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Australian Capital Territory: are land prices too high at Gungahlin?

MATTHEW ABRAHAM: Suddenly, the question of who develops land in Canberra is a hot potato. On the program, yesterday, we broke the story of mounting ALP sub-branch pressure on private development of land at Gungahlin, with an interview with the Federal Member for Fraser, John Langmore. John Langmore wants the Follett Government to act quickly to take back control of land development in the ACT, starting with Gungahlin. He points to high land prices at Gungahlin as a symptom of what has gone wrong with private land development in this town. Much of the ALP sub-branch disquiet is focused on the consortium which develops much of the Gungahlin land, Canberra Land Pty Ltd. Bob Winnel is managing director of Canberra Land. Good morning.

BOB WINNEL: Good morning.

MATTHEW ABRAHAM: Bob, this I presume, took you completely by surprise?

BOB WINNEL: Yes, I'll say so, because we believe we've been doing an extraordinarily efficient job in Gungahlin.

MATTHEW ABRAHAM: Are you aware of the extent of ALP sub-branch concern about this? It is quite deep and widespread.

BOB WINNEL: No, I wasn't, Matthew, but I am aware that there are some land shortages and the reason for those land shortages should be understood in the public arena. And I think John Langmore should be doing something about addressing the reasons for the shortages, and can I just say that there has been continual delay by the Government in raw land releases. There was an auction scheduled for October, delayed to February, delayed to March, delayed to April, delayed to May, and this is the kind of efficiency that's going to give us a better delivery of the actual production process. In addition to that, land that is being auctioned this May, after six months of delay, will have no connections in Gungahlin available to it till March of next year, so we are unable to even proceed with the development of that land if we're going to complete it before March of next year.

MATTHEW ABRAHAM: Are you saying that's forcing up the prices, it's putting a squeeze on existing land?

BOB WINNEL: There is no question. There is a shortage of some types of land out there in the marketplace, today, because of a lack of timeliness in government release of land which they totally control at the moment.

MATTHEW ABRAHAM: Surely though, just by its very nature, private development will mean higher prices because you've got to make a buck?

BOB WINNEL: That's the fallacy. It's like saying that if the Government were to manufacture washing machines or fridges they could do it more efficiently. The biggest single cost in the production of land are holding charges. We produce land in 30 weeks with an average of 40 weeks. The Government, when it was producing land, took an average of 104 weeks from planning to the actual settlement of the site, and that kind of time frame - and can I point out that back in the early '80s there were 7,000 surplus blocks of land. By 1985, there was an acute shortage of land.

The Government is very good at regulating but it is like a battleship. If you want to change its course in response to a very sudden change in the market, you've got to give it two years notice in writing with various Cabinet submissions about the raising of funds, et cetera. We make decisions as soon as indicators emerge.

MATTHEW ABRAHAM: Well, Mr Langmore says land prices, for instance, on the south side - prices at Gungahlin, sorry, have been a lot higher than prices on the south side. Now, why is that?

BOB WINNEL: Well, that's a very obvious answer. When the Government was selling land on the north side of town - and they were in North Lyneham and they were in McKellar - exactly the same position prevailed. Canberrans are reasonably - like other people elsewhere in Australia, they like to be close to the action. They will pay more for a block of land 11 kilometres from the city centre than they'll pay for a block of land 26 kilometres from the city centre, and it is purely market forces that drives the price of land in Gungahlin up, when coupled with a lack of timeliness in the government provision of basic infrastructure and adequate raw land.

MATTHEW ABRAHAM: But where's the competition? Where's the competition in Gungahlin?

BOB WINNEL: There are three developers in Gungahlin and there, of course, have been about seven developers enter the land market in Canberra. Four of them, including interstate companies, have found the going too tough - they've had their fingers burned. There are three local companies which are still in there and I can assure you ....

MATTHEW ABRAHAM: You don't exactly beat each other over the head, do you, with rolled-up bus tickets?

BOB WINNEL: Well, that is actually a total misconception. We do, in fact, beat each other over the head, and I would say that we are being extraordinarily competitive in the products we offer. But can I also say that we are totally constrained by the planning system at the moment. There's a one-year delay in providing small blocks, cottage courtyard blocks. What is the reason for the delay? The reason is that we have been very competitive. We've got out there and changed the response to the market by producing what it wants.

The Government, on the other hand, through their planning constraints, have denied us the ability to provide any more small lots, and they've insisted on a much larger range of standard residential blocks for which there is no demand.

MATTHEW ABRAHAM: John Langmore says there is a need for cheaper land and cheaper houses, that you're not catering for that end of the market.

BOB WINNEL: Well, I, 100 per cent agree with John Langmore on that, and we have put submissions to the Government, but we haven't conducted our critique of the government land development processes in public. We have given them some very weighty and concise technical documents to show how we can increase the density.

But I have to say this, in closing, Michael, that John Langmore - it was his government that privatised land development, the Federal Government, in 1988. John Langmore was repudiated by his own government, could not convince his own colleagues. So now he's out there misleading the public about the private sector land development's role and bludgeoning the local ACT Labor Party into trying to do something which his own colleagues repudiated.

MATTHEW ABRAHAM: All right. I don't know if he's bludgeoning it. We've got a number of sub-branches looking at - and as I said, I've had these resolutions from the Telopea Branch of the ALP which look at the issue, but we're out of time. Bob Winnel, thank you for coming in - much appreciated.

BOB WINNEL: Thanks, Matthew.

MATTHEW ABRAHAM: Bob Winnel is managing director of Canberra Land, one of the three private developers in the business out at Gungahlin, beating each other over the heads.