Page 4519 - Week 15 - Wednesday, 20 November 1991
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What is the motivation to redevelop this site in Forrest to include 26 prestigious townhouses, at a cost of some $3.3m? If we were to sell those townhouses, of two storeys plus the basement, what would we get? If they were three-bedroom units in Argyle Square, you would be looking at $200,000-plus. Let us be conservative and say that if they were in Argyle Square in Reid they would bring in $200,000. So, 26 at $200,000 is $5.2m. On a $3.3m development, there would be roughly $2m profit. But it is not in Reid; it is in Forrest.
So, it would probably still be quite conservative to say that with two- to three-bedroom houses there you could expect to pick up $300,000. I think that is very conservative. If you calculate that out, you are talking about $7.8m, or $4.5m profit. That is not a bad motivation. If you build three- to four-bedroom units, and they are really topnotch, you may even bring in - it is not beyond the imagination, although it is not conservative - $400,000 per townhouse; then we would be talking about a profit of $7.1m.
What is driving this is profit. The critical part - it is a part to which Mr Wood drew attention - is that it depends on exactly where they are located. Those same townhouses located in one of the other areas that Mr Wood mentioned may be worth $150,000. But let us say that they are worth some $400,000 because they are in Forrest. There we have what is known in most areas as speculation. It is blatant speculation, not on the building - they are entitled to make their profit by putting up buildings and selling them - but by making a profit from an increase in the value of the land. Let us halve it and say that they will make a profit of $3.5m from the increase in the value of the land.
We halve it because we are going to charge them a 50 per cent betterment tax. That is how it would appear. Mr Wood mentioned that there are other possibilities there, but it looks at this stage like it will be a 50 per cent betterment tax. We would get a $3.5m loss to the community; that is what we are talking about.
Mr Wood: Where is the money going?
MR MOORE: Where is the money going? I think Mr Wood has asked the most pertinent of all questions. Certainly, some of that money is going back into the development of the greens and the development of the bowling club. I pointed out that that was the extreme case, on $400,000. But let us say that it is only $1m that we are talking about, so we are talking about a profit, after betterment tax, of $500,000. What sporting body in the community would not like to put their hand out and say, "I would like to have $500,000, community, please"? That is the reality of what we are doing here.
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