Economic Significance of the Property Industry to …...Economic Significance of the Property...

Economic Significance of the

Property Industry to the Australian Economy

Property Council of Australia

2015

Economic Significance of the Property Industry to the Australian Economy Final Report

i

Document Control

Job ID: 17907

Job Name: Economic Significance of the Property Industry to the Australian Economy 2013-14

Client: Property Council of Australia

Client Contact: Chris Mountford (PCA – QLD)

Project Manager: Ashley Page

Email: [email protected]

Telephone: (07) 3831 0577

Document Name: PCA Econ Sig of Prop Sector 2013-14 AUS Report Final (a)

Last Saved: 6/10/2015 9:50 AM

Version Date Reviewed Approved

Draft v1.0 30 April, 2015 KL AP

Draft v2.0 20 May, 2015 KL SS

Final 22 May, 2015 KL SS

Final (a) 6 October, 2015 KL AP

Disclaimer:

Whilst all care and diligence have been exercised in the preparation of this report, AEC Group Pty Ltd does not warrant the accuracy of the information contained within and accepts no liability for any loss or damage that may be suffered as a result of reliance on this information, whether or not there has been any error, omission or negligence on the part of AEC Group Pty ltd or their employees. Any forecasts or projections used in the analysis can be affected by a number of unforeseen variables, and as such no warranty is given that a particular set of results will in fact be achieved.

mailto:[email protected]


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Key Findings

The property sector has a larger footprint on the Australian economy than any other industry.

It directly contributed $182.5 billion to Gross Domestic Product (GDP) in 2013-14 (11.5%), and is estimated to have contributed a further $279.7 billion to Australian

GDP through flow-on demand for goods and services.

It also directly employed 1.17 million full time equivalent (FTE) employees in 2013-14 (11.8% of Australian total), and supported some 1.54 million FTE jobs through flow-on activity.

Approximately 28.6% of wages and salaries paid to Australian workers is generated by the property sector.

The majority of the property sector is generated by residential activity.

It contributed approximately $72.1 billion in combined Australian and State Government tax revenues and local government rates, fees and charges revenue in 2013-14. This equates to 16.0% of total Australian and State/ Territory taxes and local government rates, fees and charges revenues in 2013-14.

Residential property ownership is not the only way every day Australians participate in the property sector; 14.1 million Australians have a financial stake in the property

industry through their super funds.


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Executive Summary

The Australian Property Industry...

The Australian property industry consists of organisations and individuals involved in

developing, operating and facilitating activities within the property industry that meet the residential and non-residential property needs of Australia. Typically this includes residential and non-residential construction along with finance, property and business services associated with property development and operation. While many of these industries are also involved in non-property related activities, this report examines only the contribution of the property related components of these industries to the Australian

economy.

The definition of the property industry used in this report does not include ownership of dwellings, which are rents paid by tenants to landlords and imputed rents to owner occupiers.

The Property Industry is the largest industry in Australia…

The property industry is the largest industry in Australia. The industry is estimated to have contributed $182.5 billion to Australian GDP in 2013-14, accounting for 11.5% of GDP for the year (of $1,583.6 billion).

Figure ES.1. Direct Contribution to Gross Domestic Product by Industry, 2013-14 ($ Billion)

Note: * - Only non-property related activity is included for this industry classification. All property related activity is included in the property industry.

Sources: AEC, ABS (2015a, b and c; 2014a and b; 2013a and b), APRA (2013), RBA (2015a and b; 2013a and b).

$9.9

$13.6

$29.8

$38.6

$39.2

$39.8

$46.0

$46.7

$48.3

$66.6

$75.3

$78.8

$80.2

$85.1

$89.1

$107.1

$108.0

$110.9

$140.9

$147.1

$182.5

$0 $50 $100 $150 $200

Rental, hiring and real estate services *

Arts and recreation services

Other services

Accommodation and food services

Construction *

Agriculture, forestry and fishing

Electricity, gas, water and waste services

Information media and telecommunications

Administrative and support services

Wholesale trade

Retail trade

Education and training

Transport, postal and warehousing

Professional, scientific and technical services *

Public administration and safety

Health care and social assistance

Manufacturing

Financial and insurance services *

Mining

Ownership of dwellings

Property industry

Gross Product ($ Billion)


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The Property Industry is the second largest employer in

Australia…

The property industry was the second highest contributing sector to employment in 2013-14. Around 1.17 million full time equivalent (FTE) employees were directly employed in the property industry in 2013-14, accounting for 11.8% of the total FTE employees in Australia.

Figure ES.2. Direct Contribution to Employment by Industry, 2013-14 (‘000 FTEs)

Note: * - Only non-property related activity is included for this industry classification. All property related activity is included in the

property industry. Sources: AEC, ABS (2015a, b and c; 2014a and b; 2013a and b), APRA (2013), RBA (2015a and b; 2013a and b).

The Property Industry is also a strong contributor to Australia’s economy through flow-on activity…

In addition to the direct contribution of the property industry to the Australian economy, the property industry is estimated to have contributed a further $279.7 billion to Australian GDP through flow-on demand for goods and services, including production induced1 and consumption induced2 effects. Combined, the property industry contributed $462.2 billion to GDP in 2013-14 through direct and flow-on activity.

The property industry also indirectly contributes to employment in Australia through flow-on demand for goods and services. The property industry supported jobs for some 1.54 million FTE employees in 2013-14 through flow-on activity. Over 2.7 million FTE jobs were supported by the property industry in 2013-14 through direct and flow-on activity

combined.

The Residential Property Sub-Sector provides the majority of

Property Industry economic activity…

The residential sub-sector of the property industry directly contributed 59.9% of total property industry gross product and 63.0% of employment in 2013-14, with the non-

residential sub-sector contributing the remainder.

1 Represents the combination of activity required from all industries that supply goods and services to the property industry, as well as the induced activity from all industries to support the production of industries supplying the property industry. 2 Represents the subsequent induced activity due to spending by the wage and salary earners across all industries arising from the compensation received for their labour as part of the direct and production induced effects.

0

45

99

147

163

178

249

261

314

345

372

410

508

542

605

750

805

828

899

1,166

1,181

0 200 400 600 800 1,000 1,200 1,400



Construction *




Mining



Wholesale trade


Other services




Manufacturing



Retail trade

Property industry


Employment ('000 FTEs)


v

The Property Industry is a key contributor to taxation revenues...

The property industry contributed approximately $72.1 billion in combined Australian and State Government tax revenues and local government rates, fees and charges revenue in 2013-14. This equates to 16.0% of total Australian and State/ Territory taxes and local government rates, fees and charges revenues in 2013-14. State governments received the largest revenue from property related activities, accounting for 38.0% of total property related revenues to government.

Australian and State Government property related taxes of $48.9 billion represents a

contribution of approximately 11.4% of total combined Australian and State Government tax revenues in 2013-14.

Table ES.1. Property Related Tax Revenues (a), All Levels of Government, 2013-14

State Australian Government

Taxes ($M) (b)

State Government

Taxes ($M)

Local Government

Rates, Fees & Charges ($M)

Total Tax Revenues

($M)

Contribution to Total Tax Revenues (a)

New South Wales $6,541.9 $9,811.5 $7,187.2 $23,540.6 N/A

Victoria $4,994.3 $7,309.4 $4,320.2 $16,623.9 N/A

Queensland $3,814.6 $4,205.0 $5,727.6 $13,747.2 N/A

South Australia $1,200.6 $1,615.4 $2,033.2 $4,849.2 N/A

Western Australia $3,758.0 $3,624.2 $2,819.1 $10,201.4 N/A

Tasmania $220.6 $313.5 $614.3 $1,148.4 N/A

Northern Territory $457.9 $188.7 $167.3 $814.0 N/A

Australian Capital Territory $499.3 $371.1 $340.0 $1,210.3 N/A

Australia $21,487.1 $27,438.8 $23,209.0 $72,134.9 16.0%

Notes: N/A = Not applicable. (a) Includes rates, fees and charges revenues to local government. (b) The total Australian Government taxation revenue from property may be understated as it does not include tax on residents or non-residents for some property related activities such as

through rental income. Sources: AEC, ABS (2015d; 2014c), Australian Government (2014), ATO (2015a; 2015b), ACT Government (2014), NSW Government (2014), NT

Government (2014), Queensland Government (2014), SA Government (2014), Tasmanian Government (2014), Victorian Government (2014), WA Government (2014). Alice Springs Town Council (2014), Barkly Regional Council (2014), Belyuen Community Government Council (2014), Central Desert Regional Council (2014), City of Darwin Council (2014), City of Palmerston Council (2014), Coomalie Community Government Council

(2014), East Arnhem Regional Council (2014), Katherine Town Council (2014), Litchfield Council (2014), MacDonnell Regional Council (2014), MAV (2014), NSW Government (2014b), Queensland Government (2015), Roper Gulf Regional Council (2014), Tasmanian Audit Office (2015),

Tiwi Islands Regional Council (2014), Victoria Daly Regional Council (2014), Wagait Shire Council (2014), West Arnhem Regional Council (2014).


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Table of Contents

DOCUMENT CONTROL .......................................................................................... I

KEY FINDINGS ................................................................................................... II

EXECUTIVE SUMMARY ...................................................................................... III

TABLE OF CONTENTS......................................................................................... VI

1. INTRODUCTION .......................................................................................... 1

1.1 BACKGROUND .................................................................................................. 1

1.2 DEFINITION OF THE PROPERTY INDUSTRY ................................................................... 1

1.3 GEOGRAPHIC SCOPE .......................................................................................... 1

1.4 METHODOLOGY ................................................................................................ 1

2. CONTRIBUTION TO NATIONAL ECONOMY ................................................... 2

2.1 CONTRIBUTION OF THE PROPERTY INDUSTRY TO AUSTRALIA ............................................. 3

2.2 CONTRIBUTION OF PROPERTY SUB-SECTORS TO AUSTRALIA ............................................. 7

2.3 STATE CONTRIBUTION OF THE PROPERTY INDUSTRY ....................................................... 7

2.4 COMPARISON WITH OTHER INDUSTRIES .................................................................... 9

2.4.1 GROSS DOMESTIC PRODUCT ....................................................................... 9

2.4.2 INCOMES ............................................................................................. 9

2.4.3 EMPLOYMENT ....................................................................................... 10

3. CONTRIBUTION TO FEDERAL ELECTORATES ............................................. 11

4. TAXATION CONTRIBUTION ....................................................................... 15

4.1 CONTRIBUTION TO AUSTRALIAN TAXES ................................................................... 15

4.2 CONTRIBUTION TO STATE TAXES .......................................................................... 15

4.3 LOCAL GOVERNMENT RATES, FEES AND CHARGES ....................................................... 16

4.4 SUMMARY OF TAX REVENUES ............................................................................... 16

5. INVESTMENT ............................................................................................. 17

5.1 RESIDENTIAL PROPERTIES OWNED AND RENTED ......................................................... 17

5.2 PROPERTY INVESTED IN THROUGH SUPER FUNDS ........................................................ 17

REFERENCES ..................................................................................................... 18

APPENDIX A: DEFINITION OF THE PROPERTY INDUSTRY ................................. 21

APPENDIX B: SIGNIFICANCE ASSESSMENT METHODOLOGY ............................. 28

APPENDIX C: DIRECT CONTRIBUTION TO AUSTRALIA BY INDUSTRY ............... 32

APPENDIX D: ALLOCATION OF TAXES ............................................................... 33

APPENDIX E: PROPERTY INVESTMENT THROUGH SUPER METHODOLOGY ......... 37


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1. Introduction

1.1 Background

The Property Council of Australia commissioned AEC Group Pty Ltd (AEC) to estimate the

economic significance of Australia’s property industry. The industry consists of organisations and individuals involved in developing, operating and facilitating activities that meet Australia’s residential and non-residential property needs.

1.2 Definition of the Property Industry

The report uses the Australian and New Zealand Standard Industrial Classifications (ANZSIC) definition of industry classifications (ABS, 2008). The property industry is defined as:

Parts of the construction industry focused on the development of residential and non-residential building, as well as all construction services.

Architectural, engineering and professional services involved in the development of

property.

Non-residential property operators and real estate services.

Parts of banking, non-bank finance and other financial and insurance services that facilitate the development, acquisition and ownership of property3.

While many of these industries are also involved in non-property related activities, this report only focuses on the contribution of the property related components of these industries to the Australian economy. The definition of the property industry used in this

report does not include ownership of dwellings, which are rents paid by tenants to landlords and imputed rents to owner occupiers. Appendix A provides a full list of ANZSIC classes included in the definition of the property industry.

1.3 Geographic Scope

The scope of this report is on the economic significance of the property industry in Australia, each Australian State/ Territory, and each Australian Federal Electorate.

Data for Federal Electoral divisions as required for this study is not available from the Australian Bureau of Statistics, and to undertake analysis for the Federal Electorates correspondence files (based on population counts) between Federal Electorates and both Statistical Area 2 (SA2) and local government area (LGA) geographic boundaries from the Australian Bureau of Statistics (ABS, unpublished) were utilised to convert SA2/ LGA data

to Federal Electorates. All estimates of property industry activity at the Federal Electorate level are therefore subject to a softer confidence due to any inconsistencies introduced by transforming data using these correspondence files.

1.4 Methodology

The estimates in this report are produced using Input-Output transaction tables and models developed by AEC. Data sources used include State and National Accounts and industry specific ABS and other agency data. Input-Output models were used to produce estimates of the direct and flow-on contributions of the property industry to Australia’s economy, each State/ Territory, and each Federal Electorate. Measures used in this report include Gross Domestic Product (GDP), Gross Value Added (GVA) activity, employment, and income (i.e., wages and salaries). Appendix B presents a detailed description of the

methodology.

All estimates are presented in nominal terms (i.e., current prices in the year received), unless otherwise stated.

3 Parts of banking and credit union operations facilitating acquisition/ ownership of commercial property is excluded

due to data limitations (though residential property is included). This is outlined in more detail in Appendix A.


2

2. Contribution to National Economy

This chapter describes the property industry’s significance and economic contribution to the Australian economy. It includes estimates of direct and flow-on contributions to other industries where relevant.

The contribution of the property industry’s output to the Australian economy is estimated

across the following three key measures:

Gross Product: Refers to the value of all outputs of an industry including taxes/ subsidies on its final products after deducting the cost of goods and services inputs in the production process. Gross Domestic Product (GDP) is the measure of a nation’s total gross production.

Incomes: Measures the level of wages and salaries paid to employees of each industry.

Employment: Refers to the part-time and full-time employment positions supported by an industry, and is expressed in terms of full time equivalent (FTE) positions.

An additional measure, industry output, is also referenced in this Chapter. Industry output refers to the total dollar value of all goods and services produced during the year. This measure overstates the true economic contribution of the industry as it double counts the value of material and services inputs used in the production of an industry’s goods

and services.

The economic contribution is measured in terms of:

Direct impacts, which are the first round of effects from direct operational

expenditure on goods and services by the property industry.

Flow-on impacts, which comprise the second and subsequent round effects of

increased purchases by suppliers in response to increased sales. Flow-on impacts are disaggregated to:

o Industry Support Effects (Type I), which represent the production induced support activity as a result of additional expenditure by the property industry on goods and services, and subsequent round effects of increased purchases by suppliers in response to increased sales.

o Household Consumption Effects (Type II), which represent the consumption

induced activity from additional household expenditure on goods and services resulting from additional wages and salaries being paid within the economy.


3

2.1 Contribution of the Property Industry to Australia

The Australian property industry is estimated to have directly produced some $462.4 billion in total industry output in 2013-14. This is estimated to have directly contributed $182.5 billion to Australia’s GDP, or 11.5% of total GDP (see Table 2.1 and Table 2.2). Including flow-on activity, the estimated total contribution of the property industry to Australia’s economy was $462.2 billion or 29.2% of total GDP.

The property industry supported over 2.7 million FTE employment positions in 2013-14; 1.17 million directly and 1.54 million through flow-on activity. This represented 27.5% of

Australia’s total employment. These jobs provided approximately $191.8 billion in incomes (wages and salaries), representing 28.6% of total incomes in Australia in 2013-14.

Table 2.1. Estimated Direct and Flow-On Contribution of the Property Industry to the Australian Economy, 2013-14

Property Industry Component Gross Product ($M)

Incomes ($M)

Employment (FTE)

Direct Contribution

Residential Building Construction $15,730.6 $5,349.6 152,274

Non-Residential Building Construction $12,909.2 $4,967.2 55,868

Construction Services $65,733.6 $28,814.4 565,690

Finance $29,890.1 $8,287.7 54,659

Insurance and Superannuation Funds $1,335.1 $779.3 4,898

Non-Residential Property Operators and Real Estate Services $34,893.1 $12,500.6 158,787

Professional, Scientific and Technical Services $22,042.9 $11,480.9 173,390

Total Direct Contribution $182,534.5 $72,179.7 1,165,565

Flow-On Contribution

Production Induced (Type I) $119,748.2 $58,873.2 645,718

Consumption Induced (Type II) $159,948.4 $60,747.7 897,402

Total Flow-On Contribution $279,696.7 $119,620.9 1,543,120

TOTAL CONTRIBUTION TO AUSTRALIA $462,231.2 $191,800.6 2,708,685

Notes: Totals may not sum due to rounding.


Table 2.2. Estimated % Contribution of the Property Industry to the Australian Economy, 2013-14

Property Industry Component Gross Product (%)

Incomes (%)

Employment (%)

Direct Contribution

Residential Building Construction 1.0% 0.8% 1.5%

Non-Residential Building Construction 0.8% 0.7% 0.6%

Construction Services 4.2% 4.3% 5.7%

Finance 1.9% 1.2% 0.6%

Insurance and Superannuation Funds 0.1% 0.1% 0.0%

Non-Residential Property Operators and Real Estate Services 2.2% 1.9% 1.6%

Professional, Scientific and Technical Services 1.4% 1.7% 1.8%

Total Direct Contribution 11.5% 10.8% 11.8%

Flow-On Contribution

Production Induced (Type I) 7.6% 8.8% 6.5%

Consumption Induced (Type II) 10.1% 9.1% 9.1%

Total Flow-On Contribution 17.7% 17.8% 15.6%

TOTAL CONTRIBUTION TO AUSTRALIA 29.2% 28.6% 27.5%




4

The property industry’s total (i.e., direct + flow-on) contribution to GDP has almost doubled

over the past 10 years, increasing from $238.4 billion in 2003-04 to $462.2 billion in 2013-14 (see Figure 2.1). Over this period, the percent contribution to total Australian GDP has fluctuated between 27.5% and 29.5%, but has generally been increasing over time.

Figure 2.1. Estimated Direct and Flow-On Contribution of the Property Industry to Australian GDP, 2003-04 to 2013-14, Current Prices (i.e. Nominal Terms)


Annual growth in gross product supported by the Australian property industry (both directly and through flow-on activity) is presented in Figure 2.2, compared to growth in Australian GDP. The figure shows growth in the property industry has been somewhat cyclic yet trending down in recent years, but rebounded in 2013-14. Growth in the national economy was relatively steady between 2004-05 and 2008-09, but has been experiencing similar

cyclic activity to the property industry since 2009-10, though out of phase with the property industry until the past two years.

25.0%

25.5%

26.0%

26.5%

27.0%

27.5%

28.0%

28.5%

29.0%

29.5%

30.0%

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

% C

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tribu

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to T

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Pro

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nd

ustr

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ross P

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($M

)

Direct Type I Flow-On Type II Flow-On % of Australia


5

Figure 2.2. Annual Growth in Property Industry Supported Gross Product (Direct + Flow-

On) and Australian GDP, 2004-05 to 2013-14, Current Prices (i.e. Nominal Terms)


Employment supported by property industry activities (including direct and flow-on jobs) steadily increased between 2003-04 and 2010-11, to a peak of 2.82 million FTE jobs in 2010-11 (see Figure 2.3). Total employment supported by the property industry dipped in 2011-12 and 2012-13, but rebounded in 2013-14 to over 2.7 million FTE jobs, the third highest total since 2003-04.

The property industry supported nearly 30% of Australia’s total employment in 2009-10

and 2010-11, but has fallen to 27.5% in 2013-14.

Figure 2.3. Estimated Direct and Flow-On Contribution of the Property Industry to Australian Employment, 2003-04 to 2013-14


0%

2%

4%

6%

8%

10%

12%

14%

An

nu

al

% G

row

th

Property Industry Total Economy

25.0%

25.5%

26.0%

26.5%

27.0%

27.5%

28.0%

28.5%

29.0%

29.5%

30.0%

30.5%

31.0%

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

1,750,000

2,000,000

2,250,000

2,500,000

2,750,000

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Direct Type I Flow-On Type II Flow-On % of Australia


6

Annual change in employment supported by the Australian property industry (both directly

and through flow-on activity) is presented in Figure 2.4, compared to the annual change in Australian employment. The figure shows strong cycles in property industry growth every two to three years. However, both the peaks and troughs of growth have reduced between

2004-05 and 2013-14, and as outlined in Figure 2.3 above, this is reflective of an industry that has seen employment levels fluctuating around 2.6 million to 2.8 million since 2006-07.

By comparison, growth in national employment has generally been much steadier, though has also trended downward since 2004-05.

Figure 2.4. Annual Growth in Property Industry Supported Employment (Direct + Flow-On) and Australian Employment, 2004-05 to 2013-14


-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

An

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% G

row

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Property Industry Total Economy


7

2.2 Contribution of Property Sub-Sectors to Australia

The property industry is disaggregated into Residential and Non-Residential sub-sectors in Table 2.3 to examine their direct4 contributions to Australia’s economy. The Residential sub-sector contributes around 60% of direct property industry activity in Australia, producing around $109.4 billion in gross product and directly supporting nearly 735,000 FTE jobs.

The methodology used to disaggregate the direct contribution of the property industry to its constituent sub-sectors is described in Appendix B.

Table 2.3. Estimated Direct Contribution of the Property Industry to the Australian Economy by Property Sub-Sector, 2013-14

Property Sub-Sector/ Type Gross Product ($M)

Incomes ($M)

Employment (FTE)

Direct Contribution

Residential $109,373.2 $42,992.2 734,851

Non-Residential $73,161.4 $29,187.5 430,714

Total Direct Contribution $182,534.5 $72,179.7 1,165,565

Percent of Total Direct Contribution

Residential 59.9% 59.6% 63.0%

Non-Residential 40.1% 40.4% 37.0%

Total % of Direct Contribution 100.0% 100.0% 100.0%



2.3 State Contribution of the Property Industry

A breakdown of the direct and flow-on contribution of the property industry by State/ Territory is presented in Table 2.4 below, and highlights:

New South Wales accounts for the largest share of total national property industry economic activity, at around 30% of the Australian total. Victoria, Queensland and Western Australia account for the next largest shares of total Australian property industry economic activity. Combined, these four States account for approximately

90% of total Australian property industry activity.

The property industry in Victoria, Western Australia and Northern Territory contributed an above national average proportion of total State/ Territory economic activity (with the exception of gross product in Western Australia). The property industry in all other States/ Territories recorded below national average proportions of total State/ Territory economic activity.

The property industry contributed a considerably higher share of the Northern Territory

economy, and considerably smaller share of Tasmania’s economy, compared to other States/ Territories in Australia.

4 Only direct contributions have been examined as insufficient data is available to appropriately identify any variances

between sub-sectors contribution to flow-on effects.


8

Table 2.4. Estimated State/ Territory Economic Contribution of the Property Industry, 2013-14

State/ Territory Direct Contribution Flow-On (Type I + Type II) Contribution Total Contribution

Gross Product ($B)

Incomes ($B)

Employment (FTE)

Gross Product ($B)

Incomes ($B)

Employment (FTE)

Gross Product ($B)

Incomes ($B)

Employment (FTE)

Value Contribution

New South Wales $54.5 $20.3 311,352 $88.3 $36.0 451,209 $142.8 $56.3 762,560

Victoria $41.7 $17.4 272,949 $68.0 $32.7 419,224 $109.7 $50.1 692,173

Queensland $33.8 $14.7 239,772 $49.9 $22.3 292,684 $83.7 $37.0 532,456

South Australia $10.5 $4.4 73,325 $16.3 $7.2 95,011 $26.8 $11.6 168,336

Western Australia $31.8 $11.7 205,979 $44.8 $16.9 224,331 $76.5 $28.7 430,310

Tasmania $2.0 $0.9 13,923 $2.7 $1.3 16,060 $4.6 $2.1 29,983

Northern Territory $3.9 $1.3 22,763 $4.5 $1.4 19,739 $8.4 $2.7 42,502

Australian Capital Territory $4.3 $1.4 25,502 $5.3 $1.8 24,863 $9.6 $3.2 50,364

Total Australia $182.5 $72.2 1,165,565 $279.7 $119.6 1,543,120 $462.2 $191.8 2,708,685

% of National Property Industry

New South Wales 29.8% 28.2% 26.7% 31.6% 30.1% 29.2% 30.9% 29.4% 28.2%

Victoria 22.9% 24.1% 23.4% 24.3% 27.3% 27.2% 23.7% 26.1% 25.6%

Queensland 18.5% 20.4% 20.6% 17.8% 18.7% 19.0% 18.1% 19.3% 19.7%

South Australia 5.8% 6.1% 6.3% 5.8% 6.0% 6.2% 5.8% 6.0% 6.2%

Western Australia 17.4% 16.3% 17.7% 16.0% 14.2% 14.5% 16.6% 14.9% 15.9%

Tasmania 1.1% 1.2% 1.2% 1.0% 1.0% 1.0% 1.0% 1.1% 1.1%

Northern Territory 2.2% 1.8% 2.0% 1.6% 1.2% 1.3% 1.8% 1.4% 1.6%

Australian Capital Territory 2.4% 2.0% 2.2% 1.9% 1.5% 1.6% 2.1% 1.7% 1.9%

Total Australia 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

% Contribution to State Economy

New South Wales 11.1% 9.7% 10.2% 18.0% 17.1% 14.8% 29.0% 26.8% 25.1%

Victoria 11.9% 10.6% 11.1% 19.4% 19.9% 17.1% 31.3% 30.5% 28.2%

Queensland 11.4% 10.9% 12.1% 16.8% 16.5% 14.8% 28.3% 27.4% 26.9%

South Australia 10.8% 9.8% 10.5% 16.8% 16.0% 13.6% 27.7% 25.9% 24.1%

Western Australia 12.0% 14.4% 17.6% 16.9% 20.8% 19.2% 28.8% 35.3% 36.8%

Tasmania 7.8% 6.8% 7.0% 10.7% 9.8% 8.1% 18.5% 16.6% 15.1%

Northern Territory 17.9% 18.4% 22.1% 20.4% 20.4% 19.2% 38.2% 38.7% 41.3%

Australian Capital Territory 12.1% 9.6% 11.7% 14.8% 12.2% 11.4% 26.9% 21.8% 23.0%

Total Australia 11.5% 10.8% 11.8% 17.7% 17.8% 15.6% 29.2% 28.6% 27.5%




9

2.4 Comparison with Other Industries

This section presents comparisons of the direct contribution of the Australian property industry to the Australian economy against other industries in the national economy. This section only presents the direct contribution of the property industry compared to the direct contribution of other industries. Flow-on contributions cannot be presented as this would introduce double counting across national economic activity (as flow-on contributions of the property industry represent direct activity of the industries it purchases from, and vice versa).

A summary table of the direct contribution of the property industry compared to other industries is provided in Appendix C.

2.4.1 Gross Domestic Product

Australia’s total GDP was $1.58 trillion in 2013-14. Figure 2.5 shows the property industry was Australia’s largest industry contributing $182.5 billion directly to the national economy,

or 11.5% of total. The property industry directly contributed approximately 25% to 30% more to GDP than the next largest sectors, ownership of dwellings ($147.1 billion or 9.3%

of total) and mining ($140.9 billion or 8.9% of total).

Figure 2.5. Direct Contribution to Gross Domestic Product by Industry, 2013-14 ($ Billion)

Note: * Only non-property related activity is included for this industry classification. All property related activity is included in the property industry. Sources: AEC, ABS (2015a, b and c; 2014a and b; 2013a and b), APRA (2013), RBA (2015a and b; 2013a and b).

2.4.2 Incomes

Figure 2.6 shows the property industry was the second highest direct contributing sector to incomes (wages and salaries) in Australia in 2013-14, paying approximately $72.2 billion to Australian households (10.8% of Australia’s total wages and salaries paid directly to workers in 2013-14). The largest income paying sector in 2013-14 was health care and

social assistance, paying approximately $73.8 billion.

$9.9

$13.6

$29.8

$38.6

$39.2

$39.8

$46.0

$46.7

$48.3

$66.6

$75.3

$78.8

$80.2

$85.1

$89.1

$107.1

$108.0

$110.9

$140.9

$147.1

$182.5

$0 $50 $100 $150 $200



Other services


Construction *





Wholesale trade

Retail trade






Manufacturing


Mining


Property industry

Gross Product ($ Billion)


10

Figure 2.6. Direct Contribution to Incomes by Industry, 2013-14 ($ Billion)

Note: * Only non-property related activity is included for this industry classification. All property related activity is included in the

property industry. Sources: AEC, ABS (2015a, b and c; 2014a and b; 2013a and b), APRA (2013), RBA (2015a and b; 2013a and b).

2.4.3 Employment

Figure 2.7 shows that the property industry was the second highest direct contributor to Australian jobs in 2013-14. The industry employed 1.17 million FTE workers (11.8% of

Australia’s total). This was approximately 15,000 less FTE workers than Australia’s largest employing industry, health care and social assistance, which employed 1.18 million FTE workers (12.0% of the Australia’s total).

Figure 2.7. Direct Contribution to Employment by Industry, 2013-14 (‘000 FTEs)

Note: * Only non-property related activity is included for this industry classification. All property related activity is included in the property industry.


$0.0

$4.4

$6.5

$7.9

$12.8

$13.4

$16.8

$17.7

$20.9

$23.3

$32.8

$34.1

$34.7

$41.5

$44.7

$48.3

$49.3

$56.5

$58.8

$72.2

$73.8

$0 $20 $40 $60 $80







Other services

Construction *


Mining



Wholesale trade

Retail trade



Manufacturing



Property industry


Incomes ($ Billion)

0

45

99

147

163

178

249

261

314

345

372

410

508

542

605

750

805

828

899

1,166

1,181

0 200 400 600 800 1,000 1,200 1,400



Construction *




Mining



Wholesale trade


Other services




Manufacturing



Retail trade

Property industry


Employment ('000 FTEs)


11

3. Contribution to Federal Electorates

The following table provides a summary of the direct contribution of the property industry to each Federal Electorate in Australia, in terms of gross product, incomes and employment. The direct contribution the property industry makes to each electorate’s economy is presented both in value and as a proportion of total electorate economy.

Table 3.1. Direct Contribution of Property Industry by Federal Electorate, 2013-14

Federal Electorate Property Industry Contribution % of Total Electorate

Gross Product

($M)

Income ($M)

Employment (FTEs)

Gross Product

(%)

Income (%)

Employment (%)

New South Wales

Banks $706.3 $258.2 4,129 12.6% 11.8% 12.6%

Barton $795.4 $273.1 4,098 12.4% 11.3% 11.0%

Bennelong $1,221.1 $490.8 8,035 7.8% 7.3% 8.6%

Berowra $653.9 $263.7 4,602 12.7% 11.3% 12.7%

Blaxland $821.4 $321.1 5,564 8.7% 7.8% 8.9%

Bradfield $792.0 $300.4 4,780 12.0% 10.2% 10.7%

Calare $627.9 $259.3 4,553 6.8% 6.6% 7.2%

Charlton $548.3 $222.6 3,916 8.4% 8.4% 9.6%

Chifley $442.9 $180.3 3,227 7.6% 7.4% 8.6%

Cook $921.2 $369.6 6,299 13.5% 12.0% 12.8%

Cowper $708.9 $268.6 4,645 10.7% 9.2% 9.8%

Cunningham $1,124.8 $423.6 6,777 10.9% 9.3% 10.0%

Dobell $769.3 $277.3 4,726 11.4% 9.9% 10.6%

Eden-Monaro $927.4 $371.7 6,766 14.1% 13.0% 14.2%

Farrer $709.9 $297.4 5,312 9.5% 8.7% 9.1%

Fowler $381.8 $133.2 2,252 9.7% 8.7% 9.1%

Gilmore $724.0 $283.8 4,853 13.8% 11.9% 12.2%

Grayndler $955.1 $354.2 5,712 10.6% 10.2% 10.5%

Greenway $784.4 $313.1 5,455 10.2% 9.1% 10.3%

Hughes $638.3 $251.4 4,300 9.7% 8.6% 9.5%

Hume $662.8 $278.8 4,986 11.0% 10.4% 10.9%

Hunter $677.0 $300.5 4,915 5.9% 6.9% 7.5%

Kingsford Smith $1,021.0 $394.3 6,534 6.1% 5.6% 6.9%

Lindsay $775.9 $304.9 5,260 10.4% 8.8% 9.5%

Lyne $630.0 $226.7 3,881 9.4% 8.5% 9.2%

Macarthur $686.6 $277.8 4,818 11.6% 10.1% 11.0%

Mackellar $995.4 $401.1 7,044 14.0% 12.8% 14.5%

Macquarie $678.5 $274.7 4,801 11.9% 10.2% 11.0%

McMahon $787.5 $331.9 5,874 8.3% 7.6% 9.2%

Mitchell $1,159.6 $436.4 7,125 13.8% 11.4% 12.1%

New England $680.9 $287.1 5,113 9.0% 7.7% 8.3%

Newcastle $1,369.0 $536.5 8,155 10.1% 8.4% 8.9%

North Sydney $2,655.4 $1,033.2 14,412 10.5% 9.3% 10.4%

Page $647.7 $267.8 4,512 9.3% 7.7% 8.1%

Parkes $646.7 $245.1 4,116 6.9% 7.1% 6.3%

Parramatta $1,886.6 $618.8 7,995 11.4% 8.8% 8.6%

Paterson $661.3 $267.0 4,474 10.9% 10.1% 10.2%

Reid $2,181.4 $766.7 10,694 12.3% 10.6% 10.8%

Richmond $694.1 $285.2 4,890 12.7% 11.5% 11.8%

Riverina $973.0 $359.7 5,971 10.0% 9.2% 9.0%

Robertson $841.1 $304.3 5,043 11.9% 10.0% 10.4%


12


Gross Product

($M)

Income ($M)

Employment (FTEs)

Gross Product

(%)

Income (%)

Employment (%)

Shortland $568.2 $220.4 3,665 12.7% 11.5% 12.0%

Sydney $12,846.0 $4,356.9 49,705 14.4% 11.5% 12.0%

Throsby $692.7 $258.6 4,407 12.5% 10.9% 11.2%

Warringah $1,173.6 $441.0 7,287 13.4% 13.4% 14.2%

Watson $642.2 $236.7 4,010 8.8% 8.3% 8.8%

Wentworth $1,425.7 $486.2 7,489 11.1% 10.9% 10.7%

Werriwa $554.4 $230.7 4,174 8.9% 8.1% 9.5%

New South Wales $54,468.3 $20,342.4 311,352 11.1% 9.7% 10.2%

Victoria

Aston $855.6 $401.5 6,873 11.9% 10.4% 11.5%

Ballarat $887.0 $358.1 6,075 12.2% 10.7% 11.3%

Batman $684.9 $288.0 4,849 9.9% 9.2% 9.9%

Bendigo $928.3 $390.8 6,557 12.9% 11.2% 11.6%

Bruce $1,266.8 $561.5 8,914 9.8% 8.2% 9.0%

Calwell $1,131.5 $506.3 8,917 8.9% 8.0% 9.6%

Casey $736.2 $343.3 6,144 13.9% 12.3% 13.3%

Chisholm $1,156.0 $507.8 8,771 10.2% 8.5% 10.1%

Corangamite $643.1 $283.1 5,125 13.8% 12.6% 13.2%

Corio $921.0 $415.3 6,830 10.6% 9.1% 9.9%

Deakin $863.1 $384.4 6,556 11.7% 10.3% 11.2%

Dunkley $843.2 $351.9 5,964 14.3% 12.3% 12.7%

Flinders $905.4 $417.6 7,495 15.5% 15.8% 16.5%

Gellibrand $930.7 $393.3 6,784 8.7% 7.9% 9.1%

Gippsland $593.5 $292.2 5,141 7.4% 7.9% 8.7%

Goldstein $809.2 $324.0 5,349 13.9% 12.8% 13.6%

Gorton $482.0 $204.8 3,776 11.8% 11.1% 13.1%

Higgins $1,264.5 $512.6 7,983 13.8% 13.1% 13.1%

Holt $637.6 $282.9 5,113 14.1% 12.9% 14.2%

Hotham $838.9 $377.9 6,609 9.1% 8.4% 9.4%

Indi $820.7 $342.2 5,724 11.4% 9.7% 9.9%

Isaacs $987.7 $458.8 8,136 11.9% 10.8% 12.3%

Jagajaga $723.3 $308.4 5,323 13.4% 11.3% 12.0%

Kooyong $1,136.2 $486.3 7,254 13.3% 11.6% 12.3%

La Trobe $681.1 $286.2 5,066 16.8% 14.8% 15.7%

Lalor $765.3 $327.2 5,852 10.5% 9.9% 11.5%

Mallee $697.8 $229.4 3,868 6.7% 7.1% 6.5%

Maribyrnong $697.4 $279.6 4,717 11.3% 10.0% 10.7%

Mcewen $798.6 $335.2 5,919 17.4% 15.9% 17.1%

Mcmillan $752.1 $346.7 5,969 12.3% 11.9% 11.6%

Melbourne $9,443.7 $3,563.2 41,447 13.4% 10.9% 10.5%

Melbourne Ports $3,521.7 $1,503.0 20,724 13.4% 12.3% 13.2%

Menzies $579.1 $245.8 4,125 16.0% 14.0% 14.3%

Murray $819.2 $345.1 5,708 10.8% 10.4% 9.5%

Scullin $741.8 $324.1 5,775 13.1% 11.5% 12.9%

Wannon $598.2 $208.1 3,459 7.8% 8.1% 6.0%

Wills $575.9 $240.8 4,058 9.7% 9.7% 10.2%

Victoria $41,718.1 $17,427.7 272,949 11.9% 10.6% 11.1%

Queensland

Blair $579.9 $236.0 3,820 8.5% 7.5% 7.8%

Bonner $953.3 $426.0 7,001 10.4% 9.8% 11.1%


13


Gross Product

($M)

Income ($M)

Employment (FTEs)

Gross Product

(%)

Income (%)

Employment (%)

Bowman $846.0 $380.5 6,842 16.8% 15.5% 17.1%

Brisbane $5,292.1 $2,328.0 31,020 13.2% 11.2% 12.0%

Capricornia $1,125.1 $472.9 8,117 6.7% 7.8% 9.5%

Dawson $1,073.5 $464.0 7,960 11.1% 10.5% 11.8%

Dickson $827.2 $364.7 6,483 16.2% 15.4% 17.2%

Fadden $952.0 $425.8 7,524 13.2% 13.0% 15.2%

Fairfax $1,060.6 $447.8 7,491 14.1% 12.2% 13.4%

Fisher $848.0 $367.4 6,022 15.2% 13.6% 14.8%

Flynn $1,337.8 $563.4 9,846 9.5% 11.1% 13.2%

Forde $893.3 $428.0 7,829 15.3% 14.3% 17.1%

Griffith $1,891.5 $797.1 12,096 14.4% 12.3% 13.1%

Groom $968.0 $399.3 6,635 11.4% 10.0% 10.6%

Herbert $1,002.1 $484.8 8,248 11.4% 10.3% 11.8%

Hinkler $833.6 $368.7 5,912 15.2% 13.0% 13.7%

Kennedy $644.3 $248.1 4,369 4.3% 5.3% 6.3%

Leichhardt $905.2 $405.7 6,786 9.6% 8.2% 9.4%

Lilley $1,263.4 $563.9 9,308 8.5% 7.8% 9.3%

Longman $661.0 $294.4 5,107 13.7% 12.9% 13.9%

Maranoa $796.3 $287.6 4,969 5.2% 6.5% 6.7%

Mcpherson $1,071.6 $464.3 8,000 14.7% 13.8% 15.3%

Moncrieff $1,666.9 $727.8 11,448 16.4% 14.3% 14.5%

Moreton $1,289.2 $542.9 9,238 10.9% 9.8% 11.7%

Oxley $940.6 $407.7 7,135 10.4% 9.8% 11.6%

Petrie $643.0 $264.3 4,528 13.7% 12.5% 13.6%

Rankin $1,023.1 $447.2 8,145 15.4% 14.0% 16.4%

Ryan $963.1 $411.5 6,385 12.5% 11.2% 12.1%

Wide Bay $860.1 $386.4 6,338 14.4% 12.4% 13.2%

Wright $613.2 $285.5 5,170 13.1% 13.2% 14.3%

Queensland $33,824.9 $14,691.9 239,772 11.4% 10.9% 12.1%

South Australia

Adelaide $3,088.5 $1,244.2 17,605 11.5% 9.3% 9.6%

Barker $591.9 $241.6 4,314 7.0% 7.2% 6.7%

Boothby $786.5 $315.8 5,087 13.5% 10.8% 11.2%

Grey $661.9 $236.4 4,331 6.1% 6.9% 7.1%

Hindmarsh $1,120.2 $459.8 7,675 11.3% 10.3% 11.7%

Kingston $604.9 $270.1 4,771 14.8% 13.7% 14.5%

Makin $604.9 $268.7 4,942 12.7% 11.3% 13.2%

Mayo $570.4 $273.5 4,973 12.4% 11.8% 12.3%

Port Adelaide $1,042.9 $477.0 8,575 10.1% 9.3% 10.9%

Sturt $933.3 $391.8 6,811 16.1% 14.3% 16.1%

Wakefield $509.5 $231.3 4,241 9.2% 8.6% 9.1%

South Australia $10,514.7 $4,410.1 73,325 10.8% 9.8% 10.5%

Western Australia

Brand $1,184.8 $477.7 8,834 14.3% 14.6% 18.2%

Canning $1,268.6 $482.6 8,811 13.8% 16.1% 19.2%

Cowan $2,333.8 $911.7 17,559 23.8% 24.0% 29.6%

Curtin $2,840.2 $1,146.4 17,984 13.9% 13.9% 16.0%

Durack $3,179.8 $1,001.2 18,177 5.2% 10.6% 14.8%

Forrest $1,986.9 $749.1 13,172 15.5% 17.2% 19.7%

Fremantle $1,950.0 $795.8 14,436 15.3% 15.4% 19.5%


14


Gross Product

($M)

Income ($M)

Employment (FTEs)

Gross Product

(%)

Income (%)

Employment (%)

Hasluck $1,418.3 $513.6 9,517 13.8% 13.2% 16.5%

Moore $1,295.0 $508.2 9,279 22.5% 20.4% 22.5%

O'Connor $1,435.9 $416.3 7,529 6.0% 8.1% 8.6%

Pearce $1,136.4 $417.6 7,858 17.2% 18.8% 21.0%

Perth $4,638.9 $1,756.1 26,457 12.6% 13.3% 15.9%

Stirling $2,725.4 $967.5 18,440 23.2% 21.7% 27.0%

Swan $2,459.4 $828.0 14,342 9.8% 9.6% 11.7%

Tangney $1,924.8 $759.5 13,587 18.7% 18.9% 22.7%

Western Australia $31,778.2 $11,731.2 205,979 12.0% 14.4% 17.6%

Tasmania

Bass $404.6 $180.1 2,772 8.0% 6.6% 6.6%

Braddon $315.9 $141.8 2,370 6.3% 5.8% 6.0%

Denison $718.4 $318.7 4,762 8.4% 6.8% 7.1%

Franklin $337.9 $157.2 2,758 11.0% 10.0% 11.1%

Lyons $180.2 $71.9 1,260 5.3% 5.4% 5.0%

Tasmania $1,956.9 $869.6 13,923 7.8% 6.8% 7.0%

Northern Territory

Lingiari $1,268.1 $396.1 7,437 12.1% 13.1% 16.2%

Solomon $2,656.7 $882.5 15,326 23.1% 22.5% 26.8%

Northern Territory $3,924.8 $1,278.6 22,763 17.9% 18.4% 22.1%

Australian Capital Territory

Canberra $1,985.4 $626.3 11,432 12.0% 9.3% 11.4%

Fraser $2,363.2 $801.9 14,070 12.2% 9.9% 11.9%

Australian Capital Territory $4,348.6 $1,428.2 25,502 12.1% 9.6% 11.7%

Australia

Australia $182,534.5 $72,179.7 1,165,565 11.5% 10.8% 11.8%

Notes: Totals may not sum due to rounding. Sources: AEC, ABS (2015a, b and c; 2014a and b; 2013a and b; unpublished), APRA (2013), RBA (2015a and b; 2013a and b).


15

4. Taxation Contribution

This chapter outlines the direct contribution of property related activities to Australian and State government taxes as well as local government rates and charges. The approach utilised in allocating Australian and State taxes to property related activities is outlined in Appendix D.

4.1 Contribution to Australian Taxes

Australian Government property related tax revenues amounted to approximately $21.5 billion in 2013-14. Company income tax (excluding capital gains tax) was the largest contributor (38.3% of property related taxes or $8.5 billion), followed by capital gains tax

(31.7% or $6.8 billion) and GST (29.8% or $6.4 billion). Other property related taxes contributed 0.2% of total property related taxes paid to the Australian Government.

Table 4.1. Australian Government Property Related Taxes, 2013-14

State Capital Gains Tax

($M) (a)

Company Income Tax (excl. CGT)

($M) (b)

GST ($M) Other Property Related

Taxes ($M)

Total ($M) (c)

Contribution to Total

Australian Taxes (%)

New South Wales $2,074.7 $2,543.0 $1,909.6 $14.6 $6,541.9 N/A

Victoria $1,709.1 $1,810.0 $1,462.6 $12.5 $4,994.3 N/A

Queensland $1,192.4 $1,425.7 $1,185.8 $10.6 $3,814.6 N/A

South Australia $373.9 $454.9 $368.6 $3.2 $1,200.6 N/A

Western Australia $1,141.7 $1,493.8 $1,114.1 $8.4 $3,758.0 N/A

Tasmania $70.3 $81.0 $68.6 $0.6 $220.6 N/A

Northern Territory $122.2 $197.2 $137.6 $0.9 $457.9 N/A

Australian Capital Territory $128.2 $217.6 $152.5 $1.0 $499.3 N/A

Australia $6,812.6 $8,223.3 $6,399.4 $51.9 $21,487.1 6.2%

Notes: N/A = Not applicable. (a) Includes Capital Gains Tax paid by individuals, companies and superannuation funds. (b) CGT = Capital Gains Tax. The Company Income Tax estimates presented are net of the estimated Capital Gains Tax paid by companies. (c) The total Australian

Government taxation revenue from property may be understated as it does not include tax on residents or non-residents for some property related activities such as through rental income.

Sources: AEC, ABS (2014c), Australian Government (2014), ATO (2015a; 2015b).

4.2 Contribution to State Taxes

Property related activities generated $27.4 billion in State taxation revenue in 2013-14. Transfer/ stamp duties made up the majority of property-based taxation revenue (57.3% or $15.7 billion), followed by land tax (23.2% or $6.4 billion). Property related payroll tax is estimated to have contributed $2.4 billion (8.6%), with other property related taxes accounting for $3.0 billion (10.9%).

Table 4.2. State Government Property Related Taxes, 2013-14

State Payroll Tax ($M)

Transfer/ Stamp Duties

($M)

Land Tax ($M)

Other Property Related

Taxes ($M)

Total ($M) Contribution to Total

State Taxes (%)

New South Wales $685.0 $5,841.6 $2,335.0 $949.9 $9,811.5 38.3%

Victoria $524.6 $4,167.5 $1,658.7 $958.6 $7,309.4 43.1%

Queensland $425.0 $2,403.0 $986.0 $391.0 $4,205.0 29.6%

South Australia $107.1 $801.3 $566.0 $141.0 $1,615.4 36.6%

Western Australia $522.0 $1,976.2 $662.0 $464.0 $3,624.2 24.6%

Tasmania $20.5 $154.0 $86.0 $53.0 $313.5 31.6%

Northern Territory $46.0 $142.8 $0.0 $0.0 $188.7 26.2%

Australian Capital Territory $31.7 $225.8 $79.0 $34.6 $371.1 38.9%

Australia $2,361.9 $15,712.1 $6,372.7 $2,992.1 $27,438.8 34.9%

Sources: AEC, ABS (2014c), Australian Government (2014), ACT Government (2014), NSW Government (2014), NT Government (2014),

Queensland Government (2014), SA Government (2014), Tasmanian Government (2014), Victorian Government (2014), WA Government (2014).


16

4.3 Local Government Rates, Fees and Charges

A total of $23.2 billion in rates, fees and charges revenue is estimated to have been raised by Australian local government authorities in 2013-14. New South Wales local governments received the largest rates and charges revenues at $7.2 billion, followed by Queensland ($5.7 billion) and Victoria ($4.3 billion).

Table 4.3. Estimates of Local Government Rates, Fees and Charges, 2013-14

State Total ($M)

New South Wales $7,187.2

Victoria $4,320.2

Queensland $5,727.6

South Australia $2,033.2

Western Australia $2,819.1

Tasmania $614.3

Northern Territory $167.3

Australian Capital Territory $340.0

Australia $23,209.0

Sources: AEC, ABS (2015d; 2014c), ACT Government (2014), Alice Springs Town Council (2014), Barkly Regional Council (2014),

Belyuen Community Government Council (2014), Central Desert Regional Council (2014), City of Darwin Council (2014), City of Palmerston Council (2014), Coomalie Community Government Council (2014), East Arnhem Regional Council (2014), Katherine Town Council (2014), Litchfield Council (2014), MacDonnell Regional Council (2014), MAV (2014), NSW Government (2014b),

Queensland Government (2015), Roper Gulf Regional Council (2014), Tasmanian Audit Office (2015), Tiwi Islands Regional Council (2014), Victoria Daly Regional Council (2014), Wagait Shire Council (2014), West Arnhem Regional Council (2014).

4.4 Summary of Tax Revenues

The property industry contributed approximately $72.1 billion in combined Australian and State Government tax revenues and local government rates, fees and charges revenue in 2013-14. This equates to 16.0% of total Australian and State/ Territory taxes and local

government rates, fees and charges revenues in 2013-14. State governments received the largest revenue from property related activities, accounting for 38.0% of total property

related revenues to government.

Australian and State Government property related taxes of $48.9 billion represents a contribution of approximately 11.4% of total combined Australian and State Government tax revenues in 2013-14.

Table 4.4. Property Related Tax Revenues (a), All Levels of Government, 2013-14

State Australian Government

Taxes ($M) (b)

State Government

Taxes ($M)

Local Government

Rates, Fees & Charges ($M)

Total Tax Revenues

($M)

Contribution to Total Tax Revenues (a)

New South Wales $6,541.9 $9,811.5 $7,187.2 $23,540.6 N/A

Victoria $4,994.3 $7,309.4 $4,320.2 $16,623.9 N/A

Queensland $3,814.6 $4,205.0 $5,727.6 $13,747.2 N/A

South Australia $1,200.6 $1,615.4 $2,033.2 $4,849.2 N/A

Western Australia $3,758.0 $3,624.2 $2,819.1 $10,201.4 N/A

Tasmania $220.6 $313.5 $614.3 $1,148.4 N/A

Northern Territory $457.9 $188.7 $167.3 $814.0 N/A

Australian Capital Territory $499.3 $371.1 $340.0 $1,210.3 N/A

Australia $21,487.1 $27,438.8 $23,209.0 $72,134.9 16.0%

Notes: N/A = Not applicable. (a) Includes rates, fees and charges revenues to local government. (b) The total Australian Government taxation revenue from property may be understated as it does not include tax on residents or non-residents for some property related activities such as through rental income.

Sources: AEC, ABS (2015d; 2014c), Australian Government (2014), ATO (2015a; 2015b), ACT Government (2014), NSW Government (2014), NT Government (2014), Queensland Government (2014), SA Government (2014), Tasmanian Government (2014), Victorian Government (2014), WA

Government (2014). Alice Springs Town Council (2014), Barkly Regional Council (2014), Belyuen Community Government Council (2014), Central Desert Regional Council (2014), City of Darwin Council (2014), City of Palmerston Council (2014), Coomalie Community Government Council (2014), East Arnhem Regional Council (2014), Katherine Town Council (2014), Litchfield Council (2014), MacDonnell Regional Council (2014),

MAV (2014), NSW Government (2014b), Queensland Government (2015), Roper Gulf Regional Council (2014), Tasmanian Audit Office (2015), Tiwi Islands Regional Council (2014), Victoria Daly Regional Council (2014), Wagait Shire Council (2014), West Arnhem Regional Council (2014).


17

5. Investment

This chapter outlines the level of investment in property assets in Australia held either directly through home ownership and/ or rental properties, or through superannuation funds.

5.1 Residential Properties Owned and Rented

As at Census night 2011, more than 5.26 million dwellings were either owned outright by their occupant(s) or were being purchased by their occupant(s), accounting for 68.5% of total dwellings. An additional 2.26 million dwellings (29.4%) were occupied by tenants paying rental incomes to owner investors. The remaining dwellings were occupied under

alternative tenure types (e.g. public housing).

Table 5.1. Residential Properties Owned and Rented, by State/ Territory, 2011

State Owned Outright

Owned With a

Mortgage

Being Purchased

Under Rent/ Buy Scheme

Rented Other Total

New South Wales 830,225 822,534 5,604 731,207 47,072 2,436,642

Victoria 671,078 696,153 4,434 506,297 34,617 1,912,579

Queensland 467,541 533,580 3,498 508,571 34,480 1,547,670

South Australia 206,055 218,308 1,169 169,678 15,597 610,807

Western Australia 244,126 300,541 1,846 226,960 21,699 795,172

Tasmania 70,614 65,743 539 49,593 3,932 190,421

Northern Territory 12,570 18,796 162 28,836 3,709 64,073

Australian Capital Territory 37,048 50,435 218 39,704 1,757 129,162

Australia 2,539,257 2,706,090 17,470 2,260,846 162,863 7,686,526

Source: ABS (2013b).

5.2 Property Invested in through Super Funds

The methodology used to estimate the amount of property investment through super funds is outlined in Appendix E.

Approximately $1.78 trillion in total assets is estimated to have been held by super funds at the end of the 2013-14 financial year. It is estimated (as no direct data is available) approximately $182 billion was held across property assets. A total of 14.1 million people (95.5% of people with superannuation) are estimated to have an investment in property

through their super fund.

A summary of super investment in property is provided in the table below.

Table 5.2. Property Investment through Super Funds, by State/ Territory, 2013-14

State People with Superannuation (a)

Derived Number of People with Investment in

Property through Super

Derived Investment in Property through Super

($M)

New South Wales 4,713,389 4,499,144 $58,079.4

Victoria 3,696,862 3,528,823 $45,553.5

Queensland 2,953,862 2,819,596 $36,398.1

South Australia 1,077,233 1,028,268 $13,273.9

Western Australia 1,617,795 1,544,258 $19,934.8

Tasmania 326,376 311,540 $4,021.7

Northern Territory 146,930 140,251 $1,810.5

Australian Capital Territory 245,317 234,166 $3,022.8

Australia 14,777,763 14,106,047 $182,094.8

Note: (a) The breakdown of people with superannuation by State/ Territory has been estimated based on the number of people age 18 and over as at June 2014. Additional details of the method used is outlined in Appendix E. Sources: AEC, APRA (2015; 2014), ABS (2015d; 2014d), Financial Services Council (unpublished).


18

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19

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June 2014. Australian Government, Canberra.

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Central Desert Regional Council (2014). Central Desert Regional Council Annual Report 2013/14. Available from: http://centraldesert.nt.gov.au/annual-reports. Last accessed: 15 May, 2015.

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from: http://www.darwin.nt.gov.au/council/publications-and-reports. Last accessed: 15 May, 2015.

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Available from: http://www.palmerston.nt.gov.au/council/council-reporting/council-publications. Last accessed: 15 May, 2015.

Coomalie Community Government Council (2014). Coomalie Community Government

Council Annual Report 2013/14. Available from: http://www.coomalie.nt.gov.au/index.php/about-us/council-publication. Last accessed: 15 May, 2015.

East Arnhem Regional Council (2014). East Arnhem Regional Council Annual Report 2013/14. Available from: http://www.eastarnhem.nt.gov.au/publications-resources/. Last accessed: 15 May, 2015.

Financial Services Council (unpublished). Australians with Superannuation. Unpublished

data provided via email (23rd September, 2015), Financial Services Council.

Katherine Town Council (2014). Katherine Town Council Annual Report 2013/14. Available from: http://www.ktc.nt.gov.au/Your-Council/Publications-and-Policies/Annual-Reports. Last accessed: 15 May, 2015.

Litchfield Council (2014). Lichfield Council Annual Report 2013/14. Available from: http://www.litchfield.nt.gov.au/council/council-plans-and-publications/annual-reports. Last accessed: 15 May, 2015.

MacDonnell Regional Council (2014). MacDonnell Regional Council Annual Report 2013/14. Available from: http://macdonnell.nt.gov.au/about/annual-reports. Last accessed: 15 May, 2015.

MAV (2014). Capital works the key focus of council budgets. Media Release, Friday 5 July 2013. Municipal Association of Victoria. Available from: http://www.mav.asn.au/about-local-government/local-government-

finance/Pages/council-rates-property-valuations.aspx. Last accessed: 14 May, 2015.

NSW Government (2014a). Report on State Finances, 2013-14. New South Wales Government, Sydney.

NSW Government (2014b). Council Comparative Reports – 2011/12 – 2012/13 Time Series Data. New South Wales Government Office of Local Government. Available from: https://www.olg.nsw.gov.au/public/my-local-council/NSW-local-

government-comparative-information/council-comparative-reports. Last accessed: 14 May, 2015.

NT Government (2014). Treasurer's Annual Financial Report, 2013-14. Northern Territory Government, Darwin.

Queensland Government (2015). Queensland Local Government Comparative Information 2013/14. Queensland Government Department of Infrastructure, Local Government and Planning. Available from: http://www.dip.qld.gov.au/about-

local-government-and-councils/queensland-local-government-comparative-information.html. Last accessed: 14 May, 2015.

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http://www.coomalie.nt.gov.au/index.php/about-us/council-publication

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http://www.eastarnhem.nt.gov.au/publications-resources/

http://www.ktc.nt.gov.au/Your-Council/Publications-and-Policies/Annual-Reports

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http://www.litchfield.nt.gov.au/council/council-plans-and-publications/annual-reports

http://www.litchfield.nt.gov.au/council/council-plans-and-publications/annual-reports

http://macdonnell.nt.gov.au/about/annual-reports

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http://www.mav.asn.au/about-local-government/local-government-finance/Pages/council-rates-property-valuations.aspx

https://www.olg.nsw.gov.au/public/my-local-council/NSW-local-government-comparative-information/council-comparative-reports

https://www.olg.nsw.gov.au/public/my-local-council/NSW-local-government-comparative-information/council-comparative-reports

http://www.dip.qld.gov.au/about-local-government-and-councils/queensland-local-government-comparative-information.html




20

Queensland Government (2014). 2013-14 Report on State Finances. Queensland

Government, Brisbane.

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http://www.rba.gov.au/statistics/tables/index.html#assets_liabilities. Last accessed: 18 March 2015.

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Available from: http://www.rba.gov.au/statistics/tables/index.html#assets_liabilities. Last accessed: 18 March 2015.

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accessed: 18 March 2015.

Roper Gulf Regional Council (2014). Roper Gulf Regional Council Annual Report 2013/14. Available from: http://ropergulf.nt.gov.au/plans-report/. Last accessed: 15 May, 2015.

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4. Tasmanian Audit Office. Available from: http://www.audit.tas.gov.au/publications/financial-audit-reports/. Last accessed: 14 May, 2015.

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Tasmanian Government, Hobart.

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accessed: 15 May, 2015.

Victoria Daly Regional Council (2014). Victoria Daly Regional Council Annual Report 2013/14. Available from: http://www.victoriadaly.nt.gov.au/governance/shire-plan. Last accessed: 15 May, 2015.

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21

Appendix A: Definition of the Property Industry

The information contained in this report is obtained from published data produced by the Australian Bureau of Statistics (ABS) as well as other data sources as relevant. The ABS

uses the Australian and New Zealand Standard Industrial Classification (ANZSIC) in the collection and publication of statistics. The 2006 ANZSIC (ABS, 2008) has been used in this report.

The property industry as defined in this report consists of the following industries.

Construction

Class 3011 – House Construction

This class consists of units mainly engaged in the construction of houses (except semi-detached houses) or in carrying out alterations, additions or renovations to houses, or in organising or managing these activities.

Not included are units mainly engaging in:

Off-site production of prefabricated buildings or building components are included in

the appropriate classes of Group 222 Structural Metal Product Manufacturing

Providing special trade repair services such as electrical or plumbing repairs are included in the appropriate classes of Group 323 Building Installation Services

Providing architectural or building consultancy services are included in the appropriate classes of Group 692 Architectural, Engineering and Technical Services.

Class 3019 – Other Residential Building Construction

This class consists of units mainly engaged in the construction of residential buildings

(except freestanding houses) or in carrying out alterations, additions or renovations to such buildings or in organising or managing these activities.


Off-site production of prefabricated buildings or building components are included in the appropriate classes of Group 222 Structural Metal Product Manufacturing

The construction of hotels, hostels, hospitals and other public buildings are included in

Class 3020 Non-Residential Building Construction



Class 3020 – Non-Residential Building Construction

This class consists of units mainly engaged in the construction of non-residential buildings

such as hotels, motels, hostels, hospitals, prisons or other buildings, in carrying out alterations, additions or renovation to such buildings, or in organising or managing these activities.


Off-site production of prefabricated metal buildings or metal building components are included in the appropriate classes of Group 222 Structural Metal Product Manufacturing




22

Class 3211 – Land Development and Subdivision

This class consists of units primarily engaged in subdividing land into lots and servicing land (such as excavation work for the installation of roads and utility lines), for subsequent sale.


Constructing buildings on lots they subdivide or develop are included in the appropriate classes of Subdivision 30 Building Construction

Construction of roads on a subcontract basis for land subdividers are included in Class 3101 Road and Bridge Construction

Legal subdivision of land without land preparation are included elsewhere in the classification system based on the primary activity of the unit.

Class 3212 – Site Preparation Services

This class consists of units mainly engaged in earthmoving work such as levelling of construction sites, excavation of foundations, trench digging or removal of overburden.


Quarrying sand or gravel are included in Class 0911 Gravel and Sand Quarrying

Quarrying earth soil or filling are included in Class 0919 Other Construction Material

Mining

Selling sand, gravel or other quarried construction materials are included in Class 3339 Other Hardware Goods Wholesaling.

Class 3221 – Concreting Services

This class consists of units mainly engaged in concreting work, concrete pouring or other concrete work on construction projects.


Terrazzo laying are included in Class 3243 Tiling and Carpeting Services

Brick paving are included in Class 3291 Landscape Construction Services.

Class 3222 – Bricklaying Services

This class consists of units mainly engaged in bricklaying or concrete block laying.


Units mainly engaged in brick paving are included in Class 3291 Landscape Construction Services

Class 3223 – Roofing Services

This class consists of units mainly engaged in roof tiling, metal roof fixing and the application of roof coatings.


The installation of insulation materials are included in Class 3239 Other Building Installation Services

The installation of roof guttering are included in Class 3231 Plumbing Services

The installation of wooden roof trusses are included in Class 3242 Carpentry Services.

Class 3224 – Structural Steel Erection Services

This class consists of units mainly engaged in the erection (including on-site fabrication) of metal silos, storage tanks or structural steel components for buildings or other structures such as bridges, overhead cranes or electricity transmission towers.



23

The construction of buildings (which incorporate structural steel components) are

included in the appropriate classes of Subdivision 30 Building Construction

The construction of complete structures such as bridges, towers or oil refinery plants (which incorporate structural steel components) are included in the appropriate classes

of Subdivision 31 Heavy and Civil Engineering Construction.

Class 3231 – Plumbing Services

This class consists of units mainly engaged in plumbing or drainage (except sewerage or stormwater drainage systems construction). Also included are units mainly engaged in septic tank and other plumbing installation and repair.


The construction of sewerage or stormwater drainage systems are included in Class

3109 Other Heavy and Civil Engineering Construction

Installation of fire sprinkler systems are included in Class 3234 Fire and Security Alarm

Installation Services

Repairing gas appliances are included in Class 9421 Domestic Appliance Repair and Maintenance

Pumping or cleaning septic tanks are included in Class 2921 Waste Treatment and

Disposal Services.

Class 3232 – Electrical Services

This class consists of units mainly engaged in the installation of electrical wiring or fittings in buildings or other construction projects. Electrical work arising from the installation of appliances is included in this class.


Repairing electricity transmission or distribution lines are included in Class 3109 Other

Heavy and Civil Engineering Construction

Installing fire and/or security systems are included in Class 3234 Fire and Security Alarm Installation Services

Repairing electrical appliances are included in Class 9421 Domestic Appliance Repair and Maintenance.

Class 3233 – Air Conditioning and Heating Services

This class consists of units mainly engaged in the installation of heating equipment,

refrigeration equipment, air conditioning equipment, or in the installation of air conditioning duct work.


Manufacturing air conditioning duct work are included in Class 2240 Sheet Metal Product Manufacturing (except Metal Structural and Container Products)

The on-site assembly of industrial furnaces from prefabricated components are included

in Class 3109 Other Heavy and Civil Engineering Construction

Installing motor vehicle air conditioning equipment are included in Class 9411 Automotive Electrical Services.

Class 3234 – Fire and Security Alarm Installation Services

This class consists of units mainly engaged in the installation of fire protection, detection and control systems, and in installing security systems.


Units mainly engaged in the installation and monitoring of security systems are included in Class 7712 Investigation and Security Services.


24

Class 3239 – Other Building Installation Services

This class consists of units mainly engaged in building installation services not elsewhere classified.

Class 3241 – Plastering and Ceiling Services

This class consists of units mainly engaged in plastering, plaster fixing or finishing.

Class 3242 – Carpentry Services

This class consists of units mainly engaged in carpentry work or the fixing of wooden formwork on construction projects.


Units mainly engaged in manufacturing prefabricated, wooden built-in cabinets, cupboards or shop fronts and their installation (except on-site fabrication) are included

in Class 1492 Wooden Structural Fitting and Component Manufacturing.

Class 3243 – Tiling and Carpeting Services

This class consists of units mainly engaged in laying carpet, or setting wall or floor tiles


Installing roofing tiles are included in Class 3223 Roofing Services

Installing wooden flooring are included in Class 3242 Carpentry Services

Class 3244 – Painting and Decorating Services

This class consists of units mainly engaged in painting, decorating or wallpapering houses or other structures.


Units mainly engaged in roof painting, spraying or coating are included in Class 3223

Roofing Services.

Class 3245 – Glazing Services

This class consists of units mainly engaged in glazing, including glass installation and repair work.


Units mainly engaged in the fabrication of aluminium and timber framed glass products are included in the appropriate classes of Division C Manufacturing.

Class 3291 – Landscape Construction Services

This class consists of units mainly engaged in constructing landscapes, including

landforming and the provision of retaining walls and paths, decks, fences, ponds and similar structures. Units also engaged in garden planting or installation of sprinkler/drainage

systems in conjunction with constructing landscapes are included.


Landscape consultancy and design services are included in Class 6921 Architectural Services

Garden maintenance activities and maintenance of lawns are included in Class 7313 Gardening Services.

Class 3292 – Hire of Construction Machinery with Operator

This class consists of units mainly engaged in hiring construction machinery, plant or equipment with operator(s).



25

Units mainly engaged in hiring earthmoving plant and equipment with operator are

included in Class 3212 Site Preparation Services.

Class 3299 – Other Construction Services – not elsewhere classified

This class consists of units mainly engaged in construction services not elsewhere

classified.

Rental, Hiring and Real Estate Services

Class 6712 – Non-Residential Property Operators

This class consists of units mainly engaged in renting or leasing non-residential properties.


Units mainly engaged in land development and subdivision are included in Class 3211 Land Development and Subdivision.

Class 6720 – Real Estate Services

This class consists of units mainly engaged in valuing, purchasing, selling (by auction or private treaty), managing or renting real estate for others.


Providing title transfer or conveyancing service are included in Class 6931 Legal Services

Providing engineering or structural property and house inspections are included in Class 6923 Engineering Design and Engineering Consulting Services.

Financial and Insurance Services

Class 6221 – Banking (Partial Only)

This class consists of units mainly engaged in operating banks (except merchant banks). Banks incur liabilities by accepting demand and other deposits and make commercial, industrial and consumer loans.


Performing central banking functions are included in Class 6210 Central Banking

Operating building societies are included in Class 6222 Building Society Operation

Operating credit unions are included in Class 6223 Credit Union Operation

Operating merchant banks are included in Class 6229 Other Depository Financial Intermediation.

Not all of this class has been allocated to the property industry. The allocation of this class to the property industry is based on the share of loans and advances to the

residential sector in the banks’ total assets. Although part of loans to the commercial sector

is property-related, data limitations regarding loans to the commercial sector precluded its inclusion.

Class 6222 – Building Society Operation

This class consists of units mainly engaged in operating building societies which accept deposits and provide specialised financing for home building or purchasing purposes.


Operating development, savings and trading banks are included in Class 6221 Banking

Operating credit unions are included in Class 6223 Credit Union Operation.


26

Class 6223 – Credit Union Operation (Partial Only)

This class consists of units mainly engaged in operating credit unions which accept members’ share deposits and provide loans to their members for various purposes.


Operating development, savings and trading banks are included in Class 6221 Banking

Operating building societies are included in Class 6222 Building Society Operation.

Not all of this class has been allocated to the property industry. The allocation of this class to the property industry is based on the share of loans and advances to the residential sector in credit union’s total assets. Although part of loans to the commercial sector is property-related, data limitations regarding loans to the commercial sector precluded its inclusion.

Class 6322 – General Insurance (Partial Only)

This class consists of units mainly engaged in providing general insurance cover (except life and health insurance).


Providing insurance broking services are included in Class 6420 Auxiliary Insurance Services

Providing insurance cover for hospital, medical, dental, pharmaceutical or funeral expenses or costs are included in Class 6321 Health Insurance

Providing life insurance and life reinsurance cover are included in Class 6310 Life Insurance.

Not all of this class has been allocated to the property industry. The allocation of this class to the property industry is based on the share of property industry assets in the total assets of general insurance.

Class 6330 – Superannuation Funds (Partial Only)

This class consists of units of separately constituted funds mainly engaged in providing retirement benefits.


Investing money on their own account in predominantly financial assets (e.g. shares, bonds, bills etc, including mortgages) are included in Class 6240 Financial Asset Investing

Managing or in carrying out the operations of separately constituted superannuation funds on a commission or fee basis are included in Class 6419 Other Auxiliary Finance and Investment Services.

Not all of this class has been allocated to the property industry. The allocation of this class to the property industry is based on the share of land and buildings in superannuation total investment. Although part of equities and units in trusts is property-

related, data limitations regarding loans to the commercial sector precluded its inclusion.

Professional, Scientific and Technical Services

Class 6921 – Architectural Services

This class consists of units mainly engaged in providing architectural services such as

planning and designing buildings and structures; or planning and designing the development of land. Units apply knowledge of design, construction procedures, zoning regulations, location and land use, building codes and building materials.


Units mainly engaged in managing or organising construction projects as the prime contractor are included in the appropriate classes of Division E Construction.


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Class 6922 – Surveying and Mapping Services

This class consists of units mainly engaged in providing surveying and mapping services (including exploration surveying services on contract). Units in this class use a variety of surveying techniques depending on the purpose of the survey, including magnetic surveys,

gravity surveys, seismic surveys or electrical and electromagnetic surveys. These services may also include surveying and mapping of areas above or below the surface of the earth.


Units mainly engaged in exploring for petroleum or minerals are included in the appropriate classes of Group 101 Exploration.

Class 6923 – Engineering Design and Engineering Consulting Services

This class consists of units mainly engaged in providing engineering consulting services.

These units are primarily involved in applying physical laws and principles of engineering in the design, development and utilisation of machines, materials, instruments, structures,

processes and systems. Units provide advice, prepare feasibility studies, prepare preliminary and final plans and designs, provide technical services during the construction or installation phase, inspect and evaluate engineering projects, and related services.


The physical or chemical transformation of materials into new products are included in the appropriate classes of Division C Manufacturing

Managing or organising construction projects as the prime contractor are included in the appropriate classes of Division E Construction

Undertaking scientific research are included in Class 6910 Scientific Research Services

Providing scientific or technical laboratory or testing services are included in Class 6925 Scientific Testing and Analysis Services.


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Appendix B: Significance Assessment Methodology

The economic significance estimates in this report are produced using Input-Output transaction tables and models developed by AEC for the purposes of this assessment,

combined with data from a range of sources, including State and National Accounts data and various industry specific data from the ABS. The Input-Output models were used to produce estimates of the direct and flow-on contribution of the property industry to the Australian, State/ Territory and Federal Electorate economies in terms of output, gross value added activity, employment and income (i.e., wages and salaries).

Overview of IO Modelling

Input-Output (IO) analysis demonstrates inter-industry relationships within an economy,

depicting how the output of one industry is purchased by other industries, households, the government and external parties (i.e. exports), as well as expenditure on other factors of production such as labour, capital and imports. IO analysis shows the direct and indirect (flow-on) effects of one industry on other industries and the general economy. As such, IO

modelling can be used to demonstrate the economic contribution of an industry on the overall economy and how much the economy relies on this industry or to examine a change in final demand of any one industry and the resultant change in activity of its supporting industries.

The economic contribution can be traced through the economic system via:

Direct impacts, which are the first round of effects from direct operational expenditure on goods and services.

Flow-on impacts, which comprise the second and subsequent round effects of

increased purchases by suppliers in response to increased sales. Flow-on impacts can be disaggregated to:

o Industry Support Effects (Type I), which represent the production induced

support activity as a result of additional expenditure by the industry experiencing the stimulus on goods and services in the intermediate usage quadrant, and subsequent round effects of increased purchases by suppliers in response to

increased sales.

o Household Consumption Effects (Type II), which represent the consumption induced activity from additional household expenditure on goods and services resulting from additional wages and salaries being paid within the economic system.

These effects can be identified through the examination of five types of impacts:

Output: Refers to the gross value of goods and services transacted, including the costs of goods and services used in the development and provision of the final product.

Output typically overstates the economic impacts as it counts all goods and services used in one stage of production as an input to later stages of production, hence counting their contribution more than once.

Value added: Refers to the value of output after deducting the cost of goods and

services inputs in the production process. Value added defines the true net contribution and is subsequently the preferred measure for assessing economic impacts.

Gross product: Gross product (or more commonly known as Gross Domestic/ State/

Regional Product) is a similar measure to value added, but also includes taxes less subsidies on the final goods and services produced. Gross product is the most commonly used headline measure of economic activity.

Income: Measures the level of wages and salaries paid to employees of the industry under consideration and to other industries through flow-on activity.

Employment: Refers to the part-time and full-time employment positions generated

by the economic shock, both directly and indirectly through flow-on activity, and is expressed in terms of full time equivalent (FTE) positions.


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IO Assumptions

The key assumptions and limitations of Input-Output analysis include:

The inputs purchased by each industry are a function only of the level of output of that

industry. The input function is generally assumed linear and homogenous of degree one (which implies constant returns to scale and no substitution between inputs).

Each commodity (or group of commodities) is supplied by a single industry or sector of production. This implies that there is only one method used to produce each commodity and that each industry or sector has only one primary output.

The total effect of carrying on several types of production is the sum of the separate effects. This rules out external economies and diseconomies and is known simply as the additivity assumption. This generally does not reflect real world operations.

The system is in equilibrium at given prices. This is not the case in an economic system subject to external influences.

In the static input-output model, there are no capacity constraints so that the supply of each good is perfectly elastic. Each industry can supply whatever quantity is

demanded of it and there are no capital restrictions. This assumption would come into play depending upon the magnitude of the changes in quantities demanded.

Despite these limitations, IO techniques provide a solid approach for taking account of the inter-relationships between the various sectors of the economy in the short-term and provide useful insight into the quantum of final demand for goods and services, both directly and indirectly, generated by the property industry.

Significance Assessment Versus Impact Assessment

The framework employed in significance assessment differs from that employed in economic impact analysis in that economic significance assessment primarily seeks the contribution of an existing industry as opposed to the impact of a “stimulus” in a particular

industry or in several industries (West, 1993). The usual approach of comparing what the

economy would be with and without the industries whose contributions are to be assessed does not work because the inter-relationship between industries means whether or not the industries to be assessed exist, there will still be demand for their outputs (e.g., a complete vehicle needs tyres so that whether or not the entire tyre manufacturer is closed down, the car manufacturer’s demand for tyres still exists). From a modelling stance, this problem is solved by assuming that demand for outputs of the industries to be assessed will instead

be met by imports.

Model Development

The models used in this assessment are derived from sub-regional transaction tables developed specifically for this project. The process of developing a sub-regional transaction

table involves developing regional estimates of gross production and purchasing patterns based on a parent table, in this case the 2009-10 Australian transaction table (ABS, 2013a).

Estimates of gross production (by industry) in the study areas (Australia, each State/

Territory and each Federal Electorate) were developed based on the percent contribution to employment (by place of work) of the study areas to the Australian economy (ABS, 2012), and applied to Australian gross output identified in the 2009-10 Australian table.

Industry purchasing patterns within study areas were estimated using a process of cross industry location quotients and demand-supply pool production functions as described in West (1993).

In addition to the general limitations of Input-Output analysis, there are two other factors that need to be considered when assessing the outputs of sub-regional transaction table developed using this approach, namely:

It is assumed the sub-region has similar technology and demand/ consumption

patterns as the parent (Australia) table (e.g. the ratio of employee compensation to employees for each industry is held constant).


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Intra-regional cross-industry purchasing patterns for a given industry vary from the

national tables depending on the prominence of the industry in the regional economy compared to its input industries. Typically, industries that are more prominent in the region (compared to the national economy) will be assessed as purchasing a higher

proportion of imports from input industries than at the national level, and vice versa.

Input-Output tables utilise an aggregated system of industry classifications based on the ANZSIC system. In total, the 2009-10 Input-Output tables produced by the ABS (2013a) define 114 distinct industries, some of which are aggregates of the industry classes outlined in Appendix A. Some of the property related industries in the Input-Output tables consist of both property and non-property related sub-sectors, and it is necessary to separate the property component from the non-property component in the related Input-Output

industry.

The industries defined in the Input-Output tables that are included in the property industry are as follows:

Residential Building Construction (all).

Non-Residential Building Construction (all).

Construction Services (all).

Finance (partially).

Insurance and Superannuation Funds (partially).

Non-Residential Property Operators and Real Estate Services (all).

Professional, Scientific and Technical Services (partially).

The separation of property from non-property related operation for those Input-Output industries listed as “partially” included in the property industry is based on either:

1. The share of total income (revenue) of the sub-sectors listed in Appendix A in the

total income (revenue) of all sub-sectors grouped under the same Input-Output industry classification code5; or

2. The share of asset (loans and advances to as well as investment in) in the property industry in the total assets of all sub-sectors grouped under the same Input-Output industry classification code6.

These shares are then utilised to expand the original Input-Output table to separate these industries into their property related and non-property related components to facilitate the

economic significance assessment of the property industry in isolation. Once the transaction table is complete, the significance model is developed through the development of coefficients as per West (1993).

Significance Assessment Approach

Contribution to Queensland and its Regions

The significance assessment is initially undertaken for the 2009-10 financial year to be consistent with the Input-Output transaction tables utilised. These estimates are then

“rebased” to 2013-14 values using:

Data from the National and State Accounts (ABS, 2014a) to identify growth between 2009-10 and 2013-14 in gross product and gross value add for each industry of the

economy.

Data on the value of building work done (ABS, 2015a) and the value of engineering construction work done (ABS, 2015b) to estimate the proportion of overall construction sector growth attributable to building construction versus engineering.

5 The “Professional, Scientific and Technical Services” Input-Output sector uses this approach based on data from

the ABS (2010b and c).

6 The “Finance” and “Insurance and Superannuation Funds” sectors use this approach based on data from the RBA

(2012a, b, c and d) and APRA (2009 to 2012).


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Data on labour productivity increases (ABS, 2014b) to identify changes in productivity

per employee for each industry between 2009-10 and 2013-14. These estimates were then applied to 2013-14 production (estimated above) to identify 2013-14 employment for each industry.

Estimates of incomes in 2013-14 were obtained assuming that the relationship between income and output in 2009-10 remains constant, which is consistent with the stylised fact of cost shares of output being close to constant over the long-term.

Time series estimates for Australia (and each State/ Territory) were also developed. The approach used for each year followed the same process as for 2013-14.

Estimates of the flow-on effects of the property industry in 2013-14 are obtained assuming constant proportion between individual industries’ flow-on effects and the direct

(total) effects (output, GVA, income and employment) in 2009-10. Since the relationship between industries is likely to have changed over this period, the estimates produced are indicative only. In the absence of a more recent Input-Output transaction table, which forms the basis to quantify the inter-relationships between industries, the estimates

produced represent the flow-on effects of the property industry assuming no significant structural changes in the relationship between industries.

Regional allocation of the direct and flow-on effects is performed in three steps:

1. Individual Input-Output transaction tables and significance assessment models were developed for each State/ Territory and Federal Electorate (as described in the “Model Development” section of this Appendix). This approach produces regional estimates of direct and flow-on property industry contributions assuming each region operates in isolation, and therefore does not account for any inter-regional flow-on relationships.

2. To account for inter-regional flows of demand for goods and services between States/

Territories, the difference between the total Australian flow-on effects and the sum of flow-on effects for each State/ Territory by industry (the “inter-regional” flow-on effects) has been redistributed to each State/ Territory based on the proportion that each State/ Territory contributes to total Australian activity in each industry (i.e., if New South Wales accounts for 50% of total Australian output in retail trade, then 50%

of the inter-regional retail trade flow-on effects have been allocated to New South Wales).

3. To allocate to each Federal Electorate the same approach is used as for States/ Territories in redistributing inter-regional flows, but uses the proportional contribution of each Federal Electorate to the State/ Territory in which it is located to allocate inter-regional flows within the State/ Territory rather than Australia.

Contribution to Australia by Property Sub-Sector

The direct contribution of the property industry to the Australian economy has also been

disaggregated across Residential and Non-Residential property sub-sectors. The direct contribution of each property sub-sector has been estimated based on allocation of each of the Input-Output industry contributions to the sub-sectors. Allocations have been based on:

Direct “Residential Building Construction” effects is entirely allocated to the Residential

property sub-sector.

Direct “Non-Residential Building Construction” effects is entirely allocated to the Non-

Residential property sub-sector.

All other property related Input-Output industry effects are allocated based on the proportional split of value of total building works commenced for each sub-sector in the corresponding year of analysis (ABS, 2015a).


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Appendix C: Direct Contribution to Australia by Industry

The following table presents a comparison of the direct economic contribution of the property industry to the Australian economy compared to other industries.

Table C.1. Comparison of Direct Contribution of the Property Industry and Other Industries to the Australian Economy, 2013-14

Industry Gross Product ($B)

Incomes ($B)

Employment (‘000 FTE)

Property industry $182.5 $72.2 1,166

Agriculture, forestry and fishing $39.8 $7.9 314

Mining $140.9 $23.3 249

Manufacturing $108.0 $49.3 750

Electricity, gas, water and waste services $46.0 $13.4 178

Construction * $39.2 $17.7 99

Wholesale trade $66.6 $34.7 345

Retail trade $75.3 $41.5 899

Accommodation and food services $38.6 $20.9 542

Transport, postal and warehousing $80.2 $34.1 508

Information media and telecommunications $46.7 $12.8 163

Financial and insurance services * $110.9 $48.3 261

Rental, hiring and real estate services * $9.9 $4.4 45

Professional, scientific and technical services * $85.1 $44.7 605

Administrative and support services $48.3 $32.8 372

Public administration and safety $89.1 $58.8 828

Education and training $78.8 $56.5 805

Health care and social assistance $107.1 $73.8 1,181

Arts and recreation services $13.6 $6.5 147

Other services $29.8 $16.8 410

Ownership of dwellings $147.1 $0.0 0

Total $1,583.6 $670.7 9,867

Notes: Totals may not sum due to rounding. Sources: AEC, ABS (2015a, b and c; 2014a and b; 2013a and b), APRA (2013), RBA (2015a and b; 2013a and b).


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Appendix D: Allocation of Taxes

Australian Taxes

Australian Government taxation revenues have been allocated to property related activities

based on the allocation approach outlined in Table D.1. All taxation data except capital gains tax was sourced from the Australian Government (2014). Capital gains tax components of personal income tax, company income tax and income tax paid by superannuation funds was estimated as follows:

Historic data of capital gains tax paid by individuals, companies and super funds between 2008-09 and 2012-13 was collated from the Australian Taxation Office (ATO,

2015a).

The average contribution of capital gains tax paid by individuals, companies and super funds to total personal income tax, company income tax and income tax paid by super

funds (respectively) was estimated by dividing the five year ATO data by the total personal income tax, company income tax and income tax paid by super funds revenue received by the Australian Government between 2008-09 and 2012-13 (ABS, 2014c).

The average percent contribution of capital gains tax between 2008-09 and 2012-13

was applied to 2013-14 estimates of total personal income tax, company income tax and income tax paid by super funds revenue received by the Australian Government (Australian Government, 2014).

Table D.1. Allocation of 2013-14 Australian Government Taxes to Property Related Activities

Tax Item Total Tax ($M)

Method of Allocation

Income Taxes Levied on Individuals

Personal Income Tax $166,479

Capital Gains Tax Component $4,066 Property related activity

Tax on Other Income Component $162,413 Not allocated to property (a)

Fringe Benefits Tax $4,285 Not property related

Total Income Taxes Levied on Individuals $170,764

Income Taxes Levied on Enterprises

Company Income Tax $70,549

Capital Gains Tax Component $2,529 Property related activity

Tax on Other Income Component $68,020 By industry based on contribution to GDP – Incomes (a)

Income Tax Paid by Superannuation Funds $6,147

Capital Gains Tax Component $218 Property related activity

Tax on Other Income Component $5,929 Not allocated to property (a)

Total Income Taxes Levied on Enterprises $76,696

Income Levied on Non-Residents $1,436 Not allocated to property (b)

Government Borrowing Guarantee Levy $10 Not property related

Superannuation Guarantee Charge $482 By industry based on contribution to Incomes

Taxes on the Provision of Goods Services

Goods and Services Tax (GST) $55,517 By industry based on contribution to GDP

General Taxes (Sales Taxes) $1,302 Not property related

Excises and Levies $26,272 Not property related

Taxes on International Trade $9,282 Not property related

Other Taxes on Provision of Goods and Services $7,447 Not property related

Total Taxes on Provision of Goods/ Services $99,820

Total Taxation Revenue $349,208

Notes: (a) Personal income tax, company tax and income tax paid by superannuation funds includes potential income streams from property related activities (e.g. rents) other than capital gains. However, the Australian Government does not release any data to enable a breakdown of

these taxes by property related components and has therefore been excluded from this assessment. (b) This includes income and withholding tax on some property related activities, including sale of property and incomes earned from property (e.g., rents). However, the Australian Government does not release any data to enable a breakdown of income tax levied on non-residents by property related component and has

therefore been excluded from this assessment. Sources: AEC, ABS (2014c), Australian Government (2014), ATO (2015a; 2015b).


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Australian Government tax revenues have been allocated to each State/ Territory using

the following approach:

Capital gains tax on individuals was allocated based on the 2012-13 proportional split by State/ Territory outlined by the ATO (2015b).

Capital gains tax on companies and super funds was allocated based on the State/ Territory contribution to total property related gross product in 2013-14.

Company income tax (excluding capital gains tax) was allocated based on the State/ Territory contribution to total property related gross product less total property related incomes paid in 2013-14.

GST was allocated based on the State/ Territory contribution to total property related gross product in 2013-14.

Other property related taxes (which consist of super guarantee charges) were allocated based on the State/ Territory contribution to total property related incomes paid in 2013-14.

A summary of Australian Government taxes based on the above methodology is outlined in Table D.2.

Table D.2. Australian Government Property Related Taxes, 2013-14

State Capital Gains Tax

($M) (a)

Company Income Tax (excl. CGT)

($M) (b)

GST ($M) Other Property Related

Taxes ($M)

Total ($M) (c)

New South Wales $2,074.7 $2,543.0 $1,909.6 $14.6 $6,541.9

Victoria $1,709.1 $1,810.0 $1,462.6 $12.5 $4,994.3

Queensland $1,192.4 $1,425.7 $1,185.8 $10.6 $3,814.6

South Australia $373.9 $454.9 $368.6 $3.2 $1,200.6

Western Australia $1,141.7 $1,493.8 $1,114.1 $8.4 $3,758.0

Tasmania $70.3 $81.0 $68.6 $0.6 $220.6

Northern Territory $122.2 $197.2 $137.6 $0.9 $457.9

Australian Capital Territory $128.2 $217.6 $152.5 $1.0 $499.3

Australia $6,812.6 $8,223.3 $6,399.4 $51.9 $21,487.1

Notes: (a) Includes Capital Gains Tax paid by individuals, companies and superannuation funds. (b) CGT = Capital Gains Tax. The Company Income Tax estimates presented are net of the estimated Capital Gains Tax paid by companies. (c) The total Australian Government taxation revenue from property may be understated as it does not include tax on residents or non-residents for some

property related activities such as through rental income. Sources: AEC, ABS (2014c), Australian Government (2014), ATO (2015a; 2015b).

State Taxes

In estimating State government taxes, some tax items in the relevant State’s Budget or Financial Statement papers were grouped, and were split into sub-items based on historic shares (past five years) outlined in the Taxation Revenue, Australia, 2012-13 (ABS, 2014c)

data.

State Government taxation and royalty revenues have been allocated to property related

activities based on the allocation approach outlined in Table D.3.


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Table D.3. Allocation of 2013-14 State/ Territory Taxes to Property Related Activities

Tax Item NSW ($M)

VIC ($M)

QLD ($M)

SA ($M)

WA ($M)

TAS ($M)

NT ($M)

ACT ($M)

Method of Allocation

Payroll Tax $7,083 $4,949 $3,914 $1,089 $3,617 $300 $250 $330 Across industry based on contribution to incomes

Property Taxes

Transfer $5,842 $4,168 $2,403 $801 $1,976 $154 $143 $226 Property related activity

Land Tax $2,335 $1,659 $986 $566 $662 $86 $0 $79 Property related activity

Other Property Related Taxes $950 $959 $391 $141 $464 $53 $0 $35 Property related activity

Total Property Related Taxes $9,127 $6,785 $3,780 $1,508 $3,102 $293 $143 $339

Gambling Taxes and Levies $1,910 $1,672 $1,044 $388 $309 $94 $60 $52 Not property related

Taxes on Financial Institutions (a) $1,992 $1,071 $847 $463 $619 $80 $46 $76 Not property related

Guarantee Fees $638 $115 $230 $57 $56 $31 $0 $0 Not property related

Motor Vehicle Taxes

Stamp Duty on Vehicle Registrations $698 $663 $486 $167 $396 $62 $30 $26 Not property related

Other Motor Vehicle Taxes $2,166 $1,233 $1,543 $400 $725 $96 $38 $108 Not property related

Total Motor Vehicle Taxes $2,864 $1,896 $2,029 $567 $1,121 $158 $67 $134

Other Taxes $681 $413 $0 $45 $0 $0 $0 $23 Not property related

Royalties from Mining $1,338 $58 $2,378 $291 $5,911 $36 $154 $0 Not property related

Total Taxation and Royalty Revenue $25,633 $16,959 $14,222 $4,408 $14,735 $992 $721 $954

Note: NT and ACT governments also collect municipal rates revenues. (a) Includes insurance. Sources: AEC, ABS (2014c), Australian Government (2014), ACT Government (2014), NSW Government (2014), NT Government (2014), Queensland Government (2014), SA Government (2014), Tasmanian Government

(2014), Victorian Government (2014), WA Government (2014).


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A summary of State Government taxes based on the above methodology is outlined in

Table D.4.

Table D.4. State Government Property Related Taxes, 2013-14

State Payroll Tax ($M)

Transfer/ Stamp

Duties ($M)

Land Tax ($M)

Other Property Related Taxes

($M)

Total ($M)

New South Wales $685.0 $5,841.6 $2,335.0 $949.9 $9,811.5

Victoria $524.6 $4,167.5 $1,658.7 $958.6 $7,309.4

Queensland $425.0 $2,403.0 $986.0 $391.0 $4,205.0

South Australia $107.1 $801.3 $566.0 $141.0 $1,615.4

Western Australia $522.0 $1,976.2 $662.0 $464.0 $3,624.2

Tasmania $20.5 $154.0 $86.0 $53.0 $313.5

Northern Territory $46.0 $142.8 $0.0 $0.0 $188.7

Australian Capital Territory $31.7 $225.8 $79.0 $34.6 $371.1

Australia $2,361.9 $15,712.1 $6,372.7 $2,992.1 $27,438.8

Sources: AEC, ABS (2014c), Australian Government (2014), ACT Government (2014), NSW Government (2014), NT Government

(2014), Queensland Government (2014), SA Government (2014), Tasmanian Government (2014), Victorian Government (2014), WA Government (2014).

Local Government Rates, Fees and Charges

Local government rates, fees and charges data for 2013-14 was collated for the States/ Territories of Victoria (MAV, 2014), Queensland (Queensland Government, 2015), Tasmania (Tasmanian Audit Office, 2015) and Australian Capital Territory (ACT Government, 2014) from relevant State Authority publications.

Data for 2013-14 for New South Wales was not available from the relevant State Authority. Data for 2012-13 was available (NSW Government, 2014b), and an indicative estimate for 2013-14 was calculated as follows:

Calculate the average rates, fees and charges paid per person in New South Wales

2012-13 (by dividing rates, fees and charges revenues by total population (ABS, 2015d)).

Multiply the estimated average rates, fees and charges paid per person in 2012-13 to the New South Wales population estimate for 2013-14 (ABS, 2015d).

Local government rates, fees and charges data for 2013-14 for the Northern Territory was sourced from relevant annual reports for each Council in the Northern Territory.

Local government rates and charges data was not collated for South Australia and Western Australia, as no single authority publishes this data in these States and budget considerations precluded the collation of this data from individual Councils. An indicative

estimate of the rates, fees and charges revenues for 2013-14 in these States was estimated as follows:

Calculate the average municipal rates paid per person between 2003-04 and 2012-13 (by dividing municipal rates revenues by State (ABS, 2014c) by total population (ABS, 2015d) in each corresponding year).

Calculating the average annual change in municipal rates per person for each State between 2003-04 and 2012-13, to estimate an average municipal rates per person for

each State in 2013-14.

Multiplying the estimated average municipal rates per person for each State in 2013-14 to State population estimates for 2013-14 (ABS, 2015d).

Inflating the 2013-14 municipal rates data to include an indicative estimate of fees and charges revenue by applying the difference between actual 2013-14 data for the States in which data is available and their respective municipal rates estimates from ABS data

(2014c).

All rates, fees and charges revenues are included as property-related revenue to local governments.


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Appendix E: Property Investment through Super Methodology

Total Super Fund Investment

An estimated $1.62 trillion in total assets was held by super funds at the end of the 2012-13 financial year (APRA, 2014). Historic trends between 2003-04 and 2012-13 were used to develop an indicative estimate of $1.78 trillion in assets held through super in 2013-14.

Property Investment

As at the December Quarter 2014, property assets contributed approximately 10.25% of total asset investment for 120 MySuper products (APRA, 2015), with 95.5% of the 120 products having property assets within the portfolio. Assuming this mix is representative

of asset investment across all super funds, it was derived approximately $182 billion of the total $1.78 trillion in super fund investment in 2013-14 is in property assets.

Number of People Investing in Property through Super

The number of people with investment in property through their super was derived based on the number of people with superannuation in Australia (Financial Services Council, unpublished) and applying the 95.5% of funds with property assets within the portfolio.

The number of people with superannuation by State/ Territory was not available, and was derived based on the number of people aged 18 or over in each State/ Territory of Australia (as a representation of the number of people that may be expected to have super) (ABS 2014d; 2015d), as a proportion of total people aged 18 or over in Australia. This percent was then applied to the total number of people with superannuation.


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