Fees aimed at preventing builders from land banking in the territory's leasehold system have instead turned into crippling revenue raising, according to the ACT Master Builders Association.
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It says this means builders are not proceeding with projects at a crucial time, when the territory is bracing for ongoing uncertainty on the future of Commonwealth Government agencies and projects.
Banks reluctance to lend money post the global financial crisis, their insistence on 60 per cent pre-sales for financing units, coupled with long planning approval time have stalled construction projects, attracting the late fees.
MBA deputy executive director Jerry Howard said large late fees - $100,000 and $500,000 in two cases - could add up to more than what was paid for a building site.
"If there's no concession, they won't bother with their projects, " Mr Howard said.
"Some want to hand the land back to the government. 'We can't afford to keep it, take it back' they'll say.
"But they are still left with the late fees."
MBA executive director John Miller said the government needed to act quickly to avoid the industry grinding to a standstill.
"We are getting some sympathetic hearings, but this is not converting into any remedial action within government agencies."
Treasurer Andrew Barr was cheered at a Property Council gathering after last year's ACT budget when he announced waiving the fee for commercial, mixed-use and multi-unit residential developments.
In a statement, Mr Barr said the fee would continue to apply only to single dwellings on standard residential blocks, but the Government was not going to waive fees incurred before June last year, and had not indicated that it would.
Mr Miller said population growth had driven building, which boosted the ACT economy, but the latest indications, including the Federal Government's upcoming Commission of Audit, pointed to a slowdown in activity.
"This is a big game of confidence. We are not fully restored in confidence after the GFC [global financial crisis]. The ACT government is at a critical time; it's not the right time to be enforcing commence and complete fees.
"We're pleased to have projects like the City to the Lake, Capital Metro and new convention centre, but they're long term, we're talking about short term. This is about employment and survival."
Mr Howard said late fees were insignificant in the overall economy, but the work that hinged on them being waived was significant because it generated other commercial activity, like window manufacturing, concrete making and bricklaying .
