Powers to acquire land are necessary, but full compensation must be given to land owners

12 March 2010

The NSW governments proposal to give the Sydney Metropolitan Development Authority powers to deliver major urban renewal projects is welcome, so long as private land owners are fully compensated for land the Authority acquires.

The Urban Taskforce chief executive, Aaron Gadiel, said that almost any significant new urban renewal project is likely to involve some private land.


Government will have a crucial role in consolidating fragmented land parcels into single sites to enable major urban renewal, Mr Gadiel said.


If it doesnt have the power to acquire land on just terms, many derelict parts of our urban centres may never be re-built.


The new Authoritys powers should be tempered by an obligation to compensate land owners not only for the full pre-existing value of their land, but also for any increase in value that occurs as a result of the Authoritys redevelopment plans.


Mr Gadiel said that property rights form the basis of Australias economic system.


Investment cannot and will not take place unless there is clear unambiguous title to property, he said.


This means a private land owner not government should be the party entitled to benefit from the development of their land.


Its crucial that any powers given to the Sydney Metropolitan Development Authority do not create incentives for the Authority to nationalise land in order to rezone, make profits, and sell the land back to the private sector.


Any legislative regime which facilitates this kind of conduct would damage the NSW economy.


And unfortunately thats the power that the NSW Government gave local councils last year, when it legislated to override a High Court decision and permit the acquisition of land for on-sale without full compensation being paid the affected private owners.


Mr Gadiel said that the Urban Taskforce supported the United Kingdom model.


There, a land owner who faces a compulsory acquisition order for urban renewal purposes is compensated based on the genuine land value, including any increase in value attributable to the governments re-development plans, he said.


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


For every $1 million in construction expenditure, 27 jobs are created throughout the broader economy.


The construction activity made possible by property developers contributes $78 billion to the national economy each year and creates 849,000 direct jobs.



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