Councils Could Spike Unemployment
The UDIA are drawing their swords against the budget this month, with a recent release discussing the affect local government budgets can have on the housing and property industries, particularly the impact of increasing development charges.
THG’s Richard Katter prepared a report for the UDIA, The Finance Sector’s Viscosity is Inhibiting the Flow of Property Development
, which emphasises the importance of the property sector’s influence on Queensland’s GDP. Mr Katter said, "This report is especially timely considering the very recent withdrawal of ALDI from their two proposed sites at Pimpama and Coomera due to exorbitant infrastructure charges. In an increasingly marginal development climate we will start to see more big projects of this nature failing to proceed with the major cause being infrastructure charges."
The UDIA’s beef that hiking up infrastructure charges could push the industry beyond feasibility and spell job losses in all regional centres is coming to fruition, prompting UDIA Queensland President Warren Harris to call on Queensland local authorities to urgently review their infrastructure charge intentions before bringing down their budgets for 2009/2010.
“All of the data that has been released to date shows that Queensland is suffering more than any other state with declining housing activity,” Mr Harris said. “It is very disappointing that the Queensland Government has not taken a lead to cap infrastructure charges as the increases that have been mooted up and down the Queensland coast will only escalate the current downturn in the development and property sectors,” Mr Harris said.
Releasing the independent report by THG, Mr Harris said that there had been a radical drop in construction finance which far outweighed the drop in total commercial finance in the last 12 months. He said, “This report clearly shows that the inability of developers and builders to access finance is having a dire impact on the property industry and the broader community”.
THG’s research into the economic impact of the development industry shows that every million dollars’ worth of property development directly generates $44,700 in direct and indirect taxes and the flow-on effects generate $95,100 in direct and indirect taxes. What this means is that, based on current trends, the THG report also indicates that there will be at least 33,000 additional unemployed in Queensland’s development sector in the next 12 months.
According to Mr Harris, “This is due to three primary factors which are: land supply; wasted costs in the industry due to time delays; and the impact of infrastructure charges.
“With infrastructure charges being increased by $10,000 to $15,000 overnight, home ownership is being placed further out of reach, particularly for younger people,” he said.
Mr Harris said the health of the housing industry was essential to the economic wellbeing of Queensland’s regional centres. “With home building approvals dropping 50 per cent in recent months, there is a massive gap in activity to be overcome. For the Queensland economy to recover satisfactorily it is essential that workers are retained in the housing and construction industry by getting projects out on the ground as soon as possible,” he said.
In order to provide a solution for the problem, the UDIA has proposed that Queensland councils adopt a grace period for the payment of infrastructure charges such as is currently being offered in New South Wales. Mr Harris said “although local authorities will forgo the interest on those charges over a period of time, perhaps one or two years,” he said, “this is a minimal cost compared to the significant benefits that will be achieved by the industry.”
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