Housing Minister Michael Sukkar says the federal government intends to have a greater say on how land it sells is used and developed. Sukkar says the government will be happier to accept a lower price if it makes it easier to impose stipulations on developers to increase housing supply with the right mix of affordable, social and market-priced homes for rental and ownership. He also wants to provide incentives to state and local governments to accelerate planning reforms, as well as working with them on improved development of land located close to CBDs. From The AFR:
“The good old days of the Commonwealth, where private developers get hold of land, get it rezoned and triple the value – those days are over”…
Aside from incentivising governments to reform planning laws, Mr Sukkar’s broader plans to increase housing include helping them handle density and “NIMBY” problems better…
“The answer to that is smart density on public transport corridors in the middle ring suburbs,” he said.
The key problem is that the federal government collects around 80% of Australia’s total tax revenues, leaving only scraps for both the state and local governments. The federal government also sets the immigration intake and gains most of the benefits from immigration – e.g. via personal and company tax collections – while leaving the cash starved states to pick up the costs (e.g. schools, hospitals, public transport and other infrastructure).
These vertical fiscal imbalances have meant that the states have a financial incentive to restrict the urban footprint from expanding in order to save on infrastructure costs, as well as drive-up home prices and stamp duty receipts, which has become their main taxation source.
The federal government also likes this situation because it can deflect blame onto the states for failing to boost supply, even though this supply would not be needed in the first place if it didn’t continually flood the major cities with migrants.
Sukkar’s interventions are the equivalent of ‘fiddling while liveability burns’.
The federal government will continue to run immigration at turbo-charged levels because it gains financially and does not wear the costs. The urban footprints of our major cities will continue to be restricted due to insufficient funds flowing to state and local governments. And our major cities will continue to be crush-loaded and a planning disaster.
In short, the financial incentives are misaligned and this drives the dysfunctional planning system.