Residential development uneconomical

The UDIA has previously expressed concern to both Wyong Council and the NSW Department of Planning that the combination of State Infrastructure Charges and Section 94 Contributions are making residential development uneconomic on the Central Coast, and in particular, in the green fields localities of Wyong Shire. These areas are predominantly being occupied by first home buyers who cannot afford the cost of these charges and contributions.

It is somewhat ironic that the State Government has agreed to an extra $14,682.11 to be added to the previous maximum allowable charge of $20,000 for Wyong Shire Council’s Section 94 Contributions, when land in the Shire is predominantly developed for lower income families. This additional contribution – to be paid upfront – is equivalent to an extra $95 per month on an average mortgage.

In the Sydney and Hunter Regions the State Government has abolished levying contributions for water and sewer augmentation works. However, as water and sewerage works on the Central Coast are provided by the local Councils there has been no elimination of such charges in this region. As a result, the full cost of additional servicing in this region is paid by new home buyers, together with a levy from the Roads and Traffic Authority and the full cost of Section 94 Contributions which, in Wyong Shire, now amount to $34,682.11 per lot.

Notwithstanding that Councils want to provide services to the community, there has been little consideration given to whether the community needs the full range and cost of the services for which levies are being charged. There has been little or no consideration given to the extent to which such services are needed and whether they should be paid from general or special rates.

It is clearly time for a thorough consideration of how much services should be funded by contributions up front in comparison with on-going user-pay charges, as is the case with our telephone network. The funding through contributions has been largely created as a means to avoid caps on Council rate revenues. However, such costs are a tremendous up-front burden on first home buyers at a time when they can be least afforded. Perhaps it is time to go back to first principles to determine how local services and facilities can be provided in a more affordable manner.

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