MoneyBillion-dollar bombshell hidden in Moreton Bay infrastructure

04:20  03 september  2019
04:20  03 september  2019 Source:   brisbanetimes.com.au

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Billion-dollar bombshell hidden in Moreton Bay infrastructure© Jono Searle/AAP Queensland Planning Minister Cameron Dick sent Moreton Bay Regional Council back to the drawing board last year.

Ratepayers north of Brisbane are exposed to more than $1 billion in infrastructure costs for required new homes because the Palaszczuk government has refused to allow the council to charge developers the full costs of building in greenfield areas, leaked documents show.

Billion-dollar bombshell hidden in Moreton Bay infrastructure© Dan Peled/AAP Developer David Trask arriving to give evidence at the CCC's Belcarra hearings in 2017.

The Moreton Bay region is one of the fastest-growing in Australia and at least 40,000 new homes will be needed in growth areas over the next two decades under policies agreed between the state and local governments.

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But internal financial modelling seen by Brisbane Times shows the council is facing a shortfall of up to $1.3 billion - equal to twice its entire annual budget - to pay for roads, parks and stormwater drainage networks if all the homes are built.

Planning Minister Cameron Dick last year blocked an attempt by Moreton Bay Regional Council to make up the shortfall by levying higher infrastructure charges on developers in “emerging community” areas, saying it was illegal.

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Insiders claim the move has given developers, including a major donor to mayor Allan Sutherland, a free kick and put the region’s planning system into extended limbo.

They also claimed it had come despite lawyers for both sides earlier giving the plans the green light.

“The planning scheme amendment was the only way forward without exposing the people of Moreton Bay to hundreds of millions of dollars of infrastructure costs that they don’t need to bear,” one senior bureaucrat said.

“Now (the council is) stumbling around trying to work out how they’re going to progress it.”

Mr Dick’s intervention came a year after his predecessor as planning minister, Jackie Trad, approved drafts of the intended amendments to the planning scheme.

Correspondence shows Mr Dick acted in spite of warnings the unfunded infrastructure burden would expose the region’s 450,000 residents to sustained higher rates and undermine the council’s financial stability.

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Brisbane Times can also reveal the move came after intense lobbying of Mr Dick by the property industry and, in particular, by developers with tens of millions of dollars speculatively invested in the growth areas, some of whom have close links to councillors.

“Council has developed a complex financial model to understand the financial impacts of the emerging community areas developing,” council chief executive Daryl Hitzman told Mr Dick in a September 2018 letter seen by Brisbane Times.

“This model indicates that the Moreton Bay community would be exposed to costs in excess of $1 billion if an appropriate planning and cost apportionment methodology is not implemented by way of a planning scheme amendment.

“This would significantly impact the cost of rates to our residents on an ongoing basis, and would significantly impact the financial stability of the council.”

Mr Dick blocked the proposed planning scheme a month later and it was withdrawn by the council.

The revelations come weeks after the long-serving Cr Sutherland announced he would not contest the 2020 local elections.

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The Crime and Corruption Commission this week took the unusual step of confirming Cr Sutherland was under investigation in its probe into a range of corruption allegations at the council.

Ministerial intervention questioned

Council insiders said Mr Dick’s move to reject the planning scheme had been all the more surprising because lawyers for local and state government had approved drafts of the intended amendments.

“All the legal teams said it advanced the purpose of (state planning laws),” a council staffer said.

“(Mr Dick) never once said what the problem was.”

A spokeswoman for Mr Dick said the proposed amendments were “unusual and unprecedented” and his decision to reject them had been “informed by advice” provided by his department.

“Having considered all relevant matters, the department gave clear advice that, under the law, it was not open to the minister to approve the amendment,” she said.

“Since the amendment package was rejected no evidence has been provided which suggests a risk to the council’s financial stability.”

A state government source said there appeared to have been a difference of views within the council, with Cr Sutherland expressing a willingness to withdraw the planning scheme that was not shared by Mr Hitzman.

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Council staffers said one of the biggest beneficiaries of the resulting planning policy crisis was likely to be developer David Trask, the main financial donor to Cr Sutherland since 2008.

Since 2015, Mr Trask has spent more than $40 million buying rural properties in Morayfield South, an “emerging community” area where the council’s modelling shows standard infrastructure costs would cover just a third of the actual cost of building roads, parks and stormwater drainage networks.

Mr Trask’s companies have six cases under appeal in the Queensland Planning and Environment Court after his development proposals in the growth areas were rejected by council bureaucrats.

Local government sources claimed Mr Dick’s rejection of the planning scheme had weakened the council’s legal position in these cases.

In his October 2018 letter to Cr Sutherland rejecting the planning scheme, Mr Dick was scathing of council staff and accused them of holding up development by refusing development applications in the growth areas, even calling for them to be investigated over their actions.

“This was just a swipe at the staff to take as much of the heat as possible and to defer the fight, if you like, away from the politicians,” one staffer said.

The staffer added that council bureaucrats had simply been implementing an internal policy instruction to make sure any development in the growth areas could only take place on a “full cost-recovery” basis.

Donor one of the biggest beneficiaries of crisis

Mr Trask told Brisbane Times he had been facing additional costs of $47 million based on the council’s proposals and claimed the council’s infrastructure cost modelling was “fraudulent”.

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“It was a threat to my entire business,” he said.

Mr Trask said he had persistently lobbied Mr Dick, as well as Local Government Minister Stirling Hinchliffe, over the council's proposed infrastructure charging plans, although he had only ever received “polite, political” responses that were non-committal.

He accepted that the rejection of the planning scheme was advantageous to him.

“I guess so,” he said.

Mr Dick’s spokeswoman said the amendment had “attracted a high degree of interest from the development industry”.

“These parties had a range of views, some of which were supportive … and others who did not support the concept at all,” she said.

MBRC modelling showed if developers’ contributions were capped at the maximum $28,000 per lot permitted in established areas, which Mr Trask asked for at Morayfield South, the council was facing an infrastructure funding shortfall in that area of more than $350 million.

Similarly, at Caboolture West, a rural area where up to 28,000 new homes could be built, a single proposal submitted in July by developer AV Jennings for 8700 homes represents $165 million in unfunded infrastructure costs, based on the council’s financial modelling.

The AV Jennings scheme is represented by town planner Tim Connolly, who has acted as trustee to Cr Sutherland’s election funding vehicle, Moreton Futures Trust, since 2008.

The trust, which came under intense scrutiny during the CCC’s Belcarra hearings into local government in 2017, has also channelled donations to deputy mayor Mike Charlton and councillors James Houghton, Julie Greer and Peter Flannery.

Moreton Bay Regional Council did not address detailed questions, saying only that the council’s current proposed planning scheme amendment did “not include growth areas”.

“Previous planning scheme amendments were advertised appropriately and community consultation occurred,” the council said in a written statement.

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There has been no public discussion of ratepayers’ financial exposure. This was in spite of councillors having attended “numerous presentations” on the issue from late 2017, a council source said.

“All the councillors had full visibility (of it). Everybody - all the councillors, the mayor, CEO, deputy CEO,” the source said.

“From mid-2018, councillors knew about the $1 billion exposure and the developers have seen the numbers.”

Mr Trask confirmed he had attended briefings at council offices where he and other landowners were shown infrastructure costings for the growth areas.

“I’m producing an estate (in Morayfield South) in what’s classed as one of the region’s affordable housing regions and my infrastructure costs were going to be $52,000 (per lot) or maybe more, and I had no say in it,” he said.

“There was me and multiple other developers that were wheeled into a room and we were told: ‘This is the way it’s going to be and if you don’t like it, f--- off’.”

Under fixed cost-sharing arrangements, in established areas the council receives $17,000 of the $28,000 maximum charge levied on developers, with the rest going to Unitywater and the Department of Transport and Main Roads to build water, sewerage and trunk road networks.

Council modelling found in the emerging communities of Caboolture West, Morayfield South, Burpengary East, Narangba East and Joyner, between $19,000 and $37,000 per lot would be required on top of this figure.

Council insiders said it had never been explained why the whole planning scheme, covering everything from carport setbacks to drainage rules, had to be thrown out, causing additional costs to ratepayers and inconvenience to residents, rather than allowing the bulk of it to proceed under temporary arrangements.

“It doesn’t make sense,” said Brent O’Neill, who until February was manager of strategic planning and economic development at the council.

“There’s no one that I know of that can understand why that occurred.

“The normal process from a planning perspective would have been to conditionally approve the scheme."

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