Paving the Way to the Future
It is 2014 and Canberra is embarking on its next century of expansion and maturity. Our population is set to soar and government has set targets for inner-city growth, affordable and sustainable housing and a light rail system to link new suburbs to the city centre. What’s wrong with this picture? Despite these strategies for responsive and innovative development, non-competitive development taxes, fees and charges will continue to stifle investment to the detriment of our economy and community.
That old hoary chestnut the lease variation charge remains a significant tax on redevelopment adding considerable cost to new projects. Contrary to the Territory’s positive policy to increase urban density, the LVC structure almost forces new development into greenfield subdivisions or onto vacant residential sites in established suburbs. This is not the stuff of development folklore – rather the facts show that in the first year following the introduction of the tax the number of development applications processed in the ACT fell by a huge 56 per cent as projects were delayed or abandoned. In its current form the LVC could effectively put an end to urban infill and adaptive reuse of old commercial buildings in Canberra.
The same is true of commence and complete fees. Initially introduced as a disincentive to ‘land banking’ of residential blocks these fees have been extended to cover commercial, mixed use and multi-unit sites. It seems obvious that investors do not buy land simply to incur holding costs and pay rates. However, in the current economic climate some owners have no choice but to ‘weather the storm’ as they wait for new tenants or bank finance. The fees - which in some cases can be hundreds of thousands or even millions of dollars - unreasonably penalise these owners, jeopardising Canberra businesses and the future of our construction industry.
The Property Council has been working closely with the ACT Government to find a collaborative way forward. Property development is critical to the ACT economy and over the past decades our industry has transformed the city, providing a platform for new business and investment and community activities and culture.
The Government’s soon to be released ‘stimulus package’ has the potential to resolve the obvious and unnecessary barriers to positive investment in Canberra - freeing industry to once again respond to the needs of our community and to set a new standard for future innovative urban development.
Catherine Carter is ACT Executive Director of the Property Council of Australia.