Is private office space a public good? SRL density plan suggests so

Developers would be able to build more densely around Suburban Rail Loop stations in return for creating office space, under a contentious proposal that housing advocates say repeats mistakes made in the City of Melbourne.

Councils and advocates have warned the incentive would diminish social and affordable housing along the underground rail line, which the state government has branded Australia’s largest housing project.

An artist’s impression of the precinct around the Cheltenham SRL station.Credit: Suburban Rail Loop Authority

Skyscrapers and housing clusters planned for stations on the Suburban Rail Loop East line will come under the microscope next week when public hearings are held for the $34.5 billion project’s structure plans.

The committee hearings will allow the public to provide feedback on the locations where the government has proposed the tallest towers, commercial precincts, and green space or transport corridors.

One issue to be debated for every SRL precinct is whether a proposal that classifies office space as a “public benefit” contradicts the government’s housing ambitions.

The state government is proposing a public benefit uplift scheme similar to the one that operates in the City of Melbourne. This would permit developers to build taller and denser buildings in return for delivering features that improve quality of life, such as green space or affordable homes.

But, like the Melbourne scheme, the government has included office space as one of the trade-off features, across certain areas in their structure plans.

Housing advocates say these commercial spaces should be excluded from the scheme because the financial benefits are too tempting compared to the alternatives, thus disincentivising the construction of social and affordable housing.

The City of Melbourne’s 2020 to 2030 affordable housing strategy found existing controls had not effectively delivered affordable homes at scale and recommended the council advocate for a rule change with the state government.

“The intention to provide affordable housing as an uplift is fully supported, but while it competes with options such as commercial office space, it will not be prioritised,” it found.

“Given the need for affordable housing and the availability of commercial space in the central city, the inclusion of commercial space as an uplift incentive is no longer justified.”

Committee documents show that two issues to be discussed for every precinct are whether the structure plans will deliver affordable housing and whether the public benefit scheme, which includes office space, is appropriate.

Community Housing Industry Association Victorian acting chief executive Jason Perdriau said schemes where developers could voluntarily contribute affordable housing did not work.

“A voluntary scheme in the City of Melbourne, that mirrors the one the state government is proposing for SRL East, has not delivered the affordable housing that’s needed,” he said.

“Developers get the same incentive to build office space as they do to build affordable housing. Delivering homes that are affordable for renters is a less profitable choice for developers, so unless it’s mandatory, it won’t happen.

“Mandatory schemes actually work, and Sydney proves it with the thousands of affordable homes that are being built because developers are required to contribute.”

Responding to these concerns, the Allan government pointed to its goal of creating thousands of jobs around rail loop precincts – alongside the plans for 70,000 homes – that require commercial space.

A spokesperson said the government had already fast-tracked 2000 homes across SRL precincts, which were required to develop a minimum 10 per cent affordable housing, approved through the government’s streamlined Development Facilitation Program.

In a submission to the planning committee, Monash City Council said that offering faster planning approvals was a better incentive for affordable homes than increasing floor space as proposed in the public benefit scheme.

The council also said an ordinary person would not consider office space a benefit worthy of increased density.

“Furthermore, it could encourage the wrong type of office floor space in the wrong area,” it said.

Whitehorse Council also questioned the inclusion of office space in the scheme, which is said would be complex and costly to administer.

An artist’s impression of the SRL East station at Cheltenham.

“It is difficult to understand what the public benefit of such floor space is,” it said in its submission.

Advocacy group YIMBY Melbourne’s submission said the public benefit scheme should be altered to put a greater focus on social housing, not just affordable housing.

This could include cash payments to Victoria’s Social Housing Growth Fund.

“‘Affordable’ housing simply provides a subsidy for the marginal homebuyer or renter to occupy a unit that would have otherwise been sold or rented at full market price,” YIMBY said.

“However, it does little to provide homes for those in acute housing need.

“The greatest public benefit is yielded from helping those most in need of housing. That means individuals and families on the social housing waitlist.”

Other issues to be discussed at the hearings include whether there is enough floor space for population growth, whether the plans encourage a shift to other forms of transport, and how contaminated land should be handled.

Opposition planning spokesman Richard Riordan said local amenity should guide building height limits, irrespective of retail, commercial and residential space.

“At the end of the day, until the Labor government solves its addiction to taxes and puts downward pressure on construction costs, nothing is going to be built anyway,” he said.

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