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Public housing furore reflects true cost of tram

By Greg Cornwell - 14 July 2017 29

Broken piggy bank

Is Canberra in financial strife as a result of the light rail project?

Recent big-ticket cancellations like that of the planned convention centre, confusion about whether a new sports stadium will be built and then the Government’s initial refusal to fund SHOUT a trifling $110,000 raise concerns that the ‘progressive’ development of our city is stalling.

And it’s not just the fact that there have been adjustments to expenditure. Our Government is looking to increase its income via land sale profits by a smart – some might say sneaky – manoeuvre.

Changes to the Territory Plan some years ago altered the definition of ‘supportive’ housing – homes for aged or disabled residents – to include the broader term ‘social housing’, which meant that land previously set aside for the aged or disabled could now be used for general public housing.

The Government pays nothing for this land, which means it can move all public housing tenants, i.e. those in ‘social housing’, from prime land sites along Northbourne Avenue, and then sell it off to developers for a handsome profit.

Residents of suburbs in which this unexpected community land switch is occurring such as Holder and Chapman have protested at the lack of prior consultation, but the Government says the sites are not negotiable. This is a worrying development because the Government’s action could be repeated all over Canberra, again without appeal.

Perhaps as a sign of future expansion into the suburbs is the recently announced first ‘urban renewal precinct’, which will be developed at the minister’s discretion, along the Northbourne Avenue corridor. It incorporates far more than that valuable strip, taking in land from Flemington Road down to and including Civic, parts of Dickson, Braddon, Turner and the ANU.

How many moveable public facilities exist in this broad area is unknown but again, it affords our Government the opportunity to relocate its tenants to free land elsewhere and sell off in-demand central sites to developers.

The loss of community facility land from Canberra’s suburbs will include open recreation space, which whether formalised or not has long been accepted as such by local communities. For the relocated public housing tenants, access to shops probably not as convenient as the current Northbourne Avenue sites, however, the extra custom will be welcomed by the suburban shopkeepers.

The ACT Government would also see the potential of extra Labor votes in more marginal electorates too. On balance however, the suburbs lose. More pepper than salt methinks.

Flushed from its October 2016 election victory there is arrogance in the ACT Government which has the potential to fatally damage the Bush Capital image.

The Manuka Oval saga is not over, a stoush is ahead at the Italo-Australian site in Forrest, Yarralumla shows pretty pictures of the brickworks (interest declared) not the outside development and skyscraper-like proposals are floated for town centres.

Cutting back on expenditure, relocating public tenants, selling off prime real estate … How much is the tram really costing?

What’s Your opinion?


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Public housing furore reflects true cost of tram
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dungfungus 12:55 pm 19 Jul 17

dungfungus said :

Chris Steel MLA said :

You forget Mr Cornwell, that you were part of a Liberal Government that cut around 1000 public housing dwellings from our stock without replacing them.

We reject that approach. The Labor Government’s long term policy of public housing renewal called the ‘Public housing asset management strategy 2012-2017’ has the goal of reducing concentrations of disadvantage through public housing redevelopment and aligning housing with changing social structures and tenant needs. We are not simply selling off stock as your Government did, but reinvesting in new stock.

This and previous strategies have had a consistent focus for years on reducing concentrations of disadvantage. So this is not the first time that tenants have been moved into more suitable, lower density and better quality accommodation.

Northbourne flats are only the latest part of the renewal, with Burnie Court in Lyons and others having also been redeveloped to provide better quality public housing for residents. Strathgordon Court in Lyons is another one on the Southside that is on the renewal list over the forward estimates.

Where were the 1,000 public housing dwellings you refer to located?

Any development with identifying the other 590 yet, Chris?

Damien Haas 3:49 pm 18 Jul 17

Garfield said :

Are you on ACT Labor’s payroll? The reason I ask is that your arrogant dismissal of community concerns about the loss of CFZ land exactly matches that of Barr and his government.

I’m not on any political partys payroll, and I am not a member of a political party. But your comment reeks of the politicisation of a community issue. You are perfectly entitled to your view, but portraying my view as arrogance is just staggering.

I agree with the Chief Minister on this issue, but here is the kicker – he is saying what many people think – that public housing is a community use.

Garfield said :

You mention land use changes, but there weren’t any. When land is rezoned there’s public consultation and the opportunity to submit objections. This is why I specifically mentioned the technical amendment of 2015 and that technical amendments are not supposed to significantly change the interpretation. That is why there was no Opposition or public outcry at the time. Public housing could not be built on CFZ land before the amendment and as it was only a technical amendment it should not be able to be built there afterwards.

I still can’t see how this is an issue. It is a change in the way community land is used. A change that provides greater flexibility and more options for public housing in the community. Surely more options are better?

Garfield said :

You keep harking on $80m p.a. only being a small hit to the budget, but we all know that’s only for stage 1 and the auditors estimated full cost for stage 1 was $1.78bn or $89m p.a. over 20 years. The government is pressing ahead with stage 2 and they will no doubt press on with the remaining stages unless they lose an election. Stage 1 is presumably the most viable stage and so it’s reasonable to assume those other stages will cost at least as much. That will take the cost of the LR network to $445m+ p.a. for 20 years. Additionally we’ll still be stuck with the $120m+ subsidy for the buses as LR will take the profitable trunk routes. We’re talking about roughly quintupling the cost of providing public transport to the territory in a time where government revenue should only double, assuming taxation is kept in line with population growth and inflation. The budget will not be able to sustain that sort of increase without even bigger tax increases than we’ve seen recently or even bigger deficits.

I keep trying to bring a sense of balance to catastrophisation prophecies masquerading as fact. Over the course of the contract its around $80m a year. The only contract signed to date is for stage one. Any future stage needs a business case to be endorsed, and then figures for those stages will be known.

Fundamentally the difference in how we are assessing public transport infrastructure spending is that I view it as an investment and you only see the cost.

Garfield 1:57 pm 18 Jul 17

Damien Haas said :

Garfield said :

If you don’t believe there’s a furore about new public housing precincts on CFZ land, go talk to some of the people who purchased land in Molonglo after being told the CFZ land there was going to become a community centre.

I’m not sure a few NIMBY’s opposed to public housing are representative of the Canberra population. I saw the TV news report of the “March on the Assembly” by the Chapman NIMBYS and there was less than half a dozen – including a pet dog.

Garfield said :

The new public housing is linked to light rail financially due to the proceeds of the sale of public housing properties in the corridor being earmarked for the lump sum payment to the consortium, as you yourself have mentioned previously on this website. The government is not reinvesting the proceeds from the sale of public housing into new public housing, but into LR.

Under the Federal Liberal Asset Recycling scheme the funds raised can only be used on assets that will generate economic productivity. Light rail is the program that the Federal Liberal government endorsed for the asset recycling funds to be used on.

There is already a program in place and budgeted for, that provides for new public housing stock to be purchased. It operates year in, year out.

Garfield said :

The government has chosen to place new public housing on CFZ land, which has not happened in the past. They are relying on an interpretation of a technical amendment from 2015. Technical amendments are not supposed to change the substance of legislation, yet somehow prior to the amendment and 2016 election, public housing could not be placed on CFZ land, but now it can. They have not chosen to purchase existing blocks and they have not chosen to use as yet unreleased residential land for the new public housing. Both could have been financially viable options if the sale of existing stock was reinvested into more public housing. It seems the cost of LR has encouraged the government to take the cheap and possibly dubious option of turning CFZ land into residential land for public housing.

As I said, the asset recycling funds can only be used for light rail.

The general community are quite comfortable with public land being used for public housing. Land use changes occur all the time. The Liberal opposition in the Assembly didn’t say a word at the time of the changes. Surely if there was such public concern it would have been raised at the time? No one said anything.

Garfield said :

The ACT is still in deficit and likely to remain so according to the auditor general. There’s only so long a government can remain in deficit and $80m p.a. for each LR stage, of which there are 5 major ones planned, plus the existing bus subsidy is going to see the public transport cost to the budget explode exponentially.

Health and education consume nearly 60% of the ACT Budget, that is now over $6 Billion a year. Light rail at a tiny $80m a year will not impact the deficit in any meaningful way.

As a technology known to attract investment, employment and economic activity in addition to the many transport benefits it delivers – light rail will help boost the economy. Money spent on it is definitely an investment in Canberra’s future.

… (continued)
You mention land use changes, but there weren’t any. When land is rezoned there’s public consultation and the opportunity to submit objections. This is why I specifically mentioned the technical amendment of 2015 and that technical amendments are not supposed to significantly change the interpretation. That is why there was no Opposition or public outcry at the time. Public housing could not be built on CFZ land before the amendment and as it was only a technical amendment it should not be able to be built there afterwards.

You keep harking on $80m p.a. only being a small hit to the budget, but we all know that’s only for stage 1 and the auditors estimated full cost for stage 1 was $1.78bn or $89m p.a. over 20 years. The government is pressing ahead with stage 2 and they will no doubt press on with the remaining stages unless they lose an election. Stage 1 is presumably the most viable stage and so it’s reasonable to assume those other stages will cost at least as much. That will take the cost of the LR network to $445m+ p.a. for 20 years. Additionally we’ll still be stuck with the $120m+ subsidy for the buses as LR will take the profitable trunk routes. We’re talking about roughly quintupling the cost of providing public transport to the territory in a time where government revenue should only double, assuming taxation is kept in line with population growth and inflation. The budget will not be able to sustain that sort of increase without even bigger tax increases than we’ve seen recently or even bigger deficits.

Garfield 1:37 pm 18 Jul 17

Damien Haas said :

Garfield said :

If you don’t believe there’s a furore about new public housing precincts on CFZ land, go talk to some of the people who purchased land in Molonglo after being told the CFZ land there was going to become a community centre.

I’m not sure a few NIMBY’s opposed to public housing are representative of the Canberra population. I saw the TV news report of the “March on the Assembly” by the Chapman NIMBYS and there was less than half a dozen – including a pet dog.

Garfield said :

The new public housing is linked to light rail financially due to the proceeds of the sale of public housing properties in the corridor being earmarked for the lump sum payment to the consortium, as you yourself have mentioned previously on this website. The government is not reinvesting the proceeds from the sale of public housing into new public housing, but into LR.

Under the Federal Liberal Asset Recycling scheme the funds raised can only be used on assets that will generate economic productivity. Light rail is the program that the Federal Liberal government endorsed for the asset recycling funds to be used on.

There is already a program in place and budgeted for, that provides for new public housing stock to be purchased. It operates year in, year out.

Garfield said :

The government has chosen to place new public housing on CFZ land, which has not happened in the past. They are relying on an interpretation of a technical amendment from 2015. Technical amendments are not supposed to change the substance of legislation, yet somehow prior to the amendment and 2016 election, public housing could not be placed on CFZ land, but now it can. They have not chosen to purchase existing blocks and they have not chosen to use as yet unreleased residential land for the new public housing. Both could have been financially viable options if the sale of existing stock was reinvested into more public housing. It seems the cost of LR has encouraged the government to take the cheap and possibly dubious option of turning CFZ land into residential land for public housing.

As I said, the asset recycling funds can only be used for light rail.

The general community are quite comfortable with public land being used for public housing. Land use changes occur all the time. The Liberal opposition in the Assembly didn’t say a word at the time of the changes. Surely if there was such public concern it would have been raised at the time? No one said anything.

Garfield said :

The ACT is still in deficit and likely to remain so according to the auditor general. There’s only so long a government can remain in deficit and $80m p.a. for each LR stage, of which there are 5 major ones planned, plus the existing bus subsidy is going to see the public transport cost to the budget explode exponentially.

Health and education consume nearly 60% of the ACT Budget, that is now over $6 Billion a year. Light rail at a tiny $80m a year will not impact the deficit in any meaningful way.

As a technology known to attract investment, employment and economic activity in addition to the many transport benefits it delivers – light rail will help boost the economy. Money spent on it is definitely an investment in Canberra’s future.

Are you on ACT Labor’s payroll? The reason I ask is that your arrogant dismissal of community concerns about the loss of CFZ land exactly matches that of Barr and his government. In Wright there was exactly 1 parcel of land set aside for community facilities. I spoke to a friend of a friend two months ago who bought land in Wright and one of the key selling points was that land was going to become some sort of community centre, according to the LDA people they spoke to. Now as we know its going to become more residential land and there will not be any community facilities in the suburb. Objecting to the loss of promised community facilities is not being an anti public housing NIMBY. The community council meeting after the announcement was overflowing and the petition presented by those marchers you dismiss had 900 signatures on it and was only in relation to the Chapman site being unsuitable because its in a bush fire zone.

The government has been claiming the sale of public housing in the corridor will help defray the costs of stage 1, while conveniently ignoring the additional cost of funding replacement public housing as there is no reinvestment from those sales. The scheme in place that operates year in year out to acquire new public housing can’t replace many hundreds of homes lost to LR without those funds being reinvested into new public housing, and we know they’re not. So the government is making use of CFZ land for the first time ever for public housing.

TBC …

dungfungus 10:36 am 18 Jul 17

John Moulis said :

dungfungus said :

JC said :

dungfungus said :

Where were the 1,000 public housing dwellings you refer to located?

Baringa gardens demolition would have been around this time. There would be a fair amount of the 1000.

Actually, 410 units made up Baringa Gardens and it was vacated progressively before the social expiriment disaster was demolished so there must have been available public accommodation available elsewhere in Canberra at the time.
https://www.myheritage.com/research/record-10450-25484274/canberra-times-act

Snapshot of Baringa Gardens at Melba from Hansard, 15th October 1991:

“A typical social mix. Poor public and self image Isolation. High density. Low level of privacy. Poor traffic planning. Unenforced lease conditions. Lack of maintenance. Vandalism. Dogs. Physical: Inadequate heating/ ventilation. Condensation. Water penetration. Mould. Dampness. Poor orientation. Inadequate landscaping.
Prototype Upgrade: 377 of the 795 residents (47.5%0) living at Melba one year previously. Low income, high unemployment. Flats used for priority and emergency housing – short stays.”

It had to be demolished on building related health issues alone; just like Labor’s decision to demolish over 1,000 privately owned Mr Fluffy houses.

Ah Baringa Gardens, I’d almost forgotten about it. I think everybody who lived in Canberra at the time has a Baringa Gardens story to tell. Mine is how the crime rate was so high police declared it a no-go area and when word spread around the place that it was a cop-free zone guys used to walk around the place stark naked.

I recall those happenings you refer to and after Baringa was “closed down” Burnie Court at Lyons took over the title of “canberra’s premier no-go area”.

It soon became known as Burning Court but it wasn’t as bad as the public housing estates in Paris last week http://www.breitbart.com/london/2017/07/17/trumps-paris-migrant-900-cars-burned/

Damien Haas 10:06 am 18 Jul 17

Garfield said :

If you don’t believe there’s a furore about new public housing precincts on CFZ land, go talk to some of the people who purchased land in Molonglo after being told the CFZ land there was going to become a community centre.

I’m not sure a few NIMBY’s opposed to public housing are representative of the Canberra population. I saw the TV news report of the “March on the Assembly” by the Chapman NIMBYS and there was less than half a dozen – including a pet dog.

Garfield said :

The new public housing is linked to light rail financially due to the proceeds of the sale of public housing properties in the corridor being earmarked for the lump sum payment to the consortium, as you yourself have mentioned previously on this website. The government is not reinvesting the proceeds from the sale of public housing into new public housing, but into LR.

Under the Federal Liberal Asset Recycling scheme the funds raised can only be used on assets that will generate economic productivity. Light rail is the program that the Federal Liberal government endorsed for the asset recycling funds to be used on.

There is already a program in place and budgeted for, that provides for new public housing stock to be purchased. It operates year in, year out.

Garfield said :

The government has chosen to place new public housing on CFZ land, which has not happened in the past. They are relying on an interpretation of a technical amendment from 2015. Technical amendments are not supposed to change the substance of legislation, yet somehow prior to the amendment and 2016 election, public housing could not be placed on CFZ land, but now it can. They have not chosen to purchase existing blocks and they have not chosen to use as yet unreleased residential land for the new public housing. Both could have been financially viable options if the sale of existing stock was reinvested into more public housing. It seems the cost of LR has encouraged the government to take the cheap and possibly dubious option of turning CFZ land into residential land for public housing.

As I said, the asset recycling funds can only be used for light rail.

The general community are quite comfortable with public land being used for public housing. Land use changes occur all the time. The Liberal opposition in the Assembly didn’t say a word at the time of the changes. Surely if there was such public concern it would have been raised at the time? No one said anything.

Garfield said :

The ACT is still in deficit and likely to remain so according to the auditor general. There’s only so long a government can remain in deficit and $80m p.a. for each LR stage, of which there are 5 major ones planned, plus the existing bus subsidy is going to see the public transport cost to the budget explode exponentially.

Health and education consume nearly 60% of the ACT Budget, that is now over $6 Billion a year. Light rail at a tiny $80m a year will not impact the deficit in any meaningful way.

As a technology known to attract investment, employment and economic activity in addition to the many transport benefits it delivers – light rail will help boost the economy. Money spent on it is definitely an investment in Canberra’s future.

mcs 9:36 am 18 Jul 17

dungfungus said :

mcs said :

dungfungus said :

mcs said :

dungfungus said :

As I understand it, the operators of the light rail will receive an annual undisclosed sum to run it and the government will collect and keep all the fares. The difference between these two sums will be how much it costs us but it won’t be revealed unless an audit flushes it out.

There is absolutely nothing ‘undisclosed’ about the availability payments – a 30 second google search soon finds the public contract summary that has that exact detail in it on page 14. While much of the project is shrouded in a cloud of minimal detail, this is not one part of it.

http://www.tccs.act.gov.au/__data/assets/pdf_file/0007/887686/Light-rail-Capital-Metro-Project-Contract-Summary.pdf

Farebox revenue is another story altogether, and the inherent subsidy in between. But a bit of research can find some important facts, such as this one – rather than the usual ‘cloak of invisibility’ assumption many make on here.

You should also read the caveats and qualifications about the “availability payments” on page 14.

Care to show an example for a major infrastructure project of such a size that isn’t full of caveats and qualifications, and triggers for variations?

The ones quoted are perfectly normal and reasonable for such an arrangement – being abatement for underperformance (I.e. would reduce the availability payments), changes due to refinancing (again, something that often happens on major projects), and contract variations around ‘force majeure’ style outcomes that significantly impact on the contract.

It is standard stuff, especially for a PPP style arrangement. Of course the final amounts are subject to change – they always area in this style of contracting. To suggest its ‘undisclosed’ is a fairly strong twisting of the truth.

If I “twisted the truth” what do you call the government doing when, according to the Auditor General, they assumed higher revenues from the sale of “vacated” public housing sites along Northbourne Avenue?

https://the-riotact.com/audit-queries-sales-revenue-estimates-for-public-housing-sites/208199

You really are a great one for a subtle deflection when your shown up to be talking nonsense. I was commenting solely on your assertion that the estimated availability payments for Capital Metro were ‘undisclosed’ – which is a clear lie, as has been shown.

I made no comment in relation to public housing, because that is an entirely different topic to what I was responding to. Nowhere have I suggested that the Government in that capacity hasn’t twisted the truth… because I haven’t made any comments in that regard….

dungfungus 11:36 pm 17 Jul 17

Damien Haas said :

“Public housing furore reflects true cost of tram”

What furore? How is it linked to light rail funding?

“Is Canberra in financial strife as a result of the light rail project?”

Clearly not – there is a contract in place with payments set at $80m a year for a fixed period. With an annual ACT Budget over $6 Billion I still don’t know why the very small percentage of the budget allocated to light rail infuriates those opposed to better public transport.

I am not sure where you are getting the $80 million a year figure from Damien but the indicative figures shown in the business plan is for a not so small percentage of the budget being a one off start payment of $375 million to Canberra Metro in 2018 and varying annual availability payments of approx. $36 million in 2019 through to $75 million in 2038 and a final payment of $13 million in 2039.

Then there are the costs of running the Transport Canberra bureaucracy and if I had the time I
am sure there are a lot of latent contingencies that are known and unknown that I could find.

Furore is the wrong word – despair is more a appropriate one.

But as long as the Canberra ratepayers continue to underwrite the financial black hole it is destined to be I am sure the trams will run on time.

Garfield 8:45 pm 17 Jul 17

Damien Haas said :

“Public housing furore reflects true cost of tram”

What furore? How is it linked to light rail funding?

“Is Canberra in financial strife as a result of the light rail project?”

Clearly not – there is a contract in place with payments set at $80m a year for a fixed period. With an annual ACT Budget over $6 Billion I still don’t know why the very small percentage of the budget allocated to light rail infuriates those opposed to better public transport.

If you don’t believe there’s a furore about new public housing precincts on CFZ land, go talk to some of the people who purchased land in Molonglo after being told the CFZ land there was going to become a community centre.

The new public housing is linked to light rail financially due to the proceeds of the sale of public housing properties in the corridor being earmarked for the lump sum payment to the consortium, as you yourself have mentioned previously on this website. The government is not reinvesting the proceeds from the sale of public housing into new public housing, but into LR.

The government has chosen to place new public housing on CFZ land, which has not happened in the past. They are relying on an interpretation of a technical amendment from 2015. Technical amendments are not supposed to change the substance of legislation, yet somehow prior to the amendment and 2016 election, public housing could not be placed on CFZ land, but now it can. They have not chosen to purchase existing blocks and they have not chosen to use as yet unreleased residential land for the new public housing. Both could have been financially viable options if the sale of existing stock was reinvested into more public housing. It seems the cost of LR has encouraged the government to take the cheap and possibly dubious option of turning CFZ land into residential land for public housing.

The ACT is still in deficit and likely to remain so according to the auditor general. There’s only so long a government can remain in deficit and $80m p.a. for each LR stage, of which there are 5 major ones planned, plus the existing bus subsidy is going to see the public transport cost to the budget explode exponentially.

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