Headworks cutting property off at the knees
Released 9 August 2011
“The financial crisis has had a big impact on the real estate sector, both restricting development funding and amplifying the effect of infrastructure charges,” Ellis said.
“Where once local councils’ headworks charges paid mostly for water and sewerage, they now include a host of other charges, including infrastructure costs for roads and in some cases recreational and community facilities, electricity charges, footpath networks and more.”
In New South Wales, Victoria and Western Australia, headworks charges varied between $58,000 and $404,000, but on the Gold Coast a similar development was charged $2.5 million.
According to Ellis, councils and governments, especially those in regional areas, need to change their attitude if they want their regions to prosper.
“Regional areas are in desperate need of growth and, if the bureaucrats and policy makers really want to attract people to these areas, these headworks costs defy logic as they stand in the way of development,” he said.
“There is an ideal opportunity to develop these regions as desirable locations for people to move to, but developers need to be given the right incentives to do this, such as reducing headwork charges to make the developments more commercially viable”.
As a fundamental economic driver of the Australian economy, more needs to be done to encourage property development, both residential and commercial and the best place to start is with governments and councils looking at what is a fair and reasonable charge, rather than just a money grab.