			<th scope="col">Very low income range (annual)</th>
			<th scope="col">Low income range (annual)</th>
			<th scope="col">Moderate income range (annual)</th>
		</tr></thead>
<tbody>
<tr>
<td>Single Adult</td>
			<td>Up to $18,380</td>
			<td>$18,381 - $29,400</td>
			<td>$29,401 - $44,100</td>
		</tr>
<tr>
<td>Couple, no dependents</td>
			<td>Up to $27,560</td>
			<td>$27,561 - $44,100</td>
			<td>$44,101 - $66,160</td>
		</tr>
<tr>
<td>Family (one or two parents and dependent children)</td>
			<td>Up to $38,590</td>
			<td>$38,591 - $61,750</td>
			<td>$61,751 - $92,610</td>
		</tr>
</tbody>
</table>
With these definitions now described in law, it allows developers, councils and the state government to negotiate affordable housing outcomes with a specific set of unambiguous definitions. 

As <a href="http://www.ratio.com.au/affordable-housing-update">Ratio Consultants</a> note the amendments to the act do not specify what the cost of housing should be for the people who fit within the income bands, noting "it is generally accepted that, to avoid housing stress, housing costs should not exceed 30% of household income."

Likewise, the legislative changes included no targets for affordable housing throughout all or some of the new development pipeline for Victoria but as Ratio further note, the affordable housing can be a strong negotiation tool.

<blockquote>
Councils are increasingly seeking to strongly encourage or even require affordable housing in new developments (City of Melbourne’s West Melbourne Structure Plan and Fishermans Bend discretionary requirements, and Glen Eira’s Carnegie, Elsternwick and Bentleigh Structure Plans).  

The voluntary provision of affordable housing can be a strong negotiation tool with recent agreements including in the Queen Victoria Market Munro Precinct where PDG are providing 15% affordable housing (being 56 apartments out of the total 360).
<a href="http://www.ratio.com.au/affordable-housing-update"><cite>Ratio Consultants</cite></a>
</blockquote>

The Department of Environment, Land, Water and Planning (DELWP) has also published guidance for those seeking to negotiate affordable housing agreements within the context of the new definitions, see <a href="https://www.planning.vic.gov.au/policy-and-strategy/affordable-housing">planning.vic.gov.au</a> for more information.

Lead image credit: <a href="https://www.vic.gov.au/affordablehousing/">vic.gov.au</a>
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Alastair Taylor

Definitions around affordable housing in Victoria come into force

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Urban Taskforce Australia has reacted swiftly to the Australian Housing and Urban Research Institute's (AHURI) latest report on increasing affordable housing supply.

AHURI's report examines how planning mechanisms support affordable housing supply in both Australia and overseas locations. Headline points covered in the report which was released yesterday include:

<ul>
<li>'Inclusionary planning' tools leverage significant quantities of affordable housing supply in many parts of the UK and US.</li>
	<li>12,866 affordable housing units (43% of total affordable housing output) were delivered through inclusionary planning requirements in England between 2015–16. About 12 per cent of annual housing completions in San Francisco are affordable dwellings produced through inclusionary zoning or impact fee requirements. Similar schemes apply to more than 500 cities across the United States.</li>
	<li>In comparison to this international practice, inclusionary planning for affordable housing is not as widespread in Australia. However, South Australia delivered 5,485 affordable homes between 2005–15 through an inclusionary planning target applying to new residential areas. This amounts to around 17 per cent of total housing supply in that state.</li>
	<li>In NSW, a planning incentive scheme introduced in 2009 has yielded around 2,000 affordable rental dwellings in Sydney, equivalent to about 1 per cent of the city’s total supply.</li>
	<li>Across all jurisdictions examined, planning system tools can support affordable housing supply, but additional funding or subsidy is usually required to produce homes affordable to those on low and very low-incomes.</li>
	<li>Planning system tools for affordable housing supply work best when part of a wider whole-of-government strategy to address the continuum of housing needs.</li>
</ul>
As a result, AHURI has leaned toward the expansion of inclusionary planning approaches across Australia where "affordable housing inclusion can be mandated when land is rezoned for residential development, when planning rules are varied for particular projects, or following significant infrastructure investment."

AHURI's suggested measure is intended to make affordable housing (especially apartments) more attainable for buyers across Australia, and particularly so in Sydney which is home to the nation's most expensive real estate.

For its part, Urban Taskforce Australia fired back promptly yesterday arguing that any move to advance inclusionary zoning measures would in fact drive prices up. Urban Taskforce CEO Chris Johnson released in-depth commentary on AHURI's paper.

With a particular focus on Sydney, excerpts from Chris Johnson's statement read as follows:

<blockquote>
The AHURI report by a number of Australian academics is a useful exploration of trends and policies across the world but the Sydney market is different. 

Houses and apartments in Sydney are amongst the most expensive in the world when related to household income. Much of this high price is driven by restrictions on zoning new land for residential homes according to the Reserve Bank report on ‘the Effect of Zoning on Housing Prices’.

The zoning effect increased Sydney per house price by a whopping $489,000 and in Melbourne by $324,000. On top of all this there is a range of levies and taxes added to the cost of a dwelling by the NSW Government and the local council.

To add even more cost to new dwellings as proposed by AHURI will only drive overall housing costs upwards.

The AHURI preferred approach is to have inclusionary zoning only applied to apartments yet apartments have already become the affordable way to live for many Sydney households. The average apartment in Sydney is around 40% cheaper than the average house so this dwelling type has become the affordable way to live for many households.

AHURI however proposes an inclusionary zoning system that can only lead to forcing apartment costs up. We should be getting other building types like detached houses, commercial and retail developments to contribute to affordable housing rather than add an extra cost to the most affordable dwellings in the city.

The Urban Taskforce has developed an approach to providing up to 40,000 affordable homes across Sydney over a ten year period. We propose using the Affordable Rental Housing SEPP that gives an uplift in floor space if 20% of the apartments are affordable rentals for 10 years.  
 
</blockquote>

Australian Housing and Urban Research Institute's r<a href="https://www.propertyobserver.com.au/https://www.ahuri.edu.au/research/final-reports/297">eport on supporting affordable housing supply</a> can be seen in full here.

Lead image: City West Housing
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silvermb

Affordable housing to come at the cost of ... affordable housing?

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To be fair, there isn't a particularly large number of genuine skyscrapers planned for West Melbourne, yet should a new structure plan for 3003 be ratified, the likes of 420 Spencer Street seen below will be the exceptions and not the norm.

The West Melbourne Structure Plan (WMSP) last night went before the Future Melbourne (Planning) Committee at City of Melbourne with the intent of seeking endorsement prior to a period of community and stakeholder consultation during July and August. The new plan will go some way to alleviating Council and community concerns regarding the arrival of skyscrapers within West Melbourne; the tallest reaching 38 levels to date.

Consultancy Urbis has provided a concise <a href="https://urbis.com.au/insights-news/draft-west-melbourne-structure-plan">explanation</a> of the WMSP.

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/img_3391.jpg" rel="gallery-all" title="420 Spencer Street is a new high point for West Melbourne "><img alt="" class="image-article-full-width-580px" height="870" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/img_3391.jpg?itok=coSqWadg" title="420 Spencer Street is a new high point for West Melbourne " width="580"></a>

<figcaption>420 Spencer Street is a new high point for West Melbourne</figcaption></figure>According to Urbis, key takeaway points from the proposed WMSP include:

<ul>
<li>Height and Floor Area Ratio for Spencer, Flagstaff, Adderley and Station Precincts, and retaining mandatory height controls in other areas. Built form controls are also proposed to apply.</li>
	<li>Rezone key land to Special Use Zone, and require 1:1 employment to residential floor area in Spencer, Station and Flagstaff precincts and 0.5:1 in Adderley Precinct.</li>
	<li>Establish new activity centres to support new local convenience, and support community and creative infrastructure.</li>
	<li>Create new open space and high-quality green streets.</li>
	<li>Require 6% affordable housing as part of developments.</li>
</ul>
These changes are proposed with the intent of maintaining West Melbourne's character whilst promoting feasible growth.

<blockquote>
West Melbourne will play a complementary role to the more intensive areas of development which will surround it into the future. It will retain its identity, diverse areas of character and mix of uses as it evolves.

Its heritage buildings and wide green streets will provide high amenity for residents, as well as commercial and retail opportunity in this distinct, inner urban neighbourhood.
<cite>West Melbourne Structure Plan – Draft for Consultation</cite>
</blockquote>

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/image46_9.jpg" rel="gallery-all" title="Proposed changes to the Design and Development Overlay’s in West Melbourne. Image: WMSP"><img alt="" class="image-article-full-width-580px" height="397" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/image46_9.jpg?itok=DKFoCiru" title="Proposed changes to the Design and Development Overlay’s in West Melbourne. Image: WMSP" width="580"></a>

<figcaption>Proposed changes to the Design and Development Overlay’s in West Melbourne. Image: WMSP</figcaption></figure>The graphic above demonstrates the new height limits expected to become reality across West Melbourne.

16 levels within the blue shaded Flagstaff Precinct is the maximum height allowable under the proposed changes; a substantial cut in heights relative to a number of towers which currently hold approval in the precinct. Beyond 420 Spencer Street, Deague Group's soon to be built Melbourne Village at 83 Batman Street is the next tallest at 27 levels.

From a development perspective, there are implications for a number of large sites which have been earmarked for development or have yet to head to planning. A lesser development yield can be expected for sites such as the JLL-marketed <a href="http://rca.jll.com.au/property-land+development-vic-west+melbourne-502066978">404-418 Spencer Street</a>; 16 levels is a far cry from the neighbouring 420 Spencer Street at 38 levels.

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/image24_11.jpg" rel="gallery-all" title="Plus Architecture's 407-415 King Street was refused during April"><img alt="" class="image-article-full-width-580px" height="322" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/image24_11.jpg?itok=0-JU0tad" title="Plus Architecture's 407-415 King Street was refused during April" width="580"></a>

<figcaption>Plus Architecture's 407-415 King Street was refused during April</figcaption></figure>This planning working being undertaken by the City of Melbourne appears to go hand in hand with the council's recent commentary on the West Gate Tunnel project, and the council's belief that it will increase traffic in the CBD.  The West Gate Tunnel project, based on publicly available plans, is to have an intersection/exit with Dynon road which eventually becomes Spencer Street.

Whilst skyscrapers look likely to have no further impact upon West Melbourne's skyline, the suburb is still a major development hot spot relative to other locales.

Urban.com.au's Project Database is tracking 26 separate residential projects within West Melbourne, with many more thousands of apartments yet to be delivered. These for the most will come in the form of mid-rise projects of between 6-9 levels.

The expectation is that post last night's Future Melbourne (Planning) Committee meeting, the WMSP will be subject to a six week engagement period from today Wednesday 5 July through to Sunday 18 August 2017. 

Further details on the WMSP and the opportunity to provide your feedback is available on the dedicated <a href="https://participate.melbourne.vic.gov.au/westmelbourne#overview">Participate Melbourne</a> page.
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Is this the end of the West Melbourne skyscraper?

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GUEST OBSERVATION
Whether or not we end up in surplus in five years’ time, <a href="https://www.budget.gov.au/2016-17/content/myefo/html/" target="_blank">yesterday’s Mid Year Economic and Fiscal Outlook (MYEFO)</a> exposes nasty political problems for the Turnbull government in the here and now.
Real GDP growth for 2016-17 has been sensibly but shockingly revised down to 2% – the lowest outcome since the global financial crisis, the second lowest in 16 years and the third lowest since the long upswing began in 1991/92. Sensible, because we know, from the third-quarter GDP numbers and other indicators this year, that the upswing in residential investment has peaked before (and perhaps well before) an upswing in business investment has begun.
Shocking, because if labour productivity continues to run a little above 1% – as it has for the last four years – the implied growth in employment of 1% or so will probably not be enough to stop unemployment rising. The MYEFO projects the unemployment rate in the June quarter next year at 5.5% – lower than today and lower than the average of 5.8% over the last four years.
Yet, at 2.6% year average GDP, growth in those four years has been markedly stronger than the 2% MYEFO now projects for 2016-17. Even with the projected decline in the participation rate, the MYEFO unemployment forecast will be a struggle.
Disappointing GDP growth is political problem number one for Malcolm Turnbull and Treasurer Scott Morrison. Problem number two is the implacable persistence of substantial federal deficits.
These deficits limit the government’s response to problem number one. In 2012-2013 government receipts were 23.0% of GDP, payments 24.0% of GDP, and the deficit 1.2% of GDP. Labor lost office a little over nine weeks after the end of that fiscal year.
In these latest projections for the 2016-17 Budget, four years on from 2012-2013, receipts are expected to be 23.3% of GDP, payments 25.2% of GDP and the deficit 2.1% of GDP. Compared to 2012-13, receipts have increased 0.3% of GDP, spending 1.2% of GDP and the deficit 0.9% of GDP. Receipts are up, but spending is up even more and so is the deficit.
There are plenty of reasons for this woeful fiscal performance, mostly to do with modest increases in profits and wages and the tax-minimisation policy of former Treasurer Peter Costello. But these reasons are not ones that square with Treasurer Morrison’s rhetoric, or which can any longer be laid at the door of the previous Labor government.
Nor does the MYEFO give any confidence that the troubles of the Turnbull government will soon be eased. The path to the return to surplus depends completely on increasing tax revenue.
Spending as a share of GDP is now, according to these MYEFO projections, locked in at 25.2% of GDP right through to the end of the forward estimates period (and beyond the next election) in 2019-20. The projected decline of the deficit arises only because tax receipts are expected to increase over that period by 1.6% of GDP.
A slow economy, a rising tax take, perhaps rising unemployment, and not much room to move. 2017 won’t be cheerful for the prime minister or treasurer – or for the rest of us.
John Edwards<a href="https://theconversation.com/profiles/john-edwards-89846"></a> is nonresident fellow at the Lowy Institute for International Policy and Adjunct Professor with the John Curtin Institute of Public Policy at <a href="https://theconversation.com/institutions/curtin-university-873" target="_blank">Curtin University</a>
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/there-are-two-big-political-problems-buried-in-the-latest-budget-update-70595" target="_blank">original article</a>.
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jchancellor-FAypfDUnLy

The two big political problems buried in the latest budget update: John Edwards

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Globally, interest in national urban policy peaked in the late 1970s and declined sharply thereafter. The trend held true for Australia, peaking under the Whitlam government.
The decades after the Whitlam government produced a variety of federal housing and other urban policies. None had the scope of a national urban policy.
Not until 2011, with Labor’s Our Cities, Our Future, was a national urban policy launched. This did not mirror a similar resurgent interest in Western countries. These countries promote intergovernmental decentralisation, while Australia has increased centralisation.
Australian exceptionalism – both its “unique model of metropolitan governance” and its extreme <a href="https://theconversation.com/renewing-federalism-what-are-the-solutions-to-vertical-fiscal-imbalance-31422">vertical fiscal imbalance</a> (VFI) – provides the setting for federal policy that assumes the prerogatives of state and metropolitan urban policy.
<h2>Commonwealth role rarely challenged</h2>
Urban academics and professional organisations such as the Planning Institute of Australia celebrated Our Cities, Our Future – perhaps due to the increased prominence accorded urban affairs.
Few questioned the rationale for federal engagement in matters such as metropolitan strategic planning, infrastructure investment and housing. No significant urban outcomes can be attributed to Our Cities, Our Future.
Yet the policy environment at the time did have a legacy, following the creation in 2008 of Infrastructure Australia. In a context of VFI, then-prime minister Kevin Rudd sought to rationalise federal infrastructure funding based on the “business case” for projects. He tasked the COAG Reform Council with preparing guidelines for capital city strategic planning systems that would provide an “evidence base” for federal decision-making.
In 2014, the remit of Infrastructure Australia was expanded. It was to undertake an Australian Infrastructure Audit and prepare an Australian Infrastructure Plan. The plan, finalised in 2016, holds that:
The Australian government should drive change in the planning and operation of Australia’s cities through the use of Infrastructure Reform Incentives.
This approach would:
 …tie the provision of additional funding for infrastructure to the delivery of a range of city-based reforms, focused on improving the quality of planning, development and infrastructure across Australia’s cities.
This is an extraordinary assertion of power over planning for, and infrastructure investment in, cities. It has no constitutional foundation. VFI, however, frees the pens of the drafters of urban policy and the presumptions of their political masters.
Lest we forget, at the time the plan was being finalised, for 99 days there was a minister for cities and the built environment. Again, responding to the attention given to urban affairs, urban academics and professionals feted the creation of this position. No significant urban outcomes can be attributed to the ministry.
Following Jamie Briggs’ misadventure and the appointment of Angus Taylor as assistant minister for cities and digital transformation, the Smart Cities Plan was launched. Its potential significance is huge. Its ambition is to “rethink the way our cities are planned, built and managed”, with the Commonwealth to lead the rethinking.
<h2>So what’s in the latest plan?</h2>
The plan contains much that is interesting, but little that is substantial. It has the appearance more of a think-piece than a substantive policy document. Some prominent ideas are plugged in, then ignored.
An example is the “30-minute city”. It gets headlines, but it is difficult to identify what this adds to the urban agenda once the actual commitment to public transport is considered.
What the 30-minute city concept does do is reveal the extent of federal presumption about city planning. Can one really argue that this is the job of federal government?
Together, the Australian Infrastructure Plan and the Smart Cities Plan amount to a new national urban policy based on metropolitan strategic planning, infrastructure funding and City Deals.
While acknowledging the states' constitutional prerogatives to undertake metropolitan strategic and infrastructure planning and to implement projects, VFI makes federal presumptions possible. The views of a metropolitan community of interests are not a consideration.
The federal commitment is to:
<ul>
<li>
A$50 million for infrastructure planning;
</li>
<li>
establish an infrastructure financing unit; and
</li>
<li>
invite state and territory governments to partner the Commonwealth on City Deals.
</li>
</ul>
Any federal discussion about financing infrastructure in Australia’s cities is interesting and the Smart Cities Plan does appear to presage innovative public and private financing opportunities.
As for City Deals, these are to be based on federal and state/territory partnerships to “drive national priorities tailored to local needs”. So, at the local level, national priorities prevail. The federal government knows best.
In the UK, City Deals are premised on “devolution” and the creation of metropolitan governments. Deals are negotiated with local and metropolitan governments and business leaders, with reference to civil society as well. Metropolitan governments are seen as desirable because it is believed the economic growth of cities is best promoted by city leadership.
However, neither Labor nor Coalition conceptions of national urban policy envisage city leadership serving a metropolitan constituency. Representative, revenue-generating metropolitan government, which can enter the infrastructure finance market, would threaten federal and state power and influence.
<h2>How can federal policy make a difference?</h2>
There are two preconditions for effective federal engagement in urban policy.
The first is a policy that survives the next election. Because the Labor and Coalition approaches incorporate urban issues from local to federal, they are essentially political treatises. Long-lived policies are unlikely.
The second precondition is to recognise that most policies are urban in a country that is 90% urban. The unintended urban consequences of federal policies have outweighed those of policies having urban intent. Examples include negative gearing, immigration and climate-change policies. The criterion of urban consequences should be integral to federal policy formation.
A federal concern with urban policy requires locating responsibility and funding for policies to the level of government where they are most effectively addressed. Often this will be at a metro scale. It is then best undertaken by metropolitan government.
Rather than tied infrastructure and social grants, untied fiscal decentralisation is desirable. Australia should welcome policy and expenditure differences, experimentation and mutual learning among metros.
The way forward is to consider what level of government is best placed to resolve contested urban issues, in partnership with the private sector and civil society.
A federal urban policy should be limited to issues that explicitly require federal intervention. The determination of these issues will be subject to debate. But the operating assumption should be federal policy modesty in relation to states and cities, devolution of responsibilities, and fiscal decentralisation.
Richard Tomlinson is professor of Urban Planning, University of Melbourne and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/richard-tomlinson-10016" target="_blank">here</a>.
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New name, new look for latest national urban policy, but same old problem

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<h1 class="page-title">RBA Statement on Monetary Policy May 2016
</h1>
Economic conditions in Australia’s major trading partners generally appear to have eased a little of late. 
Growth in China moderated further in the March quarter. Subdued investment growth in the manufacturing sector was partly offset by rising public infrastructure investment and a return to growth in real estate investment. The latter was consistent with a strengthening in the property market in recent months in response to a range of earlier measures to stimulate demand. The moderation of Chinese growth has affected Asian economies and emerging economies in other regions that have strong trade links with China. 
Economic activity remained weak in Japan, while growth eased in the United States but continued at an above-trend rate in the euro area. Meanwhile, there have been further improvements in labour market conditions across all three economies. Despite that, inflation in the major advanced economies remains below central banks’ targets and inflation expectations have declined. This has been an important concern for central banks and contributed to the European Central Bank’s decision to ease monetary policy further in March. Monetary policy settings remain very accommodative in Japan and the United States (where markets expect no further increase in the policy rate before late 2016).
Changes in expectations about the course of the monetary policies of the major central banks have been reflected in exchange rates and financial market prices more generally. Sentiment in global financial markets has improved since late February. 
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The outlook for growth in Australia’s major trading partners in 2016 has been revised a little lower since the February Statement on Monetary Policy to incorporate generally weaker-than-expected growth in the March quarter and a reassessment of growth momentum, particularly in Asia. 
Despite the moderation in Chinese growth in the March quarter, the outlook there is much as it was earlier forecast, based on the expectation of further support being provided by more stimulatory policy settings. The Chinese authorities appear, at present, to be giving greater priority to short-term growth objectives than to the longer-term goals of deleveraging and achieving growth that is less reliant on investment and heavy industry. 
The outlook for the Chinese economy continues to be a key source of uncertainty for the forecasts. One risk is that the pursuit of the authorities’ near-term growth targets is likely to increase already elevated levels of debt and could potentially delay addressing the problem of excess capacity in the manufacturing and resources sectors.
While commodity prices are significantly lower than the peaks of a few years ago, the expectation of more policy stimulus in China has been accompanied by a sizeable increase in commodity prices over recent months. Iron ore and coking coal prices are around 60 per cent and 30 per cent above their low points in late 2015, respectively. This amounts to a rise in Australia’s terms of trade in the near term. However, it is assumed that the prices of bulk commodities are not sustained at current levels.
 Chinese steel demand is still expected to decline over the next couple of years and a substantial amount of new, low-cost iron ore supply is likely to enter the market over that period. Meanwhile, liquefied natural gas (LNG) prices are expected to be higher than previously forecast, which will tend to increase the terms of trade. The net result of these various movements is that the terms of trade are expected to be around recent levels by the end of the forecast period.
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Growth in the Australian economy over 2015 was a bit stronger than earlier anticipated, and a little above estimates of potential growth. 
Growth was moderate in the December quarter, however, and appears to have continued at about this pace into 2016, much as was forecast at the time of the February Statement. Consistent with this, employment growth has slowed from the strong pace of last year and leading indicators of employment have been somewhat mixed of late. Nevertheless, labour market conditions remain much better than a year ago. The unemployment rate has been around 53⁄4 per cent in recent months, having been as high as 61⁄4 per cent last year. 
There has been no material change to the forecast for GDP growth or the unemployment rate. GDP growth is expected to strengthen gradually to an above-trend rate, reflecting the effects o low interest rates and the depreciation of the exchange rate since early 2013. Both have been helping activity to rebalance towards the non- resource sectors of the economy. As before, the unemployment rate is forecast to remain around current levels for the next year or so and then gradually decline as growth in economic activity strengthens. The outlook for the unemployment rate is consistent with spare capacity remaining in the labour market throughout the forecast period.
Growth in household consumption picked up in the second half of last year and is expected to be sustained at around that rate in the period ahead. The pace of growth in retail sales volumes was maintained in early 2016. And while surveys suggest that households’ perceptions of their own finances 
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have eased, they were around long-run average levels in April. Growth in consumption is forecast to be maintained at a pace that is a bit above average, despite only modest growth in wages. This implies a further gradual decline in the household saving ratio over the forecast period. 
The amount of residential construction work still in the pipeline is substantial and has continued to increase. This points to further strong growth in dwelling investment, albeit at a gradually declining rate consistent with the decline in building approvals since last year. In established housing markets, conditions have stabilised over the past six months or so. Housing prices have grown moderately over 2016 to date, following a small decline at the end of 2015. 
Housing credit growth has eased a little over recent months to be around 7 per cent in six-month-ended annualised terms in early 2016. This follows increases in mortgage rates and the strengthening of banks’ non-price lending terms in response to supervisory actions. 
Surveyed conditions in the business sector remain above average and business credit growth has picked up over the past year or so. Nevertheless, indicators of investment intentions suggest that non-mining business investment is likely to remain subdued for a time, although it is expected to gradually pick up later in the forecast period as overall demand strengthens. Mining investment 
is expected to continue to fall as projects are progressively completed, although the magnitude of the falls should diminish over the next couple of years, consistent with the forecasts presented in the February Statement. Project completions will support further growth in resource exports. Net service exports are expected to continue to make a noticeable contribution to growth. 
Inflation was lower than expected in the March quarter. The various measures suggest that underlying inflation declined to a little less than 1⁄4 per cent in the quarter (compared with about 1⁄2 per cent in the December quarter), to be about 11⁄2 per cent over the year. Headline inflation was lower still, partly reflecting some temporary factors. Nonetheless, the CPI data indicate that there has been broad-based weakness in domestic cost pressures. 
This is evident in the further decline in non-tradables inflation in the March quarter. In part, this reflects lower-than-expected growth in labour costs, with unit labour costs being little changed for four or more years now. In addition, there has been heightened retail competition, a moderation in conditions in housing rental and construction markets, and declines in the cost of some business inputs, such as fuel and utilities. A number of these factors are also likely to have mitigated some of the upward pressure on the prices of tradable items arising from increasing import prices following the depreciation of the exchange rate since early 2013.
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The forecast for underlying inflation has been revised lower, reflecting the lower-than-expected outcome for inflation in the March quarter and an expectation that domestic cost pressures, including labour costs, will pick up more gradually than anticipated at the time of the February Statement. 
The outlook for domestic cost pressures is a key source of uncertainty. Despite above-trend growth in economic activity and improvements in labour market conditions over the past year, it is possible that domestic cost pressures may weaken further, and so inflation may not pick up as expected. However, it may be that the strengthening in the labour market embodied in the forecasts is associated with growth of labour costs picking up sooner or by more than is currently forecast. 
The substantial exchange rate depreciation over recent years is expected to continue to place some upward pressure on inflation for a time. While the exchange rate is assumed to remain around current levels over the forecast period, it may respond to a number of influences, including any unanticipated changes to the outlook for growth in China, commodity prices or the monetary policy decisions of the major central banks. It therefore represents a significant source of uncertainty for the forecasts of inflation, as well as for the outlook for growth in activity. 
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For some time, the Reserve Bank Board had noted that the inflation outlook provided scope for a further easing in monetary policy. After taking account of developments over recent months, the Board’s assessment at its May meeting was that the outlook for economic activity and the unemployment rate was little changed, but that the inflation outlook was lower than earlier anticipated. At the same time, the Board took careful account of developments in the housing market, noting the effects of supervisory measures to strengthen lending standards, the recent easing in housing credit growth and the abatement of strong price pressures. 
Taking all of these considerations into account, the Board judged that the prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by further easing of monetary policy. Accordingly, the cash rate was reduced by 25 basis points. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time. 
To read the full Statement on Monetary Policy, <a href="https://www.rba.gov.au/publications/smp/2016/may/" target="_blank">click here</a>.
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po-LsXgBTHBmX

The latest RBA Statement on Monetary Policy

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GUEST OBSERVER
Negative gearing and capital gains tax are a looming battleground in the federal election.
The debate was heightened last month by the release of modelling by consultants BIS Shrapnel purporting to show that reforms would lead to rent increases of between 4 percent and 10 percent. If correct, this would scare any political party.
An article in The Australian on Tuesday revealed that the ALP had seen this modelling before it released its policy to wind back the tax breaks on negative gearing and capital gains,
The ALP should be applauded for proceeding nevertheless. The report was clearly going to be inconvenient. But it was also not worth the paper on which it was printed.
The report implied that a<a href="https://grattan.edu.au/news/a-low-cost-way-to-derail-the-housing-debate/"> </a>$2 billion increase in tax would reduce economic activity by $19 billion a year. The report’s model also suggested that every additional house or apartment would increase the size of the Australian economy by $2.6 million.
None of this is remotely plausible, and consequently, it is difficult to believe anything else that the modelling or the report has to say.
Nonetheless, this report is still being discussed a month later – so it clearly needs some more critical analysis.
Tax changes will clearly reduce the after tax benefits for property investors. The key question is whether the market responds by reducing the price of housing, or by increasing rents, or by absorbing a reduction in returns.
Most likely, the price of housing will fall somewhat, investor returns will reduce a little, and rents will barely move. This is why.
Changes to negative gearing and capital gains tax will increase taxes for investors and lower their returns. Normally this would lead to lower asset prices.
But the outlook for home-buyers is different. The benefits for a home-buyer (of living in the home) won’t change. The price of the home will be a little lower due to the changes in negative gearing and capital gains tax. Therefore the return on assets (the benefits divided by the price) will be a little higher for home-buyers.
Combining the effects of the changes for investors and home-owners leads to an average after tax return on housing that is about the same as today. There will be more home-owners and correspondingly fewer investors – but higher rates of home ownership are the political goal.
The outcome might be different if the supply of new housing dried up. If there were fewer incentives to develop new homes, then eventually rents would increase.
However, our best guess is that tax changes will have little effect on housing construction. The supply of new housing is mainly restricted by planning rules rather than a lack of returns. In any case, reforms to negative gearing are likely to reduce the price of developable land, but they won’t change the returns on development.
BIS Shrapnel assume otherwise. They believe that changes to negative gearing rules will reduce the price and therefore the profitability of property developments, but not the price of developable land. And so they assert that tax changes will lead to less residential development, and therefore higher rents in the long run. Their report assumed that the price of developable land wouldn’t change based on three claims.
First claim: if the price of developable housing land fell, sites would instead be used for commercial purposes. But as a firm that advises clients on property development, BIS Shrapnel should know that in most localities land provides a much higher return per square metre when turned into residences than when used for commercial purposes. Indeed, there are concerns that too much of the Melbourne and Sydney CBDs is being converted to residential rather than commercial uses. There isn’t much evidence of enormous pent-up demand for commercial development.
Second claim: landholders will be reluctant to sell at lower prices. This is simply wishful thinking. Prices don’t rise just because sellers would like them to do so.
Third claim: it will be more expensive to aggregate sites for development. But lower prices as a result of negative gearing reform will affect all residential properties, irrespective of whether they have already been developed, or have potential to be aggregated further.
Instead of assuming that tax changes will only affect the price of development, it is much more plausible that changes in after tax returns to investors will primarily lead to lower land prices. This won’t hurt the profitability of development, the supply of rental property will continue, and the impacts on rents will be minimal.
Even if tax changes did affect the profitability of development, it’s all small beer. Quick sanity checks (the kind of things that property developers do to ensure that their modellers don’t lose them a fortune) show that the effect of negative gearing changes on property prices will be less than 2 per cent across the Australian market.
One way to think about it is that negative gearing and capital gains tax provide investors in real estate with a tax benefit of about $3 billion a year; that annual benefit converts to an asset value of about $55 billion; and all Australian residential property is worth a little over $5 trillion. If negative gearing were abolished entirely the lost value would be $55 billion, just over 1 per cent of $5 trillion of property value.
Another way to crunch the numbers shows that negative gearing and capital gains tax changes would reduce the after tax returns on real estate investment assets by about 7 percent. But this wouldn’t affect all housing assets – only 30 percent are investment properties, and the rest are owner occupied. So across the market, return on assets – and therefore asset values –would fall by about 2 percent. Or in the unlikely event that investors succeed in passing on tax costs, rents would rise by at most 2 percent.
BIS Shrapnel presented the ALP with a claim that tax changes would increase rents by 4 to 10 percent. But that claim was several times larger than fundamentals would suggest. It used a model that was not publicly available. It was allied with a series of manifestly ridiculous economic results. And it all rested on an unjustifiable assumption that tax changes won’t affect land prices.
The ALP was right to ignore such flawed analysis. It is a relief to discover that – sometimes – a political party’s policy cannot be bought off just by commissioning a flawed report with scary numbers.
<a href="https://theconversation.com/profiles/john-daley-1870" rel="author">John Daley </a>is chief executive officer, Grattan Institute and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/john-daley-1870" target="_blank">here</a>.
 
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Why it is good policy, not bad politics, to ignore bad modelling on negative gearing

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GUEST OBSERVER
The minutes of the monetary policy meeting of the Reserve Bank Board provided no real surprises from the perspective of the policy outlook.
Consistent with the Governor’s statement which was released shortly after the July Board meeting the Board still points out that the Australian dollar had provided less assistance to the economy than would normally be expected and “further depreciation seemed both likely and necessary”.
The outlook for policy remains data dependent with the Board concluding that “information to be received over the period ahead on economic and financial conditions would continue to inform the Board’s assessment of the outlook and hence whether the current stance of policy remained appropriate”.
There was no real enthusiasm about the outlook for growth. Indeed, it was noted that: “early indications were that the strength in the March quarter had not carried through to the June quarter”. Investment intentions remain subdued despite non-mining business profits having increased over the past year and surveys of business conditions improving over recent months.
Of most interest was the discussion around the labour market. Recall that a key policy guideline for the Bank has been that if the economy grows below trend (generally assessed as 3%) then the unemployment rate can be expected to edge up. Over the last year or so, growth in the economy has been stuck around a sub-trend 2.5%yr yet the unemployment rate has remained steady. The Bank attributes that to slowing population growth (1.4% for the 2014 year compared to a peak 1.8% in 2012). It is argued that easing population growth is consistent with below average growth in output and a steady unemployment rate. That may mean that the Bank is reassessing its assessment of trend growth at 3-3.25%. However, the Board is not satisfied with the current level of unemployment arguing that spare capacity remains and that wages growth remains historically low (lowest year end outcomes since the early 1990s) and that unit labour costs have been little changed over four years. Such developments indicated that inflationary pressures were well contained and likely to remain so.
The discussion around housing provided no new insights. The outlook for dwelling investment remains strong while house prices continue to grow rapidly in Sydney and to a lesser extent Melbourne. At this stage there was no evidence that the regulators’ greater scrutiny of investor housing was affecting growth.
Consumption spending continues to disappoint although it has been growing at a faster pace than household income. We were surprised to note that the Banks’ liaison suggested that retail sales were likely to be flat in June, despite the expected lift from the generous tax concessions provided to small business in the Budget.
On the international front there was a slightly more positive take on the Chinese property market: “Chinese property markets had improved somewhat and residential property prices had risen for the first time in a year”. Overall growth in Australia’s major trading partners appeared to have been around average in the June quarter.
Westpac expects that the first tightening by the US Federal Reserve will occur in September. The minutes point out that market pricing suggests a later date although they also highlight commentary from Fed officials that suggests it could be a little sooner. This is far from definitive but it is not unreasonable to conclude from this commentary that the Board is also expecting an earlier move.
The Bank now provides helpful analysis of the impact of mortgage offset accounts on overall household debt. The Board points out that despite this adjustment the household debt to income ratio had increased over the year although there was no apparent discomfort with that observation.
The outlook
From my perspective the most significant insight from these minutes is the reconciliation of below trend growth and steady unemployment. On the one hand that may signal that any decision from the Bank to lower its growth forecast for 2016 below 3% (previously accepted trend) may not necessarily signal a need to cut rates if trend growth is in fact now lower due to weaker population growth. On the other hand the Board makes it clear that it is still uncomfortable with the level of the unemployment rate. Stability in that rate at a rate of growth below previously accepted trend is not enough to argue against further stimulus while spare capacity operates in the labour market.
Markets are giving only a limited chance to a rate cut in August but still persist with around a 70% chance of a move by November. We still believe that there will be insufficient evidence on the growth outlook in 2016 by then and, given a clear apparent high degree of uncertainty from the Bank, would not see the first window for a cut coming before early 2016.
From our perspective evidence around activity momentum in the second half of 2015 will not be apparent until the first half of 2016 and therefore any policy adjustment would need to wait until then.
We are currently looking for some modest improvement in growth in 2016 back towards around 3%, a level that would likely maintain steady rates. Accordingly we maintain our call that rates will remain on hold over the course of 2015 and 2016.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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