The map accompanying the ACT Territory Plan looks a bit like the map presented at the Geneva peace talks on Bosnia-Hertzogovena.
The shaded areas show the parts administered by the Serbs or National Capital Planning Authority. The green bits are no-man’s land. The pink bits have been ethnically cleansed. The yellow is for Croat or community facilities and the orange is Muslim or residential.
It might sound like yet another lapse in journalist taste, but the comparison has some merit. Both maps express pious and worthy hopes, but people often refuse to fit colours on maps or intentions expressed in the documents that go with them.
Whereas the bullies on both sides of Bosnia-Hertzogovenia can use terror to get their way, ACT authorities, mercifully, cannot. However, they, and their federal counterparts, can do quite a few practical things to make the plan achieve its lofty aims.
This is not a discussion about the merits of the plan per se. Maxworthyites, NIMBYs, rape-pillage-and-burn developers and mystic greens have, and will continue to comment on it. Let’s for the moment take the plan as read and assume for now that all the coloured bits on the map represent the best land use for that land. Instead, let’s look at how other government policies, unless amended, are destined to frustrate the plan.
The plan says it “”seeks to respond to six major challenges”. One of these is in “”developing an efficient city”. On the residential side this “”challenge” is made more specific. The plan says: “”These policies are designed to address one of the most significant challenges facing Canberra today: how to create a range of housing opportunities which are affordable, sustainable and attractive and which meet the changing needs of the Canberra community”.
And those woolly words are later translated into objectives. Two of which are: “”to provide for a variety of housing types throughout Canberra which will enable residents to find accommodation suitable to their needs” and “”to provide the opportunity for increased residential densities to help consolidate the urban area and better utilise the existing social and physical infrastructure.”
For decades, all Australian cities, especially Canberra, relied on broadacre development at the fringe to accommodate the growing population.
Then in 1991, the Minister for Housing, Brian Howe, started talking about better cities, reviving Gough Whitlam’s earlier policy concerns about the swelling capitals.
Gough stressed regional development and decentralisation. So Canberra’s circular suburbs were repeated in Wodonga. Howe stressed increasing densities, evoking the images of the great cities of Europe.
In a way typical of governments and bureaucracies neither thought for a moment that their policies in other areas were making the position worse than it need be. Neither linked their cities policy to immigration or population policy. They didn’t even have the latter. But even leaving population policy aside (which we shouldn’t) other policies continue to make our cities less efficient and worse places to live than they ought.
Let’s return to the ACT. Up until very recently, broadacre was the go. Medium or high density was restricted by planners. The same planners prohibited high-density residential development in Civic. The nightmares of Ceausescu’s Budapest were, rightly, not for us. Broadacre was cheap and easy because there was much land and few people. Now, with more people we have run out of land. The policy response has been to pack them in tighter. This, we are told, will be the panacea.
But it is all very well changing the colours on the map to üallow@ for medium density housing, but that is not enough. You cannot force people to move; you have to encourage them to.
All Australian cities, especially Canberra, are now paying the very considerable price of grave political weaknesses of the past. The political weaknesses of the past have essentially been allowing laws and policies that pander to particular interest groups or dearly held beliefs, at the expense of the general well-being.
Stamp duty is the first example. It started as quite a small impost. As time went on, governments kept increasing it, or allowed it to increase as inflation drove up the nominal cost of houses. Now quite modest houses are attracting stamp duty at rates originally designed for mansions. Governments are using the old lawyers’ adage: hang around while large sums of money are being moved about and grab a slice of the action; often the people being hit won’t notice. Stamp duty is an easy one for governments. People only get hit once or twice in a lifetime. They therefore whinge only once or twice and forget about it. It has few political repercussions, unlike an annual tax.
But stamp duty has an important side effect. It’s all very well for the Chief Planner, George Tomlins, and his staff to slog away for three years drafting a plan so people can “”find accommodation suitable to their needs and stage in their lifestyle”, but if the ACT Government is going to hit you with stamp duty of several thousand dollars, people will not move.
Stamp duty is a tax on moving. How silly it is for a Government on one hand to encourage people to move about to create an efficient city and on the other tax the very movement they are encouraging.
Then comes real-estate-agents’ and lawyers’ fees. Governments have created cosy little monopolies for them to charge outrageous fees to further discourage people from moving. The Prices Surveillance Authority and the Trade Practices Commission have amply demonstrated that government regulation and monopolies in these two professions artificially increase fees for people moving house. Once again, how silly it is for a Government dot dot dot.
Fortunately, governments, including the ACT, are moving on these monopolies, but don’t expect any movement on stamp duty in a hurry.
Next is the great political shibboleth in Australia that the family home is beyond taxation. The failure to impose capital gains tax on the family home has resulted in idiotic investment in homes far larger than needed for living. It not only detracts from other more important investment but makes the city more inefficient. Larger homes require more heating, drainage, water etc etc. Moreover, the lifestyle of the people living in them is worse, not better. Larger homes require more work and more income to maintain. How many rooms can you be in at once?
Land tax, by and large, is not imposed on the family home. Why not? Land tax gets passed on to tenants. If you only tax them, it distorts the market in favour of buyers. Yet renters often cause less drain on city infrastructure because they are more mobile. They move to fit new conditions, thus requiring less public transport and occupying only as much housing as is needed, not occupying a huge home for tax reasons or because it is too costly to move because of stamp duty.
Next, past policies of permitting idiotic union work practices on construction sites of medium- and high-density houses is now costing us all. Why does a 12-square townhouse cost as much as a 12-square house, when the latter gets a whole lot of extra land thrown in? Because townhouses cost more in labour (not materials) to build. The detached-housing construction industry is run on contract, not union labour so it is far more efficient.
Why does Brian Howe talk about the wonders of medium density while his colleagues in government want to prop up and extend the inefficient ways it is constructed, distorting the market in favour of detached housing which is more burdensome on infrastructure?
Next, the ACT’s transport policy can only frustrate the new Territory Plan. The $50 million subsidy to ACTION to enable it to provide uneconomic services only encourages low-density houses, especially at the fringe. If you know you have subsidised transport morning, noon and night, what incentive is there to move closer to work? If the ACT Government sold the bus service, or contracted it out it would have more money available to cut stamp duty.
It could also end the taxi monopoly. Anyone should be able to get a taxi plate on meeting safety standards and a test of knowledge of Canberra’s roads.
The essential political problem is that politicians act to get re-elected, not to produce policies for the common good. This results in the politics of greed and screams. The greed of the few _ lawyers, real-estate agents, developers, taxi-owners, building unionists, the bus-drivers’ union, the ethnic lobbies _ is appeased by warped population, transport and industrial policies. The scream of the many is attended to by warped taxation policies which extract money as seamlessly as possible.
These policies have now caught up with us. We find we have large, spread-out, over-populated cities which are not working very well. But it is naive to imagine they can be fixed by merely changing planning rules and waving the magic words in-fill and medium density about. Other bullets have to be bitten.
Moreover, medium density itself is not necessarily more efficient as broadacre development. Less private green space will create a demand for more public green space. More run-off in the inner areas will test beyond the limits existing storm-water drainage, as Sunday night’s storm evidences.
At first blush it might seem that extended sewer lines and electricity cables to the fringe of the city would be more costly than tapping into existing networks in the centre. But this might not be true. It is very expensive to put new works in established areas.
And further, once built, there is no guarantee that any savings will be passed on to the ordinary people who will occupy them. It may be that we will just cram people into cheaper and smaller blocks and still sting them whatever their income and interest rates at the time will bear. Further, there is no guarantee that the savings, if any, made on the provision of infrastructure will be passed on in lower taxation rather than squandered on newer and bigger vote-catching or lobby-group-appeasing scheme.
To make sure that the savings are passed on the ACT Government will have to do a lot more work to ensure more competition in the development scene. The Government has to be aware of two sorts of monopoly that can artificially keep housing costs high: vertical and horizontal. Vertical is where one supplier takes part in the whole process: converting raw land to sub-divisions as a developer, marketing sub-divisions into blocks as a real-estate agent, organising builders for clients as a real-estate agent, and having arrangements with legal firms to provide conveyancing services.
Horizontal monopoly is where one or only a few operators control the provision of services at any one stage, for example, where there were only a few converting raw land into blocks. The fewer the providers, the easier it is for them to keep prices high.
Unless all these things are dealt with, the pretty colours on the planning map will be as pertinent to the future of Canberra as a Dulux colour chart.