The hole in Melbourne’s inner north where hundreds of affordable homes should be

By Royce Millar

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There’s a big hole in the ground in Fitzroy North where a model social and affordable housing development is supposed to be.

It’s the site of the old Fitzroy Gasworks. Ahead of the 2018 state election, then planning minister and local MP Richard Wynne promised an “unprecedented amount” of public, social and affordable housing as part of the “exemplar” urban development.

The Fitzroy Gasworks site.Credit: Wayne Taylor

Architects and builders were chosen to design and construct separate social housing and build-to-rent “affordable” apartment buildings on the first of three residential-mixed use precincts to be developed on the enticing 3.9 hectare government-owned site just a few kilometres from the CBD.

But five years on from Wynne’s promise, the architects and builders have been let go, the plans for housing shelved, and the social housing is in doubt – all in the middle of a housing crisis.

As the Andrews government prepares to this week release at least part of its landmark housing and planning package, the malaise at the Gasworks site raises some uncomfortable questions about the state’s ability and capacity to respond to the worsening crisis.

The hold-up at the Gasworks site is certainly not a result of NIMBYism (not in my backyard) – locals have campaigned for more social housing in their neighbourhood.

“The community thought there should be more of a community dividend given it is publicly owned site,” said computer programmer Glen McCallum, whose home overlooks the property. “So we pushed for as high a proportion as possible of social and affordable housing.”

Labor backed the call with a clear promise of 1200 homes with 20 percent to be social and affordable. Less clear was who was to foot the bill.

In the mid-1880s, the site was home to a coal gasification plant and later used to house construction workshops and gas storage. The heavily contaminated site was decommissioned and covered in 1978.

As once down-at-heel Fitzroy gentrified, developers began to covet the plot bordered by Alexandra and Queens parades, Smith and George streets.

In 2016, the Andrews government vowed to bring the site back to life through its in-house development agency, Development Victoria. It promised “diverse and affordable homes close to public transport, a senior high school, open space, multi-use sports centre and commercial spaces”.

The site has since been remediated, a new senior secondary school is now open, and a sports complex is close to completion. In 2022 – an election year – Premier Daniel Andrews visited, recommitting to a “real focus on public, social and affordable housing”.

Glen McCallum, a local who supports more social housing in his area, stands at the Fitzroy Gasworks site.Credit: Wayne Taylor

Most of the “affordable” housing was to be on the site known as Parcel A, including a dedicated 120-dwelling social housing complex that Development Victoria anticipated would be bought by government housing provider Homes Victoria. A neighbouring build-to-rent apartment complex was to be retained and overseen by Development Victoria.

The two buildings were to share an underground car park – hence the giant hole in the ground.

Prominent architectural firm ARM was commissioned to design the two Parcel A buildings – which it did. Builder LU Simon was chosen as the preferred builder, but not officially contracted. Work on the two buildings was meant to commence in 2022 but didn’t – and still hasn’t.

An artist’s impression of Parcel A at proposed Fitzroy Gasworks development.

In June, the local City of Yarra notified councillors that the government had “paused” the social and affordable housing projects on parcel. The government has made no public statement about Parcel A.

But the Gasworks social housing was in doubt as early as mid-2022, when a development plan for the site specified that it would be “subject to state funding”. Homes Victoria had not committed.

A ministerial planning permit signed just days after the state election specified that “if” social housing was to be built, a previous reference in planning documents to it being “in perpetuity” must be removed – suggesting that any social housing may only be temporary.

Remediated land in the heart of North Fitzroy is valuable, and the transfer of properties between state agencies must be done at market value.

A source familiar with the project, speaking anonymously because they were not authorised to speak publicly, said high land values and ballooning construction costs were pushing the price per social housing dwelling towards $700,000 – much more than Homes Victoria usually pays when buying other areas, even in neighbouring Collingwood.

Unhappy with the price and the proposed design, Homes Victoria opted out of the Gasworks projects, leaving Development Victoria with a gap in its budget and a hole in the ground.

Development Victoria is now in negotiations with developers that are bidding to build private housing on Parcels B and C – including Lend Lease, Stockland and PDG – about how they might incorporate affordable housing across the site if they were to win development rights.

Development Victoria refused requests for an interview or comment.

It’s another headache for a cash-strapped state government that has struggled to deliver on some housing promises and already delayed or abandoned major projects including the $13 billion Airport Rail Link. It also pulled out of hosting the 2026 Commonwealth Games, citing cost blowouts. Development Victoria was a key agency delivering Games infrastructure before the government withdrew in July.

The Gasworks saga has again highlighted questions about value to taxpayers from the development of government land, especially at a time of housing need.

Richmond Greens MP Gabrielle de Vietri (centre) says Victoria needs public housing on public land. Credit: The Age

Former Greens Yarra councillor and now local MP Gabrielle de Vietri has a keen interest in the Gasworks site.

She said that while Labor went to two elections promising public, social and affordable housing, “now all we’re getting is expensive, private development on public land – in the middle of a housing crisis”.

“We need public housing on public land.”

In June, Deputy Premier Jacinta Allen told parliament’s public accounts and estimates committee that the government was still committed to 20 percent affordable housing “across” the site, but did not answer when asked about social housing.

Premier Daniel Andrews and Deputy Premier Jacinta Allen.Credit: Justin McManus

The Age reported this month that the government’s official parameters for “affordable” private rental actually leave many workers, such as cleaners and baristas, childcare and aged care staff, priced out of Melbourne’s inner-and middle-suburb rental markets.

On Friday, the government did not directly answer a list of questions including why it had shelved the proposed buildings on Parcel A and the 120 social housing dwellings.

“We said we would build 1200 new homes at Fitzroy Gasworks and that’s exactly what we will deliver, including 20 per cent affordable housing within the precinct,” a spokesperson said. The government would not commit to social housing on the site but said it was “actively exploring opportunities to deliver social housing as part of that mix”.

An artist’s impression of the proposed Fitzroy Gasworks development.

Back at the Gasworks site, a disappointed but resolute Fitzroy resident McCallum has been a leader in the push for social housing.

He said the best way for the government to get social value out of the development of the site was to ensure housing for people otherwise priced out of his suburb.

“If I achieve one thing in my life it’s going to be this: getting as much social housing on this site as is possible, so we retain a diversity of people in Fitzroy.”

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