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Discussion paper sparks infrastructure levy talk

SPECULATION within the State’s development industry suggests the WA Government is considering an infrastructure levy on newly developed blocks similar to that implemented in New South Wales last year.

In NSW a transport tax/levy of $15,000 for each new residential lot was introduced in 2002.

Now there are whispers the WA Government is considering a similar infrastructure levy on all newly developed blocks.

One development industry source said the industry talk was that the Government was looking at a transport levy that would comprise $5,000 per near city blocks and $20,000 per block on fringe developments.

Sparking these industry fears are some of the recommendations contained in the Dialogue with the City background paper and the recently released Costs of Urban Form discussion paper, which highlight the infrastructure cost of urban fringe developments and raise the issue of a ‘user pays’ scenario.

While the introduction of a transport levy “would not go down well politically”, as one source termed it, the development industry has been quick to react to the speculation.

The Urban Development Institute of Australia (UDIA) WA president Colin Evans said that, while he supported the Government for taking a proactive and community focused approach to the future planning of Perth, it was misguided about the true cost of providing infra-structure to urban fringe areas.

“The background paper is incorrect in its assertion that the government pays for up to 78 per cent of infrastructure cost for development in outer urban areas,” he said.

“The recommendation that new home buyers in outer locations should be forced to pay more for their blocks to pay for infrastructure is seriously flawed.”

Mr Evans said the figures used in the papers were drawn from a source that was more then 10 years out of date. 

“Recent research shows that home buyers already bear the cost of infrastructure provision for new lots, which amounts to approximately 40 per cent of the cost of a new home,” he said. 

Mr Evans said the cost of a basic house and land package has risen 70 per cent in Perth in the past decade, primarily as a result of increasing government taxes and charges. Any further increases would have a serious impact on Western Australian households, he said.

“The State Government should use this revenue to provide essential infrastructure and services for the Perth population and should not be looking to raise additional revenue from new home buyers,” Mr Evans said.

“Increasing the price of land on the urban fringes will drive up the cost of housing in Perth and will result in thousands of Perth families being unable to afford to own their own home”.

LWP Property Group general manager Russel Perry said an important factor to remember was that development was led by the market, and that the market wanted urban fringe development.

He said that while the government was to be commended for trying to raise community awareness on the complex issues of urban sprawl, the problem was not going to be solved by simplistic concepts such as transport or infrastructure levies or urban growth boundaries.

Costs such as transport levies were not absorbed and were passed onto consumers.

“Pricing urban fringe developments out of the affordable market consigns first home buyers to inner suburb battle axe developments,” Mr Perry said.

He said one way of looking at infrastructure costs, particularly transport costs, was to invest more money in generating locally based employment.

“It would be a more efficient use of government funds than building freeways and railways.”

According to UDIA figures, suburban development industry generates approximately $30 million in stamp duty revenue for the State each year, as well as GST, which is estimated to be $58.8 million, and personal income tax of approximately $26.3 million.

The industry is estimated at $1.17 billion dollars in production value, while 10,000 jobs and $265 million dollars in wages and salaries are directly and indirectly generated.

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