HIGHRISE HARRY STRONG ARMS GLADYS BEREJIKLIAN OVERDEVELOPMENT … OOPS!

Billionaire property developer Harry Triguboff. Picture: John Appleyard

IT appears that Gladys Berejiklian is not the first to be subject to such rebuke …

IT goes back some decades … here’s proof of what has happened to ‘the Australian Dream’ …

AND why our Families have lost out to black money from overseas …

HIGHRISE HARRY STRONG ARMS Gladys Berejiklian over development

By Unconventional Economist in Australian Property

July 15, 2019 | 30 comments

Billionaire Meriton apartments developer, “Highrise” Harry Triguboff, has threatened NSW Premier Gladys Berejiklian with legal action for Ryde MP Victor Dominello’s opposition to Meriton’s 1270 Meriton unit development in Sydney’s Macquarie Park. From the Daily Telegraph: (maybe Paywall)

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In an extraordinary display of force by the country’s third richest person, the Meriton founder wrote a personal letter to the Premier saying Ryde MP Victor Dominello “is being completely unreasonable” in his opposition to the company’s 1270 unit development in Sydney’s north west.

“Mr Dominello continues to specifically attack my development proposal at Macquarie Park which has endorsement from both council and the state government”…

Mr Dominello, who is the member for Ryde and NSW Customer Service Minister, had prepared an online petition objecting to the development proposal which consisted of four towers, the biggest of which being 42 storeys…

If he is unable to be controlled, then I will have no option but to commence my own legal proceedings,” Mr Triguboff wrote. “Let me know what you can do”…

Meriton’s group general counsel Joseph Callaghan doubled down on Saturday, saying:

“It is entirely appropriate that Mr Triguboff engages directly and transparently with political leaders to hold them accountable for certainty of outcome in industry”…

Mr Dominello told The Sunday Telegraph: “Mr Triguboff might be one of the country’s richest and most powerful men, but I won’t be bullied. I will continue to fight for my community. Harry does not intimidate me and my community will always come first,” he said.

For decades, Triguboff has actively strong armed Australia’s politicians to implement policies that are beneficial to his interests, including running a mass immigration policy.

The below interview from 2006 highlights these dealings in all its hideous glory:

IT’S simple, says Harry Triguboff. Sydney has too much green and not enough grey, and if you want to look at trees – well, go climb a mountain…

“You go north and we have all these reserves and you go south and you have all the reserves, and they are the best part of the coast. That is crazy. We should be building on this area,” he said.

“If they want to see trees, they can go to Katoomba, there are plenty of trees there”…

He also called for a big increase in immigration, saying the population of Sydney should be 20 million by 2050, with the population of Australia 150 million…

He said he spoke far more to Mr Carr than he does to his successor, Morris Iemma, and convinced him to * change laws concerning owners’ corporations to stop rogue elements in body corporates engaging lawyers and consultants without a proper vote.*

He said that about three years ago he convinced Mr Carr there should be more development in Sydney, saying Mr Carr would have more than $1 billion in stamp duty if councils approved developments on all of Meriton’s land.

“He was telling openly he saw me more than he saw cabinet ministers. That doesn’t mean he did what I told him but he knew [my] story very well,” Mr Triguboff said.

“This is the way it works, you have a minister of planning and then sometimes you’re not happy with what he does and you go to Carr … and you say ‘listen, this is the position’.

Harry Triguboff has also claimed credit for changing the Australian dream:

In 1963, Harry Triguboff decided to challenge the Great Australian Dream of owning a house on a quarter-acre block.

“I looked around and I saw cottages everywhereI thought it was time they lived in apartments.”

So, who is setting Sydney’s planning policies: the State Government or Highrise Harry?

It’s high time our politicians set policy in the interests of the ordinary residents, whose neighbourhoods and amenity are being destroyed by ugly high rise towers.

SOURCE: https://www.macrobusiness.com.au/2019/07/highrise-harry-strong-arms-gladys-berejiklian-development/

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BUILDING INDUSTRY DEMANDS GOVT ‘FIX CRISIS’ IN BUILDING INDUSTRY

No photo description available.
No photo description available.

AS we keep sayin’ it is the Deve-loper’s project … all professionals, trades, labour and building materials suppliers work for the deve-loper … it is its project …

ISN’t this a Crisis of their own making?

FROM the comments …

-this started due to self-regulation … means they are allowed to pillage and plunder while the govt ensures taxpayers will pick up the bill … this is what the building industry is asking for!

-suggestion … easier to stick a bunch of dodgy developers in gaol; sequester all their assets

-our govts privatised building inspection and certification (at whose request … cough … cough)

-going after the developers for recompense is unlikely to be successful …

.because these companies cease to exist

-suggest go after the directors (they have assets) and need to face scrutiny … even gaol terms/fines

THAT could soon remedy the situation …

Building industry demands government ‘fix crisis’ in building industry

By Unconventional Economist in Australian Property

July 15, 2019 | 12 comments

Five of Australia’s largest business groups – Master Builders Australia, the Australian Industry Group, the Insurance Council of Australia, the Property Council of Australia and the Australian Construction Industry Forum – have demanded urgent federal government intervention to fix the insurance crisis afflicting private building certifiers in the wake of widespread reports of faults and flammable cladding across Australia’s high-rise. From The Australian:

The groups have voiced their deep dissatisfaction to federal ­Industry Minister Karen And­rews ahead of a meeting she will chair this week with state counterparts that will focus on the ­inability of many private building certifiers and surveyors to obtain compulsory insurance.

In a letter to the minister, the five signatories stress the need to renew “public confidence” in the nation’s building industry as the sector that “provides the most full-time jobs” and contributes more than 7 per cent of GDP as “a vital engine room of economic growth”…

MBA chief executive Denita Wawn said the inability of many private building certifiers to gain professional indemnity insurance in the wake of apartment block disasters in Sydney and Melbourne meant the building industry was “grinding to a halt”…

Driving the escalation of ­indemnity insurance costs, which certifiers say they will be forced to pass on to consumers, is much higher premiums charged by the few remaining operators in the insurers’ market as the discovery of more apartment building cracks and the past widespread use of flammable cladding leads to remedial action and increased damages payouts.

Question: How did this whole fiasco start? 

*Answer: the building industry chose to use materials and construction processes that were inferior, and these passed inspection by dodgy (or incompetent) private building certifiers.

The industry, having walked away with the profits, now wants the federal government to tidy up its mess.

Insurance premiums for professional indemnity reflect the risk that the professional will make an error for which they will be sued. And the increased number of building cracks and problems reflects failure on the part of anyone whose job it was to certify the soundness of said buildings. Hence, higher premiums.

*Across the board, we have witnessed formal de-regulation and less formal ‘regulatory capture’ of regulators who have insufficient resources and clout to do their jobs.

The long-term solution to this mess is, therefore, not to provide the perpetrators with federal government handouts, but to conduct a warts-and-all royal commission into construction processes, standards and regulations.

This will determine the true causes, finger those responsible, and provide recommendations on how to prevent a reoccurrence in the future.

No photo description available.

SOURCE:

https://www.macrobusiness.com.au/2019/07/building-industry-demands-government-fix-crisis-in-building-industry/

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HARRY TRIGUBOFF’s THREAT TO VICTOR DOMINELLO AFTER HE CREATES ONLINE PETITION OVER DEVELOPMENT

HARRY’S rebuke of Liberal Ryde MP in a letter to Premier Gladys Berejiklian … he’s really putting it out there through the Meriton Group General Counsel … that she better do something or else!

MEANWHILE … NSW Labor opposition planning spokesman Adam Searle said: “This letter shows a too close relationship between key developers and the current government”.

“No wonder they are dragging their heels on building reforms, and no wonder the government can’t come clean and tell the community how many of the 150 recommendations from the Lambert report they have acted on,” he said.

NOTE … the original development proposal was for a 63-storey tower with 3 other towers ranging from 43 to 27 storeys … Macquarie Park has been rezoned from a Business & IT Park for a number of high-rise Precincts!

NSW

Harry Triguboff’s threat to Victor Dominello after he creates online petition over development

Billionaire property developer Harry Triguboff directly threatened Premier Gladys Berejiklian unless she “controlled” one of her senior ministers after he prepared an petition objecting a development proposal.

READ THE FULL LETTER.

Ben Pike, The Sunday Telegraph

July 14, 2019

DAILYTELEGRAPH1:47The Rich List: Australia’s wealthiest revealed

A look at Australia’s wealthiest citizens, from programmers to property moguls, and see how they made their billions

EXCLUSIVE: Billionaire property developer Harry Triguboff warned Premier Gladys Berejiklian to control one of her senior ministers or he would call in the lawyers.

In an extraordinary display of force by the country’s third richest person, the Meriton founder wrote a personal letter to the Premier saying Ryde MP Victor Dominello “is being completely unreasonable” in his opposition to the company’s 1270 unit development in Sydney’s north west.

NSW Liberal Minister for Customer Service, Victor Dominello, was the MP in question by Harry Triguboff. Picture: Jane Dempster
NSW Liberal Minister for Customer Service, Victor Dominello, was the MP in question by Harry Triguboff. Picture: Jane Dempster

The letter, written in July last year and obtained under freedom of information laws, has been seen as an unprecedented broadside against the government from the building industry.

“Mr Dominello continues to specifically attack my development proposal at Macquarie Park which has endorsement from both council and the state government,” Mr Triguboff, who has a personal worth of $12.31 billion, wrote.

“We find it unusual that a state member takes such an active role in undermining development at a local level which we have never seen before and tried to attack the council and mayor for being consistent with the government’s own polices.”

Billionaire property developer Harry Triguboff. Picture: John Appleyard
Billionaire property developer Harry Triguboff. Picture: John Appleyard

Mr Dominello, who is the member for Ryde and NSW Customer Service Minister, had prepared an online petition objecting to the development proposal which consisted of four towers, the biggest of which being 42 storeys.

He was under enormous pressure about overdevelopment in Ryde in the lead up to the March 2019 state election.

“If he is unable to be controlled, then I will have no option but to commence my own legal proceedings,” Mr Triguboff wrote.

“Let me know what you can do.”

Mr Triguboff wrote to NSW Premier Gladys Berejiklian. Picture: AAP Image/Dean Lewins
Mr Triguboff wrote to NSW Premier Gladys Berejiklian. Picture: AAP Image/Dean Lewins
How the 27-storey Meriton tower will look in Talavera Rd.
How the 27-storey Meriton tower will look in Talavera Rd.

*Ryde Council later recommended to refuse the development in December 2018.

During that month the Premier announced a public inquiry, to be run by the Greater Sydney Commission, into overdevelopment in Ryde.

Ms Berejiklian refused to say what she said in reply to Mr Triguboff’s letter or to comment for this story.

READ THE FULL LETTER (Maybe a Paywall)

VIEW CAAN COPY: https://caanhousinginequalitywithaussieslockedout.com/2019/07/14/meriton-letter-to-premier-berejiklian-2-july-2018-re-dominello-over-development-petition/

Meriton’s group general counsel Joseph Callaghan doubled down on Saturday, saying: “It is entirely appropriate that Mr Triguboff engages directly and transparently with political leaders to hold them accountable for certainty of outcome in industry”.

“If something needs to be said to the powers that be, he will say it in no uncertain terms,” Mr Callaghan said.

“The Premier always graciously thanks Mr Triguboff for his correspondence.”

Mr Dominello told The Sunday Telegraph: “Mr Triguboff might be one of the country’s richest and most powerful men, but I won’t be bullied”.

“I will continue to fight for my community. Harry does not intimidate me and my community will always come first,” he said.

The Meriton development on Talavera Rd at Macquarie Park.
The Meriton development on Talavera Rd at Macquarie Park.

*The GSC and then Planning Minister Anthony Roberts remain defendants in the case after the Premier was removed as a party in the proceedings last month.

*If mediation fails the case will return to Land and Environment Court for a two-day trial starting August 21.

*NSW Labor opposition planning spokesman Adam Searle said: “This letter shows a too close relationship between key developers and the current government”.

“No wonder they are dragging their heels on building reforms, and no wonder the government can’t come clean and tell the community how many of the 150 recommendations from the Lambert report they have acted on,” he said.

Mr Callaghan said the “government now acknowledges what Harry has been saying for years, that planning in NSW is a mess

In relation to the Talavera Rd development, he said: “The Department of Planning on behalf of the Greater Sydney Commission endorsed it as being the right development in the right area”.

“Since no decision was forthcoming, we’ve asked the question of government on dozens of occasions, ‘if you want us to change something about the plans, tell us.”

“We’re committed to work with you for the best community outcome’.

We heard nothing in reply so reluctantly had to turn to the courts.”

SOURCE: https://www.dailytelegraph.com.au/news/nsw/harry-triguboffs-threat-to-victor-dominello-after-he-creates-online-petition-over-development/news-story/92db9a584626f22ae655877443d7572a

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DOUBTS OVER REFUND STIMULUS AS DEBT SOARS ON BACK OF PROPERTY SPLURGE

HOW was the property market-fuelled? Where did the competition for our domestic housing come from?

-the Libs allowed developers to market 100% of ‘new homes’ overseas …

AND as recently as October 2018 the Morrison Govt exempted the Real Estate Gatekeepers from Anti-Money Laundering Rules …

-shelved for more than 12 years!

AND sadly those who need a tax cut most on $37,000 income p.a. will only get a cheque for $255 … not $1080!

Doubts over refund stimulus as debt soars on back of property splurge

By Shane Wright and Eryk Bagshaw

View all comments

*A property market-fuelled surge has left Australians with record debt and more people in mortgage stress than ever before, raising doubts about whether the Morrison government’s tax refunds will boost the economy.

A survey of wealth and income carried out every two years by the Australian Bureau of Statistics shows that in 2017-18, the median debt-to-income ratio hit 110 per cent, or $1.10 in debt for every dollar of income.

IFM Investors' Alex Joiner expects about half of the tax refunds, which started flowing into bank accounts on Friday, to be used to pay down debt.
IFM Investors’ Alex Joiner expects about half of the tax refunds, which started flowing into bank accounts on Friday, to be used to pay down debt.CREDIT:WAYNE TAYLOR

*After holding steady following the global financial crisis until 2013-14, median debt to income has jumped by more than 20 per cent.

*It coincided with a sharp run-up in house prices, particularly in Sydney, Melbourne and Hobart, as households without solid income growth resorted to loans from their bank to buy into the property market.

While total debt levels are up, the proportion of Australians holding extreme levels has reached new heights.

More than 30 per cent of the poorest households are carrying debts three times their income. A decade ago, the proportion was less than 23 per cent.

But it is not an issue confined to those with low incomes. The proportion of high-income households with high debt levels has also reached a record 29.5 per cent.

*Across all income groups, there has been an increase in high levels of debt, particularly since the take-off in the property market in 2011. In the past two years, there has been a near 5 per cent increase in the number of high-debt households.

Among high-wealth households, property loans account for 90 per cent of their debt, with almost half having a mortgage of some sort. Fifty-seven per cent of middle-income households have property loans, which account for 93 per cent of their total debt.

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COPIED HERE: https://caanhousinginequalitywithaussieslockedout.com/2019/07/13/revealed-the-households-with-surging-wealth-and-the-households-standing-still/

Lower-income households are less likely to have property debt but more than a quarter of their outstanding loans are for university or vocational education.

IFM Investors chief economist Alex Joiner said the high level of indebtedness across Australians suggested the government’s tax cuts, starting with refunds up to $1080 that hit bank accounts on Friday, may have a muted impact on the economy.

“I would expect at least half the people who get a cheque are going to look to use some of it to pay down debt, with much of the rest going into non-discretionary spending,” he said.

“We’ve got high income-to-debt ratios here, some of the highest in the world, and you would expect people to use some of this extra income to look to pay that down.”

The figures also revealed another trend – older people going into retirement with debt.

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*In 2003-04, 44 per cent of people aged between 65 and 74 had some sort of debt. Now, close to 55 per cent of this group owe money while more than a third of those aged over 75 hold debt.

Apart from the financial troubles large debts can cause, they can also have a broader impact on people and their feeling of wellbeing.

NAB’s quarterly measure of wellbeing, released on Friday, found the single largest negative for life satisfaction is non-mortgage debt.

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Work or job issues, the daily commute, substance abuse and social media all detract from wellbeing in small ways, but nothing approaching non-mortgage debt, which detracted from wellbeing for a net 35 per cent of those surveyed. Mortgage debt was a negative for one in five people.

Almost 40 per cent said they withdrew socially, a quarter said they got angry or argued, a fifth filtered phone calls while a similar number left bills unopened. Twelve per cent lied to their partner or family or turned to alcohol and drugs.

Dealing with debt was a particular issue for many.

It follows the release of groundbreaking research from the Reserve Bank of Australia this week that suggested that increasing debt levels are a growing risk to the broader economy.

It contrast to long-term economic theory that people take into account both their debts and the increasing value of their assets when looking at their spending patterns, the RBA research showed there was a “debt overhang” that directly hit household consumption plans.

We’ve got high income-to-debt ratios here, some of the highest in the world, and you would expect people to use some of this extra income to look to pay that down.

According to the research, a 10 per cent increase in debt could reduce household spending by 0.3 per cent.

ABS chief economist Bruce Hockman said more debt was being held by those with higher incomes and total wealth.

*The absence of income growth over recent years showed people had increased their leverage levels in a bid to buy into the property market.

“Without the large income growth, people have looked to borrow more – helped by lower interest rates – to take on property which has added to their wealth, especially for those with higher wealth,” he said.

Shane Wright

Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.

Eryk Bagshaw

Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.

For sale sign outside an apartment building along a street in Brisbane on October 31, 2018.

ABC Photo: ABC News Liz Pickering April 2019

SOURCE: https://www.smh.com.au/politics/federal/doubts-over-refund-stimulus-as-debt-soars-on-back-of-property-splurge-20190712-p526mn.html

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AUSTRALIAN HOMES RESOLD AT A LOSS HIGHEST SINCE 2013

CORELOGIC shows the areas with the greatest share of loss were recorded in Strathfield, Parramatta and Ryde.

RESEARCH DINAH LEWIS BOUCHER TUE 09 JUL 19

Australian Homes Resold at a Loss Highest Since 2013

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While the majority of properties that resold over the March quarter sold at a profit, data shows 12.1 per cent of resales across Australia transacted at a loss, representing a six-year high.

Corelogic data shows this portion is the highest share of loss-making sales since the March 2013 quarter.

“Australia had a total of $486.8 million in realised gross losses from resales over the March quarter,” CoreLogic’s research analyst Cameron Kusher said.

“Every capital city saw an increase in the share of loss-making resales for the period compared to the previous quarter.”

For the combined capital cities, the total value of resales made at a profit was $10.156 billion. Based on these figures, sales for the combined capital cities represent 70.9 per cent of the total value of all profits for the March quarter.

In comparison, the total value of losses across the capital cities was $378.3 million for the quarter, 64.5 per cent of the total value of losses nationally.

Sydney regions with highest portion of loss: March quarter

Sydney council areas with highest portion of loss% of salesTotal value of loss
Strathfield20%-$1,902,000
Parramatta18.8%-$7,051,850
Ryde15.7%-$3,764,000
Lane Cove15.2%-$1,981,300
Canterbury-Bankstown13.8%-$7,686,184
Botany Bay13.7%-$1,172,800
Liverpool12.6%-$4,712,467

CoreLogic

The resale of properties made at a profit was worth $3.479 billion for the first quarter in Sydney, accounting for 24.3 per cent of all national resales at a profit.

The total value of resales at a loss was recorded at $116.5 million, reflecting 19.9 per cent of the total value of national home sales at a loss.

*Corelogic shows the areas with the greatest share of loss were recorded in Strathfield, Parramatta and Ryde.

Melbourne regions with highest portion of loss: March quarter

Melbourne council areas with highest portion of loss% of salesTotal value of sales
Melbourne31.8%-$5,463,024
Stonnington24%-$4,840,494
Yarra18.5%-$2,077,500
Port Phillip17%-$3,221,637
Monee Valley13.6%-$1,767,240
Boroondara12.3%-$6,611,500
Glen Eira12.1%-$1,389,125

CoreLogic

Resales of Melbourne properties generated $3.363 billion worth of profits and $44.8 million in losses for the March quarter.

Melbourne generated 23.5 per cent of total resale profits nationally over the quarter, with no resales loss in Macedon Ranges and a small proportion recorded in Banyule, Melton and Moorabool.

Sales made at a loss in Melbourne were 7.6 per cent.

The council regions with the highest proportion properties sold at a loss located in Melbourne, Stonnington and Yarra.

Brisbane regions with highest portion of loss: March quarter

Brisbane council areas with highest portion of loss% of all salesTotal value of loss
Brisbane14.10%-$25,038,247
Somerset10.9%-$339,500
Logan10.1%-$2,583,700
Moreton Bay9.1%-$5,822,049
Lockyer Valley8.6%-$239,000
Redland8.1%-$1,494,900
Ipswich7.8%-$1,390,428

CoreLogic

“In Brisbane resale losses haven’t been this high since November 2013,” Kusher said.

The Brisbane regions with the highest proportion of resale losses were Brisbane, Somerset and Logan.

Brisbane generated 9.1 per cent of the total value of resale profits nationally for the March quarter and 6.3 per cent of the losses.

#Research#Corelogic

AUTHOR Dinah Lewis Boucher

SOURCE: https://theurbandeveloper.com/articles/the-number-of-australian-homes-resold-at-a-loss-highest-since-2013?utm_medium=email&utm_campaign=100719%20NSW&utm_content=100719%20NSW+CID_194a2b5e965f3ac7ff7aaaddde7897ab&utm_source=email&utm_term=Continue%20Reading

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NEGATIVE MORTGAGE EQUITY SPREADS ACROSS AUSTRALIA’s APARTMENT MARKET

WHAT has this sector got going for it?

WILL the ‘same players’ move across to the next boom ….

of low-rise medium density housing?

+

Negative mortgage equity spreads across Australia’s apartment market

By Unconventional Economist in Australian Property

July 9, 2019 | 43 comments

CoreLogic’s has released its latest Pain & Gain Report, which shows that more than one-in-five recent apartment buyers across Australia’s capital cities sold at a loss in the March quarter of 2019 – roughly double the level of three years ago:

As shown in the below table, all mainland capitals experienced double-digit loss-making apartment sales in March, with Darwin (-58.2%) and Perth (-49.2%) faring worst and Sydney (-11.0%) faring best:

According to CoreLogic:

For capital city units, 78.6% resold at a profit over the quarter with the share down from 81.8% the previous quarter and 85.7% a year earlier.

The 78.6% of units resold at a profit was slightly higher than the previous month, but prior to that, it was the lowest share since the 3 months to June 1997. With housing market conditions continuing to weaken since March 2019, we would expect the share of capital city houses and units reselling for a loss to continue rising…

Units sold at a loss over the quarter were typically held by their owners for 6.3 years.

Not surprisingly, given their larger representation in the apartment market, investors experienced sharper losses than owner-occupiers 17.0% versus 10.5% across the combined capitals in the March quarter:

Why aluminium composite cladding is flammable

With concerns around high-rise flammable cladding and structural defects proliferating, the poison of negative equity will likely spread across Australia’s apartment market.

No photo description available.

CAAN Photo: Water leaks like a water fall; when it is not raining the walls are permanently stained!

No photo description available.
CAAN Photo: Extensive cracking to the floor of the basement garage

No photo description available.

CAAN Photo: Concrete cancer? Paint bubbling; water leaks?

No photo description available.

Photo: A dam built into the living room of an apartment to collect the water!

Avoid this segment like the plague.

unconventionaleconomist@hotmail.com

SOURCE: https://www.macrobusiness.com.au/2019/07/negative-mortgage-equity-spreads-across-australias-apartment-market/#comments

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CHANDLER: THE SOCIALISATION OF AUSTRALIA’S CONSTRUCTION INDUSTRY IS NO PLACE TO GO

THE CONSTRUCTION INDUSTRY is normally fiercely in favour of LOW TAXING GOVERNMENTS … LESS RED TAPE and ANTI-NANNY STATE INTERVENTIONS … yet here it is needing more interventions and PUBLICLY FUNDED SUPPORT!

IN NSW … the level of developer surety …

The government only requires a 2 per cent developer surety to be lodged to cover defects during the first 3 years of a strata development!

-how is that adequate?

-nor does the scheme provide for strata owners to recover monies beyond the 2 per cent surety in the event of developer resistance or insolvency

-some developers reportedly treat the scheme as a means to cap their liability, and include the surety in the cost of the development; adding to the cost of housing for purchasers and renters

-taxpayers also contribute when investor operating or capital losses result

READ MORE! 

Chandler: The socialisation of Australia’s construction industry is no place to go

†

Mascot Tower owners left homeless

David Chandler, CE Advisory | 2 July 2019

The construction industry is normally fiercely in favour of low taxing governments, less red tape and anti-nanny state interventions. Yet here it is needing more interventions and publicly funded support.


State governments are being confronted with growing public disquiet over non-compliant construction, defects, building failures and residential apartment owners being forced onto the street with little or no assistance.

Being seen to do something, or blaming other people, are currently the responses of politicians.

Last week, Victorian Premier Daniel Andrews called on the federal government to step in to help, to avoid shutdowns in a construction industry already buffeted by the nation’s property downturn.

Federal minister Karen Andrews has publicly blamed ministers in the various jurisdictions for the crisis, saying it is their responsibility to administer building regulations in their own states and territories.

I am with the federal minister on this. Hopefully Karen Andrews will stand her ground until a viable way forward is nutted out.

Unless the federal government and the states get serious about the root causes of the issues the industry now faces, the cost to the community both economically and socially will become even more uncontrollable.

Construction is part of a global industry and financial marketplace.

In my view there are two frontiers that now need to be navigated:

  • What to do about the faulty buildings already in the system and their consequences. Let’s assume that this will include all new builds less than 10 years old at whatever date the governments in Australia can get insurers back in the tent – say 2022. The long tail of any fix to then could linger out to 2032. The cost risk is huge.
  • What should the regulatory framework look like when all new builds started after 2022 are hopefully covered by more certain and accessible underwrites? These underwrites can only occur with the benefit of properly qualified and licensed designers, constructors and certifiers who are individually risk assessed, with that risk properly priced and their performances tracked by a future-fit digitally enabled regulatory platform, and an effective regulatory performance that is evident and accountable.

From that point compliance should go up and the cost of the systemic industry failure go down.

The current flow of conversations is directed towards having either the states or the Commonwealth pick up the pieces.

It is likely that these responses may differ from state to state as the current spate of reported building failures have yet to include WA, SA and Tasmania. It seems pointless to try and create a national plan to underwrite existing failures.

One can understand the pressure on the Victorian Premier, who stated that “The Feds should be involved, but we will not let anybody be uninsured – there are some steps we can take”.

As a former health minister, he said he knew the state could step in as an insurer of last resort, but that also it was likely that Canberra could step in.

“We won’t leave anybody stranded.”

This is stirring stuff, but in the end, someone has to pay. It’s a state problem.

The construction industry is normally fiercely disposed to low taxing governments, lower red tape and anti-nanny state interventions – at least on the surface.

Yet here it is now needing more interventions and publicly funded support.

In NSW the building minister has put out a discussion paper – Building Strong Foundations – on how the state is minded to proceed.

Capacity building is central to any endeavour

Mixed views have been expressed about the effectiveness of the measures it outlines. Its final shape should be determined by the quality of feedback received.

No doubt the state and federal building ministers will be inundated by submissions. For my part, capacity building in the industry is central to any endeavour.

All proponents of a better industry future point to the skills that will be needed and the qualifications required.

They all seem to be on the same page about the need for a diligent regulator to root out the unqualified and poor performers, to transition to a modern industry that’s customer-facing and accountable.

Hopefully the minister will be investigating the root cause of the problem and the consequential costs of systematising practices that mostly do not now get to see the light of day. They should also consider if the solutions will be real or illusionary.

Here are some issues worth considering.

1. Home Owner Warranty Insurance

The various forms of Home Owner Warranty Insurance are in effect a last resort for owners.

In NSW the cover is provided under the Home Building Compensation Fund (HBCF).

No-one appears happy. The insurance industry has deserted this program due to its unquantifiable costs and lack of effectiveness in driving down the incidence of poor quality construction work.

It is hard to see how the HBCF is performing financially, but industry observers report that the incidence of rising claims is partially amortised over future premiums.

HBCF could be judged as a socialisation of the cost of poor industry performance, with shortcomings picked up by the taxpayer.

Exposure seems to increase during downturns. It is a bad time for this concurrence.

2. The Commonwealth’s Fair Entitlement Guarantee Fund

The Commonwealth’s Fair Entitlement Guarantee Fund (FEG) provides for reasonable wage and benefits cover for workers affected by insolvency.

The construction industry has a higher incidence of insolvency than other sectors

The construction industry has a higher incidence of insolvency than other sectors. The 2018 Auditor’s report into FEG found average annual FEG assistance advanced, had risen from $87.4 million in 2009–10 to $223.6 million in the five years to 2014–15.

Recoveries of FEG amounts advanced through the insolvency process have been low.

Data shows that the recovery rate of FEG amounts advanced from 2009–10 to 2014–15 averaged around 11 per cent. The auditor could not attest to value for money.

3. The level of developer surety

In NSW, the government requires a 2 per cent developer surety to be lodged to cover defects during the first 3-years of a strata development.

Industry advocates question the adequacy of the bond and the operability of the scheme.

The scheme does not provide for strata owners to recover monies beyond the 2 per cent surety in the event of developer resistance or insolvency.

Some developers reportedly treat the scheme as a means of capping their liability and include the surety in the cost of the development, therefore adding to the cost of housing for purchasers and renters.

Taxpayers also contribute when investor operating or capital losses result.

4. The cost of replacing flammable cladding

State governments have started to take on and self-fund the cost of replacing flammable cladding.

The costs are shaping up to be huge. It’s claimed that recovery of these costs from the responsible parties will eventually occur.

Governments already quietly fund the cost of rectifying non-conforming work that has been claimed and paid for as compliant.

The costs involved are spread across the agencies involved.

It is unlikely that there is a central register of the costs for these works as they are passed on to taxpayers with little prospect of recovery.

The method and extent of refunding the costs of replacing non-compliant cladding across a large number of private residential buildings are yet to be determined.

Many argue this should also be publicly funded. Recovery risk would seem high.

5. Support for residents displaced by unsafe buildings

The NSW government has opened the door to emergency funding to help those displaced by unsafe buildings being identified and evacuated.

This is a reasonable public response. The justification again is that the cost will be recovered from the responsible parties.

But in most instances the responsible parties will no longer exist or will be unable to bear the cost.

This intervention could in the end become like the FEG scheme with similar recovery prospects.

The net costs of these schemes are mostly passed on to taxpayers. They are interventions that would become less necessary if the regulators of the industry were more effective.

How developers cut corners

Even well intended developers and contractors become attracted to cutting corners when the regulator takes their eye off the ball or is insufficiently resourced to do their job.

Cutting corners occurs in construction on many fronts. For example, when:

  • work safety is not enforced and the costs of compensation are increasing; non-compliance with the various operations of contractor security of payment legislation occurs and assurances given by contractors to their clients that prior progress payments have been properly disbursed. When it hasn’t this adds to the overall cost of construction and has an awful flow-on impact, especially to taxpayers; the insolvent trading before administration creates costs that taxpayers pick up; a range of unpaid statutory taxes and creditor cost write-offs are impossible to recover.

Regulators taking a harder line here would be called out as anti-business by industry.

Insurers must be brought back into the tent

If the Victorian Premier elected to become the Professional Indemnity insurer of last resort it would be hard to imagine that this intervention could be cost-effective or provide the assurance value that a properly rated risk and cost cover by a substantial insurer would.

Insurers must be brought back into the tent. That will require the clarifications proposed by the Building Strong Foundations legislation in NSW to be fully enacted and for those mechanisms to be properly embedded into modernised designer, contractor and certifier terms of engagement.

This is not a time for nanny state solutions that expose taxpayers to unquantifiable risk and cost. This is not a time to underwrite the cost of bad practices.

All of these challenges make up the “wicked problem” that is today’s construction industry.

The two frontiers now facing governments are: what to do with the consequences of industry failure to this point, and what the outcomes of the current regulatory reviews should achieve.

There would be little value in advising on the changes for turning this around without a quantifiable business case to support their merits.

There would be less justification if the self-interests of the property and construction industry were calls for lower taxing, less red-tape and no nanny state interventions as a good government principle without quantifiable reform.

It is time to stop subsidising the bad performers.

Any set of reforms that simply turned a blind eye to the cost consequences of reforms amounts to a socialisation of Australia’s construction industry.

The industry has arrived at a once in a 50-year watershed. What it chooses to do now is likely to have a 50-year long tail.

Once the true costs of an industry’s poor performances became structurally embedded, they would be very hard to remove.

The implications of not achieving a systemic turnaround of construction industry performance and effectiveness will impact Australia’s competitiveness in all sectors that are dependent on a better-performing competent construction industry that is coming under increasing global competitive pressure, affecting the retention of existing jobs and the creation of new ones.

This is why we need new industry capability that is smarter, more customer-focused and assured.

The construction industry should be very careful about what it wishes for if it wants a viable future. Without insurance, and financial sector confidence, it won’t have one.

David Chandler OAM, is a construction industry practitioner and advisor, principal, CE Advisorydavid.chandler@constructionedge.com.au

SOURCE: https://www.thefifthestate.com.au/innovation/building-construction/chandler-the-socialisation-of-australias-construction-industry-is-no-place-to-go/?utm_source=The+Fifth+Estate+-+newsletter&utm_campaign=83e216eec9-1+november+2018_COPY_02&utm_medium=email&utm_term=0_5009254e4c-83e216eec9-44053365&ct=t(EMAIL_CAMPAIGN_1_COPY_02)&mc_cid=83e216eec9&mc_eid=a50592bb7c

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THE SATURDAY PAPER: HOUSE PRICES AND ZONING

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CAAN Photo: Chinese Real Estate Group Greenland, Lachlan’s Line, Macquarie Park at 5 July 2019; Ryde LGA

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CAAN Photo: Chinese developer JQZ, Prime Precinct, Waterloo Road, Macquarie Park; Ryde LGA

FROM about 2015 through to 2017 the Housing Supply was not able to meet the Foreign Demand … Was this due to Government Policies written by the Developer Lobby … ?

Who wrote the policy for the developer lobby, The Property Council of Australia before entering politics? Which Body now holds the reins of Australia?

WHY is high-rise expensive … despite the reality that storey upon storey the developer makes a motzer … able to cut costs with cladding and dumped materials at a cost around $215,000 per 2-bed unit?

AND sell for $$$$ how much more?

ISN’T THIS ABOUT REZONING and UPZONING?

KEY POINTS …

-according to the RBA research, zoning restrictions have limited the housing supply that prices increase significantly with rezoning because there is so much market demand.

Michael Buxton, emeritus professor of planning at RMIT:

-the highest prices from zoning occur from the inner city and suburbs; yet they have the least restrictive zoning controls

-one of the main reasons is the types of development – high-rise is very expensive; but profits are great

†

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CAAN Photo: ICON Towers Waterloo Road, Macquarie Park; Ryde LGA

Kate Shaw, urban geographer at the University of Melbourne:

-developers do not build affordable housing now

-they may build them cheaply and use cheap materials but the reduction in cost isn’t passed on to consumers

††

David Ross 
is a freelance journalist based in Melbourne.

NEWS

The latest figures suggest that house prices are rising once more. According to Reserve Bank research, zoning restrictions contribute to high prices – but planning experts disagree. By David Ross.

House prices and zoning

There was a time when Australians saw the growth of house prices as inevitable. So it was a surprise when the rubber band snapped in late 2017.

House prices nationally are down 8.3 per cent in the past 12 months and 3.8 per cent for the year, feeding doomsaying about the health of Australia’s economy. In March, analysts announced the country was in a per-capita recession – that is, the economy is growing more slowly than the population.

But recent relaxations on lending rules from the Australian Prudential Regulation Authority, as well as rate cuts from the Reserve Bank of Australia, may be having their desired effect – if the desired effect is pushing up house prices.

Recent data from CoreLogic shows prices in Sydney have inched up by 0.1 per cent in June, in what some are calling the end of the drop and the beginning of something new. Clearance rates may be pointing the way, with almost two in three houses that go to auction selling.

And despite recent falls, median house values in Australia are still 412 per cent higher than in 1993.

Cameron Kusher, head of research at CoreLogic, told The Saturday Paper it was too early to say whether prices would continue to rise, but the trend showed price falls in Sydney and Melbourne may be over.

“I don’t think there’s going to be a rapid acceleration from here, but we can expect subtle growth,” he said.

He said efforts to keep prices steady, neither rising nor falling, would be ideal but very hard to manufacture.

But prices aren’t the whole story. How do they get so high? Why do they stay so high? Economists and urban planners don’t agree on the answers.

The RBA thinks part of the answer is zoning – the way land is used in our cities. According to research it published last year, zoning restrictions raised the price of a detached house in Sydney in 2016 by 73 per cent above the marginal cost of supply.

DR STEPHEN KIRCHNER SAID HE SUPPORTED THE FINDINGS OF THE RBA RESEARCH. “YOU HAVE TO ASK WHY LAND IS SO EXPENSIVE. IT’S BECAUSE OF THE RESTRICTIONS ON WHAT YOU CAN DO WITH IT.”

In theory, when a site is rezoned for housing, the increased supply should reduce competition and therefore limit the impetus to push up house prices.

*But according to the RBA research, zoning restrictions have limited the housing supply to such an extent that prices increase significantly with rezoning because there is so much market demand.

RBA economists Ross Kendall and Peter Tulip found land was not necessarily scarce. Rather, the ways land can be used in our cities make it – and, as a result, housing – very expensive.

“This ‘marginal’ or ‘physical’ value of land represents the opportunity cost of extra land, as judged by what people are prepared to pay for it,” wrote Kendall and Tulip in their report.

“This difference represents what home owners need to pay for the right to have a dwelling at that location, or the cost of ‘administrative’ scarcity.”

Dr Stephen Kirchner, program director of trade and investment at the University of Sydney’s United States Study Centre, said he supported the findings of the RBA research. He rejected the argument that access to finance or rising construction costs were responsible for driving up house prices.

“It was not the deregulation of the financial system – yes, it facilitates people borrowing, but if you had a flexible supply side this would not be an issue,” said Kirchner.

“Why did car prices not go up as a result of the deregulation of the financial system? Is the reason that the supply side of the car market is not restricted in the way the housing market is?

“So you have to ask why land is so expensive. It’s because of the restrictions on what you can do with it.”

*But Michael Buxton, emeritus professor of planning at RMIT University, told The Saturday Paper the RBA research showed an “abysmal misunderstanding of the way the planning system works and zoning operates”. He said it wasn’t zoning that mattered, but rather where the land is.

“The RBA talk about zoning – it shows the highest prices from zoning occur from the inner city and suburbs, yet the [central business district] and inner-ring suburbs, particularly the CBD, have the least restrictive zoning controls,” said Buxton.

“It’s not zoning. It’s a complex combination between housing markets and construction types. One of the main reasons is the types of development – high-rise is very expensive.”

Buxton said his research had shown there was plenty of supply in the inner and middle suburbs of our cities that could cater for Australia’s growing population. He said what matters is gross density across the city, rather than density by block.

“You can’t build an entire city with areas of the density of the scale that they’re doing [in the CBD],” he said.

*“Governments have handed over the decision to the development industry and they want to cram as much as they can on their urban block.”

*According to Buxton, governments need to set a plan and stay the course – four to six storeys maximum, with 50 per cent site coverage – to get liveable cities and suburbs for the future. But, he said, developers and governments are in cahoots as profits from high-rise development are too great.

*“They’re very costly and very profitable; there’s a whole range of participants in the high-rise boom that are making money,” he said.

*Brendan Coates, household finances program director at the Grattan Institute, told The Saturday Paper he agreed with the RBA findings, saying they showed the supply of housing, despite huge additions over recent years, has been unable to meet the rising demands of population growth. House prices have therefore increased dramatically.

“The one weakness of the RBA research is that it doesn’t flow through to the zoning premium. If housing is overvalued then the zoning premium will be overestimated,” said Coates.

“The premium has become much larger over the last 15 years and that’s precisely the period where demand for housing has increased.”

Although the RBA seldom speaks publicly about its research, Peter Tulip has defended his and Kendall’s findings in a lengthy response to criticisms.

“If these criticisms were robust, they would be publishable,” wrote Tulip.

“It is the interaction of inelastic supply, due to zoning, and rising demand that explains the rise in house prices. This explains why, despite interest rates being very low across all advanced economies, sharp increases in house prices have been concentrated in localities with more restrictive zoning.”

But planners The Saturday Paper spoke to do not agree with the RBA or economists about the alleged role of zoning in pushing up prices.

Coates said the density of the inner and middle rings of Australian cities has hardly shifted in three decades, with most new building taking place in or right next to the CBD. He said the issue of zoning has grown in part because Sydney and Melbourne are now so big that commuting times make living near the CBD all the more important.

“Density has barely moved. That didn’t matter as much three decades ago because the urban fringe wasn’t that far from the city,” said Coates.

“[The] zoning premium 15 years ago was basically zero. That was because it didn’t matter as much that you couldn’t build in the middle rings because you could build 20 to 25 k’s from the city and it wasn’t that hard to get to the city.”

CoreLogic’s Cameron Kusher said the lack of supply in wealthy areas has had a striking effect.

“Look at the escalation in prices in areas [where] you haven’t seen a lot of upzoning,” he said.

“The councils there don’t allow higher-density zones. Look at what it costs for an [apartment]; that’s because people are paying such a fortune for the land.”

Brendan Coates agreed it was clear, based on the data, that approvals took longer in wealthier areas of Australia, reflecting the political will in many areas to oppose development. But he said densification often had its downsides for these people, such as more traffic, less green space or greater pressure put on public services.

“The problem here is that local councils reflect the interests of people who live there, not people who want to live there,” he said.

Kate Shaw, urban geographer at the University of Melbourne, disagrees with the RBA findings. She told The Saturday Paper Australia had relatively relaxed planning rules compared with the rest of the world.

“If you look at the inner cities of any OECD country you’ll find most are much more static than Australian cities and that’s largely because of heritage controls,” said Shaw.

“Any planning regime, by definition, is about regulating the market, controlling what can be built where and to what extent.”

In Shaw’s opinion, Australia undoubtedly needs more housing but we don’t need more high-end apartments.

*“Developers do not build affordable housing now. They may build them cheaply and use cheap materials but the reduction in cost isn’t passed on to consumers,” she said.

“As soon as prices have the slightest indication of tanking, developers stop building, the economy starts to tank, the RBA drops rates, homeowners are assisted to start buying and the whole thing turns around.”

House prices are high and now look set to grow again, for good or for bad. The extent to which zoning controls contribute to this is something no one can agree on.

But if housing demand continues to grow, as seems likely, then existing zoning restrictions will bind more tightly and place continuing upward pressure on housing prices. 

This article was first published in the print edition of The Saturday Paper on Jul 6, 2019 as “Exclusion zoning”. Subscribe here.

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CAAN Photo: Herring Road Precinct, Macquarie Park, April 2019; Ryde LGA

SOURCE:

https://www.thesaturdaypaper.com.au/news/economy/2019/07/06/house-prices-and-zoning/15623352008404

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NSW ENVIRONMENT OFFICE OBJECTS TO MIRVAC IBM SITE DEVELOPMENT PROPOSAL!

 

NSW Environment Planner, Dana Alderson said: 

“Development consent cannot be granted to proposals which impact on serious and irreversible impact entities”  …

the remnant Blue Gum High Forest and Sydney Turpentine-Ironbark Forest within the footprint of the proposed development.

AND …

“It is noted that large parts of the site, including areas that are proposed to be cleared, do not appear to have been surveyed for threatened flora.” 

ForestinDanger spokeswoman Jan Primrose said: 

“We do not believe that Mirvac should be granted any further extension of time to the Gateway Determination beyond the July 31 deadline, given Mirvac’s apparent continuing failure to properly consider preservation of the Blue Gum High Forest on the site”.

 

 

 

NSW Environment Office objects to Mirvac IBM site development proposal

 

The NSW Environment Office has issued a scathing objection to the planning proposal to build hundreds of homes at a business Park in Sydney’s north west, which is surrounded by endangered forests.

Objection letters ready to be submitted to Hills Shire Council by the Forest in Danger group in Baulkham Hills. Picture: Angelo Velardo
Objection letters ready to be submitted to Hills Shire Council by the Forest in Danger group in Baulkham Hills. Picture: Angelo Velardo

 

Plans to transform the IBM Business Park at West Pennant Hills into hundreds of homes as part of a new community by Mirvac may need to go back to the drawing board, following a NSW Government objection to the development.

 

On June 14, the NSW Environment and Heritage Office submitted a series of objections relating to the planning proposal at 55 Coonara Ave, West Pennant Hills, highlighting serious concern around the impact the development would have on remnant Blue Gum High Forest and Sydney Turpentine-Ironbark Forest within the footprint of the proposal development.

An artist impression of the development at 55 Coonara Ave, West Pennant Hills.

 

The submission highlights an upcoming preliminary determination to list the Sydney Turpentine-Ironbark Forest as critically endangered, alongside the Blue Gum High Forest, as they both “meet the principles and criteria for serious and irreversible impact”.

*“Development consent cannot be granted to proposals which impact on serious and irreversible impact entities,” NSW Environment planner Dana Alderson said.

Under the plans for 600 homes at the site, dozens of trees within the business park would be removed, while other remnant forest clusters would be rezoned as E2 environmental conservation.

Community groups are calling on residents to take a stand against the “inappropriate development” of the former IBM site in West Pennant Hills, adjoining the Cumberland State Forest. Picture: Ryan Osland

 

However, the office raised concerns about the methods used to identified threatened species in the development footprint.

“The biodiversity assessment lists threatened flora species recorded from the area and their likelihood of occurrence on the site,” Ms Alderson said.

“The biodiversity assessment states that ‘targeted random meanders’ were carried out on site, it is assumed that this method was used to survey for threatened flora species.

*“It is noted that large parts of the site, including areas that are proposed to be cleared, do not appear to have been surveyed for threatened flora.”

An overview of the proposal.

 

Ms Alderson said it was unclear if threatened species may be impacted by the proposal and also raised concerns about the impact the proposal would have on the parliament of powerful owls that calls the forests home.

Mirvac development director Adrian Checchin said, “maintaining the unique ecological characteristics of the site at Coonara has always been a key priority, which is why we have sought the highest protection environmental conservation zoning”.

“We will continue to work closely with our ecologists in accordance with relevant legislation, to ensure the ecological communities are protected,” he said.

“It is important to note that there is a clear footprint already established by former development on the site, and under current controls, the whole site is zoned business park to a height of 22 metres.”

The Advisory director for the National Trust, Graham Quint has also objected to development at the IBM SITE in West Pennant Hills. Picture: Justin Sanson

 

Mr Checchin said Mirvac’s proposal provides “far greater protection to remnant forest areas” than the existing controls.

“We acknowledge the letter received by the Office of Environment and Heritage as normal practice during the statutory referral process,” he said.

  • said “we do not believe that the planning proposal can be approved in its current format”.

Significant redesign would be required and therefore the Draft DCP, the Planning Proposal and the Voluntary Planning Agreement would need to be re-exhibited,” she said.

“We do not believe that Mirvac should be granted any further extension of time to the Gateway Determination beyond the July 31 deadline, given Mirvac’s apparent continuing failure to properly consider preservation of the Blue Gum High Forest on the site”.

 

 

SOURCE:  https://www.dailytelegraph.com.au/newslocal/hills-shire-times/nsw-environment-office-rejects-mirvac-ibm-site-development-proposal/news-story/b3c040e990bfa454a6885cf8d8a8a31c?fbclid=IwAR3rqJM6NUiBpCfRHKr5hiSQ6_ZrXMRwa7KZfJKfetnkr7orMhGe4Hs0yds

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