CEO Update from Matthew Kandelaars

28 Jun 2021

, COVID-19, News, Policy

Message from Matthew Kandelaars, UDIA CEO

It’s been a big few weeks for UDIA Victoria and it’s all hands on deck, taking up the fight for our members. Here’s a glimpse of what we’ve been doing, amongst all our business-as-usual advocacy to help you do what you do best – create jobs and bring new homes to market.

In this update
– Advocacy in Action: Rezoning Tax
– Development Contributions
– Local Government Advocacy
– Membership
 

Advocacy in Action: Rezoning Tax.

We’re deep into the detail on the rezoning tax. From Day One, we’ve called this dangerous tax out for what it is: a short-term sugar hit that will lead to long-term and far reaching consequences.

UDIA Victoria has established an Advisory Group, comprising developers and advisors with interests across metropolitan Melbourne and regional Victoria. This group has helped to establish UDIA’s initial positions to Government, outlining the consequences of the rezoning tax as it has been proposed.

We have met with the Treasurer and we’re in constant communication with his office, as well as other senior representatives across Government. We’ve also met with the Leader of the Opposition and the Shadow Minister for Planning, and key crossbench MPs in the Legislative Council.

Our initial advocacy has made the strong and consistent point that the rezoning tax will render projects unviable, kill jobs and hurt housing affordability for Victorian homebuyers.

UDIA Victoria has prepared extensive economic modelling that we have shared with the Department of Treasury and Finance which shows on the basis of just seven case studies, each project will be rendered unviable and will not proceed. This will:

  • reduce housing supply by 6,696 dwellings (including over 300 affordable, social or disabled access dwellings valued at $160 million)
  • cost over 20,000 direct jobs and nearly 100,000 indirect jobs
  • cost the State Budget $170 million in foregone Stamp Duty receipts
  • result in a total economic loss to the State of $7.7 billion.

The Government has created a massive problem by developing a policy that was rushed, lacking in meaningful detail and announced without consultation. We will continue to make the case against this tax, to deliver the best possible outcomes for our industry.


Development Contributions.

To help us advocate on your behalf, the UDIA Victoria Board invested in first-of-its-kind research to identify and compare development taxes and charges from 2010 to 2020 to determine how and why they have increased over time. This research has been vital to our submissions to the Government’s Infrastructure Contributions Advisory Committee, charged with reviewing the State’s infrastructure contributions system and making recommendations for reform.

The research, prepared by Urban Enterprise, finds that:

  • Development contributions levies increased substantially (in real terms) between 2010 and 2020 from an average of $351,000 per ha for early DCPs to $540,000 per ha for ICPs. This is driven largely by increases to the Transport Levy and frequent use of the Supplementary Transport Levy.

Greenfield Development Areas

  • The average total of greenfield development charges is approximately $880,000 per hectare – equivalent to 16% of the median lot price.
  • The ‘worst case scenario’ adopts the maximum amounts of each infrastructure charge. The cumulative value of these is $1,450,000 per hectare – or 26% of the median lot price.
  • Residential development taxes total approximately $1,600,000 per hectare – or $94,100 per lot.
  • The combined average greenfield charges and taxes is $2,480,000 per hectare. This equates to $146,100 per lot or 44% of the median greenfield lot price.
  • The combined ‘worst case scenario’ of charges and taxes equals $3,050,000 per hectare. This equates to $179,400 per lot or 54% of the median greenfield lot price.

Established Areas

  • Using a hypothetical case study approach:
    – the development charges are estimated at approximately $66,800 per dwelling; and
    – the cumulative taxes payable estimated at approximately $98,300 per dwelling.
  • The combined taxes and charges for the case study equate to approximately $165,200 per dwelling or 28% of the dwelling price.

Urban Enterprise also updated its research to reflect the impact of the Government’s property tax hikes – being increases to stamp duty and land tax, and the proposed introduction of the rezoning tax. The result shows that for a typical apartment in suburban Melbourne, total combined taxes and charges will increase from 28 to 42 per cent (or $253,000 on a $600,000 apartment); while a house in regional Victoria will comprise taxes and charges of $83,800 per lot, or 34 per cent of the typical lot price.

We’re in constant communication with policy makers on the outcomes of this research, which we know is shaping the Government’s review of infrastructure contributions and is also informing our advocacy against the rezoning tax.


Local Government Advocacy.

We are also tackling the broader issue of how Growth Area Councils need to gear up to meet the demand for new homes.

The problems are obvious: we are in a stimulus environment, yet developers remain absolutely constrained by approvals; there is no consistency in approach among councils and they are not geared up to meet the surge; and certainty around timeframes is key but there is no confidence in how long councils will take to deliver approvals.

This week we reached out for de-personalised feedback from our developer members (by LGA). We will take this feedback to each of the Growth Area Councils to highlight what is working well and what isn’t. At the end of the day, we want to support these councils to speed up approvals. UDIA Victoria will advocate on your behalf to build a case that as our industry is cyclical, long range solutions and alternate mechanisms (such as a program of private sector self-certification or third-party certification) must be put in place to meet demand when our industry is operating in a peak market.

We want to fix this problem and open up the bottlenecks as part of a solutions-focused advocacy campaign that helps to address the issue to avoid damage and delays to the road to recovery post COVID-19.


Membership.

Yet to renew your membership for 2021-22? Please do so as soon as possible to ensure UDIA can advocate when and where you need it most.

UDIA Victoria is the pre-eminent and trusted voice for the urban development industry and we will continue to secure advocacy wins for your industry, your organisation, and your people.

The past few weeks has shown the importance of UDIA Victoria membership. UDIA Victoria’s advocacy has protected and kept open thousands of worksites across our State and we will continue to fight to protect the livelihoods of people in our industry.

For those of you thinking about becoming a new member; UDIA Victoria is committed to hear and understand you, and to give you the industry representation you deserve.

You have my word that UDIA Victoria has your best interests at the forefront of everything we do. We place substance over spin and will invest all of our energy into affecting real change that will benefit your business and our industry.

If you have any questions or feedback, don’t hesitate to call me directly on 0416 443 555 or get in touch with any member of our team.