It’s a simple and seductive solution: rezone more land on the fringes of Sydney for housing and real estate prices will fall, thanks to greater supply.
But the reality is more complex.
Sydney is now facing a massive new infrastructure challenge – worse than occurred during some of its growth spurts of the past.
By trying to speed up the release of land, the New South Wales government has set up a kind of Hunger Games among developers, who are each urging spending by government in their patch.
Reports by Infrastructure Australia and multiple academics have repeatedly noted that infrastructure costs for development on the fringes of Sydney are much greater than expanding infrastructure in the inner and middle ring.
But governments have limited budgets.
The government had put significant resources into planning the Aerotropolis, now called Bradfield, near the new Badgerys Creek airport. Now the planning minister, Anthony Roberts, and premier, Dominic Perrottet, want to fast-track areas in the Macarthur region at the same time, opening up another urban frontier that is currently devoid of public transport and more than single-lane roads.
So who gets priority for scarce infrastructure dollars?
While developers pay levies per lot to build some of the infrastructure, the big-ticket items, such as rail lines, hospitals and major roads, are funded by state governments and there’s now a race among developers to get development for their sites.
A railway station can add hundreds of millions to the value of a site because it will likely lead to greater densities and taller buildings around the transport node.
Ministers will face intensive lobbying from developers to locate these valuable assets on or near their land, and with that comes the risk that factors other than the best location could intrude on decision-making.
The Perrottet government used the proceeds of privatisation of state assets to drive massive spending on infrastructure, such as the Sydney Metro Northwest and WestConnex, to make up for Labor’s neglect of the decade before.
But now it is facing its own challenge.
Having never truly embraced value capture – taxing developers for the increase in value of land that is rezoned or which benefits from government-funded infrastructure such as a railway station – the Coalition is struggling to service these new more expensive greenfields areas.
Areas that were allowed to jump the development sequencing queue on the basis that infrastructure would be provided at “no cost to government” – such as Wilton, 80km south-west of Sydney – are turning into expensive failed experiments in urban planning.
Houses in Wilton are going in before major connections to main roads are built, before town centres and before schools. Sewerage services and water supply for the region are still at the concept stage.
The Department of Planning and Environment told Guardian Australia it was in the process of updating the Infrastructure Phasing plan for Wilton “to identify funding sources and align delivery of both state and local infrastructure with current urban development scenarios for the growth areas”.
But that is cold comfort to the thousands of people who have moved to Wilton already, or are building homes there.
So just how big is the challenge?
The Aerotropolis is slated to become home to 1.4 million people by 2036 and the Macarthur Growth area to the south-west is forecast to have a population of 600,000 by 2036.
The infrastructure bill for the Aerotropolis has been estimated at an eye-watering $100bn over the next 20 years. Some of this will be funded by developer contributions, but nonetheless there will be huge costs to government.
The proposed rail line to the airport from St Marys, which will service the Western Parkland city with five stations and a connection to the CBD, has a price tag of $11bn alone.
The mayor of Wollondilly says the infrastructure shortfall for Appin and Wilton in the Macarthur region is at least $2bn, assuming the developers do their part and provide what they have committed under voluntary planning agreements.
Yet the last state budget allocated just $16bn over four years for transport infrastructure for the whole of western Sydney.
The federal government has promised to stump up some funds for the airport line, but nonetheless the figures are frightening.
Other areas such as the Sydney Science Park near Luddenham appear to have stalled with no infrastructure in sight. This area was rezoned more than a decade ago “out of sequence” on the basis that there would be “no cost to government” and the developer would provide the infrastructure.
The One Nation MP Mark Latham claimed in parliament that the developers were being given preferential treatment and that Sydney Water had now picked up the tab for the sewage plant.
Sydney Water says “it is working with the developers to provide sustainable and resilient water services to Sydney Science Park under a commercial agreement. As part of the agreement, Celestino is required to fund the facility upfront.”
Housing estates without transport and adequate roads, and schools, shops and jobs far away, are a recipe for miserable, marginal and expensive places to live in the future.
Worse still, they fall on families with modest means, who have sought cheaper housing on the fringe.
They will be forced to own multiple cars. They will lose hours of their lives commuting to jobs far away on crowded roads.
They may be forced into sending their children to private schools because the local school is too crowded or just doesn’t exist.
Governments would be well advised to look back at the great expansion into the north-west of Sydney during the late 1990s and early 2000s.
Without any public transport in place when thousands of households moved to Kellyville, Rouse Hill and surrounds, residents were forced to own multiple cars and drive to work.
The M2 opened in 1997 but became a car park until the Metro rail line finally opened in 2019.
Roberts’ simplistic formula of rezoning without infrastructure might seem like the answer but focusing on delivering more social housing and ensuring developers do their part to deliver on their commitments under existing rezonings is just as important.
