Page 1054 - Week 04 - Tuesday, 6 May 2014
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recently noted in the Canberra Times. It is quoting from the Master Builders Association. It says that their deputy executive director:
… gave an example of a small business which started with the help of a government loan in 2000, and paying $350,000 for a site for their new venture, which now employs 12 people.
He goes on to say:
Development approval and architectural fees cost $250,000. Their annual rates were $30,000.
But they cannot afford to go ahead with the building because they have a late fee of $500,000 after not completing their project within the lease’s time frame.
He goes on to say:
They were like many other small businesses, renting a place and wanting to build and rent half their space … The land is now worth less than what they paid for it.'
This is the problem. The article states:
A builder told The Canberra Times he thought he had a tenant for a block of land he bought for $2 million.
But the tenant pulled out, and about a year later neighbouring blocks of land sold for a reduced price, undermining his project.
He was able to negotiate a reduced extension-of-time fee, but was still struggling.
“The commercial market has been a very difficult market anyway,” the builder said.
These are the problems that they face. I am sure all industry will take what the government has put on the table. It is not going to significantly address the problems for people who purchased, particularly in the GFC, and have struggled since. We know there are a number of big blocks in Civic that were purchased for large amounts of money. The government happily accepted the cash when it was delivered. But because they have not been able to find a tenant, particularly a government tenant, a number of those projects have not gone ahead. Some have been able to renegotiate and have not paid any extension of time fees, but for others it becomes a problem. And if you exacerbate that problem by not taking into account any improvements in relation to the land, the bulk of the outstanding fees will remain. In the case that I just read out, if it is a $500,000 set of fees, even at $400,000, which might be the case after the remissions the government has put in place, it is still not likely to go ahead.
If we want to protect the jobs, if we want to ensure that workers can still have a living in this city, if we want to get the benefit from the construction industry and if we want to get the flow-through that comes into the economy, we need to listen to the industry and find out what they want.
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