New large scale developments aided by up-zoning increase the value of land. Unless this speculative gain is recaptured, private beneficiaries pocket most of the windfall.
Read on…
Fisherman’s Bend development approval lacked infrastructure plans, Andrews Government report finds
ABC Net Australia – NEWS
Posted Monday 19 October 2015 at 3:44pm, updated Monday 19 October 2015 at 7:05pm
Excerpts:
Victoria State’s former planning minister approved the redevelopment of Fisherman’s Bend in Melbourne without ensuring there was proper infrastructure, a report commissioned by the State Government has found. Matthew Guy, now the Opposition Leader, approved the rezoning of the land in 2012, which included new high rises for up to 100,000 residents. Covering 455 hectares, it will be bigger than the CBD.
But a report prepared by an independent committee put together to review the process of rezoning the land found there was no consideration for schools, public transport, or open spaces. “The uplift in land value means I need to compete for key social infrastructure with land that has double, tripled or quadrupled in value.”
Private developers should contribute to public infrastructure
Planning expert Professor Michael Buxton said the process, which was common, led to a “bidding frenzy” without any thought put towards public services. “The previous zone was changed into a capital city zone, which had no height controls which immediately increased the value of the land…and made overnight profits for either existing landowners or people who could see this was going to happen.”
“[So there’s] a big windfall, with very little contribution to the infrastructure and services that must be provided for the massive increase in population. What that means is that the Government must in the future pay a very substantially increased price for parks, public transport and so on.”
“We do this terribly badly in this country, where we seem to have a view that if government makes a decision and increases the value of land then the private beneficiaries pocket most of the money.”
Professor Buxton said private developers should also be required to contribute to public infrastructure. “The developer should be contributing in a substantial way, and the beneficiaries of any changes in rezoning that changes the value of the land should contribute to these public services, as happens in much of the world.”
Comments:
“Value capture is a closed-loop system of ensuring that the public receives a share of publicly funded infrastructure,” said Karl Fitzgerald, director of research at think-tank Prosper Australia.
“Value capture closes that loop so that those who have the best location and have the greatest windfall gains, actually contribute more back to the public coffers than those who live two, three, or four kilometres away.
“That’s the common-sense element of it. At the moment we’ve got this sort of take-take mentality and we need to change.”
