Infrastructure reforms needed

Written on the 6 July 2009

Infrastructure reforms needed

Those involved in property development on the Gold Coast can appreciate the significant and unique problems currently faced by the sector. Gold Coast UDIA branch president Col Dutton, is confident that tabled changes to infrastructure fees by the Gold Coast City Council will benefit the industry – the lifeblood to around 49,000 people ­— but the developers aren’t holding their breath.

ASIDE from the ever present reminder of the global financial crisis, the Gold Coast’s development industry is struggling to accommodate Queensland’s highest infrastructure charges when planning its projects.
These charges add discernible costs to the final price tag shouldered by buyers. In some instances, infrastructure charges are ruining the viability of planned developments, scuttling projects – and the jobs of workers – in the process.
But after a long, hard road of lobbying, I’m optimistic that change may be ahead.

Mayor Ron Clarke has advised the Gold Coast Urban Development Institute of Australia (UDIA) that council is looking at two options to aid the industry: Firstly, a possible restriction on infrastructure charges so fees never exceed a set percentage of the total project cost (for instance, five per cent of the project cost) and secondly, charging for the limit of the building works detailed in the development application rather than the potential of the site.

For instance, if a site has the potential to carry 12 dwellings but only eight are built, the developer will be charged for the lesser amount. At the moment, developers are paying for ‘phantom’ units.

Gold Coast UDIA, along with allied industry groups The Property Council of Australia, Sustainable Development Gold Coast Incorporated, Master Builders Association and the Housing Industry Association, applauds council for examining these options.
Industry has asked Cr Clarke to fast track the proposals as soon as possible. Immediate introduction of both options for a 12-month period would provide a shot in the arm for the local industry that would enliven the workbooks of our members.

After the 12-month period, an independent assessment could be made on the benefits of the scheme. In the meantime, our members are prepared to get in and find a long-term strategy for the implementation on infrastructure throughout the city.
Our members are optimistic and while we don’t always see eye-to-eye with local government, Gold Coast City Council must be congratulated for taking up the challenge on this issue.

We want to work with council to provide industry insight that can best fine-tune these proposals to benefit everyone involved.

Since council introduced the Priority Infrastructure Plan in January 2007, the UDIA has been fronting councillors and senior local government executives, arguing that infrastructure charges are exorbitant and an impediment to the city’s second largest workforce.

The report, The Comparative Infrastructure Charges Study, compiled by Place Design Group earlier this year, looked at head works costs across the local government areas of the Gold Coast, Brisbane, Logan, Pine Rivers, Ipswich, Townsville, Hervey Bay, Caboolture and the Tweed.

The comparison found infrastructure charges for a single lot in a green field subdivision on the Gold Coast added up to $48,986 - the most expensive of the surveyed council areas (the sample average was $36,992).
In terms of commercial product, infrastructure charges are a tremendous deterrent on the Gold Coast, with charges for a suburban shopping centre in the order of $7 million. If a developer made inquiries across the border in the Tweed Shire they would find a more favourable response with costs in the order of $4m for a comparable project.

Demographer Bernard Salt visited the Gold Coast last month to speak at a UDIA luncheon. Salt gets to visit and examine a fair slice of Australia and he was gobsmacked to discover the most affordable house and land package on the Gold Coast was around $100,000 more than a similar package offering in Melbourne’s outer western suburbs.

The population influx on the Gold Coast over the last decades has had a bearing on price – the city averaged an additional 5000 households a year between 2001 and 2006. The dire shortage of available land for development has also contributed to the bottom line. But it’s paramount to note that head works charges for residential lots in Victoria are around $5000 – around 10 per cent of charges on the Gold Coast.

Council has opened the door on this initiative and we look forward to working closely with them to improve the economy of the Gold Coast.


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