Renegade Economists Show 359
As broadcast on 3CR Wednesday 24th September.
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This week an insight into the Fisherman’s Bend developments with Rowan Groves (Fisherman’s Bend Network Committee). The Planning Minister commits a planning 101 multi-million dollar mistake but few are aware of the cost.
Ninety per cent of the 250-hectare area falls within the City of Port Phillip, which had drawn up draft design guidelines for development that mandated surpassing the building code in relation to sustainability.
Measures the council proposed include a preference for cogeneration, solar power and grey water recycling; a requirement all developments of more than 20 dwellings to utilise rooftop space for gardens or recreation areas; and a guideline that minimises car park provision to 0.5 spaces per two-bedroom dwelling and generally none for one-bedroom dwellings, while increasing the amount of bicycle parking.
Under the state government’s new Fishermans Bend Urban Redevelopment Authority design guidelines, sustainability aspects beyond the bare minimum required under the Building Code are “encouraged”, rather than required, and the guidelines also clearly state at the outset that “prescriptive” measures will be avoided.
Affordable Housing Targets – Development incentives (DCP exemption) to deliver community diversity.
The state government could be forced to spend up to $340 million buying private land to turn into public parks at vastly inflated prices in light of a major planning blunder in the new inner city suburb of Fishermans Bend.
The Sunday Age can reveal the government’s decision to re-zone 250 hectares of industrial land in Port Melbourne and South Melbourne before creating parks and open spaces has doubled or tripled its value virtually overnight, raising the spectre of a blow-out in costs for taxpayers.
This will cost us $340 million to buy the land at inflated prices. Then the billions of dollars required to build the infrastructure in the area will further add to land values, leaking from the public purse into the deep pockets of the property development industry. For this we will receive some $44m from developer charges. The stamp duty revenues will be considerable but will be passed on to the buyer, in effect exempting those who benefit most from paying much back to the community.
Our guest Rowan Groves stated 10% of the $44m in developer charges will be paid upfront. We will await the Fisherman’s Bend Network Committee Freedom of Information request for more clarity. With total development costs estimated at $738m, the $4.4m won’t pay for much infrastrucure, meaning that budgets for health and education will be squeezed. We do agree there needs to be a fairer method of funding infrastructure. Developer charges are inefficient. It would be far fairer to spread that cost over the 20 year lifecycle of the asset and recoup them with value capture.
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New research released today by the Housing Industry Association (HIA) confirms that
restricting access to negative gearing for residential property would reduce investment in
housing, erode housing affordability and put upward pressure on rents.
This assertion is actually not true. If the abolition of ‘negative gearing’ had led to a ‘landlord’s strike’, as proponents of ‘negative gearing’ repeatedly assert, then rents should have risen everywhere (since ‘negative gearing’ had been available everywhere). In fact, rents (as measured in the consumer price index) only rose rapidly (at double-digit rates) in Sydney and Perth – and that was because in those two cities, rental vacancy rates were unusually low (in Sydney’s case, barely above 1%) before negative gearing was abolished. In other State capitals (where vacancy rates were higher), growth in rentals was either unchanged or, in Melbourne, actually slowed (see Chart 9).