The Land Development Agency is set to record $256 million less revenue this financial year than was forecast, ACT budget papers show.
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Under the territory’s budget for 2013/14, estimated land revenue was $484 million. But according to the agency’s financial statements, released as part of the budget last Tuesday, it is only expected to collect half of that amount at $228 million.
The loss of $256 million in land revenue has been attributed to the unsuccessful negotiations to sell the Denman Prospect suburb as an englobo package and “decreased demand in certain parts of the residential, commercial and industrial markets”.
The budget statement also noted delays in construction due to delayed regulatory clearances and inclement weather, and the negotiation of deferred settlements also contributed to the decrease in estimated revenue.
The LDA failed to sell the 107-hectare suburb of Denman in June last year in what was the largest parcel of land ever auctioned by the agency. Just one party qualified to bid and then one offer was made, which was not accepted.
Months of negotiations followed before the LDA decided to develop Molonglo Valley’s third suburb itself.
The budget issued by the territory government showed a drastic reduction in the number of dwellings to be delivered under the Indicative Land Release Program over the next four years.
About 3000 dwelling sites have been removed from the program and the target reduced to deliver 13,500 dwellings.
The target was adjusted because of the forecast there would be lower demand for land following the Commonwealth government’s job cuts.
Treasurer Andrew Barr said the reduction in the dividend the LDA returned to the government through land sales would lead to a loss in territory revenue of $244 million over the next four years.
Land Development Agency chief executive David Dawes said the agency had reduced the dwelling targets after talking to industry and taking the Commonwealth situation into consideration.
He said while it was a reduction in numbers, the agency would continue work to have an inventory of land it could release further to the program when the market kicked up again.
Mr Dawes said the reduction in revenue targets over the next four years was a significant decrease.
According to the budget papers, estimated revenues have fallen from $553 million to $314 million in the 2014/15 financial year, from $658 million to $453 million in 2015/16, and from $556 million to $497 million in 2016/17.
Mr Dawes said no projects would be delayed but the agency had reduced the number of dwelling sites in Gungahlin and Molonglo, and had also scaled back Belconnen releases in the current financial year due to an oversupply of units in the market.
He said the agency would be ready to provide more land once the market improved.
“Even though the numbers are less, I think the important message is there’s a lot of work going on to make sure we’ve got that inventory so we can respond to the market,” Mr Dawes said.