Infrastructure contributions in NSW are complex and uncertain – six months on from the exhibition of the infrastructure contributions reform package, where to from here?
We recently partnered with Maddocks and heard firsthand from two leaders of the reform package, Jonathon Schipp, Executive Director Infrastructure Policy, Department of Planning and Environment and Geraldine Carter, Director, Economic Strategy Division, NSW Treasury. Joined also by panellists Breellen Warry, Partner, Maddocks and Richard Seddon, General Manager Industrial, Mirvac, and over 80 guests in our Sydney studio.
What you need to know
Next steps in the process: The Department received over 800 submissions from an array of stakeholders potentially impacted by the reforms. Councils made up a large proportion of these submissions, some of their key concerns have been regarding the section 7.12 reforms.
Concerns of the 7.12 application include its complexity and with rates being meagre could result in councils being financially worse off.
However, there is a firm commitment from government for no council to be worse off because of the reforms. Final recommendations are to be made to the Minister and the report on submissions will be published.
The principles for reform remain but the implementation program is unknown: The principles of certain, cost reflective, transparent, simple, and consistent will continue to guide the reforms but the Minister for Planning and Homes will determine the forward program. The timing of the next state election in March 2023, may come into play here.
Planning agreements: Planning agreements have been and are expected to remain an important component of the contributions system. They are recognised as being essential to ensure certainty in terms of contributions and support project delivery. They need to be evidence-based, well founded and transparent. Done well, planning agreements can improve transparency and certainty for all involved. Improvements are likely to be addressed through updated practice notes and guidance and work will continue to improve their perception amongst the public.
Delivery of local infrastructure: Local government is under increased pressure to deliver local infrastructure for their growing communities. The reforms aim to create a fairer and more consistent system to deliver infrastructure needed to supply more homes. Delivery of local infrastructure is not straightforward and concerns around the impact of the reforms on local government’s ability to deliver this essential infrastructure is justified.
Transport Infrastructure Contributions: Transport infrastructure contributions (TIC) are a new concept which the reforms propose to introduce. These will go through a thorough assessment prior to being imposed and any areas identified for the contribution will need to step through various levels of government before being finalised. A TIC will have a relatively narrow application and will be less about transport hubs and more about transport infrastructure linked to major transformation. The recently finalised Special Infrastructure Contribution for Pyrmont is seen as a good template the future application of TICs.
Regional Infrastructure Contributions: The newly proposed regional infrastructure contributions (RIC) have proved to be a controversial element of the reform package. There have been concerns that funds collected on one region could be used to fund infrastructure in another. However, RICs will be supported by a robust governance process to ensure the collection and expenditure of these funds is transparent and clearly reported. RICs have the potential to add considerable costs to new developments, particularly residential development. This coupled with the added complications of pressures on housing supply and affordability, will need to be considered as the reforms progress.
Early engagement: A key take away across the board is the need for infrastructure contributions to be considered at the earliest opportunity and form part of early discussions and proposal formulation. This should be considered in terms of identifying the proposal, resulting needs, infrastructure capacity and an appropriate framework for infrastructure delivery, approval, and associated contributions. This need is even further emphasised by the decision of the Court of Appeal in Ku-ring-gai Council v Buyozo Pty Ltd [2021] NSWCA 177 which has significant implications for any proposals to modify a contribution imposed under a condition of consent.
Planning pathways: There are a multitude of planning pathways in NSW at both a precinct level and for specific development projects. Varying contribution opportunities and obligations arise from each pathway and these need to be considered early in the process. The approval pathway will have an impact on the resulting contributions responsibilities and can have implications further down the line for both proponents and the approval authority.
What happens from here?
Given we are less than 8 months away from a state election, the appetite and opportunity for such broad reform is challenging. Despite this, there is a highly skilled team working behind the scenes on the reform package
We have been assured that some transition time will be built into the final reforms. A key component of this will be the establishment of sufficient transition and savings provisions, which were not exhibited in the draft reform package. Certainty in terms of contributions is essential for project feasibility. The longer these reforms remain as draft, the more uncertainty and complexity that exists. After 20 years, we are remaining hopeful that the reform package will move forward. We will keep you updated as the framework develops, and more is released.
Missed the event? View the slides here: Infrastructure Contributions Reform – Urbis Maddocks presentation