Land Affordability: The Local Government Perspective

1. Land Affordability:The Local Government Perspective Cr Dick Gross President, MAV September 2008

2. Land Affordability – Local Government • About local government • Planning and Responsible authority – land use planning • What is affordable? • What can be done • Federal Government • State Government • Local government • Industry

3. Local Government in Victoria • 79 municipal councils • Governed by 635 democratically elected councillors • Employs 38 600 people • Annual revenue of $4.74 billion • Responsible for $47.7 billion in community assets • Provide more than 100 services to Victorian communities

4. Local Government Statistics • Service 128,434 kms of roads (approx 85% of the State’s road network) • Maintain more than 1000 grassed sports surfaces • Collect 1 million tonnes of kerbside garbage pa • Collect 540 000 tonnes of recyclable materials pa • Collect 259 000 tonnes of green organic waste pa • Spend $40 million on public street lighting pa • Loan 50 million books from 310 public libraries to 2.5 million registered library users pa • Provide free internet access for more than 1.8 million bookings pa • Process more than 49 500 planning applications pa • Provide 500 000 maternal and child health consultations pa • Provide 306 600 immunisations to preschool and secondary school children pa

5. LG Funding Sources Victorian local government funding was $4.74 billion (2005-06): • $2.53 billion or 53.4% in rates (at the extremes 32% and 74%) • $841 million or 17.8% in fees, fines and charges • $684 million or 14.4% in specific purpose grants • $381 million or 8% in general purpose payments (untied revenue) • $299 million or 6.3% in other sources Local government collects three cents of every dollar raised in Australian taxes. The Commonwealth receives approx 70% and the States receive 27% of total taxation revenue.

6. What is Housing Affordability? • Affordability is usually defined as the financial cost of housing • Other costs are important when considering whether housing is affordable: • Transport • Social isolation • Energy use and other ongoing costs • The full life cycle costs of housing is a key consideration in whether it meets affordability goals • When assessing housing affordability, it is important that these issues are considered

7. Influences on Housing Affordability Major influences • Monetary policy • Financial deregulation • Taxation policy • Speculative investment • Land banking by developers • Restricts access for small/medium developers and reduces competition and decisions about timing of land release • Building regulations • Construction boom / increasing supply costs

8. Influences on Housing Affordability Minor influences • Local government planning controls / DA processes • Re-zoning, Referrals, planning and building approval processes • Currently 15 years’ supply of zoned land in Melbourne • Developer levies for infrastructure / services in new developments • Green building / design requirements

9. Competing Demands? Competing demands exist for all levels of government with the need to: • Meet community expectations • Deliver strategic outcomes • Provide affordable and diverse housing stock • Ensure amenity, a healthy environment, energy efficiency, are delivered such that the long-term benefits exceed up front costs

10. Housing Affordability - Government Roles • Responsibility is shared by all three levels of government • Federal Government • Fiscal measures and tax regimes to encourage the private sector to provide affordable housing • Coordinating role to lead affordable housing initiatives • State Government • Overall responsibility for the state’s strategic and statutory planning framework and system • Manages social housing programs • Local Government • Plans for residential development and growth • Plays an active role in ensuring the housing needs of low-income Victorians are met in local communities

11. What Can Be Done? Federal Government • Coordinate intergovernmental strategies through an Affordable Housing Steering Committee • Involve State and local government, and housing industry • Focus on joint ventures and collaboration to increase diversity of housing stock, particularly at the lower end of the housing market • Lead policy development and programs that encourage provision of infrastructure, services, transport options and local employment opportunities for new and emerging communities • Commonwealth-State Housing Agreement must aim to increase overall investment in public and non-profit housing • Introduce incentives to encourage private sector to provide more affordable housing and to increase affordable rental stock

12. What Can Be Done? State Government • Coordinate (with local government) regional housing statements that prioritise demand/provision of affordable housing • Ensure stronger links between housing, planning, design, population, employment, health and social policies to meet community needs (particularly for ageing, first home buyers and low incomes) • Targeted stamp duty savings • Tailor support and programs to boost employment where people live • Tailor incentives to encourage housing diversity • Planning controls – such as inclusionary zoning • Clearer residential zoning to encourage higher density development in priority areas

13. What Can Be Done? Local Government • Research local housing needs – local housing strategies can influence availability of affordable housing • Ensure housing developments have up front access to services, public transport and infrastructure • Set, plan for and monitor regional affordable housing goals • Investigate and implement incentives, protocols and other mechanisms • Identify surplus and under-utilised government land • Advocate to State for negotiated developer contributions, inclusionary zoning, socially-responsible rooming houses and other planning controls • Advocate for a national affordable housing agreement

14. Examples – Local Government initiatives Maribyrnong City Council – Social Impact Assessment (SIA) • SIA Guidelines for large-scale residential developments • Requires developers to assess and report on social impacts of proposal • Required 16 SIAs (16-2000 dwellings) since 2000 • Benefits include: • Improved pedestrian and disabled access • More affordable housing mix

15. Examples – Local Government initiatives Affordable Housing Information Kit (joint MAV/State government initiative) • Development of internal council protocols and processes • Guide developers through council processes and facilitate provision of planning permits for affordable housing projects • Managing community opposition • Best practice examples

16. What Can Be Done? Industry • Work with governments to identify practical strategies to improve housing affordability • Provide a greater variety of housing stock in developments • Examine opportunities to provide housing that is easily altered so it is age friendly or can more easily be shared,

17. Conclusion • The causes of a lack of affordability are many and varied – reflecting both supply and demand issues • A response to these matters requires a cooperative government and industry response • Ultimately, policy responses are difficult – government will want to maintain house prices at their current level for existing buyers yet reduce prices for new buyers • Local government is only a minor player in reducing housing affordability– the development process only causes minor issues • Councils can achieve improvements to affordability, as demonstrated by the case studies through innovative approaches to local policy