Monday, 21 December 2009

Growth Areas Infrastructure Contribution

Victorian Parliament Hansard

Title Planning: growth areas infrastructure contribution
Activity: Questions without Notice
Date: 26 November 2009

Mr KAVANAGH (Western Victoria) -- My question is for the Minister for Planning and relates to the growth areas infrastructure contribution (GAIC). The minister has recently announced a change to the proposed GAIC so that this tax will be payable on the next sale of a piece of land by the land purchaser rather than by the present landowner. Will the GAIC tax still not effectively be paid by the landowner, if only in the form of receiving a lower price for the land that is sold, even in cases where, contrary to the minister's repeated assertions, there will not be a great uplift in price due to the fact that the land cannot be developed perhaps for decades?
Hon. J. M. MADDEN (Minister for Planning) -- I welcome Mr Kavanagh's question and I welcome his interest in these matters, as I welcome the interest of members of all parties in this chamber in the impending introduction of the growth areas infrastructure contribution. There is a lot of misinformation out there, and a lot of it is based upon contradictory views about to what extent a value uplift will occur around the adjustment to the urban growth boundary. We still stand by our view that in adjusting the urban growth boundary you will get a significant uplift in the value of that land just by changing the vast majority of that land from land which is basically not currently developable to land that is developable, so there is a very significant uplift.
I have heard various contradictory remarks from a range of individuals, who on the one hand are saying, 'With this we will be rated off the land' and on the other are saying, 'With this, though, we will not be able to get any uplift'. There is a direct and stark contradiction there.
I heard it yelled from the opposition earlier in question time that they will be rated off the land. Why would they be rated off the land? They could not be rated off the land, because first of all for their rates to go up there has to be a very significant value uplift. That is of critical importance here. You cannot have the value uplift through coming into the urban growth boundary but then say, 'There is no uplift of value on my land'. That is a contradiction. What is very important here is that there is a very significant uplift in the value -- very significant.
I have no doubt that later on as the land moves through its development steps there will be additional uplift, but the most significant uplift occurs when land is brought into the urban growth boundary.
Honourable members interjecting.
Hon. J. M. MADDEN -- I take up Mr Guy's point that you have to have the cash to do it. The issue here is that there is very significant uplift in the adjustment to the urban growth boundary that is captured in the value of the land. When that land is next turned over, we will seek to capture some of that uplift through the growth areas infrastructure contribution.
I have gone through a lengthy dissertation. I expect we will hear even more about the merits of that, and I know we will hear from members of the opposition why they do not believe it is appropriate. At the end of the day the government has a commitment to building vibrant, strong communities with good infrastructure, particularly good transport infrastructure. We believe this is the most appropriate mechanism to see this through.
I have suggested, and I continue to suggest, to the opposition and other parties that if they have a different view, they should put it to this chamber in the form of an amendment and we will consider it on its merits. Labor is not the only party that will vote on these matters. Mr Kavanagh will vote on them, members of the Greens will vote on them, and from time to time the Liberal-Nationals coalition splits on things when it comes to matters of conscience. If there is a strong view from the parties on the other side of the chamber about these mechanisms, if they believe they are currently not right -- as we believe they are -- I would welcome them coming up with a solution or suggestion and letting this house of review debate it and try to work through the issue before they rule the legislation ineffective by voting against it outright.
Supplementary question
Mr KAVANAGH (Western Victoria) -- The objections to the GAIC are largely based on the timing -- the imposition of the GAIC at the point of sale rather than development. In other states the tax is imposed at the point of development, unlike what the minister is proposing in Victoria. Is the real reason for imposing it at the point of sale not to get the money now rather than leaving it to future governments?
Hon. J. M. MADDEN (Minister for Planning) -- I welcome that point. There are two issues here. As I have said before, one issue is getting the money sooner rather than later so that we can get the investment -- we do not steer away from that -- but the other issue is a technical one that the opposition seems oblivious to. I know Mr Kavanagh and members of the Greens would be interested in it because they seek to be interested in these matters rather than form a position that rules out alternatives outright.
What we do know is that sometimes when development occurs the developer never owns the land. He develops it all the way through the sequence and it is not until late in the development cycle -- with title exchange at a very late stage -- that there is a turnover of title. The misnomer -- --
Mr Guy -- But approval has nothing to do with the title.
Hon. J. M. MADDEN -- I take Mr Guy up on that. We are talking about the transaction and the title exchange; you are talking about approval.
Mr Guy -- That's right.
Hon. J. M. MADDEN -- Yes. Some developers take up the option and do not take up the land until it reaches that point anyway. It will most likely occur there anyway, because the vast majority of developers -- --
Honourable members interjecting.
Hon. J. M. MADDEN -- I know Mr Kavanagh is interested in my answer. The vast majority of developers come up with some option or arrangement anyway. What we are conscious of is that the later you push it into the cycle, the more we will have another argument. We will have another argument with developers.
They will say, 'I did not get the best deal on the land'.
Honourable members interjecting.
Hon. J. M. MADDEN -- I am trying to answer Mr Kavanagh's question, even though the opposition does not want me to give information to Mr Kavanagh. The issue here is that if you push it later into the development sequence or cycle, we will end up having another argument with the same industry representatives and the same developers.
Honourable members interjecting.
Hon. J. M. MADDEN -- I know Mr Barber and the Greens are interested in this.
We would have developers saying at the end of the precinct structure planning process, 'That developer got the retail area, which is great value; another got the residential area, which is not such bad value; and I got the industrial land, which does not hold the same value'. We know, and Mr Guy knows, we would end up with the same argument all over again with the same developers but around a different set of issues.
Mr Guy interjected.
Hon. J. M. MADDEN -- I know Mr Kavanagh is interested in my answer. At the end of the day the issue is, as Mr De Dominico of the Urban Development Institute of Australia said the other day -- and he expressed it quite holistically -- that taxes suck. I know that is the view of Mr Guy and Mr Finn. We end up in the same position time and again. No matter where we define it, no matter where we set it at, we will end up having the same argument.
Mr Guy does not have an argument about where it should occur; we know that. He is consistently shifting the argument in order to again have the same argument about no tax. He would prefer to side with the development community to stop it paying tax, to get significant uplift, to delay the infrastructure, to delay the transportation -- --
The PRESIDENT -- Order! I believe Mr Kavanagh asked both the question and the supplementary question. I suggest the minister might like to concentrate on his answer and not debate Mr Guy.
Hon. J. M. MADDEN -- Thank you for the guidance, President. To sum this up for Mr Kavanagh: we end up shifting the argument along the development sequence.
I know many people in this chamber are committed to seeing families -- the new home owners -- supplied with the right services, the right infrastructure and particularly the right transport infrastructure at this point in time, particularly if the most affordable housing option for them is a long way from the centre of the city. Our commitment is to try to do that in a way which we believe not only does justice to the infrastructure and to the new communities but also and in particular balances the needs of the building and construction industry in a measured and sensitive way that does not throw the baby out with the bathwater. No doubt Mr Kavanagh will see people who want to lobby him on their respective views, as we all will in this chamber. I look forward to the consideration of this bill being a measured consideration -- --
Mr Guy interjected.
Hon. J. M. MADDEN -- Not on ideological grounds, Mr Guy, but on views which are about what is best for these new houses, what is best for these new householders and what is best for these new families -- the people who are settling in these new growth areas -- in years to come; not in years a long way out but years just shortly down the road, when we will need to provide them with the right service.
I look forward to that support. I look forward to any suggestions as to how we can improve. I look forward to a sensible consideration of these matters when the bill comes to this chamber.


Peter Kavanagh MLC
Member for Western Victoria
Parliament of Victoria

"La Cabine"
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1 Yarra Street
Geelong VIC 3220

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