Commonwealth prepared to pay to fix contaminated Maribyrnong site

The Commonwealth is prepared to pay the clean-up bill for the contaminated Maribyrnong Defence Site to end a decades-long development stalemate on one of Melbourne’s largest housing lots, potentially opening up thousands of new homes near Highpoint shopping centre.

Almost 20 years after the federal and state governments began talking about transforming the 127-hectare site for housing, the property remains inaccessible even for dog walking and is fenced off to the public.

The 127-hectare Maribyrnong Defence Site.

Responsibility for the cost of remediation of the site – estimates are up to $200 million – has been a major obstacle to progress on a site at which thousands of workers made explosives for both the first and second world wars.

But in an exclusive interview with The Age this week, Assistant Defence Minister Matt Thistlethwaite said the Albanese government had overturned a Turnbull-Morrison government position and would wear the cost of remediation if necessary.

He said the government’s preferred option was for the company chosen to buy and develop the site to pay for the clean-up, but he said: “The cost might be just a bridge too far for the buyer of the site. It is still possible that the Commonwealth will pay for the remediation.”

“It might be that the buyer does the remediation, or the Commonwealth, or that the cost is shared,” said Thistlethwaite.

In 2017, then treasurer Scott Morrison announced the land would be put on the open market and he spruiked the potential for 6000 dwellings. The plan was to offload the site, as well as the responsibility for remediation and the funding of infrastructure such as transport, to a private developer.

Political differences between the federal Coalition and state Labor governments have dogged the project.

Six years later a registration of interest process has reduced a shortlist of potential buyers from 12 to three. However, doubt remains about the prospects for real progress given the risks of remediation and infrastructure costs. Notably, Thistlethwaite stressed that the federal government was determined to involve the state government and local council in planning for the defence property.

Maribyrnong Mayor Sarah Carter, who lives near the site and was briefed by Thistlethwaite this week, welcomed the federal government’s new willingness to consider paying for its decontamination.

Sarah Carter says there is “great potential for a significant level of housing on the site”.Credit: Penny Stephens

She said remediation had been an “insurmountable” obstacle to progress on a site that represented a great opportunity for new housing, including social housing, in a well-located position.

Carter said she was glad to hear that the minister was committed to involving both the state government and local council.

“There is great potential for a significant level of housing on the site. I made it clear that we are keen to see social and affordable housing in the mix,” Carter said. “The assistant minister seemed very supportive of that idea.”

While the defence department has done some remediation, the successful bidder for the site had been expected to cover the cost of the remaining clean-up.

Currently, the state government envisages 3300 dwellings for 6900 people, although public detail about state ideas for the site is scant.

The federal change of heart on remediation comes as both the federal and state governments struggle with a housing crisis and the Andrews administration finalises a package to map out how it intends to squeeze an extra million homes into established suburbs by the middle of the century and slow Melbourne’s outward expansion.

Located adjacent to Highpoint Shopping Centre and less than 10 kilometres from the Melbourne GPO, seasoned developers and planners say the malaise over the Maribyrnong site highlights key problems faced by the Andrews government as it struggles to rein in urban sprawl and direct growth to existing suburbs.

David Hodge is a senior consultant at prominent development firm Intrapac, which was among the developers who registered an interest in the Maribyrnong site but is not among the three remaining.

He said the site was complicated with many unknowns including the level of contamination and the infrastructure required to service a new population.

“The remediation and infrastructure provision tasks are so big and ill-defined that developers would have to factor big risks into their costs which has a major impact on what they will deliver there.”

Hodge called for the establishment of an urban renewal authority, including representatives from federal, state and local government with an independent chair and board, to manage the development.

“It would be much more practical, and probably better value for taxpayers, for an authority to remediate and master plan the site then sell super lots into the market.”

He said such a model was needed for the Maribyrnong Defence Site and other large urban renewal projects.

“The state government must embrace such a model if it is to deliver on its long-standing policy position of consolidating the city and directing growth into established suburbs.”

A defence department spokesperson confirmed that three prospective buyers had been invited to take part in a “request for proposal” process and that the department “anticipates making a recommendation to the government in 2024”.

The department refused to comment on the final remediation costs or the number of dwellings that may be built.

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