The arrival of the Newcastle Mines Grouting Fund in 2015 coincided with a development boom in the inner-city which has only recently showed signs of slowing down.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The Newcastle Herald reported in October that the value of development applications approved by City of Newcastle in 2019-20 had dropped back to $590 million, or close to pre-boom levels. But the recent slowdown followed three years of billion-dollar investment which is transforming the scale and character of the inner-city.
The Property Council says the government risks stopping that investment in its tracks if it allows the grouting fund to disappear.
The council's regional chair, Neil Petherbridge, sounded none too reassured by public statements from Planning Minister Rob Stokes and Hunter Central Coast Development Corporation that the government will examine the scheme's future at the end of 2022, when it is due to expire.
Mr Petherbridge points out that the $17 million fund does not, in fact, cost the state much at all - he estimates no more than $1.5 million over five years - because most developers use it simply to underwrite projects rather than access its pool of money.
The Newcastle Herald understands that even the large EastEnd mall redevelopment did not exceed the cap for accessing the fund, even though Iris Capital poured concrete into it for what seemed like forever.
If, as the Property Council says, the grouting fund is giving developers certainty without much cost, extending it beyond 2022, and to other parts of the Hunter, appears to be a no-brainer.
The $17 million came from the $450 million Hunter Infrastructure and Investment Fund, which was established in 2011 and ended in 2016. If this money is not used to keep the fund running, where will it go?
Given the long lead times for major projects, the future of the fund beyond 2022 will soon become an issue for investors.
In a free market, developers take on the risk of a project. In normal circumstances, taxpayers' money should not help underwrite property speculation, but the industry argues that Newcastle is a special case as the honeycomb of old mine workings under the city make significant investment almost impossible without some kind of guarantee.
If the community benefit is housing and infrastructure that people want, and construction jobs, then the relatively small outlay may well be money well spent.
ISSUE: 39,483