Urban Taskforce | Policy Agenda

Fact sheet: Boosting the Lower Hunter

26 February 2011

Under the NSW Government's 2006 Lower Hunter Regional Strategy, the region will need about 115,000 new homes by 2031, about 60 per cent of which are to be in greenfield areas.

An average of about 4,600 new dwellings - apartments or houses - should be built each year, including about 2,760 in greenfield areas.


The Lower Hunter strategy


The Metropolitan Development Program report tells us that just 2,566 new dwellings were built in 2006-07 and 2007-08.

Of those, only 485 were in new development greenfield areas - that's less than 250 a year.
While only two years of data in the report related to progress on the 2006 strategy, these figures reinforced our concern that more needs to be done to encourage new urban development in the Hunter.

Of course, that just doesn't mean housing development. It means the development of new commercial, industrial and retail premises to provide jobs and services for the local community.

All of this will be important if the Hunter is to meet the rather modest population forecast of another 158,000 people by 2036. It sounds like a big number, but it assumes a rate of population growth around half of the Hunter's traditional level.

The burden of Levies in the Hunter


In 2008 the Urban Taskforce commissioned and released a report titled Life Essentials: Water and New Homes in the Hunter it looked specifically at the impact of water infrastructure levies on new housing development. Ultimately, these levies were abolished.
However the policy conclusions of the report are as relevant to other forms of infrastructure levies as they are to new housing.

The report found that taxing new home construction was unfair, because population growth does not directly relate to new home construction.

More than 100,000 established houses in the Hunter are currently occupied by just one or two people. As Hunter residents retire many will choose to downsize by selling their existing homes to younger people and moving into newly built medium and high density homes.

If these homes carry significant infrastructure costs, embedded in their prices these retirees would be forced to bear an unfair share of the coasts of new infrastructure.
These retirees arent to blame for population growth yet they will be forced to contribute more than other existing residents who are able to stay in their existing home.
Younger families moving into a retirees existing house would account for the new population, but would not pay any development levies.

This is a heavy penalty for Hunters long-term residents to pay.

There is no way a development levy can be fair it involves singling out people who happen to buy newer housing and hitting them extra hard for the dams costs.

Nonetheless, it seems, as a matter practicality that some development levies are inevitable.
The challenge then is to ensure that any levies are as low as practicable and designed to have as minimal impact on development as possible.

Henry tax review


The Henry Tax Review, released in 2010, vindicated developers by finding problems in the way that infrastructure charges were being imposed on new development.

The report said levies that were complex, non-transparent or set too high, discourage investment in housing, lower the overall supply of housing and raise its price.

The report criticised planning rules that make development approval contingent on development charges of uncertain size, finding that the increased risk can affect project viability.

That report was the highest level recognition we've had that developer charges are undermining investment in new urban development.

The report also exposed the fact that many so-called  'infrastructure charges' were in fact merely thinly disguised betterment taxes.

The report made a clear statement that infrastructure charges should not be about taxing the profit of development.

This runs contrary to the approach of many councils and state agencies, whose starting point is to make guesstimates about the level of development, usually wrong, and then calculate the levies accordingly.

Sometimes planning authority openly say their objective is to 'capture' developer profits.

This process has killed projects, because without profits, there is no incentive for the private sector to build.

The system of "de facto levies" on development in the Hunter, introduced in 2007, has been a particular challenge, where development approval from a council for rezoning land could not be given unless the Planning Department had signed off on a developer's financial contribution to transport, education, health and emergency services.

The uncertain regime for state infrastructure contribution in the Hunter ticks every box in the Henry tax review's what-not-to-do list.


More information

For more information (and source details) please read our fact sheet:


Fact sheet: Boosting the Lower Hunter

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