Federal Treasury calls for planning law and development levy reform, no stamp duty and more urban infrastructure

24 September 2010

Federal Treasury has released its advice to government, warning that population growth is inevitable, two-thirds of future growth is destined for our capital cities and that the solution lies in reforming planning laws and development levies, abolishing stamp duty and investing in urban infrastructure. Federal Treasury today published portions of its incoming government brief (referred to as the Red Book) prepared for the returned Labor Government.

The Urban Taskforces chief executive, Aaron Gadiel, said Treasurys assessment of recent national policy issues was refreshing and might bring a touch of realism back to policy debate.


Treasury described population growth as inevitable saying that even if the level of net overseas migration was reduce to a fifth of its 2008-09 level (60,000, compared to 300,000) Australias population by 2050 would still be expected to grow to about 29 million.


Treasury said that given the powerful global forces driving the Australian economy, net immigration figures in excess of that low number are probably inescapable.


Treasury also says that much of the population growth will occur in cities, in line with Australian and worldwide experience over the last century.


Over the next 20 years, around two-thirds of the increase in Australias population is projected to occur in capital cities, Treasury states.


The choices of people and businesses to locate in cities is driven by the productivity growth of urban areas that generates economic opportunity and access to services.


The ability of government to counteract these long-established forces through regional policy would appear limited.


Historical experience shows regional settlement policies are expensive and ineffective, and result in an inefficient allocation of resources.


Treasury says that a population strategy must be about investing in the right kinds of infrastructure and using existing infrastructure more efficiently.


Treasury explains that urban problems such as congestion result from fractured and ineffective governance arrangements a clear reflection on the multiplicity of local governments covering most major cities and the lack of coherent state government direction.


To get cities right, existing impediments to the implementation of city strategic plans must be addressed, Treasury says.


Governments must ensure better integration across relevant agencies and functions, with current failures in these areas imposing significant costs, delays and risk on aspiring home owners and undermining urban infill targets.


Additional priorities include the improve prioritisation, provision and financing of urban infrastructure and, in the case of larger cities, better provision of public transport, particularly along strategic corridors.


According to Treasury the Australian Government could contribute and expedite reform through developing a National Urban Policy Reform Agenda focusing on reforming zoning laws, development approvals processes, strata title laws and development levies.


Treasury also flags that the abolition of stamp duty on housing and commercial property will help ease urban pressures.


Mr Gadiel said that Treasurys assessment of the situation was a welcome dose of rationality.


The challenges our cities face are not insoluble and nor do they require an end to urban growth, Mr Gadiel said.


Treasury clearly understands the challenges Australias cities face and is armed with a reform agenda.


Now is the time for the Federal Government to seize on this advice and make the changes necessary to re-invigorate our cities and prepare for future growth.


“States and local government should be prepared to co-operate in the implementation of this new national reform effort.


Todays independent advice makes it clear that any attempt to artificially cap our nations population or the growth of our capital cities would come at a great cost to ordinary Australians.


The advice makes it clear that we need to be using our existing urban infrastructure more efficiently that will require more apartments and commercial development around good transport services and that there needs be a greater investment in new urban infrastructure facilitating the outward growth of our cities.


The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.


Note: Extracts from Federal Treasurys red book are in the attached PDF below.


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