The West Australian government has been accused of wasting hundreds of millions of taxpayer dollars on property investment in Pilbara mining towns, many of which are currently empty houses.
The Labor opposition has identified $290 million of what it says is property speculation.
The government says it was necessary investment to provide housing amid rapid growth driven by the mining boom in towns such as Port Hedland and Karratha.
The valuer-general found those property assets were now worth $110 million, a more than one-third loss, based on the current market, Labor housing spokesman Fran Logan said.
As the mining boom ended, the towns’ populations have halved and efforts to get fly-in fly-out workers to move their families to the region have arguably been unsuccessful.
“Investors and families up there in the Pilbara have seen their asset-base home or investment decline by 60 to 80 per cent,” Mr Logan said.
“It has been absolutely unbelievable, we’ve never seen before in Western Australia such a massive decline in property assets.”
One Karratha property that had a value of $939,000 in 2008 has since plunged to $340,000 today.
Mr Logan said Pilbara MP and WA Nationals leader Brendon Grylls had also spruiked the benefits of investing in Pilbara housing to ordinary people.
“He encouraged people to invest with confidence in his vision of `Pilbara cities of the future’, with 50,000 populations for Hedland and Karratha, and a bright future,” he said.
“They did invest and the problem now for them is they have come a cropper, they are wearing huge losses.”
Government projects in the Pilbara such as Pelago, Osprey Village, Cottier Apartments and Hedland 125 have lost tens of millions of dollars in value and in some cases, the majority of homes are empty.
The government argues it has not lost anything because values will rise again but Mr Logan pointed out that it is paying operators Fleetwood $3.3 million a year to maintain the 293-unit Osprey Village, which is only 40 per cent full.
Treasurer Mike Nahan rejected Mr Logan’s argument that the mining companies – which do invest significantly in infrastructure in those towns – should have been made to develop all of the housing instead of using taxpayers’ money.
“This is what you have to do – if the state does not step in and undertake some of the risk, it doesn’t get done,” he told reporters.
“The private sector isn’t going to come in, the major input to private investment is speculators that want shortages of land and want to speculate on land values.”
He described the current situation as a “normalising” of prices after the biggest boom in the nation’s history, when rents in Karratha rose as high as $3000 a week.
He said young families were moving to Karratha and Port Hedland, and he was confident asset values would rise again.