Reserve Bank Glen Stevens - Funding conditions are not an impediment to infrastructure

Sydney like most capitals in Australia is having a housing price boom and there is concern that we are in a boom bust cycle.  The problem is the shortage of land for development.  

Glen Stevens, Reserve Bank Chair, recently made this point albeit in a diplomatic way, 'monetary policy (very low interest rates) could not add to the amount of land available for housing or improve the ability of the construction sector to respond to demand for extra housing.'  'Funding conditions are not, in fact, an impediment to infrastructure.'

For the sake of the economy and the need for affordable housing for an extra 2 million people, the State and Federal Governments must make a priority the release of development land. The problem is local government and small councils which are captive to anti development local politics.

Mosman Council is a prime example, having refused to endorse its own Spit Junction Master Plan, because of fears of an residents backlash to building heights going from 5 stories to 7 stories in a few highly selected places.  The master plan recommend higher building heights and increased FSR (2.5 to 3.5) to allow for  public amenities in the form lane way setbacks, public arcades and bus terminals.

The State Government funded the Spit Junction Master Plan, they must now be shaking their heads in disbelief.  The obvious solution from their point of view, make councils larger  and more responsible.

Extract from Glen Stevens speech reported in the Fin Review

http://www.afr.com/p/national/rba_glenn_stevens_urges_action_to_zQDQkxTeiTKlXdg9qXSN8H

“It is stating the obvious that at present, while we may desire to see a faster reduction in the rate of unemployment, further inflating an already elevated level of housing prices seems an unwise route to try to achieve that.” Mr Stevens indicated to a function organised by the Committee for the Economic Development of Australia in Adelaide on Wednesday that it was the task of state and federal gov­ernments to help ensure price gains didn’t become unsustainable.

He said monetary policy could not add to the amount of land available for housing or improve the ability of the construction sector to respond to demand for extra housing.

“Other policies have to do that – and it’s important that they do, if we are to see easy credit result in more dwellings as opposed to just higher prices for the existing dwellings,” he said. “Monetary policy can’t create the additional in­frastructure that most people agree we need. Funding conditions are not, in fact, an impediment to infrastructure.