Land Affordability:The Local Government Perspective

Cr Dick GrossPresident, MAVSeptember 2008

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

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

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

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.

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

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

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

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

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

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

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

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

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

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

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,

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