Chair and Senators, HIA has appeared before Senate Inquiries and parliamentary committees for decades. We pride ourselves on being constructive, consultative and focused on practical solutions. We come here to help find workable outcomes.

Our submission focusses on schedules 1 to 5 of the bill in two parts. One, the minimum tax on discretionary trusts and two the proposed definition of new residential dwellings.

I have to say firstly, our industry is exhausted. Just once we would like to be sitting here considering a bill that proposed to increase housing supply, improve productivity and encourage investment.

Unfortunately, today we are responding to another rush job with what seems like a foregone conclusion, one part of which simply does nothing to increase housing supply, improve business confidence, improve productivity or encourage investment and another part that seeks to put more rules and constraints on investment, construction and options for the consumer.

HIA is opposed to the proposed minimum tax on discretionary trusts and recommend that it be rejected. We recommend that before any reforms proceed there is a comprehensive assessment of the impacts on small business but if the reforms do proceed existing discretionary trusts carrying on active trading businesses should be grandfathered.

Our reasons...

• A national survey of HIA’s members indicates that about 3 in 5 construction businesses are using a trust structure.
• They are using it to manage cashflow, protect assets and plan for succession.
• The variability of their business income allows them to increase or decrease their distributions accordingly.
• Just to seek advice let alone comply will cost business thousands of dollars and add to the cumulative impact of constant regulation on small business.
• Wrong change at the wrong time.

Schedules 4 and 5 sneaking in on the heels of Schedules 1, 2 and 3 deals with the definition of a new residential dwelling.

Quite frankly, a new home is a new home, and we already have a definition. We do not need to complicate things further just because at a point in time we have suddenly decided that this part of the bill is the one part where we want to increase housing supply but that supply does not include types of housing for example that improve rental stock and add bedrooms.

Our recommendations against Schedules 4 and 5 are:

• The definition is redrafted through proper consultation with the industry.
• Align the definition with the existing GST concept of new residential premises.
• In lieu of the above recommendation, broaden the definition to include dwellings such as granny flats, substantial renovations and knock down rebuilds.
• Develop national criteria including occupancy approvals, amendment of the 24-month acquisition rule and identify the authority responsible for decision marking.

Any definition of a new residential dwelling should recognise and encourage the full range of housing supply, regeneration and renewal activities that contribute to Australia's housing objectives.

Australia needs more homes, more investment and more confidence. 

The Committee should reject the proposed minimum tax on discretionary trusts and ensure the proposed dwelling definition is redrafted to properly capture the full range of housing supply and housing regeneration solutions needed to meet Australia's housing challenge.

Let’s not make the same mistake as Tax reform Bills 1 and 2 and just wave this through. Enough is enough – this Senate should demand that only rigorously tested, consulted and costed proposals proceed that deliver a net benefit – the Australian business community and households expect nothing less. 

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