Why developers are not the devil in property disputes: Gerry Karidis

Why developers are not the devil in property disputes: Gerry Karidis
Gerry KaridisJanuary 10, 2013

Each year most Australian newspapers publish the results of a public opinion poll inquiring into the relative social standing of various professions and occupations. Ambulance drivers, firefighters and nurses usually vie for top spot and teachers usually do well. Property developers are not offered to the public for rating, but the treatment meted out to real-estate agents – 36th of 40 in the 2008 survey – would suggest that property developers would appear near the foot of the list. Would that be fair?

No, according to Gerry, because the voters in the poll don’t understand the developer’s situation. Everybody learns sooner or later that the enjoyment of one’s property rights is largely dependent on what others do in the neighbourhood. Therefore sensitivity will always surround possible changes in land use, local traffic, streetscape, noise, smells and so on. Their property is important to people for a very wide range of often conflicting reasons, so shared understandings and evaluations of change rarely arise naturally and, for good reasons, are hard to create. On top of all that, the developer is looking for a profit at a rate sufficient to compensate for the risk he or she is running and to cover the occasional loss-making venture. This is rarely a popular motive among the neighbouring onlookers who know little or nothing of the risks the developer runs and who fear they may be the source of any profit that is made rather than among the recipients or beneficiaries of it.

In short, before the developer even arrives the jobsite contains all the makings of heated conflict: angry words and contemptuous dismissals, lengthy vendettas and furious dialogues where nobody is listening. It shouldn’t surprise anybody then if fears and hopes of all shapes and colours gather around a vacant building site and the developer is cast as the devil.

Second, he claims the public forgets how much the activities of property developers are constrained by limitations imposed by our system of property holding, by local authorities’ rules and whims, our long-standing neglect of urban planning and the control that must be ceded to the banks to obtain capital funding. ‘Today’s city is not an accident. Its form is usually unintentional but it is not accidental. It is the product of decisions made for single, separate purposes, whose interrelationships and side effects have not been fully considered.’

 Councils don’t decree that their cities should be beautiful, let alone adventurous or stimulating. For most of Gerry’s early career they limited themselves to ruling out what they wouldn’t stand for because that is easier to do; and that negative perspective has survived quite well the change to basing planning on ‘desired futures’. Positive civic thinking remains at a discount; and when it manages to make an appearance it still faces an uphill battle to convince Adelaide’s habitual nay-sayers and timid safety-firsters. Banks and other finance sources don’t fund developers to build attractive cities, they provide finance so their clients can make a profit and the bank can collect fees and interest income. Anything else is secondary and a developer who thinks differently usually knows better than to say so too often or too loudly.

The beautiful and well-functioning cities that people say they want only become likely when governments provide some form of protective cover and creative input, allowing or perhaps requiring those aesthetic, social and other non-monetary considerations to feature in the project’s objectives without knocking the profit and loss accounts too far out of kilter with the financier’s expectations.

 


 

Gerry agrees that some forms of development-related corruption must occur or have occurred in Adelaide. He says there is no way of knowing whether it is as highly developed as in Queensland or New South Wales, but believes only the naive would suppose SA is free of what is occurring elsewhere. There have been decisions taken and moves made in years gone by – he won’t even hint at details – that he can’t explain unless some form of favouritism based probably on covert inducement or behind-the-scenes political pressure was involved. He mentions some counter measures that could be introduced but cautions that they would need to be carefully designed and policed or they would simply be evaded by those who didn’t mind breaking the law and thought it might be worth their while to do so.

The property profession, he claims, is not really so different from any other. It is certainly simple-minded, he says, to blame some imagined special feature of the property industry. If anything, it may already be more open to questioning and investigation because of the highly visible nature of its main business, development. The root of the problem, he argues, is the high cost of politicking in modern, media-rich societies. To gain or hold office politicians need big bankrolls, and are forced to find something to sell without being allowed to sell the things that set them apart: the power and influence that lies in their hands. He sees the party donations system as all sizzle and no sausage: an expensive but illusionary exercise that gives the politicians their funding, the critics the proof of wrongdoing they wanted and the donors little if anything at all. Reformers who go on about banning party contributions from developers have got hold of the wrong end of the stick and, in effect, are blaming the victims. What about banks, he asks, what about pharmaceutical companies, poker machine manufacturers, liquor industry interests, even unions? Why should all the other big spending groups be spared the same scrutiny and controls?

Gerry suggests only public funding of election campaigns and tough, really tough, controls of other giving will begin to clean up the scene. Graft for simple personal gain is, he believes, not likely to be a big factor and is also the easiest to uncover and prosecute. He gives the Norm Gallagher case as an instance of this. Tackling the suspicion of corruption in contexts where the evidence can be easily hidden is a distraction, he says: tackle corrupt actions by forcing them to leave their tracks on open ground.

 

buildingalwaysThis is an excerpt from Building Always Building: The Life and Times of Gerry Karidis

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