23 June 2011
Todays decision by the new NSW government to defer a scheduled 50 per cent increase in development levies is welcome, but a permanent solution to the problem is essential, according to the Urban Taskforce.
In the new release areas of Western Sydney, levies will remain close to $12,000 a home, until the end of the year, while in the Lower Hunter levies will stay at around $6,000 to $23,000 a home.
The Urban Taskforces chief executive, Aaron Gadiel, said that the decision followed a Productivity Commission finding earlier this year that NSW has the highest development levies in the country.
The governments decision to defer this very substantial increase scheduled by the former Keneally Government is a positive step, Mr Gadiel said.
The reality is the existing levies are already unaffordable.
Any increase – let alone a 50 per cent increase – will further impact the states housing supply, he said.
NSW already has the lowest rate of housing construction, per capita, in Australia.
If housing construction numbers get any worse it will be a social and economic disaster.
We support this decision by the new government to defer the increase, pending a more thorough review.
We urge the government to complete the review as quickly as possible.
The review will need to consider the disproportionate and distortionary impact development levies have on new home supply.
Every day that passes without the reform of urban infrastructure funding, represents yet more lost opportunities for new homes.
Mr Gadiel noted Planning Minister Brad Hazzards comment today that it may be a matter of use it or lose itŸ over the next six months.
No significant new land release can take place in just six months, he said.
Mr Gadiel said that, using Western Sydney as an example, a developer wishing to act on the basis of the governments announcement would need to, in a six month period:
¢ receive a ministerial declaration that the land is released;
¢ secure a rezoning of the land;
¢ obtain a development approval;
¢ complete servicing (i.e. water, sewerage, roads, electricity and telecommunications); and
¢ apply for a subdivision certificate.
According to the National Housing Supply Council, even in the best of circumstances, this process takes between three and nine years.
Very little new investment is likely to take place on the back of a six month deferral of a levy increase.
Before significant new investment in greenfield housing is unlocked developers will need to see a permanent, robust policy of no or minimal development levies, backed up by solid government infrastructure commitments.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
