2023.10 Cash without the cure

We Live Here
01 Oct 2023 01:38 PM Comment(s)

Victoria’s proposed tax on short stays will generate cash for the state government while ignoring internationally recognised solutions to tackle problems with the industry.

Major cities and jurisdictions including London, Paris, Barcelona and even New South Wales, are all trying to regulate the behemoth industry that is having a devastating effect on housing affordability.

This month New York strengthened its laws to rein in the out-of-control short-stay industry. Under the new rules, rentals less than 30 days are only allowed if the operators are registered with the city. Operators must sign a commitment to being physically present throughout the rental, sharing the home with their guests. Plus, there is a limit of two guests per booking.

Valuable lessons from cities like New York are being disregarded in Victoria, and Melbourne will continue to suffer.

The proposed Victorian tax on short-term rentals will be factored into the accommodation price and the guests will pick up the tab.  Short-stay operators already enjoy the loophole that allows the entire industry to avoid paying virtually any GST, and this new state tax only partly impacts that advantage.

If this tax is the only regulatory policy to be implemented at the state level, short-stay issues will continue unabated. The tax appears to legitimise the industry while leaving it unregulated. The government has missed the opportunity to gather intelligence on operators because the tax will be collected from the platforms like Airbnb, while operators will remain uncounted and unknown, carrying on regardless.

The only beneficiaries of the new tax will be Airbnb and other short-stay platforms; because the policy gives the impression that something is being done. Together, state government and the major short-stay platforms now have a policy outcome that will continue to ensure that Victoria is one of the most heavily saturated short-stay markets in the world.

Where did the short-stay tax idea originate? We know rising interest rates have been eroding the state’s stamp duty bonanza, and the games cancellation costs will be excruciating. Perhaps the state government just needed what the largest platform claims to offer hosts - “an extra bit of income” on the side?

We Live Here has just started liaising again with the government after a two-year hiatus. It is indeed disappointing that the issues we have been raising seem to have been discounted.

Eight years and we’re still waiting

After eight years of inaction the government has announced a policy that will only generate income for the state coffers, without solving systemic short-stay problems.

What else has the government done since 2015? It made one dismal attempt to look like it was taking action on short-stay parties, with a Bill that has had zero effect and, the last time we checked, zero tribunal orders in favour of residents.

Our policy is waiting to be heard and acted upon:

· A statewide registration system for sort-stay operators.

· Allow owners corporations to make rules on short stays.

· An annual day cap.

· Realistic and enforceable penalties.

All these basic requirements are being brushed aside while the government merely imposes a tax that might help balance its books.