Mine subsidence – sublime to ridiculous

Anyone with experience of development in Newcastle’s CBD knows the glacial speed of reform on the issue of mine subsidence.

Mine subsidence is Newcastle’s unique problem child and the CBD’s greatest barrier to investment.

The cost of remediation can run to % of land value or up to $3 million on a typical CBD development site. The cost occurs up-front and is carried for the duration of the project.

 

Because the final cost is unknown and can be more than double original estimates, traditional lenders will not provide finance and the cost is often funded at mezzanine rates. It pushes urban renewal projects in Newcastle towards peak debt at an alarming rate.

An industry submission to The City of Newcastle in February 2014 highlighted how Council could alleviate this pressure and unlock the next phase of urban renewal.

It called on Council to immediately support a key recommendation of the 2012 Newcastle Urban Renewal Strategy and remove the cost of mine remediation works from the levy calculation.

Despite briefings with the Lord Mayor, Council’s General Manager and The Hon Anthony Roberts Minister for Resources and Energy the issue has once again stalled.

The report to Council scheduled for April 2014 has not been sighted and no milestone date for achievement has been offered.

Instead, Council officers have deflected blame to Hunter Development Corporation for not having provided advice on their very specific proposal for a demonstration project of wide area grouting.

They also insist more time is required to complete investigations on the level of documentation developers must provide so the cost of grouting works can be quantified.

Responses from State and Local Government are now moving from the sublime to the ridiculous. The City of Newcastle has the opportunity – and the power – to take a leadership role on this matter and short-circuit the blame game.

They can demonstrate their commitment to the introduction of a supportive contributions system. One that facilitates and stimulates new development. Councillors can do that by immediately removing the cost of mine remediation works from the levy calculation.