A leading Newcastle developer says he has "three or four projects" in Newcastle CBD that won't go ahead after the Newcastle Mines Grouting Fund was axed by the state government.
The Newcastle Herald reported on September 26 that the NSW government was winding up the fund, which provides money to developers for unknown costs to fill underground mine voids. The amount paid is above a designated cap depending on the area.
The fund, who was designed to give assurance for financing developments, was reduced from $11 million to $6 million in the recent state budget to fund approved applications. No new applications will be accepted.
Minister for the Hunter Yasmin Catley said the government "had to direct funding to the projects that we promised at the election".
"That is why we will continue to honour the $6 million that has been set aside in the fund for those projects that have already inquired or are indeed engaged in that fund," she said.
"I am confident that Newcastle will continue to be a really popular place for people to want to come and live and work and play.
"I do not believe for one moment that this will actually turn developers away. They were here before the fund began and they'll be here after the fund."
But GWH director Jonathan Craig said that was not the case.
GWH used the fund to complete grouting for its 1 National Park Street high-rise, and has been in "long conversations" with Hunter and Central Coast Development Corporation about accessing the money for another project at Denison Street in Newcastle West.
"It was earmarked to be in the fund, and no longer is, which is a huge problem," he said.
"If we knew this was going to happen, we wouldn't have bought the site."
Mr Craig said the grout funding program was "the only thing that got development going in the city".
"The fund gave guys like us certainty," he said. "Without that certainty we'll just go and take our investment elsewhere.
"I've got probably three or four sites on my desk at the moment and we won't be going ahead with any of them unless something happens with the fund - and some of them are 100, 150, 200 apartment development sites."
Altim Property director Ian Summers said he was surprised that the program was axed considering it provided assurance for developers to obtain finance at a minimal cost to the government.
"The multiplier effect you get from it in economic activity and taxes from the government, it just really doesn't make any sense," he said.
Altim has two projects in the pipeline in the CBD, and Mr Summers said the fund's axing will have an impact on the sites they assess.
"It will be a major determinant on acquisitions," he said. "If it's got potential for mine grouting issues now you'll steer away from those sites and those parts of the city now will suffer neglect, which is frustrating.
"It's a unique Newcastle problem and for someone who isn't aware of it, it's quite mind-boggling to think that the entire city and surrounding suburbs is like Swiss cheese underneath. There's holes everywhere.
"It's very extensive in the CBD and in the city locations which are really ripe for development."
