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Thursday, 29 November 1973
Page: 4149


Mr LAMB (La Trobe) - The soaring cost ofland and the question of how it is made available are among the most obvious of today's urban problems. The cost of land has increased faster than the average rate of inflation in the past few years and is continuing to grow at an accelerating rate. According to the Commonwealth Institute of Valuers survey published only last month the value of land in Melbourne is likely to increase at a rate as high as 60 per cent in the next 12 months. The survey, showing inner suburban land price increases of up to 75 per cent, indicated that Melbourne was rivalling Sydney in the real estate price spiral. In the Waverley municipality, about 15 miles east of central Melbourne, land that a year ago sold for $22,000 an acre is now selling for $40,000 an acre. A survey of 40 Melbourne municipalities by the Institute showed that prices had increased by up to 75 per cent in Carlton, parts of Fitzroy and South Melbourne - all inner suburbs - in the 12 months ending in April this year.

At these rates of price increase young couples are forced to the outer fringes of Melbourne, but there the scene is worse. Outer Melbourne areas in an arc from Bulla extending through to Eltham and Lilydale to Mornington and Hastings have had land price increases varying from 45 per cent to 55 per cent. The cost of a building block in Melbourne's outer eastern suburbs is rising by an average of $50 a week, according to a survey carried out by Knox City Council and published in May this year. In Knox, which is in my electorate of La Trobe and in one of the fastest growing suburban areas, the average land price increase for the 12 months to February 1973 was 62.63 per cent. Prices have gone mad; they have gone up even faster in the past 6 months. The Knox survey is the most accurate one yet taken on rising land prices. It is based on sale returns lodged with the Knox building department. The increases included 50 per cent at Wantirna, 63 per cent at Boronia, 66 per cent at the Mountain Gate estate, and 55 per cent at Johnson Park estate in Fern Tree Gully.

All of this land is situated between 15 and 20 miles from the General Post Office, unsewered but with made roads and all other services. Sewered blocks in the area have just been released and are selling at between $9000 and $11,000 a block. Blocks on unmade roads jumped 59 per cent in price from $2900 to $4600. Within the next few years owners will have to meet a council road making bill. These rises are alarming, even frightening, and can be attributed mainly to the lack of supply of residential land. Unless a land policy is developed it will be 18 months to 2 years before we see any substantial improvement in the land shortage and a slow down in price increases. At present Melbourne has a population of 2.5 million and it is increasing at the rate of 50,000 a year. To stop the growth of Melbourne it would be necessary to build the equivalent of 15 Canberras within Victoria. Syphoning off the increase in population from big cities is not effective in restricting growth, as there will always be an increase in population in these areas. It is that problem which unites these Bills in this cognate debate.

Large rises in the price of land, caused by speculation, are socially undesirable and must be overcome. First, citizens with similar interests and needs for obtaining land should have equal opportunities to do so. At present high and rapidly inflating land prices produce a redistribution of wealth in the community away from tenants of houses and buyers - the have-nots - to existing land owners - very much the haves. This redistribution merely exaggerates the inequalities that exist in our society. Secondly, as I have indicated, the price of land can rise as much as $50 in a week, or $2,500 in a year. This is the amount of extra saving that must be put aside by the average salary earner. As long as the rate of inflation in the price of land and houses exceeds the general rate of inflation such a task is impossible. While land prices are not kept in check prospective home buyers on low or moderate incomes are penalised. Thirdly, the present system, provides unearned windfall profits for those already owning excess tracts of land.

The Opposition is always quick to criticise the social welfare system Labor has developed and the few so-called bludgers who receive unemployment or sickness benefit. They call loudly for a fair day's work for a fair day's pay but they are silent in relation to unearned profits from land sales. To me it is immoral that large profits should be enjoyed by land holders who receive this sort of increment without lifting a hand to earn it. I should like to give some examples of sales and potential sales of land in the city of Knox in Victoria. The first example relates to 294 acres purchased at nominal price before the area was rezoned urban. In 1972 40 acres were sold to land developers for $260,000. The remaining 254 acres is estimated to be worth almost $2m.

Recently 120 acres in Knox were sold for $1.8m. A market gardener who profited, from rezoning bought 333 acres 10 years ago for about $200 an acre. He could now get $10,000 an acre, giving him a gross return of about $3m. In a recent sale another 60 acres realised $1.5m. The vendors still hold 44 acres, estimated to be worth more than $lm.

A well known bookmaker owns 80 acres in an industrial zone. Recently 21 acres were sold for $400,000. His present holdings plus the profits from that sale will make him a millionaire. Industrial land covering an area of 244 acres is valued at $2.5m and a recent sale of only 45 acres realised approximately $333,000. Vendors are entitled to the interest due on their original investment as they could have earned that, plus the real value maintained by a factor equal to the general rate of inflation. This is a price stabilisation formula but profits over and above that are gained at the expense of future home buyers. This Government cannot condone such unearned increments and capital gains. Many of the inequities and inefficiencies of the newer areas of cities are the direct result of growth on a small unco-ordinated scale resulting from lack of large scale finance and an inability of public developers to work with broad acres. Rezoning of land to cater for varied community uses, from low density land use to higher land use patterns, causes the price to rise. Speculative demand is thus concentrated in areas where development is planned. Private developers geared for maximising profit and not community benefit cannot ensure proper distribution of urban amenities. This can be achieved only through a public development corporation.

Let us examine why land prices are rising so sharply and what are the remedies to the problem so that we might bring about stabilisation in land prices. There is a trend towards more people living in urban areas. The percentage of the population living in rural areas as pointed out by the honourable member for Casey (Mr Mathews) decreased from 32 per cent in 1947 to 14.7 per cent in 1970 - less than half. There is pressure on available blocks for residential and income earning purposes. There is a shortfall of land zoned residential on the fringes of cities and in growth centres. About 2,000 new homes are built each year in the city of Knox but about 1000 blocks are held by speculators and investors and 1400 blocks by people waiting to build a home. Little if any broad acre land is zoned residential and available for immediate subdivision. Seven years ago there were 11,500 vacant building blocks in Knox. This has been cut to 4,400, of which only 2,000 are available. A further 6,000 blocks will become available if rezoning occurs. How can we equalise the supply and demand for land so that prices stabilise? Solutions offered are many. For example, the chairman of the Melbourne and Metropolitan Board of Works listed suggestions for price control in an article published in the 'Age' on 28 August last. He listed the following points.

Legislation to compel people to market land which is ripe for development.

Consideration given to levying a holding charge on people who withhold land.

Adequate finance for servicing authorities.

Amendment to the Sale of Land Act to allow stage release of new allotments.

A speed-up at all levels of council, board and Government procedures to reduce delays.

Agreement by municipalities on uniform requirements for sub-division.

Availability of money to developers at reasonable interest rates.

Legislation requiring land owners to contribute to common services so that the cost is spread equally.

Greater co-operation by land developers with authorities.

The final approach adopted by this Government will need to recognise that more serviced land must be made available to satisfy the demand, that land prices are contained so that all who need the land are not denied it merely because of impecunious circumstances or by earning average incomes, and that a comprehensive view must be taken of land use leading to the development of urban amenities. Unless the adopted policy satisfies these three elements it will fall short of desirable measures. How do the suggested policies face up to these criteria? Holding charges, levies, capital gains taxes and so on can all be passed on to the buyer. This denies the availability of land to low income groups. Legislation which is designed to compel people to sell 'and staged releases of new allotments do not avoid price increases, and such legislation has not proved easy to implement. Ad hoc rezoning is not complementary to good town planning and creates windfall profits for land owners. The price of land is not stabilised. The availability of money at low interest rates to developers, private and public, adequate finance for servicing authorities and the sharing of service costs by the community through progressive taxation are all desirable, but they need to be part of a co-ordinated program instituted by a Federal government.

Most of the remaining measures can be achieved by the national Government entering the field of urban and regional development, in co-operation with the States. This is the purpose of the 5 Bills. If land problems are to be solved, consultation between the various levels of government will be essential. The chief method by which the Government currently hopes more serviced land will be made available, land prices contained, land use recognised and State co-operation achieved is through the establishment of land commissions in the States. "The Australian Government has proposed that each State should establish a land commission or an equivalent body which, with the help of Australian Government finance, would acquire large tracts of land needed for urban development. The commissions would be expected to release the land, fully serviced, as needed. The eventual establishment of large banks of land should help solve the problem of scarcity. The establishment of land commissions, which would be State agencies, controlled and managed by the States, would make for a more efficient use of land. By having large tracts of land needed for urban development under the control of the States, a comprehensive approach to investment in urban facilities by both the public and private sector would be made easier. This approach is necessary for the efficient use of both land and resources, which will necessitate long term planning and co-ordination of investment.

The Leader of the Opposition (Mr Snedden) is concerned that action will be taken on the fringes of existing large metropolises for urban planning and in inner suburbs for urban renewal. He need not be so concerned. The land commissions, or their equivalents, would aim initially at buying land required for urban development in areas designated by the States. This would include land on the fringes of metropolitan areas, such as Knox, as well as land required for regional centres and new cities. Their major objective will be to make land available for residential purposes and for other public purposes such as health, education, recreation and transport. The commissions would hold and control the land they acquire, but where large tracts are involved a development corporation would have the responsibility to develop. The corporation or, in the case of small areas of land, the commissions may let contracts to private developers for the servicing and developing of the land. In this way the skills of both the public and the private sector would be used in the operation of the land commission program.

In April the Australian Government announced the establishment of a commission of inquiry into land tenures under the chairman ship of Mr Justice Else-Mitchell. The Leader of the Opposition is concerned about future land tenure of acquired land after development. He said that the Opposition is adamant that the form of tenure must be freehold. We are not so presumptive as to state categorically just what form tenure should take. The precise form of the tenure system by which land controlled by the commissions would be made available to the public would differ from State to State. Details of the applicable tenure would not be settled until the commission of inquiry into land tenure had reported, but the Australian Government has said that public equity in land is necessary for effective co-ordination of development and also to prevent individuals from receiving massive profits as the result of public decisions to acquire and develop land with public money.

We are not alone in this wish. During recent hearings held by the National Estate Inquiry in Melbourne, the Westernport Regional Planning Authority appealed to the Federal Government to acquire substantial areas of Mornington Peninsula and Phillip Island. The Authority said that its present planning powers and finances were inadequate to protect Westernport against escalating pressures for undesirable change. It said that these pressures - the demand for hobby farms, holiday houses, rural residential allotments and fringe urban activities - were now threatening places of national significance in Westernport. The Authority also said that from experience in our type of democratic society, planning control can arrest the rate of such development but cannot prevent it when land is in private ownership. Public equity in land is necessary if land use is to be regulated by advanced and community oriented town planning and not allowed to degenerate through ad hoc decisions resulting from indiscriminate purchasing of land and profit motivated pressures to rezone different areas.

Land price stabilisation legislation is seen by the Australian Government as an essential part of the land commission project. It is aimed at ensuring that land does not inflate in value merely because it has been chosen for acquisition for urban development. Such inflation could make the land so costly that the States would be unable to continue their plans to acquire the land and develop the area. Although legislation would differ to suit each State's individual requirements, it is expected that where it is introduced it would follow general principles. Such legislation would stabilise the prices to be paid for the land to be acquired at the market value at the date set out in the initial proclamation of the study area, plus a value increase factor to allow for normal increase in land values, but excluding any increase principally arising from the identification of an area as a growth area. A capital cost adjustment would also be made for improvements to the land. The value increase factor and the adjustments for improvements would ensure that land owners, while they would be prevented from making windfall profits, would not lose in real money terms if their land is marked for acquisition.


Mr McKenzie (Diamond Valley) - That would be fair enough.


Mr LAMB - Fair enough, as the honourable member for Diamond Valley says. Safeguards incorporated into the legislation would allow rapid acquisition in hardship cases, so giving the legislation flexibility. Such land stabilisation cannot be described as price freezing. It allows for legitimate increments in earnings on land sales. It avoids the disadvantages of land price freezes such as the creation of a black market, the devaluation of property as inflation generally leaves real value of land behind and the creation of under-the-counter key money, often amounting to $2,000 to $3,000, on the side. Time prevents me from saying more. I congratulate the Minister for Urban and Regional Development (Mr Uren) on the advances that he has made towards conquering our urban and regional problems. There are no panaceas and no immediate solutions, but these programs, backed by $30m of the current Budget's funds, will make a great start for tomorrow's urban dwellers, particularly in land price stabilisation. I commend the Bills to the House.







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