Stanhope / Labor drives land prices ever higher at any cost

“I cannot imagine a circumstance in which a monopoly provider of a product in Australia achieving a profit of 85.5 per cent on sales would not expect or deserve to be referred to the ACCC,” […]

WITH refreshing, if somewhat surprising frankness the new CEO of the ACT Suburban Land Agency, John Dietz, has confirmed what we all knew; the number one task of the agency is to “maximise revenue” from land sales.

Jon Stanhope

Jon Stanhope.

Mr Dietz made this confession during a speech to the Australian Property Institute in late May.

The SLA is, of course, just as was the LDA before it, subject to direction from the ACT government through the responsible ministers and cabinet. In other words, the SLA does as it is told. It receives its marching orders in the form of a Statement of Intent developed by the government.

The Statement of Intent sets out the government’s expectations and intentions. It incorporates the indicative land release program, which reflects the government’s decision on how much land is to be released and for what purpose. It also stipulates how much revenue the SLA is to generate from the sale of the land and the profit it is expected to reap.

The 2018-19 indicative land release program, announced by the government as part of the Budget, provides for a total of 4060 dwelling sites. Of these 1396 are identified as single residential, compact blocks and townhouses. Bizarrely the number of standard residential blocks has not been separately identified. The remaining 2664 dwellings will be units. The government has stipulated that out of this total 60 will be for public housing and 20 for community housing.

The first thing to be said about this land release program is that it will without doubt exacerbate the level of unmet demand for detached housing and will result in a further and almost certainly large increase in the median price of detached housing in Canberra.

Secondly, the proposed split between standard residential and units is the mirror reverse of what is required to meet the housing choice of Canberrans as revealed in the government’s own research. The median price of detached housing has increased over the last six years at around $50,000 a year and is currently, according to Domain, sitting at $754,000.

That it is almost inevitable that the median house price in Canberra will continue to soar begs the question why Chief Minister Andrew Barr and Housing Minister Yvette Berry continue to deliberately and dramatically constrain the supply of land for detached housing when they must know the consequences, particularly for Canberrans in the bottom two and a half income quintiles.

However, John Dietz has in his disarming way also given us an insight into this apparent quandary.

In seeking to anticipate criticism that the SLA is indeed “profit-driven” he said that if the SLA was in fact driven by profit “why wouldn’t we hold back the supply of land ensuring the demand stays high because the profits would go through the roof.”

In making this comment, Mr Dietz didn’t go on to reveal that in 2017-18 the SLA gross profit margin on land sales was 85.5 per cent or that despite being directed to deliver significantly less land than last year that revenue is anticipated to grow from $445 million to $701 million.

Media reports I read of Mr Dietz’s speech did not report whether he blushed when decrying the possibility that the SLA was profit-driven but frankly I cannot imagine a circumstance in which a monopoly provider of a product in Australia achieving a profit of 85.5 per cent on sales would not expect or deserve to be referred to the ACCC.

Nor can I imagine, considering the housing affordability crisis in Canberra and the role which the SLA has played in implementing the ACT government land sales policy, which is unarguably a significant contributor to that crisis, that this is not a cause of major embarrassment to him and indeed his board, let alone the Minister.

Indeed, it is perhaps worth considering whether the decision by the government to exclude Canberrans from any role on the board of the SLA and to instead load it up with a mob of Sydneysiders with no connection to our community was designed to ensure that the government’s determination to strangle the supply of land and maximise revenue, at the expense of affordable housing, would be carried out without compunction or hesitation.

If you don’t live in Canberra, aren’t a part of the community, don’t read the local papers or listen to the local news, don’t rub shoulders at work or in the shops or on the streets with young families desperate for a home or unable to afford the rent and you are never required to look into their faces or respond to their despair then being on the board of the Suburban Land Agency and implementing policies that are guaranteed to deny thousands of local families their own home is probably a doddle.



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