Infrastructure bill necessary for growth: Greg Budworth

12 Feb 2019

Infrastructure bill necessary for growth: Greg Budworth

The NSW government's proposed Hunter Region Special Infra structure Contribution (SIC) has attracted criticism but things are not as black and white as some critics claim.

 

It proposes developers of dwellings on recently-rezoned land be charged a levy to help cover the cost of supplying the infrastructure needed to support the Hunter's growing population. It replaces the current system of voluntary planning agreements where developers negotiate contributions for each development.

The government estimates the SIC will raise around half a billion dollars, about 15 per cent of the cost of providing the roads, schools, health and emergency services infrastructure needed to support growth. It says the SIC is simpler, fairer, and will help speed up development. Critics claim the SIC will simply be passed on to consumers, pushing up the price of housing.

The reality is less straightforward. Some developers may try to pass additional costs on to consumers, but final purchase prices will inevitably be a function of consumers' willingness and ability to pay. These in turn are heavily influenced by market sentiment and access to credit.

Faced with this constraint, some developers may choose to factor the cost of the SIC into the price they are willing to pay for undeveloped land. Others may reduce their margin expectations. Some may do both.

It's worth noting the SIC will apply to new developments on land that has recently been, or is identified to be, re-zoned to allow residential or industrial development.

Owners of this land will have benefited from an exponential increase in its value.

It seems reasonable for those who benefit financially from new land releases to contribute to the cost of supporting infrastructure in a consistent way. That doesn't mean there isn't room for improvement.

Developers take on significant risks and play an important role in addressing the region's housingcrisis. It is important they remain profitable. Striking the right balance may involve offering developers limited concessions on floor space or car park ratios in exchange for contributions.

Successful and sustainable communities need more than just homes. They also need public infrastructure.

The question we should be asking is how the cost of providing that infrastructure can be equitably divided amongst the community.

What is vital is that there is an open and transparent process and factual debate.


Greg Budworth is the Group Managing Director, Compass Housing Services, and Vice President, UN Habitat's General Assembly of Partners