The state government has recently announced a ceiling on Gold Coast infrastructure charges of $28,000 per residential lot (for a house with three or more bedrooms), or $20,000 per unit (for a unit with one or two bedrooms). The intention is to provide “certainty” and “consistency” across the state.
On those scores, the scheme fits the bill. Once can always criticise, but the truth is that infrastructure charges should really be zero. This is because the state government has decided to transfer the cost of infrastructure (roads, stormwater drainage, regional parks etc) to the developer who already pays for all internal services in a subdivision. Not only does he pay for them, he hands them back to the local Council, free of charge. Council then proceeds to raise income from the assets in perpetuity. Not a bad deal.
On top of that, developers now contribute to external roads, stormwater drainage and parks. They immediately pass those costs onto the retail purchaser. Hence, house prices go up.
The alternative could be that all infrastructure is funded by general revenue, for example petrol tax in the case of roads. This would keep housing costs down and make Queensland a more competitive place to live.
Sunday, April 17, 2011
Monday, April 11, 2011
Gold Coast Water Pricing – Effects of Restructure
The Premier’s recent statement allowing the newly created water authorities to return where they came from, i.e. the Councils, will have no effect on water prices.
This is because the increases proposed by the new water authorities reflected the high bulk water changes imposed by the State Government – and they will not change under the “return to Councils” scheme.
The bulk water charges are based on repaying $7bn with interest over 20 years, to pay for the “water grid” for south-east Queensland. This is supposed to insure against drought by interconnecting the Gold Coast to Brisbane and the Sunshine Coast. The bulk charge is $1.57 per kilolitre, and rising in successive years.
But why 20 years, when water supply infrastructure (the desalination plant and interconnecting pipe work) have an economic life of at least 50 years?
Minister Robertson says it’s because the government wants to minimise interest charges and not delaying these charges for the next generation to pay. That’s an honourable objective but what if the outcome is to increase water charges in the Gold Coast, for example by 15% in year one? That unfairly hits existing users, who happen to be today’s voters. Not a politically savvy policy.
This is because the increases proposed by the new water authorities reflected the high bulk water changes imposed by the State Government – and they will not change under the “return to Councils” scheme.
The bulk water charges are based on repaying $7bn with interest over 20 years, to pay for the “water grid” for south-east Queensland. This is supposed to insure against drought by interconnecting the Gold Coast to Brisbane and the Sunshine Coast. The bulk charge is $1.57 per kilolitre, and rising in successive years.
But why 20 years, when water supply infrastructure (the desalination plant and interconnecting pipe work) have an economic life of at least 50 years?
Minister Robertson says it’s because the government wants to minimise interest charges and not delaying these charges for the next generation to pay. That’s an honourable objective but what if the outcome is to increase water charges in the Gold Coast, for example by 15% in year one? That unfairly hits existing users, who happen to be today’s voters. Not a politically savvy policy.
Sunday, April 3, 2011
Population Growth No Longer Queensland’s Saviour
With net interstate migration down to under 10,000 per annum in Queensland (it has been as high as 52,000 per annum historically), and the cut in overseas migration, the state’s population growth rate of 2.5% per annum is likely to fall below 2.0% per annum over the next five years.
Some would say that this is a good thing (Treasurer Andrew Fraser already has) so as to give some breathing space for infrastructure to catch up. If the state government privately believes that a slowdown in population growth will be good for us, then there needs to be another driver of the state economy in the major cities, which do not benefit from mining.
Employment in Queensland remains our weakness and what we need is incentives, not disincentives, to employ people. Payroll tax is an obvious target and should be abolished. It is an old chestnut that Labor has never addressed. All stamp duty on residential housing transactions should also be abolished. Construction is one of the largest employment sectors in Queensland, mines included, and has huge multiplier effects throughout the economy.
A tourism marketing levy should also be introduced (taxed on the users, not facilitators) to fund more promotion and marketing of our state.
Fiscal policy can be used to stimulate certain sectors of the economy but it is virtually non-existent in Queensland these days. It should be a key policy target for Campbell Newman’s “Can do Queensland”.
Some would say that this is a good thing (Treasurer Andrew Fraser already has) so as to give some breathing space for infrastructure to catch up. If the state government privately believes that a slowdown in population growth will be good for us, then there needs to be another driver of the state economy in the major cities, which do not benefit from mining.
Employment in Queensland remains our weakness and what we need is incentives, not disincentives, to employ people. Payroll tax is an obvious target and should be abolished. It is an old chestnut that Labor has never addressed. All stamp duty on residential housing transactions should also be abolished. Construction is one of the largest employment sectors in Queensland, mines included, and has huge multiplier effects throughout the economy.
A tourism marketing levy should also be introduced (taxed on the users, not facilitators) to fund more promotion and marketing of our state.
Fiscal policy can be used to stimulate certain sectors of the economy but it is virtually non-existent in Queensland these days. It should be a key policy target for Campbell Newman’s “Can do Queensland”.
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