Tuesday, July 10, 2012

Council headworks discounts revisited

A story in today's Cairns Post on a proposal by Council to discount headworks charges. This follows a similar scheme last year which apparently attracted some interest but was mostly targeted at smaller residential projects. Headworks charges have often been contentious as was discussed at the time however most concerns have related to the cost of residential land.

The difference of this proposal is that it's targeted entirely at the commercial property sector:
Under the new policy expected to be endorsed tomorrow, the council would target commercial, retail and industrial developments in a bid to create job opportunities beyond the construction phase.
I'm not sure i'm convinced on the strength of the argument that incentives for investment in those sectors will create jobs beyond the construction phase unless there is some evidence of current supply constraints restricting business? It doesn't seem to be where potentially the emerging problem actually is and the laws of unintended consequences always apply? The latest month-in-review from HTW was particularly negative on retail:
During 2009 to 2010 there was increase in vacancy levels in the retail sector resulting from a number of business closures attributed to the tough economic environment. However the increase was only a relatively mild increment to the high levels of long term vacancies in some areas that pre-dated the downturn.
The presentation from local HTW researcher Rick Carr at the recent Cairns Chamber lunch has now been posted. My memory is not fresh enough to recall any specific comments on the inductrial and commercial property sectors although again I'm not aware of any kind of significant market problem restricting business in these areas which seems to be confirmed by the Master Builders spokeman in the Post story.
"Unfortunately, I don’t know of any specific projects that are sitting on the backburner, waiting for this sort of incentive to come along and kickstart them," Master Builders regional manager Ron Bannah said.
The new Council again last week rejected the development application of Woolies at Gordonvale in defiance of local community opinion and consistent with the business lobbying of the Mulgrave Chamber of Commerce. The Redlynch sub-regional shopping centre expansion also remains stalled.

Council media release can be found here: New program to offer development incentive.  The program also includes restrictive local employment and supplier provisions

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