Land rezoning open to routine corruption

As published in The Age and online, highlighting today’s seminar. 

by Clay Lucas

The rezoning of land by state governments across Australia is so open to routine corruption and manipulation by a “mates network” among both major political parties that a cooling off period is needed before former MPs or their bureaucrats work in the property industry, an industry expert says.

Billions of dollars of economic benefit are being regularly extracted from the general population by well-connected landowners through political rezoning decisions, according to economist Cameron Murray, an expert on land supply in Queensland.

Last month he published a paper showing developers in that state with strong political connections were 81 per cent more likely to win favourable decisions on getting land rezoned.

The employment of a lobbyist provided the greatest increase in a landowner’s chances of getting land rezoned for higher density building, his study found – increasing the likelihood of success by 37 per cent.

“Think about it like getting into the mafia – a lobbyist is the guy who vouches for you,” said Mr Murray, whose study looked at $710 million worth of land sales in six massive rezoned areas of government-owned land in Queensland over five years.

It showed well-connected landowners owned 75 per cent of the rezoned land in growth areas, compared to only 12 per cent of comparable land immediately outside the rezoning boundaries.

This and other evidence indicated the decisions were primarily driven by the relationship networks of the landowners, not technical assessments of urban expansion locations.

Mr Murray, who previously worked for one of Queensland’s big house and land developers, is talking at a forum in Melbourne on Wednesday at RMIT.

RMIT’s Jago Dodson, a professor of urban policy who previously worked at Queensland’s Griffith University, said what Mr Murray had uncovered in Brisbane’s property industry was likely happening in Victoria.

And one of the organisers of the forum, Prosper Australia’s Karl Fitzgerald, said there were concerns “the same damaging trends are happening in Victoria, where planning ministers are well known to meet developers behind closed doors”.

But a spokeswoman for Planning Minister Richard Wynne said that all government planning processes in Victoria were subject to scrutiny. “Land rezoning is subject to stringent probity standards, internal controls and checks,” she said.

“Also, the use of Planning Panels provides an open and transparent process where the minister is able to receive advice in relation to proposed planning scheme amendments relating to land rezoning.”

Mr Murray said political influence in property rezoning was “not a Labor or a Liberal problem”.

“Labor seems to hide favours better by putting it within some kind of act or regulation,” he said. “Whereas Liberals will end up doing delegated authorities. Labor is a bit more systematic because they need to keep up appearances more. But it’s the same outcome in the end.”

Mr Murray said rezoning rights could be auctioned off in a public and transparent process, rather than ultimately being decided behind closed doors as at present.

“You either take away the honeypot or disrupt the trade in favours through a cooling-off period for the people involved,” he said, adding that senior bureaucrats were “too free to rotate in and out of the private industry” across Australia.

He also argued for creation of a “betterment tax”, briefly considered by the Henry tax review, that would see rezoning triggering a fee that amounts to the value gain, payable by the landowner when they develop or sell the land.

And he floated the idea of local referenda on urban expansion locations, to give community interests a say on where expansion of the city should happen.

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