Mr Abbey said jurisdictions including the ACT were moving away from stamp duty, but a broader political pathway was needed for wider reform.

"There's a strong recognition that land tax is a more effective means of taxing land than stamp duty and that it eliminates a lot of the defects, but the issue that everyone struggles with is how do you make an effective transition?

"One of the ways you could think of making that transition is making it optional.

"Across all the states and territories, you would find politicians in government and opposition who would say moving away from stamp duty and to land tax is what should be done."

The limitations of stamp duty are well known: it is inefficient, volatile to movements in property prices and sales, discourages people from buying homes that suit their needs and reduces business investment.

In its 2014 report on labour mobility, the Productivity Commission said stamp duty stood out as the main transitional impediment for people considering moving.

A switch to land tax would smooth government revenue without changing buying or selling behaviour and would not affect labour mobility or burden frequent movers.

Mr Abbey said land tax would also assist credit-constrained home buyers to enter the market, limiting upfront cost.


"Undoubtedly if it was a political issue, the proponent would be attacked for raising the prospect. Can you ameliorate that political risk by saying no one has to make this change and they have a choice?

"The second question is whether this is something that should be considered through a COAG-type process, where all of the states and territories look to introduce reform within a similar time frame and with the assistance of the Commonwealth so that you lessen the political impact."

Mr Abbey said experts and all sides of politics recognised the current system as flawed but needed to agree on a new model.

"You've just seen in different states the budgetary challenges that the change in the markets has created. Nobody thinks that's good for state governments, to have those circumstances arise.

"Everyone recognises that our cities are becoming physically bigger and the distance people live from work is more and more a significant issue.

"If you look at cities like Sydney, it's now recognised that where you live has a huge impact on your personal economic outcomes and your ability to move from that place to where there are better opportunities," he said.