Opinions are divided over who will pay for a proposed development tax Melbourne City Council wants to impose on new high-rise apartments in the CBD.
The council voted unanimously this week to ask the planning minister to endorse a $900 per dwelling charge for new Hoddle Grid residential towers, before a forecast tidal wave of construction in the area.
The aim of the charge is to get cash to help fund $26.5 million of public infrastructure needed for 14,300 extra residents expected to move in before 2031.
But even when voting in favour of the new tax, Melbourne lord mayor Robert Doyle said it was the public that would ultimately foot the bill, a hit on housing affordability.
''It will be passed straight through to the purchasers of these residential units. Simple as that,” Cr Doyle said.
The announcement has infuriated the Property Council of Australia, which repeated concerns the tax would be passed on to home owners.
''I am not aware of any home ownership tax which improves housing affordability,'' said the group’s Victorian executive director, Jennifer Cunich.
Ms Cunich said the property council had not been formally consulted on the decision, which led her to ''question the professionalism'' of the city council. ''It is very disappointing to see the council embark down a road where community input is not a key factor in their thinking.''
Cr Stephen Mayne first proposed the new charge and rejects the argument the entire tax will be borne by home buyers.
Although he conceded some of the tax may be passed on, he said ultimately the market would determine how much properties were sold for.
The proposed charge received a far more encouraging response from the Planning Institute of Australia.
Victorian president Brett Davis said the levy could have a positive impact on housing options in the CBD by encouraging developers to build a greater variety of apartments.
''Instead of a developer building 100 bedsits, they may mix it up more with say 20 bedsits and 30 two and three-bedroom apartments,'' he said.
Other capital cities have already implemented bigger infrastructure taxes. Developers in Brisbane are charged $19,000 for one or two-bedroom apartments, and $27,000 for apartments with three bedrooms or more.
Melbourne’s comparatively ''modest'' tax will first have to get the tick of approval from Planning Minister Matthew Guy, who said he was "happy to have a look at it, but would like to see some consultation with the development industry and the community".
If approved, it will apply to all new Hoddle Grid multi-apartment applications approved from September this year.
It is possible CBD developments could be hit with a further $4500 per dwelling state government levy from July next year. But this will be contingent on the Hoddle Grid being classified a Strategic Development Area.