Last week I mentioned the Queensland government’s building revival forum and said I was waiting for some outcomes before passing judgement.
Now I know it is easy to be cynical about this, but in that post I said.
At macrobusiness we have no issue with the industry arguing for more responsive planning and a reduction in developer charges, as this would help to make the supply-side more responsive, thereby improving housing affordability (in the long-run) and reducing the potential for volatile boom/bust cycles.
So I thought I should give at least a little credit to Ms Bligh’s media announcement this morning.
ANNA Bligh has capped infrastructure charges for new developments in a bid to boost housing affordability.
The Premier also hopes the cap, announced this morning at a Building Revival Forum in Brisbane, will help the struggling construction sector. Councils will be limited to a maximum $28,000 charge for homes with three or more bedrooms, a saving for developers of up to $22,000.
One and two-bedroom homes will have a maximum $20,000 charge, a $10,000 saving. Annual increases will be capped to inflation. The charge is used to fund the building of new water, sewerage, stormwater, roads and park infrastructure.
It seems however she may not have actually discussed that announcement with anybody, including the councils, because the response has been… well not good.
The Queensland government’s move to cap infrastructure charges has marred the first day of the post-floods Building Revival Forum in Brisbane.
Premier Anna Bligh announced the government would cap infrastructure charges in a bid to make housing more affordable, in her opening address at the forum this morning.
However the Local Government Association of Queensland is already warning the move could backfire, with the Property Council of Queensland and the Urban Development Institute of Australia slamming the move as a “king hit” to jobs.
The industry pushed for reforms arguing high infrastructure costs are stifling development across southeast Queensland, creating an undersupply of dwellings and driving up house prices.
The Infrastructure Charges Taskforce was set up to examine the current regime, under which local councils charge developers to offset water, road and other infrastructure costs when new dwellings are built.
Under the reforms announced today, standard maximum residential charges will be set at $28,000 for a home with three or bedrooms, and $20,000 for one and two-bedroom dwellings.
Ms Bligh said that was significantly lower than under the current system, with charges as high as $50,000 and $30,000 respectively.
Standard maximum charges for non-residential development will range between $50 and $200 per square metre of gross floor area depending on the development type.
A stormwater charge per square metre will also apply. Developers will also be able to defer paying infrastructure charges until settlement rather than at the planning stage.
Ms Bligh said the reforms ensured developers contributed to infrastructure costs, while making new homes affordable.
“It also gives industry the certainty they need to make investment decisions and that is one of the things we need if we are to see a building revival in Queensland,” she said.
The Property Council of Queensland executive director Kathy MacDermott has slammed the reforms, saying the level of infrastructure charges will lock out investment from Queensland for the next three years.
“On a day when the industry has come together – in good faith – at the Queensland government’s Building Revival Forum to discuss how we can resuscitate the property sector, the Premier has announced infrastructure charges that will trigger a hemorrhaging in job losses in the state’s most important industry,” she said.
“Instead of talking about ‘revival’, Queensland needs to be addressing its economic survival.”
LGAQ acting chief executive Greg Hoffman said rates would likely rise when councils had to borrow more money to cover infrastructure costs.
“The capping of the infrastructure charges in a perverse way will stifle development, not help it,” he told 612 ABC Radio.
“It might look good for a couple of years, but thereafter we’re in serious problems with the capacity of councils to develop land for residential development.”
UDIA chief executive Brian Stewart said infrastructure charges were only a small part of the problem plaguing developers in Queensland.
“This is not going to be the panacea that will suddenly see projects that were unviable become viable,” he told 612 ABC.
He said developers were hindered by an onerous and complex approvals system.
“This isn’t just developers crying into the wind. We have the most complex, the most difficult, the most convoluted planning system in the country and that leads to unaffordability,” he said.
So it would seem that the forum may not be going to plan.
With the Premier making announcements about council regulation changes but not mentioning anything about state government stamp duty it would seem the government isn’t about to give up its cash cow and the building industry is not going to get any new “stimulus”. As the property market continues to roll over in Queensland this could be a very costly political choice for Ms Bligh.