This article is from the Australian Property Journal archive
THE NSW government will undertake the biggest shakeup to the state’s infrastructure contributions system in 30 years, to unlock up to $12 billion in benefits.
Treasurer Dominic Perrottet and Minister for Planning and Public Spaces Rob Stokes said the government will adopt all 29 recommendations in the final report made by Productivity Commission.
The key recommendations in the final report include:
- a move towards a principles-based infrastructure contributions system;
- enhance the capacity of councils to support growth;
- strike a balance between efficiency, simplicity and certainty for local infrastructure contributions;
- develop a stronger funding base for state and regional infrastructure;
- make the system more consistent, transparent and easy to navigate; and
- better align infrastructure contributions and strategic planning and delivery.
Treasurer Perrottet said the major reforms will unlock up to $12 billion in productivity benefits through changes to how public facilities and services are funded through the planning system.
“These important reforms will ensure communities across the state will have the services and facilities they need and is an example of the type of microeconomic reform that will boost productivity and make NSW an even more attractive place to live and invest.
“These changes will help drive our economic recovery from the pandemic by providing local jobs on smaller-scale infrastructure projects by encouraging investment in new housing supply and in the end will create better connected communities,” he added.
The government will publish its blueprint to implement the recommendations and how it will be delivered in the next 18 months.
“This is the biggest shake-up of the system in three decades and could deliver billions of dollars of benefits over the next 20 years through better services, savings for business and better public spaces,” Stokes said.
“Solving the uncertainty of infrastructure contributions was one of four pillars of our Planning Reform Action Plan. That’s why we’re adopting the Productivity Commission’s recommendations in full to build a more timely, transparent and certain planning system,”
“New and growing communities need new roads, parks, schools and hospitals, and it is imperative industry and communities have a clear understanding of how these services get delivered.
“Alongside changes to the local government rate peg methodology, we’re getting the settings right for local communities to proactively plan for growth. Digital tools will also help create certainty for investors, communities and local government.” Stokes said.
Urban Taskforce CEO Tom Forrest welcomed the news and said there is much more to be done in planning reform, but this announcement represents strong progress.
“This is a clear sign that the NSW Government has been listening to the concerns raised by the Urban Taskforce and our members regarding fees taxes and charges associated with local and state infrastructure,”
Forrest said councils rate pegs will now be adjusted to take into account population growth – meaning Councils won’t be punished for approving the construction of new homes anymore.
“Councils and state government agencies will be banned from gold-plating infrastructure at the expense of new home buyers by allowing IPART to set benchmark costs for infrastructure. Contribution plans will be set prior to the rezoning of land. This will be a major change and will limit windfall profits from speculative landowners as all the fees and charges will be able to be factored into the purchase price.
“Infrastructure Contributions will not be paid until the new building is completed and ready for occupation. This is a major change from the current requirement to pay s.7.11 fees up front. This will free up cash-flow to get projects going.
“Broadening the tax base for “SIC” infrastructure levies which will apply to state government (s.7.24) infrastructure so the burden is shifted away, to some extent, from new home buyers,”
Forrest said councils will also be held accountable for the levies they collect and their expenditure on infrastructure.
“There is more to be done to boost the number of approvals and relieve the current boom in new home prices – but this is a tremendous step in the right direction and just what the economy needed as we move out of the COVID-19 recession,” he concluded.
The 29 Productivity Commission Recommendations on Infrastructure Contribution
Summary recommendation – Principles
- Enhance efficiency of the infrastructure contributions system
Summary recommendation – Local government rate reform
- Allow councils’ general income to increase with population
Summary recommendation – Early identification of infrastructure needs
- Develop infrastructure contribution plans upfront as part of the zoning process
Summary recommendations – High and rising land values
- Introduce a direct land contribution mechanism to improve both efficiency and certainty for funding land acquisition
- Issue advice for land valuation to improve consistency and accuracy
- Index land contribution amounts to changing land values
Summary recommendations – Section 7.11 contributions
- Section 7.11 contributions plans use benchmark costs
- Contributions plans reflect development-contingent costs only
- Independent Pricing and Regulatory Tribunal review of contributions plans be ‘by exception’ and based on efficient costs
- Contributions plans are prepared using standard online templates and digital tools
- Encourage councils to forward fund infrastructure, through borrowing and pooling of funds
- Defer payment of contributions to the occupation certificate stage
Summary recommendation – Section 7.12 contributions
- Increase the maximum rate for section 7.12 fixed development consent levies
Summary recommendations – Local planning agreements
- Planning agreements consistent with the principles-based approach
- Publish guidelines for planning agreements for mining and energy related projects consistent with the principles-based approach
Summary recommendation – Affordable housing
- Improve accountability for affordable housing contributions
Summary recommendations – State and regional contributions
- Adopt regional infrastructure contributions
- Improve guidance for state planning agreements
- Adopt transport contributions for major projects
Recommendation – Biodiversity
- Create a new category of contributions specific to biodiversity
Recommendation – Metropolitan water
- Phase in metropolitan water contributions for more efficient delivery of water infrastructure
Recommendations – Making the system more consistent, transparent, and easy to navigate
- Develop and implement a centralised contributions digital tool
- Promote consistency and transparency in works-in-kind agreements
- Build the capability and expertise of the planning sector
- Introduce a simple, clear, standardised exemptions policy
Recommendations – Better align infrastructure contributions and strategic planning and delivery
- Better synchronise state and local strategic planning frameworks
- Incorporate the local infrastructure contributions system into the Integrated and Performance Reporting framework
- Strategic planning to maximise the efficient use of land
Recommendation – Governance
- Strong governance to guide implementation
