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Development Industry Welcomes Budget Focus on Growth

 

The Urban Development Institute of Australia Northern Territory (UDIA NT) welcomes the Northern Territory Government’s focus on growth in the 2014 – 2015 budget.  The recognition that the cost of living and affordable housing are critical issues facing Territorians is also welcomed.

 

At the national level UDIA has been a strong advocate for the timely release of land in all jurisdictions within Australia for many years, recognising that when the pace of land release falls behind market demand, the only possible outcome is a spike in land prices.

 

The Northern Territory Government’s budget focus on land release across the Territory will ensure land remains as affordable as possible into the short to medium term future.  But it is also critical that the pace of land release is continually adjusted to ensure it meets demand into the future.  Hence the development industry strongly supports long-term planning which matches land release to population projections and identifies priority areas for land release into the future.

 

While Governments and Ministerial responsibilities change over time, it takes many years, sometimes over a decade (or even more), for development plans to come to fruition.  A more bipartisan approach to long term planning for the release of land would ensure the development industry is able to operate more effectively and more efficiently, in turn helping to minimise the costs of doing development business here.

 

Provided planning is based on strong community input, it should be possible to achieve support from all major political parties for the planning blueprints which the Northern Territory produces.

 

But to focus again on the current budget, changes to the First Home Buyer’s Grant to exclude purchase of established houses is an initiative which has long been supported by the development industry, as it places the economic stimulus where it is needed – on the supply of new stock.

 

While the budget investment of $84.4 million to roll out residential land to support the construction of 6,500 new homes will certainly help to ensure land prices do not increase in the manner we have seen over the past decade or so, the development industry also recognises the Territory’s housing market faces other problems that are not so easily addressed in budget planning.

 

Other factors affecting the cost of constructing a house here include the relatively high costs of labour compared to other more densely populated areas of Australia, the relatively high costs of materials (caused by our relative isolation and our small market), and the margins the building industry are forced to include if they are to survive, given the “boom and bust” cycles which have traditionally led to either a feast or a famine of work.  More recently, the impacts of the Global Financial Crisis on availability of finance, and on the conditions for achieving finance for development projects, have also affected margins.

 

It is clear many of these factors are outside the immediate control of the Northern Territory Government.  But the development industry recognises the importance of strong NT Government support for initiatives like development of Australia’s north, as well as public statements by the Treasurer that we need to smooth out our economic growth curve.  These actions will help to change the nature of the NT economy over the longer term, making this a more efficient place for the development industry to operate in and in turn bringing down the costs of housing for residents.

 

Enhanced expenditure on infrastructure is also a critically important element in opening up the north and will also help to ensure a wide range of industries can operate more efficiently here.

 

While it is essential to plan for the systematic and timely release of land for housing, Territory businesses have in the past been affected by a failure to release land for the growth in industrial and commercial developments that accompany the growth of our population and the expansion of our industries.  UDIA (NT) is pleased to see recognition of this need in the 2014 – 2015 budget.

 

The Northern Territory’s development industry welcomes the clear signs in the budget that the NT Government is listening to industry concerns and acting upon those concerns.  The Urban Development Institute of Australia (NT) will continue to bring matters of concern to the attention of Government Ministers and looks forward to continuing to work on unravelling the bureaucratic restrictions that impose unnecessary costs on all Territory housing.