Prosper Australia has expressed strong concerns over the Allen Labour Government’s recent announcement of 50 new activity centres across Victoria, citing the absence of any form of Land Value Capture (LVC) mechanism as a missed opportunity to ensure fairness and economic sustainability.
The government’s decision to create new activity centres is an ambitious step toward addressing urban sprawl, improving public transport, and supporting local communities. However, Prosper Australia argues that without an LVC mechanism in place, the proposed activity centres will lead to increased land speculation, higher property prices, and further inequality in the housing market, with prospective homeowners locked out by speculative buyers looking to cash in on rising values.
“Land value capture is crucial to ensuring that upzoning benefits all Victorians rather than lining the pockets of a few,” said Rayna Fahey, spokesperson for Prosper Australia. “Our research shows if Victoria were to capture value uplift by pricing rezoning as the ACT does, it could raise over $4bn in revenue that will otherwise go to landowners in largely-untaxed capital gains.”
“The Victorian Government knows that rezoning creates a windfall gain and recognises that in legislation. However, residential-to-residential rezoning is excluded from the existing windfall gains tax, so upzoning has become a massive free lunch for land speculators.”
“The time to announce how you’re taxing these windfalls for public revenue is at the time of announcement, before speculators start buying up land, not after, once developers who actually want to build houses have paid the tax-free price for a site.”
“Solving the housing crisis has to include a major investment in public housing for Victoria’s most vulnerable. Amending the Windfall Gains Tax to include upzoning unlocks the potential for a major financial boost for public housing investment.”
Victoria’s historical failure to apply value capture, notably at Fisherman’s Bend, missed an opportunity to secure billions in uplift value. Research by Prosper Australia demonstrated a 368% increase in value between permitted and non-permitted land; a massive windfall for developers.
“The Fisherman’s Bend giveaway is regarded amongst planners and economists as one of Victoria’s greatest missed opportunities. Yet, this latest announcement shows no evidence that lessons have been learned.”
Prosper Australia advocates for land value capture for public decisions such as infrastructure development or rezoning, ensuring that public investments in infrastructure, transport, and amenities are reinvested into the community. The absence of such mechanisms in these new activity centres could undermine the government’s efforts to create equitable and affordable communities.
“This is a golden opportunity for the Allen Labour Government to capture the windfall gains created by planning changes and share these fairly among all Victorians,” added Ms Fahey. “Without it, we risk exacerbating wealth inequality and locking out more Victorians from affordable housing.”
I disagree with the sentiment expressed in this article. I now own my parents’ house in a rezoned area and my rates have been inflated to reflect ‘development’ potential. Highly unfair given that hat I haven’t developed the property. So this impost is purely speculative on the part of the government and directly contradicts the tenor of the article. Perhaps she should dip her toe in the market and see the real and punitive costs of owning property in this state. Pure disgrace and disincentivising to developers who are critical to building homes for the rapidly growing population. It’s crazy and completely paradoxical to solving what has now become a crisis in this country.