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Government Land Selling Fast!
Wither innovation in public land stewardship?
Did you know that almost 40% of all land in Victoria is held by the government on our behalf?
Since 2015, the Victorian Government Landholding Policy, has required agencies like VicRoads to report their land assets on an annual basis. Surplus land must be transferred off that agency’s books or sold in the private market.
Land is deemed to be in surplus when it:
- Does not contribute directly to current or future service delivery,
- Is not central to the core business of that government agency,
- Does not contribute to State finances when compared to an alternative investment
The public sector has first dibs on surplus land. If there are no takers the land is referred to the DEWLP Fast Track Government Land Service to be rezoned and sold off. The fast track service cuts a lot of red-tape. It also brings substantial, well located land to market, such as the Old Peter Mac Cancer facility in East Melbourne.
Sales and listings are on the Treasury website and surrounding residents are notified in advance. This allows communities to debate the real value of ‘surplus’ land in their neighbourhoods. An inclusionary zoning convenant is being trialled on larger sites, adding some badly needed affordable stock.
However, there are reasons to be cautious about converting ‘surplus’ public land to freehold title.
We reduce public optionality at uncertain cost.
The Kennett era school closures seemed rational under the circumstances at the time, but now inner city schools scramble to add capacity as hundreds of new apartment blocks go up around them. We are quite literally watching this mess as the Prosper offices overlook North Melbourne Primary School. See also, the recent parkland debacle in Fishermans Bend.
The terms of reference reduce the space for cross-instituitonal cooperation and innovation. As Clay Lucas points out, water authorities are not charged with delivering open space networks, and councils don’t necessarily have the budgets to jump on an opportunity. So public agencies must sell land that may support novel cross-institutional projects (like Greening the Pipeline) that have yet to be identified. Or budgeted for.
Can we capture the rents?
When we transform public land to freehold title, we trade away future, increasing land rents for a once-off windfall gain.
Where government land should be made available to the private sector we should explore the alternatives to freehold title. Why don’t we offer the land on a 99 year lease? Leasehold title with an annual ground rent offers a revenue stream and the advantage of public optionality. Singapore, Canberra, Hong Kong all provide precedents.
Or we could seed a community land trust (CLT) for perpetually affordable housing? Or simply lease the Peter Mac to a community sector housing provider? After all, land is the most valuable piece of the affordable housing puzzle.
The Fast Track Service has sold several homes (including an entire apartment block) compulsorily acquired for East-West link. A more inventive approach would enable shared equity between owner-occupiers and a CLT. Think ACT's land rent scheme with shades of W.A's Keystart program. Shared equity offers a leg-up for first homeowners or low-income households
without the demand-side impacts of First Home Buyer Grants. Even better, a CLT retains the initial public subsidy and captures land rents in perpetuity!
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