Manufacturers Call for Policy Action as Land Tax Costs Escalate

Why It Matters

Escalating land taxes erode manufacturers’ ability to reinvest, jeopardising sector productivity and Australia’s broader economic diversification goals. Policy relief could restore investment confidence and safeguard jobs.

Key Takeaways

• Land tax bills rose average 80% 2024‑2026
• Some manufacturers faced over 200% tax hikes
• SEMMA proposes five‑year land‑tax cap
• Cap linked to capital equipment investment, CPI indexing after 2030

Pulse Analysis

Victoria’s land‑tax regime, traditionally based on land value and size, has become a fiscal pressure point for capital‑intensive manufacturers. Unlike retail or services, factories rely on large parcels of land as production platforms, not speculative assets. The abrupt 80% average increase – and outliers exceeding 200% – forces firms to reallocate cash from expansion projects to tax liabilities, inflating product prices and prompting workforce cuts. This dynamic underscores a mismatch between tax policy design and the operational realities of modern manufacturing.

In response, the South East Melbourne Manufacturers Alliance (SEMMA) is lobbying for a five‑year tax exemption for manufacturers that invest in capital equipment between 2025 and 2030, followed by CPI‑indexed adjustments. The proposal aims to deliver fiscal certainty, encouraging firms to upgrade machinery, adopt automation, and expand apprenticeship programs. Similar targeted relief measures in other Australian states have shown modest boosts to capital spending, suggesting that a well‑crafted cap could stimulate the sector without dramatically eroding state revenue.

The stakes extend beyond individual plants. SEMMA’s Manufacturing BLUEPRINT targets a rise in manufacturing’s contribution to GDP from 5.9% to 10% by 2030, a cornerstone of Australia’s sovereign capability agenda. Persistent tax volatility threatens that ambition by dampening productivity gains and discouraging foreign investment. A predictable, sector‑specific tax framework would not only protect jobs but also align with broader economic policies aimed at diversifying the economy away from commodity dependence. Policymakers therefore face a clear choice: sustain short‑term revenue gains or foster a resilient manufacturing base that fuels long‑term growth.