The Property Council of Australia has welcomed New South Wales Premier Morris Iemma’s plans to revitalise the Wollongong CBD. However, the industry body stop short of welcoming the Premier’s new tax scheme.
In the draft City Centre Plan, Premier Morris Iemma and Planning Minister Frank Sartor proposes a tax of 3% of the construction costs of new development in the commercial core as a major financial support to the city’s proposed $129 million infrastructure package.
Yesterday the Property Council’s Illawarra chairperson Quentin Dennis welcomed initiatives to upgrade the city centre, stimulate the Wollongong economy and grow its employment base, however it warned that an additional ‘Wollongong tax’ would inhibit city centre development.
He added that the Government needed to adopt an incentives approach to stimulate business investment, such as making the CBD a payroll tax exempt zone, not introduce a new tax on the very investment they are trying to attract.
“The hard reality is that Wollongong’s CBD has not had a new office building for 18 years. Attracting new office investment will be a serious challenge. Wollongong needs all the incentives and encouragement it can get, not a new tax.
“This tax jeopardises the plan to revitalise the Wollongong CBD. We encourage the Government to pursue the idea of alternative funding mechanisms included in the plan, such as Private Public Partnerships to maximise the value and timely delivery of that infrastructure and see it become a reality,” he added.
Dennis said the Government needed to reconsider a comprehensive analysis commissioned by the Property Council which demonstrated that the new tax would not be feasible.
“The analysis showed that even with the proposed larger buildings allowed under the plan, office development in the city centre is still unlikely to be viable in the short to medium term and have little chance of securing bank finance. The study showed the new levy would add an extra $1.3 million to the cost of new office buildings of the type the Government wants to encourage in the CBD.
“New development already makes a contribution to the city’s infrastructure, but this new tax is just not feasible,” he said.
The Property Council has proposed several practical alternatives to this tax to help the State Government meet its objectives in the plan, some which have been included in the draft plan’s vision statement.
Property Council proposals include:
• the State Government adopt a leadership approach to seed fund a key element of the proposed infrastructure to kick start investment in the city centre. The Government made a $24 million contribution to the University of Wollongong’s Innovation Campus but there is no similar offer for the CBD;
• introducing a business improvement district model incorporating a special rate into an infrastructure fund overseen by a board comprised of significant local business representation – potential of $1.5 million revenue;
• release of section 94 monies previously collected in the CBD;
• use of debt funding by Wollongong City Council to ensure upfront construction of a significant proportion of the proposed infrastructure, recognising that the CBD contributes significantly to council’s rate revenue.
In a submission to the State Government, the Property Council proposed other initiatives to maximise the potential of the city centre plan, including declaring Wollongong CBD be a payroll exempt zone for incoming businesses in line with the Premier’s economic incentives announcement earlier this year; reform the way city developments are assessed; consider moving a government agency to the city and support a CBD marketing campaign to promote the benefits of this city.
“The Property Council wants a revitalisation plan to work for this city. We will be making significant contributions to support the city’s growth, such as extending our office market report to Wollongong to provide greater transparency to the market and planning an investor tour of the city.
“Investors are interested in Wollongong, but this new tax needs to be rethought or it will destroy the feasibility of new office development,” Dennis said.
By Kathryn O’Meara
