The council submissions reveal a significant divide between the State and local government in relation to funding local infrastructure. Concerning was the lack of evidence provided to support council submissions, contrary to the councils calling for further evidence from the Government to support the proposed reforms.
These different positions further reinforce why a review is overdue.
Key themes in submissions:
Threshold triggers for reviewing a contributions plan to be significantly increased
The discussion paper suggests options for value thresholds to trigger an independent review process of a local contributions plan by IPART. Most Councils recommended that the Department implement the highest threshold option, which would result in one single threshold of $45,000 per dwelling/lot, whilst several Councils stated that the preference was to have no threshold.
Levies to be increased up to and beyond 3%, in more locations
The Department’s discussion paper sets out some principles to be applied when councils seek to introduce Section 7.12 development contribution levies that are higher than the 1% standard maximum. The principles are aimed to limit the additional contributions to areas experiencing growth, identified as centres in a strategic plan. These areas will have significant employment growth and local planning controls aligned to support that growth.
Some Councils have called for an increase to the standard maximum percentage for all areas within their LGA. Other Councils have requested the maximum development contribution rate increase up to the proposed 3% and be applicable to areas of ‘significant residential growth’, as well as employment growth. There are also Council submissions calling for assessment criteria and a clear process to seek a higher section 7.12 levy above the 3% maximum.
Will the Government draw the line at 3%? We are aware that there are currently contributions plans under consideration that extend to 4%.
Prevent the removal of existing exemptions from the review process
Some Councils do not support the removal of grandfathered plans. The Government have rightly sought to remove the grandfathered plans, as with the uncapping of contributions, the thresholds now to operate as the triggers for the review of contributions plans. In this regard, it is no longer appropriate to exempt these contribution plans from the review process.
Increase levies to capture administrative costs in Contributions Plans
The Department has proposed a maximum of 0.2% of a contributions plan to capture administration costs associated with a contributions plan. Some Councils are seeking to increase this to 1.5%.
It needs to be carefully considered whether this level of additional contribution is reasonable, especially for Contributions Plans in high growth areas where capital works are in excess of $100 million.
Support the Introduction of Special Infrastructure Contributions (SIC) Guidelines
The introduction of guidelines for SICs is generally welcomed by Councils, who are also seeking the guidelines to promote greater coordination and collaboration with local government.
In 2017, Minister Stokes identified a need for greater collaboration between the NSW Government and Councils on strategic planning and sequencing of regional infrastructure to enable more effective delivery of infrastructure. The finalisation of SICs needs to be a priority to ensure the efficient delivery and coordination of infrastructure to unlock housing and employment opportunities.
Planning Agreement Guidelines to allow value capture
Many Councils support the use of Planning Agreements to capture a portion of the increased value of land. Planning Agreements are a useful component of a flexible planning system. To retain flexibility and impartiality, while allowing for the timely delivery of infrastructure, the process requires certainty.
Concerns arise where Councils have sought to capture a portion of the value uplift particularly as part of Planning Proposals. The guidelines are an important step forward to ensure that Planning Agreements are aligned with strategic planning and robust evidence of the need for additional social infrastructure.