Good development is being stymied by a lack of certainty

Too many building blocks – Good development is being stymied by a lack of certainty, long council delays and noisy protest actions – By Harry Triguboff AO, founder and managing director of Meriton Group

(Originally published on Daily Telegraph, Sydney on 21 March 2019)

The property development industry is the largest employer in NSW and generates billions in government revenue. Certainty of process is key for us while we navigate the planning system, which takes many years and a lot of effort, but if we get it working the rewards are for everyone.

Currently, planning system delays in this state are costing billions in investment and tens of thousands of jobs (according to the Property Council of Australia, one in four people in NSW rely on our industry for employment). It is also costing substantial government income, which is critical for the delivery of schools, hospitals, roads and services.

Over $250,000 is collected per unit sale in NSW (with an average sale price of $950,000) including GST, land tax, stamp duty and council contributions, which also play their part in housing prices.

Accordingly, a thriving property development industry is critical to the success of the state and now we need more certainty than ever for the market to recover, but that seems to be politically inconvenient. We think the market has stabilised so the economy needs us to start building, and we are well positioned to build as we don’t rely on the banks. But we find it very difficult in NSW.

We spend years and a lot of effort to progress projects as per the requirements, directions and approvals of the local council and state government. Even when you comply with all policies, get relevant approvals and agree to substantial extra contributions through “voluntary” agreements to ensure we are sharing the value of an increase in development, it still takes years and you don’t know what will get until the very end — and then, that can change. Then, if approved, we still need a DA from the council to build. It can take many the years to deliver what they want, while we absorb enormous holding costs, which further adds to housing prices.

In Queensland, they have an efficient planning system in place to get the right development in the right location efficiently. It is built in to their system so there is transparency.

There are no lengthy separate planning processes, no planning panels and no additional charges that add to the cost of the development – and we believe our buildings generate superior design outcomes in Queensland. We deal directly with the council only and we have the approval to build within six months. It is a tough market but we can proceed quickly and with certainty.

In NSW I have had to commence a court case for my development in Macquarie Park, which is regrettable. I’d much rather work with the government for good planning outcomes.

I will leave the detail of that case for the court process but I will say this — I have been building in Ryde for the past 35 years. The name Meriton came from Meriton Street in Gladesville. Of course developers make
money, but they also contribute homes, jobs and amenities to the local community.

A project like the one at Macquarie Park can provide the following:

• New additional dwellings in highly accessible locations close to jobs, transport, education and other services to reduce reliance on cars;
• Reduced development pressure on the suburbs to get to the necessary housing supply targets that are set by the government;
• Up to 4500 direct and indirect jobs. That’s not only the people on site, but the factory workers, truck drivers and future building mangers and maintenance workers;
• Over $300 million in taxes and charges, which will fund the schools, hospitals, roads and other government services on which we all rely;
• Additional contributions such as key-worker housing for local police, firemen, nurses and teachers, who wouldn’t otherwise be able to live in the area;
• Additional upgrades to local and state infrastructure — that could be upgrading the local soccer pitch or fixing a local road bottleneck; and
• Better quality buildings through design competitions.

But this is inconsequential when there is an election on foot and a small minority of the community can have a substantial impact on well-planned projects getting off the ground to the detriment of the broader community. That is why we encourage people who live in units or depend on our industry for their jobs and livelihood to get involved and
make their voices heard. That way, the politicians will have both sides of the story when making decisions.

Normally, both sides of politics would be falling over each other to support the right development in the right location, but the election has got the better of them at the moment and that can be bad for everyone.

All we can hope is that due process is allowed to continue so we get the best possible outcome for our developments and we can focus on fixing the planning system.