The newspapers are full of bullish predictions for 2021 on the back of the development of a COVID vaccine and the expectation that President Elect Joe Biden will be pumping up the economy with Federal Reserve cash.
There has been a lot of focus on economic policy over the past year and lots of promises have been made – particularly in the area of Planning reform in NSW.
The planning reform agenda has been informed by the NSW Productivity Commission Green Paper and its separate review into infrastructure contributions. Unfortunately, some in the planning space have resisted reform, a focus on efficiency and the acknowledgement of economic growth as the key objective of the planning system and the actors within it.
The key to success in 2021 will be holding the public servants and their political masters to the sensible commitments they made during the height of the COVID 19 Pandemic.
- Restoring immigration numbers to above pre-COVID levels and thus bolster the tax-payer base, stimulate demand for housing construction and boost economic growth
- Ensure the planning system (DPIE, Councils, independent panels and the Courts) deliver more approvals, more constructions starts and more completions than are required – thus placing consistent downward pressure on prices for the first time since the 1980s
- Abolishing Stamp Duty and replacing it with a broad-based property tax (with savings provisions as proposed in the NSW Budget in November 2020)
- Developing a policy which will encourage investment in Seniors’ Living
- Developing a Housing Diversity SEPP which will see the development of a diversity of homes in all suburbs at all price points (without pumping prices through the roof through over regulation and prescriptive standards)
- Developing a workable Court appeals mechanism for re-zoning applications
- Rationalise the Apartment Design Guide (ADG) and allow for innovative solutions to meet all price points by reducing prescription
- Implementing changes to local and state infrastructure charges on a permanent basis – reducing the burden on new home buyers
- Abolish rate pegging and eliminate “infrastructure charges” which have no nexus with the development (eg. affordable housing levies)
- Developing a Build-to-Rent scheme which actually works to stimulate both foreign and local investment, while developing an effective alternative to home ownership
While the newspapers are bullish, some of this is, no-doubt, wishful thinking and self-serving prophecies.
China is the only Country in the world with a strong (and history would suggest credible) prediction of economic growth – recently announced at 8%. So why are our national political leaders doing so much to offend them? Chinese investment saved the east coast of Australia from the ravages of the GFC with investment in apartment property development. Those apartments not only stimulated the construction and property sector, but they were filled with university students, stimulating the education sector, the retail and hospitality sectors. Many students subsequently immigrated to Australia, helping boost economic growth and make up for the ageing demographic.
The Commonwealth has recently removed the “zero threshold” on FIRB review and approval of all foreign investment. But NSW continues to apply a punitive regime of stamp duty (foreign investors are charged an additional 8%) and land tax (again – foreign investors are charged double). Why? We need their investment. We need more houses, more workplaces, more education and health facilities, new and improved manufacturing facilities, new commercial, retail and industrial employment.
The imperative of economic growth represents a conundrum for planners. Sydney, more than Melbourne, Perth or Brisbane, is constrained by geography and topography. Ocean to the east, mountains to the west, National Parks to the north and south. Growth therefore requires lateral thought and necessarily dictates changes to the local character of the suburbs we grew up in. Well designed, well built, high rise development will be increasingly needed to house the growing population. Our population must grow until at least 2045, so we can afford to pay for the baby boomer generations care as they progressively leave the workforce – too often without enough superannuation to pay for their retirement years. Ignoring this is simply not an option.
The economic reality is if we want to pay our nurses more (and for that matter, our pre-school, infants, primary and secondary school teachers), improve the quality of aged care, continue the advances in medical health which increase both the quality and length of life, then we need to ensure there is a revenue base.
As populations grow, major cities around the world sprawl first, then “go up”. To name a few, New York, Shanghai, Singapore, Chicago and more recently London, the outskirts of Paris, and Tokyo – have all seen this pattern of development.
Those cities that have transitioned best ensure that mass public transport serves those areas with high residential and employment densities. The cost of new infrastructure to greenfields locations is massive – so where it is funded, careful thought must be applied to ensure we don’t just reproduce endless hectares of low-density sprawl. Housing choice is the key – but not every house needs to be a model home from Vogue. Diversity in amenity results in diversity in price and thus increases affordability across the spectrum.
So: the agenda is tough. Focus on population growth, economic growth, growth in housing supply, growth in jobs … while protecting amenity and shifting expectations to enable the gradual change in the character of our suburbs (particularly those with available or new infrastructure capacity).
2021 – it will be quite a year! Happy new year.
By Tom Forrest, CEO, Urban Taskforce