Gold Coast City Council Damages the Coast’s Recovery

Gold Coast City Council Damages the Coast’s Recovery

ADC Commentary:  Amendments to the Adopted Infrastructure Charges Resolution will damage the Gold Coast’s recovery in a post GFC environment.  Just as the Gold Coast’s construction and development sector was getting back on its feet the Gold Coast City Council has done an about face with Infrastructure Charges.  These charges which are effectively a tax and hand brake on development in the City are now to be increased to the maximum level permitted in the State of Queensland.  This is very disappointing considering Mayor Tom Tait’s Construction Kick Start which in 2013 more than halved infrastructure charges.  This Kick Start was a real shot in the arm for construction and development and delivered thousands of jobs to the Coast’s economy.  Projects that would not have occurred previously were made viable and the industry congratulated the Council accordingly.  However this recent budgetary move from Council to not only fail to extend any sort of incentive for job creation or Kick Start for the sector but as well increase Infrastructure Charges to the maximum level will place a real hand brake on the Coast’s recovery and cost real jobs in construction and development, as developers look for neighbouring Local Government areas with a better understanding of the financial issues facing development in South East Queensland.

ADC calls on Gold Coast City Council to reconsider what could only be described as a shortsighted policy increasing infrastructure charges to the maximum and placing a hand brake on the Gold Coast economy.  Infrastructure Charges are a real opportunity for Council’s to incentivise business, construction and development thus creating much needed jobs for the local economy  –  The Gold Coast City Council has regrettably missed this opportunity.michael-arnold

 

UDIA Story  –  Amendments to Gold Coast City Council Infrastructure Charges Resolution:

The council of the City of Gold Coast recently resolved to increase infrastructure charges for a residential development in the City, as part of their recent budget deliberations.  It is apparaent that the City of Gold Coast, like many other Councils, is looking for opportunites to increase its revenue in a post GFC marketplace. This has become increasingly difficult for any Council to do.  In a city such as the Gold Coast that is heavily reliant on the development and construction industry as one of its two main pillars, a unilateral decision like this may have unintended consequences.

The effect of these changes by Council is to raise infrastructure charges on the Gold Coast to the maximum level permitted under the Queensland Government’s ‘capped infrastructure charging’ regime.

Whilst there are broader discussions occurring between the UDIA (Qld) and the State Government regarding infrastructure charging arrangements throughout the State, Council’s recent decision will have an immediate impact on any development which had not been decided prior to the changes being made, and all development applications which are currently progressing through the assessment process.

The scale of the changes varies, with some being significant, as indicated in the following table:

Development TypeOld ChargeNew ChargeDollar and Percentage increase
Detached Dwelling 1br$17,636.47$20,000$2,363.53 (13.4%)
Detached Dwelling 2br$20,000$20,000No Change
Detached Dwelling 3br $28,000$28,000No Change
Attached Dwelling 1br$17,636.47$20,000$2,363.53 (13.4%)
Attached Dwelling 2br$20,000$20,000No Change
Attached Dwelling 3br$24,030.98$28,000$3,969.02 (16.5%)
Apartment 1br$14,439.21$20,000$5,560.79 (38.5%)
Apartment 2br$18,152.16$20,000$1847.84 (10.17%)
Apartment 3br$23,515.30$28,000$4,484.70 (19.07%)
Apartment 4br$25,165.49$28,000$2,834.51 (11.2%)

 

The most significant increase has occurred to the charges for a 1 bedroom Apartment, which has increased by approximately $5,500 or 38.5%.

As this represents the most affordable end of the Apartment market in a price sensitive marketplace, it risks creating a disincentive to develop 1 bedroom Apartments in the City, particularly given that a 2 bedroom Apartment attracts the same infrastructure charges. The UDIA (Qld) Gold Coast Branch is keen to engage with council to convey our concerns.

The recent increases in charges came as some surprise to the development industry, particularly in light of Council’s successful ‘Construction Kickstart’ program. The ‘Kickstart’ exercise resulted in Council forgoing approximately $30 Million of infrastructure revenue that they would not have otherwise collected due to slow economic conditions in the City, but unleashed approximately $800 million of new development value which was spread through the City’s economy. An impressive result!

With the new charges already in place, a key aim of the UDIA (Qld) is now to ensure that any development application that has already been lodged with Council has the certainty and confidence to continue under the same charging regime that was in place when the application was submitted to Council. Most importantly, that the financial viability of the proposed projects is not adversely impacted. In order to achieve this, the UDIA (Qld) is recommending that there be a transitional arrangement imposed by Council that prevents all existing lodged development applications from being subjected to new charges.

Sources: Urban Development Industry of Australia ( Queensland) on 9th September 2014