Jacinta Allan - Leading a zombie government

[Sphynx]

Interested in the comparison to overseas where costs are ‘cheaper’. I’m fairly sure overseas has much higher building costs than before.

But the article does underline the need for massive profit is a key factor too

Our construction costs are roughly double some of the other more expensive global markets like NYC.

It’s all labour costs. Especially factoring we are in the gateway to China. Why do you think so many poms and Irish tradies are moving out in their droves?

 

[Sphynx]

You can tell this is written by somebody with a heavily vested interest in private-led property development. Max in his wisdom is calling for the government to keep doing the same thing, but collect less revenue from developers and spend more of the state's money to make their developments (investments) liveable. I suppose at least he is transparent in his self-interest.

No doubt he's correct in that it costs more per m2 to build an apartment. This is obviously going to be the case when you consider that most single storey dwellings are lightly constructed with minimal foundations, easy to access and generally put up by the lowest paid construction workers in the state. Apartments with deep foundations and basements have a considerably more involved build and, particularly with highrise, the pay scales are at the other end of the chart.

No, you can tell this has been written by someone with real world experience of the current market conditions.

I don't think he can be accused of self interest, he's simply stating he can't produce that product because it's currently not viable for multiple reasons. There's no demand for it and it's not profitable to do. Which is right.

But there's more to developing land than building a dwelling - you've actually got to connect it to society. And even in spite of the DCP and CIL the cost of doing this is almost never fully recovered because the money simply does not go far enough. Freeway upgrades and train line upgrades that become necessary once the suburb has reached full are certainly not covered. There's no consideration for the true cost of establishing a school and getting people to staff it, generally only a grant for the land. There's no ongoing subsidy to emergency services who need to expand their area of operation to cover paddocks that are now full of houses. The state (taxpayer) foots the bill for all of this.

The author says that this could be done at a fraction of the cost of the Big Build - ironic given that projects like both Monash Freeway and the Suburban Roads Upgrade have been purely about easing the congestion caused by the thousands of extra cars entering the system at the extremities of the network. WGT, NEL, M80 Upgrades, Mordialloc Bypass, Mernda extension etc. the list goes on, literal billions spent on upgrading the transport network that is largely due to building the houses that the author can knock up at 25% of the cost of an apartment.

The approach isn't sustainable. If we extracted the true cost of these pop up suburbs from developers they would claim that housing would be unaffordable and that nobody would buy property in those areas. They're 100% right about that.

So the obvious alternative is moving the new builds to areas like the established inner and middle ring suburbs where the infrastructure is largely already existing and there is more than one way in and one way out. Townhouses are a good start, apartments will inevitably be necessary around the transport hubs as populations begin to grow. People may not like the idea of living like this but unfortunately it isn't 1980 anymore and the dream of owning a detached house 10kms from the city is not going to be possible for 90% of the population - arguably it already isn't.

The exact same consideration of true costs apply to the proposed activity centers. Possibly even more so, as you are talking about refurbishment of existing services in urban areas.

The infrastructure isn't largely already existing for the proposed scale of this urban plan. It's akin to the country farms roads being sufficient for a new housing development, like you have alluded.

That's why we have to put in a $100B+ rail tunnel if they are going to turn suburban areas into high density apartments and have them accessible and not destroy the current road network.

That's why we will end up spending billions in refurbishing community hospitals like Sandringham for the doubling of the population in the number of residents in the near radius.

Every public school in this area will need significant upgrading.

There's largely no underground power in these areas. The grid will need upgrading for the rise in demand.

All the hydraulic services will need upgrading.

etc etc.

Except in these areas, it's 10 x the cost of doing it vs a paddock, as you have described. Not to mention the huge disruption to peoples lives it causes when doing it to this scale in existing areas. Refurbishment of hospitals, roads, stadiums, schools are always far less efficient than building new.

With high density apartments of the size proposed, comes higher overall higher single project costs. With higher single project costs, comes union thresholds. With unions, you can essentially double or triple the build costs.

So the obvious alternative is moving the new builds to areas like the established inner and middle ring suburbs where the infrastructure is largely already existing and there is more than one way in and one way out. Townhouses are a good start, apartments will inevitably be necessary around the transport hubs as populations begin to grow. People may not like the idea of living like this but unfortunately it isn't 1980 anymore and the dream of owning a detached house 10kms from the city is not going to be possible for 90% of the population - arguably it already isn't.

Townhouses may as well be detached houses from an efficiency of space perspective. You aren't building 1.2m townhouses in metro areas without acquiring every green wedge and parkland available. So it's largely irrelevant.

People don't necessarily want to live 10km from the city. Infact the majority of the population already don't.

I don't think any government is in a position to manipulate or tell people what they do or don't want either.

We live in an extremely unique country, with a high quality of living, with vast tracks of land and generations of people having experienced this way of life.

We don't have to conform to urban planning schemes of European and Asian countries when we have nowhere near the same geographical constraints.

 

[peetoo]

Our construction costs are roughly double some of the other more expensive global markets like NYC.

It’s all labour costs. Especially factoring we are in the gateway to China. Why do you think so many poms and Irish tradies are moving out in their droves?

We have high labour costs because of high housing costs. Enjoy

 

[peetoo]

Btw has the stalled pentridge development got going again? Plenty of examples like this

 

[swingdog]

Btw has the stalled pentridge development got going again? Plenty of examples like this

Was it stalled? Seems plenty busy everytime I go there to the cinema.

 

[Sphynx]

We have high labour costs because of high housing costs. Enjoy

Nah.

Wage growth in that sector has outstripped inflation and housing price increases significantly for a long long time.

 

[GrayRanga]

Nah.

Wage growth in that sector has outstripped inflation and housing price increases significantly for a long long time.

Bloody socialist

Complaining about how the free market is meant to operate.

May i remind you that labour is also a commodity which can be traded on the free market for the highest possible price.

True entrepreneurs know this and price their goods accordingly by what the market will bear

 

[The Punter]

Bloody socialist

Complaining about how the free market is meant to operate.

May i remind you that labour is also a commodity which can be traded on the free market for the highest possible price.

True entrepreneurs know this and price their goods accordingly by what the market will bear

He was merely pointing out a factor in the price rise.

When a government is pumping billions into an industry through buying its product while at the same time, when questioned on costs, says "the real cost is not building it", the wage increases and the price rises they cause are hardly groundbreaking news. In terms of wages and conditions, the CFMEU has done well for its members.

If you aren't a member or at one time worked for the wrong company and you don't want to get locked in a shed for four hours, not so much.

 

[Sphynx]

Bloody socialist

Complaining about how the free market is meant to operate.

May i remind you that labour is also a commodity which can be traded on the free market for the highest possible price.

True entrepreneurs know this and price their goods accordingly by what the market will bear

No shit.

That's why we have had severe cost-push inflation with very few mechanisms to reduce it.

 

[peetoo]

Nah.

Wage growth in that sector has outstripped inflation and housing price increases significantly for a long long time.

Playing catch up

 

[peetoo]

Our construction costs are roughly double some of the other more expensive global markets like NYC.

It’s all labour costs. Especially factoring we are in the gateway to China. Why do you think so many poms and Irish tradies are moving out in their droves?

I said ‘increase in costs’ which is what’s relevant locally

Turns out Allen’s big push is all about grandstanding ans wedging, which is something more common in the coalition and as a I usually call it out there, I call it out here.

And no mention of increased resources for their centralised planning, so do they really expect something to happen?

All that may happen is developers cut costs and buyers spend more for less quality

Why Victoria's high-rise apartment plan will fail

Over the weekend, Victorian Premier Jacinta Allan chose the wealthy suburb of Brighton to launch her plan of seizing planning controls away from local councils to create 50 activity centres the government has earmarked for higher density. These areas will be rezoned for high-rise apartment...

www.macrobusiness.com.au

 

[Rob R]

So cutting red tape by centralising planning. Translation empty gesture leading to more political interference and more senior crats.

On SM-A136B using BigFooty.com mobile app

 

[Sttew]

Tax relief not to be part of the Allen government’s ‘open for business’ plan. Taxes are probably the biggest impediment for businesses…

 

[Saint]

Tax relief not to be part of the Allen government’s ‘open for business’ plan. Taxes are probably the biggest impediment for businesses…

So we cut taxes (and services) to make businesses more profitable. Despite the fact that unemployment is at all-time lows and business profits as a percentage of GDP are at all-time highs.

What justification is there for reducing taxes on businesses other than "it'll make businesses more profitable"?

How would that help the broader economy? And which services do you think should be cut to allow these increased business profits?

 

[Sttew]

So we cut taxes (and services) to make businesses more profitable. Despite the fact that unemployment is at all-time lows and business profits as a percentage of GDP are at all-time highs.

What justification is there for reducing taxes on businesses other than "it'll make businesses more profitable"?

How would that help the broader economy? And which services do you think should be cut to allow these increased business profits?

If they want to entice businesses to Victoria or stop businesses leaving...pretty simple!

Why would any business look at setting up in Victoria when Payroll tax, land tax, WorkCover levies are the highest?

Of course if the "We're open for business" is nothing more than a glib promise, then it doesn't matter.

 

[Saint]

If they want to entice businesses to Victoria or stop businesses leaving...pretty simple!

Why would any business look at setting up in Victoria when Payroll tax, land tax, WorkCover levies are the highest?

Of course if the "We're open for business" is nothing more than a glib promise, then it doesn't matter.

So, no evidence or broader strategy?

Do we need more businesses? What's wrong with the current ones?

Victoria has 28% of all of Australia's small businesses (compared to 25% of population) and is the headquarters of a lot of multi-nationals.

Location of Australia’s small businesses by state and territory

www.asbfeo.gov.au

Saying "cut business taxes" with no reasoning is about as sensible as saying "cut all income taxes and Stamp duties", what's the actual point?

I'm guessing you run a business and it's not going well and the easiest thing is to blame the Government. Sounds like most of the so-called "welfare cheats" we hear about who blame everyone else for their problems.

 

[eddiesmith]

So, no evidence or broader strategy?

Do we need more businesses? What's wrong with the current ones?

Victoria has 28% of all of Australia's small businesses (compared to 25% of population) and is the headquarters of a lot of multi-nationals.

Location of Australia’s small businesses by state and territory

www.asbfeo.gov.au

Saying "cut business taxes" with no reasoning is about as sensible as saying "cut all income taxes and Stamp duties", what's the actual point?

I'm guessing you run a business and it's not going well and the easiest thing is to blame the Government. Sounds like most of the so-called "welfare cheats" we hear about who blame everyone else for their problems.

Actually he’d be replying to the State Governments plan to attract more businesses to Victoria, so clearly they think we need more…

 

[Sttew]

So, no evidence or broader strategy?

Do we need more businesses? What's wrong with the current ones?

Victoria has 28% of all of Australia's small businesses (compared to 25% of population) and is the headquarters of a lot of multi-nationals.

Location of Australia’s small businesses by state and territory

www.asbfeo.gov.au

Saying "cut business taxes" with no reasoning is about as sensible as saying "cut all income taxes and Stamp duties", what's the actual point?

I'm guessing you run a business and it's not going well and the easiest thing is to blame the Government. Sounds like most of the so-called "welfare cheats" we hear about who blame everyone else for their problems.

Firstly, I am not the one boasting that Victoria is "open for business". The Allen government has made this announcement. And yet taxes, the biggest impediment to businesses, are not part of the plan to make Victoria attractive to businesses. Secondly, I assume you are a public servant with no exposure or experience in private enterprise. Am I right?

I don't run a business, so your assumption is incorrect. I am PAYG. But I do know the state tax cost comparison between the Victorian branches and interstate branches of the company where I work is astounding. Payroll tax and WorkCover levies in particular.

So I repeat. Why would any business feel inclined to move to Victoria from another state? And if you were crippled by the tax regime as many businesses are, what incentive is there to stay?

It is clear as daylight the Victoria is open for business is just a bullshit campaign that will have zero impact.

 

[Saint]

Firstly, I am not the one boasting that Victoria is "open for business". The Allen government has made this announcement. And yet taxes, the biggest impediment to businesses, are not part of the plan to make Victoria attractive to businesses. Secondly, I assume you are a public servant with no exposure or experience in private enterprise. Am I right?

I don't run a business, so your assumption is incorrect. I am PAYG. But I do know the state tax cost comparison between the Victorian branches and interstate branches of the company where I work is astounding. Payroll tax and WorkCover levies in particular.

So I repeat. Why would any business feel inclined to move to Victoria from another state? And if you were crippled by the tax regime as many businesses are, what incentive is there to stay?

It is clear as daylight the Victoria is open for business is just a bullshit campaign that will have zero impact.

"crippled by the tax regime" doesn't really match up with the fact that business are making larger profits than ever.

Maybe if businesses are struggling it's because off-shore profiteering and wage stagnation by companies is decreasing the disposable income of all of their clients?

The same argument about Vic vs other states could be made about Australia vs Cayman Islands or Ireland. Yet still businesses exist in Australia.

I'm also PAYG, never worked for Govt, but have seen how little they achieve within Govt offices. There are definitely cuts needing to be made around the Premier etc.

 

[hamohawk1]

The labor government should be right for the picking. Been in power for 12+ years by the time the next election goes around and do seem to have a bit of policy fatigue.

The libs would get her if they could organise themselves next election but either way i think eventually they will have their bite at the cherry in 2030.

Will be interesting to see how Jacinta pivots now the big build projects are finishing and obtaining funding doesn't seem to be as easy moving forward

 

[peetoo]

Australians brace for second boom in defective apartments

Buying a new high-rise apartment in Australia is a game of financial Russian Roulette. The second half of last decade saw the greatest high-rise construction boom in Australia’s history. In recent years, hundreds of these buildings have been required to remove potentially combustible cladding...

www.macrobusiness.com.au

Buyer beware

Funny thing is the previous wave of dog box apartments….lsignificant numbers of them are empty

 

[Ice-Wolf]

Australians brace for second boom in defective apartments

Buying a new high-rise apartment in Australia is a game of financial Russian Roulette. The second half of last decade saw the greatest high-rise construction boom in Australia’s history. In recent years, hundreds of these buildings have been required to remove potentially combustible cladding...

www.macrobusiness.com.au

Buyer beware

Funny thing is the previous wave of dog box apartments….lsignificant numbers of them are empty

Aussie builders Champagne Pricing, Cask Wine workmanship

 

[Sphynx]

Aussie builders Champagne Pricing, Cask Wine workmanship

It's not due to workmanship.

It's due to material compliance, most of these products were legal to use.

In some instances, are still legal to use.

It's also a worldwide problem by the way and not solely related to high rises. A big % of industrial facilities in Australia will get reclad because of this issue.

In fact, so should most new houses in Australia (which are by far the most dangerous and least regulated) . But residential is categorized different to commercial class buildings.

It's not to dissimilar to the asbestos issue of the 80's regarding a compliant product having further testing and investigation, being deemed not fit for purpose or dangerous in subsequent years.

 

[hawkman]

102 executives employed on SRL out of 650 staff

 

[checkraiseulite]

It's not due to workmanship.

It's due to material compliance, most of these products were legal to use.

In some instances, are still legal to use.

It's also a worldwide problem by the way and not solely related to high rises. A big % of industrial facilities in Australia will get reclad because of this issue.

In fact, so should most new houses in Australia (which are by far the most dangerous and least regulated) . But residential is categorized different to commercial class buildings.

It's not to dissimilar to the asbestos issue of the 80's regarding a compliant product having further testing and investigation, being deemed not fit for purpose or dangerous in subsequent years.

it's due to absolute shithouse design more than anything.