29 December 2023

Solve the housing crisis with respectful practical infill, says Cain

| Peter Cain MLA
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Housing development.

The ACT Government urgently needs to address infill, says Peter Cain. Photo: Michelle Kroll.

The Labor-Greens government’s new infill policies are weak, lacking in ambition and will not help solve the housing crisis.

The Canberra Liberals and the Labor-Greens government’s policies on development within RZ1 zoned land appear similar but are actually significantly different with respect to two key elements: a broader choice for landowners and a wider housing range for the market.

Prior to the recently announced changes by the government, on RZ1 zoned land in the ACT the Crown lease holder was allowed to build a single residence. On parcels larger than 800 sqm a secondary residence up to 90 sqm could be built, but without the option of subdivision.

According to government data provided to me in October this year, there were almost 45,000 such parcels in the ACT, with the majority, just over 28,000, sized between 800 sqm and 1000 sqm.

This means that there were about 16,500 parcels greater than 1000 sqm. Given the government’s priority for releasing relatively small RZ1 parcels in new areas such as the Molonglo Valley, these numbers would not be significantly different from the current date.

As such, splitting the title of a (say) 1000 sqm parcel would provide two parcels, possibly 500 sqm each, depending on site features, that would conform with the current land release strategy for newly zoned RZ1 areas.

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A policy that the Canberra Liberals took to the 2020 election, and to which we remain committed, is to allow the owner of such larger parcels to separately title, or unit title, the land and construct a second dwelling. In recent changes to the Territory Plan, the Labor-Greens government has provided a weak, almost embarrassingly incompetent version of this policy.

Under the new Labor-Greens policy, the owner of these larger parcels would only be able to unit title the parcel, with a cap of 120 sqm on the new dwelling, i.e. will require setting up of body corporate, strata levies, etc. This inferior version of the Canberra Liberals’ policy is deficient in two key areas.

Firstly, the size limit of 120 sqm means that the government says all you can build is a small townhouse – barely bigger than a standard two-bedroom unit. Their policy prohibits the construction of standard-sized homes. While this may suit down-sizing empty-nesters and childless couples, it serves as a hindrance for families needing more space but unable to break into the market.

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When so many RZ1 blocks are quite large, e.g. 3511 over 1400 sqm, this policy is simply deficient and a missed opportunity to solve the housing crisis.

Secondly, it prevents the landowner from separately titling the land, limiting them to a unit title accompanied by obligations under the Unit Titles (Management) Act 2011. This also denies the market a freshly tilted parcel, a more attractive market option.

The Canberra Liberals RZ1 infill policy will allow separate titling of secondary dwellings and allow the construction of standard-sized houses. It will be a policy that will create extra supply and genuine housing choice – not some glib slogan about “housing choices”.

The Liberals’ policy will increase the variety of housing available to the market, while preserving existing guidelines around canopy cover and permeable surface areas.

Infill is the great opportunity waiting to be seized to solve the housing crisis without doing any damage to our beautiful bush capital and its unique suburban character.

It is an opportunity an Elizabeth Lee-led Canberra Liberals government will seize with an urgency that suggests we actually want all Canberrans to have a safe, secure roof over their heads.

Peter Cain MLA is Shadow Minister for Planning and a Liberal MLA for Ginninderra

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Onelia Herriot, For sun access that is not always strong enough. Sun access and the properly designed house can reduce energy use for heating considerably. Less energy used, less green house gases, which the aim is to reduce. Catering to this though in a suburban setting might just be the need to limit the height of housing, not the density. At least on the northern side of a potentially affected dwelling.

I so totally agree.

Why should those investors buying up and profiting from Territory owned land benefit only themselves without putting a percentage of their financial gains into the community and its common goods through land taxes Onelia Harris and Geoffrey Bell?

I don’t care how much it is, our community and its services should benefit from those gains as well!

devils_advocate1:39 pm 02 Jan 24

The reason they shouldn’t be paying taxes is because taxes discourage whatever activity it’s taxing

If you want less of something, tax it. If you want more of something, pay a subsidy.

Investors shouldn’t be paying taxes d-a?

Tax reforms have been benefiting buyers and underway in the ACT for close to 15-years and I haven’t seen the sky fall in. Nor have I seen these changes discouraging investors or those buying their first homes. The reforms have been praised by both sides of government.

The statistics speak for themselves. This is despite the many peaks and troughs over the years, particularly throughout and following Covid. Canberra has always remained competitive with the other states, particularly in construction and lending statistics.

The tax reforms have led to lower stamp duty costs and given greater opportunities to investors and those young people entering the housing market. The government’s recent zoning changes will also boost density and affordability costs and provide greater opportunities for buyers. This is despite the Canberra Liberals and the party’s Peter Cain constant whingeing and complaining in the media.

devils_advocate10:52 am 04 Jan 24

Bad faith argument.

Of course investors should pay taxes. They already pay exorbitant taxes especially when bringing new supply to the market. These include but are not limited to:
-stamp duty
-lease variation charges
-excess holding costs incurred due to bureaucratic planning processes
-income tax on any gains realised

New development is the only way of increasing supply. Yet there are hundreds of thousands of dollars (yes, hundreds of thousands of dollars) in deadweight tax costs even before a townhouse or apartment is brought to market.

This discourages investment and adds to the final cost of housing.

Not an argument at all.

You agree investors should pay taxes, rents on resource value. You then iterate some taxes, and offer an opinion you don’t like it (“deadweight”). And…what?

I see your earlier comment that if you want less of something then tax it more. Given taxation is the price of a civil society then I could take it you favour social collapse. If you are not so absolutist then try delivering measured comments accordingly, or simply less driven by self-interest.
‘Making something cheaper’ is not a principal aim of tax policy or toward tax equity.

devils_advocate12:34 pm 04 Jan 24

@Charmaine a “deadweight loss” is not an opinion about whether I like or dislike something.

It most commonly refers to the difference between the quantity demanded and the quantity supplied due to the imposition of a tax or tariff.
That is, the number of efficient transactions that would have occurred but did not due to the separation between the buyer’s willingness to pay, and sellers willingness to sell (the “tax wedge”)

Also laughable that I am being called absolutist here. It is absolutely the stated policy of the government to make housing cheaper (“affordable”). Loading each property up with hundreds of thousands of dollars of deadweight costs is explicitly counter to that stated objective. As does many of the other policies that have the stated objective of improving affordability (eg demand-side subsidies).

Finally, policies to increase supply might actually increase the total tax receipts, if it drives volume.

I am not sure what your argument is d-a! In your first comment you are arguing against property taxes and in your second argument you agree that taxes are justified but argue against them! Did you read my comment or even understand it?

Everyone pays taxes! Taxes have been around since the corvée and the tithe in Ancient Egypt. Taxes fund government expenditure and regulate and reduce negative externalities. If builders and developers did not pay up front taxes as a charge against their properties, the ACT government would be liable if they became bankrupt or insolvent. The ATO is also a creditor in bankruptcy matters and would be repaid on a first preference basis, if and when monies became available!

Property and tax reforms have been underway in the ACT for close to 15-years. These reforms have not discouraged developers, investors or those buying their first homes. The reforms have led to lower stamp duty costs and given greater opportunities to purchasers and those young people entering the housing market. The recent zoning changes will further boost density and affordability costs providing greater opportunities for buyers. This is despite the constant opposition and whingeing we see from the Canberra Liberals and Peter Cain in particular. Mr Cain is hostile to those he disagrees with but slavish in appeasing those building and lobby group mates who contribute so much to the Liberal party’s coffers!

ACT taxpayers should not bear the brunt of rogue and cowboy developers!

devils_advocate4:25 pm 04 Jan 24

The argument on taxes is straightforward:
1) yes taxes are necessary to fund public goods.
2) taxes influence behaviour.
3) that influence might be positive (excise on cigarettes discouraging smoking) or negative (income taxes discouraging productive labour).
4) it is not a question of whether to tax at all, but what and how much.
5) new property developments – particularly urban infill, the topic of this article – are hit with disproportionately high taxes and other costs.
6) applying hundreds of thousands of dollars of deadweight loss in the form of taxes to new properties will not entirely eliminate the economic activity.
7) however it will reduce the level of that activity significantly below what it otherwise would be.
8) this outcome is inconsistent with the stated objective of improving housing affordability.

Here I was thinking that it was going to be a slow news day from our local media during this festive season. The endless replays of Christmas specials and the repeats we always see on TV at this time of year. The Riot-Act’s Genevieve and Ian going into family focused hybernation depriving me of my entertainment and daily news focused on the Canberra Liberals’ silliness and confusion!

Lo and behold, along comes Peter Cain MLA to provide a bit of Christmas cheer and silliness, jolting me out of my festive slumber! This time we see him blathering on about “respectful, practical infill” entertaining us yet again with his inane blatherings! What a pity the writer of this piece did not display the RiotAct’s Thomas Lucraft photo which epitomises Mr Cain’s demeanour so well and his approach to his opponents and planning in the ACT! Always frothing and aggressive to those with different opinions to his and slavish in appeasing those lobby groups who contribute so much to the Canberra Liberal party’s coffers! The Master Builders Association, the gambling industry and the far-right fringe lobby groups including the Australian Christian Lobby, Right to Life Association and Advance Australia are just a few.

The Canberra Liberals have not participated cooperatively or fully in the recent past or current planning inquiries and has opposed any of their findings. As if the party or Peter Cain would know the first thing about what respectful, practical infill means!

As we get closer to the 2024 Territory election, Mr Cain’s desperate behaviour has become increasingly embarrassing and erratic, both inside and outside of the Assembly. Elected on the slimmest of margins, Mr Cain has gone rogue and uses most of his time making a goose of himself, out in the electorate knocking on doors and taking selfies with voters, trying to shore up his slim chances of re-election at the next Territory election in 2024.

Does leader Elizabeth Lee have any control? Someone in the party really needs to talk to Peter about his behaviour going into next year’s election!

HiddenDragon7:30 pm 29 Dec 23

“Infill is the great opportunity waiting to be seized to solve the housing crisis without doing any damage to our beautiful bush capital and its unique suburban character.”

In theory, perhaps, but in practice, no – because Canberra too often operates like an incestuous little kleptocracy in which rules ostensibly designed to protect against bad outcomes really only apply to people who don’t have the right connections, while for those who are “connected”, the rules can be wondrously malleable in their application.

Any reassurances that things would be done differently under a Liberal government need to be considered in light of the likelihood that such a government would rely on the support of one or more MLAs who would run as independents but, in truth, be developer-backed stooges.

The ACT Liberals are kidding themselves if they think that their current stance on this issue will win them more votes than it will lose from swinging/wavering voters.

Stephen Saunders6:57 pm 29 Dec 23

Under bipartisan policy, Australia is growing by more than one Canberra a year.

Infill is a lovely idea, but it is not part of any “urgent” solution to the housing crisis.

If you want to get serious, Peter, try dividing migration by five or six.

Both the Liberals and Labor/Green have now completely botched the city’s RZ1 development planning.

Why limit denser housing purely on the size of an RZ1 land parcel? Every planning student will be taught in their first year university to increase housing density ‘nearer’ to public transport stops, schools, shops, jobs, urban infrastructure and community facilities. Not further away.

Our MLA’s instead focus the vast majority of their housing and population density strategy on the larger blocks at the city’s fringes and on the suburban fringes. It’s the exact opposite of how to do missing middle development.

The Griffins and Canberra’s planners from before self government must be rolling in their graves. Such a missed opportunity.

What does the author consider to be a ‘standard-sized house’? We should pause to consider what is an acceptable size for a home in modern Australia. Does everyone need a media room? Do we all need four bedrooms? Is a home-office needed? Do children need a seperate playroom? Do parents and carers need a bedroom with room for a lounge? Why ask these questions? Because it all contributes to resource use and price, as well as land size needed to accommodate the structure.

Knocking down the small cheap houses (like the old government houses) and replacing them with large expensive ones won’t improve affordability. As flawed as the government’s overall policies are, the 120 sqm limit is good as it will encourage houses of a size which is otherwise not built anymore and is decreasing in supply.

It depends on how you define housing affordability.

If you see everyone as a number and on sheer numbers no.
If you build larger houses and see the housing affordability as a person with the space for them then it does.

devils_advocate11:21 pm 29 Dec 23

Nope. Adding to the supply will reduce prices. It doesn’t matter at which level you add the supply, as long as the total supply of houses is increased.

If the Liberals were really serious about this they would reduce the LVC for unit titling back to $7k

Nope. Replacing cheap with expensive dwellings will alter the price structure, with less expensive expensive houses and more expensive cheaper ones.

I know you’re thinking of a study that claims adding more expensive houses improves affordability overall. Aside from the trick of using quintiles to hide absolute changes (and it used rents, not prices), it wasn’t the same as here, where the cheap house supply is actually being decreased.

Supply narratives use oversimplified models that can’t explain the price dynamics over the past two decades, or why major price decreases only occur with economic crises. Supply of credit is the factor, you actually weren’t allowed to borrow as much decades ago as you can now.

devils_advocate10:46 am 02 Jan 24

@knight37 you’re arguing against a point I never made.

I simply stated that adding to supply reduces house prices, regardless of whether the added supply is high or low end housing.

I’m not talking about simply replacing one home with another. That’s not added supply (unless the house being replaced is literally at the end of its useful life).

Adding another dwelling on an RZ1 block -regardless of whether it is an additional large home or small – will increase supply and cause prices to be less than they otherwise would be.

Similarly reducing the LVC back to a reasonable amount would encourage redevelopment of rz2 and above blocks and add to supply, and improve affordability.

I agree. Limiting the second house to 120sqm will give more choice. Not enough being built now. Plenty of McMansions now available, for those who want that.

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