The Brumby government’s ill-fated Growth Areas Infrastructure Tax was defeated in the Victorian Senate last evening.
This spells the danger of poor land policy. Why did they attempt to charge $95,000 per hectare as a flat fee? Why wasn’t this infrastructure cost spread over a 20 year period as per traditional council bond funded infrastructure (repaid over time by the rating system – until neo-liberalism took over to undermine public finance)?
With developer’s squeezing at least 16 titles into each hectare, the per hectare land value would be worth approximately $4.5m (16 x $280,000). Even a more pessimistic price of $200,000 per possible title would deliver bucket loads to farmers.
Could farmers really look the people in the eye to say that they deserved to earn more in one foul swoop than they have over their entire life time?
The $95,000 per hectare flat tax was destined to cause controversy as it ignored those sites with access to nearby roads or services. This disadvantaged those farmers in poor locations, for which the media was made well aware of. Obviously, some sites would be more advantageous than others and so their land values would be higher.
Why didn’t the Brumby government communicate to MP’s and the public alike that firstly, huge millionaire windfalls would result from the re-zoning. With numbers please. Secondly, the naturally appreciating value of land.
Many criticisms would have been avoided if the government bond system of finance was repaid over the average 20 year lifetime of infrastructure by the landholders who benefited most from the new train stations etc.
As we show above, the $95K is minuscule compared to the land value per hectare post re-zoning. That’s barely 2% of the upkick. Worse yet, all this controversy for a GAIC that has been shown to only capture 15% of the projected infrastructure costs.
If the government was serious about financing such sprawl, it should implement a 10% land value capture policy on any re-zoned land. This will force the land to be used for it’s best and highest use (in this case housing). The farmer will still take home 90% of the windfall, but the public would receive some compensation for the privilege bestowed upon these landowners.
Readers of this site would understand that we would prefer to keep the 10% LVC charge in place and start removing stamp duty, payroll and the loophole ridden income tax. This would ensure that developers release all land to market asap, rather than drip feeding sites to the market over 18 years like Stockland have admitted at their Highlands sight in in Craigieburn. More positive spin offs can be seen here.
Who do rising property prices really benefit?