Business Daily Media

Our states are crying poor. They wouldn't if they charged for rezoning like the ACT

  • Written by Cameron Murray, Research Fellow - Henry Halloran Trust, University of Sydney

Throughout Australia, when land is rezoned from industrial to high-rise residential, a charge is levied to help fund the required infrastructure.

In NSW it is called an infrastructure contribution[1].

The NSW government is reviewing it[2] in order to cut “red tape[3]” and “fix the uncertainty[4]”.

They are words that ought to set off alarm bells. Queensland tells us how it is likely to play out.

A decade ago Queensland developers complained that a similar system lacked transparency[5] and was not proportional to underlying infrastructure needs[6]. So the Queensland government fixed it by by requiring each council to publish a standard schedule[7] of charges based on estimated infrastructure costs.

Problem solved. Right?

No, as it happens. In 2011 the Queensland Premier suddenly announced[8] a cap on charges. Overnight the system was disbanded and replaced with a fixed charge statewide.

Developers want lower infrastructure charges

The reality was that developers didn’t just want certainty and transparency, and they weren’t particularly keen on proportionality. They wanted lower charges.

In Victoria the property lobby is arguing for lower charges directly[9], without going through the charade about wanting less uncertainty and red tape.

To see the value of lower charges for developers, consider that current contributions in NSW are usually in the range of A$20,000 to A$70,000 per new apartment.

Read more: Four ways we can clean up corruption in land rezoning[10]

If a $50,000 charge was halved, for example, it would create a $2.5 million windfall for the owner of a site who developed 100 apartments. Add that up across all the sites owned by developers and it comes to billions.

Yet they are enriched by rezoning

It’s not as if developers can’t afford what’s charged. The moment their properties are rezoned they make much, much more.

Here’s an example.

A well-situated industrial site in Sydney’s inner west was bought for $8.5 million, rezoned high density residential, then sold again for $48.5 million[11]. The 470% windfall[12] was the result of a government decision: rezoning.

Our states are crying poor. They wouldn't if they charged for rezoning like the ACT The rezoned site of the Lewisham Estates in Sydney’s inner west. Inner West Council[13]

Not only are these windfalls enormous, they can add to the cost of infrastructure.

An industrial site in Altona North in Melbourne was bought by a developer for $8.7 million, rezoned for “comprehensive development” and then compulsorily acquired by the Victorian government for the West Gate Tunnel project for $22.5 million[14].

The Altona North rezoning added $14 million to the cost of the tunnel.

Our states are crying poor. They wouldn't if they charged for rezoning like the ACT Rezoned industrial land in Altona North. The Age[15]

Why not charge for rezoning?

The simplest way to fund council infrastructure would be to remove all fees and charges and sell the property rights granted through rezoning at market prices.

It could raise eight times what infrastructure charges do.

We know it can be done because the Australian Capital Territory has been doing it since 1971, charging 75%[16] of the market price for new property rights granted through rezoning.

Read more: Property developers pay developer charges, that’s why they argue against them[17]

In Sao Paulo, Brazil, the rights to develop to at higher densities have to be bought from the government at auction[18].

Developers won’t like it. Yet it would give them what they say they want, which is certainty. More than anyone else, they are acutely aware of what rezoning does to the value of their properties.

References

  1. ^ infrastructure contribution (www.planning.nsw.gov.au)
  2. ^ reviewing it (productivity.nsw.gov.au)
  3. ^ red tape (www.claytonutz.com)
  4. ^ fix the uncertainty (www.claytonutz.com)
  5. ^ lacked transparency (treasury.gov.au)
  6. ^ not proportional to underlying infrastructure needs (treasury.gov.au)
  7. ^ standard schedule (www.dlgrma.qld.gov.au)
  8. ^ suddenly announced (statements.qld.gov.au)
  9. ^ directly (udiavic.com.au)
  10. ^ Four ways we can clean up corruption in land rezoning (theconversation.com)
  11. ^ $48.5 million (theconversation.com)
  12. ^ 470% windfall (www.propertyobserver.com.au)
  13. ^ Inner West Council (theconversation.com)
  14. ^ $22.5 million (www.theage.com.au)
  15. ^ The Age (www.theage.com.au)
  16. ^ 75% (www.planning.act.gov.au)
  17. ^ Property developers pay developer charges, that’s why they argue against them (theconversation.com)
  18. ^ at auction (www.iadb.org)

Authors: Cameron Murray, Research Fellow - Henry Halloran Trust, University of Sydney

Read more https://theconversation.com/our-states-are-crying-poor-they-wouldnt-if-they-charged-for-rezoning-like-the-act-142838

Business Today

Why A Champagne Hamper Is A Great Corporate Gift

Suppose you’re a business owner looking for the best corporate gift to give your employees or clients. Perhaps, it could be a giveaway during special occasions, such as the company’s anniversary, holidays, or corporate eve...

Why growing small businesses are rejecting traditional loans to stay afloat

Australian small businesses look for alternatives to fund growth A record number of Australian small businesses are ditching traditional bank loans to fund growth and generate cash flow. “Around 75% of businesses who come ...

The most common mistakes active travellers make that put their lives in danger

PIONEERING scale-up Advanced Mobility Analytics Group (AMAG) is calling for the phasing out of historic methods that rely on crash data for managing pedestrian risk on our roads with more powerful, proactive methods enabled by...

6 charts shows key role firearms makers play in America’s gun culture

Sales of handguns have exploded in recent years. AP Photo/Sue OgrockiAmericans have blamed many culprits, from mental illness to inadequate security, for the tragic mass shootings that are occurring with increasing frequency in sc...

3 in 4 fundraisers have experienced sexual harassment on the job – often because of inappropriate behavior from donors

Sexual harassment is a common workplace hazard for nonprofit fundraisers.fizkes/iStock/Getty Images PlusWhile the #MeToo movement that raised public awareness of sexual harassment is making fewer headlines than it did in 2017 and ...

Cathay Pacific 2021 Sustainability Report

New commitments in carbon neutrality and diversity, and supporting the Hong Kong community during the pandemicThe Cathay Pacific Group has released its annual Sustainable Development Report that addresses its commitment and prog...

Business Daily Media Business Development

Why A Champagne Hamper Is A Great Corporate Gift

Suppose you’re a business owner looking for the best corporate gift to give your employees or clients. Perhaps, it could be a giveaway during special occasions, such as the company’s...

Business Daily Media - avatar Business Daily Media

there's a vital way to reduce it that everyone overlooks – raise productivity

Inflation has become one of the great issues of our times. The UK’s is the highest in the G7, weighing in at 9% a year according to the most recent figures on consumer price inflation...

David McMillan, Professor in Finance, University of Stirling - avatar David McMillan, Professor in Finance, University of Stirling

Is it wrong to steal from large corporations? A philosopher debates the ethics

Mike_shots / ShutterstockIf you ask someone whether it’s okay to steal, chances are most people would say no. This absolutist approach – stealing is wrong, no matter what –...

Emma Borg, Director of the Reading Centre for Cognition Research & Professor of Philosophy, University of Reading - avatar Emma Borg, Director of the Reading Centre for Cognition Research & Professor of Philosophy, University of Reading

how a day off work affects the economy

Shutterstock/Ian FrancisThe Queen’s platinum jubilee will be celebrated across the UK with parades, picnics and street parties. But perhaps the most popular event planned to mark her 7...

Edward Thomas Jones, Lecturer in Economics, Bangor University - avatar Edward Thomas Jones, Lecturer in Economics, Bangor University

Why growing small businesses are rejecting traditional loans to stay afloat

Australian small businesses look for alternatives to fund growth A record number of Australian small businesses are ditching traditional bank loans to fund growth and generate cash flow...

Optipay CEO Angus Sedgwick - avatar Optipay CEO Angus Sedgwick

The most common mistakes active travellers make that put their lives in danger

PIONEERING scale-up Advanced Mobility Analytics Group (AMAG) is calling for the phasing out of historic methods that rely on crash data for managing pedestrian risk on our roads with mor...

Simon Washington, AMAG CEO - avatar Simon Washington, AMAG CEO



NewsServices.com

Content & Technology Connecting Global Audiences

More Information - Less Opinion