Reformed Infrastructure Contributions MAV Presentation Kathy Mitchell, Chair Standard Development Contributions Advisory Committee 23 May 2014

Development Contributions 2 Complex, time consuming, difficult to implement, unpopular, inconsistent, contested Vary markedly in Growth Areas, lack of consistency in application, lengthy debates and hearings to implement Councils – want developers to pay more; Developers - want to pay less In non Growth Areas, no simple and effective way to capture contributions for infrastructure required to service new development catering for growth

Development Contributions Part 3B of the Planning and Environment Act 1987 provides for the preparation of DCPs Key principle – now and post review: Contribution not full cost recovery 3

Advisory Committee Members: Kathy Mitchell (Chair), Trevor McCullough, Rodger Eade, Chris De Silva and Bryce Moore Terms of Reference: Advise the Minister on a system of standard levies to apply to all development scenarios Implementation and operation of a new system Setting and implementing standard levies for development settings and for different categories of Infrastructure Fix the system 4

Key Challenges and Issues Simplicity and certainty Ease of introduction and adaptation Flexibility for users Transparency Demonstrating Need, Equity, Nexus and Accountability Standards and adequate funding for ‘starter’ infrastructure 5

Consultation and Reporting Process 6 Stage 1 Stakeholder meetings late 2012 with over 35 meetings with 100 participants 58 written submissions Report 1 Setting the Framework (submitted to the Minister 17 December 2012) Released by the Minister on 26 January 2013 Stage 2 69 written submissions The Committee met with over 800 people from over 100 organisations Report 2 Setting the Levies submitted to the Minister 31 May 2013 Stage 2 released by the Minister on 1 May 2013 and the new reform agenda announced

Urban Infill and Renewal Areas Typically the contribution to public infrastructure for a development in an urban infill or renewal area is $0 Negotiated s173 agreements for some developments A small number of DCPs outside growth areas, e.g. Darebin $130 to $3,600 per dwelling Manningham (Doncaster Hill) $2,139 per dwelling 7

Interstate Comparisons 8 StateInfill AreasGrowth Areas/Greenfield including State Infrastructure Non-Residential VIC$0 (generally)Approx $15,000/ lot plus GAIC $5,000/ lot Section 173 only (site specific) QLD$20,000/ lot up to 2 bedrooms $28,000 for 3 bedrooms $30-40,000/ lot and upHigh per m 2 rates for different uses. Triggered by change of use. NSW1% of development cost OR Capped at $20,000/ lot (plus State charges) “Capped” at $30,000/lot but typically between $50-60,000/ lot including on average $10,000 State levy Generally 1% of project cost.

How was the Growth Area Levy Determined? 9 Average DCP cost (including open space and $900 per dwelling Community Infrastructure Levy) for Growth Areas: 2008 $194,000 per net developable Ha 2009$215,000 per net developable Ha 2010 $218,000 per net developable Ha 2012$245,000 per net developable Ha Scope creep in boom market saw ‘blow out’ in DCP costs Typically spent on: Community services and open space30% Roads and traffic management 30% Public land purchase40%

How was the Growth Area Levy Determined? 10 Showed consistency across regions Showed ‘normalising’ of total costs over the period Analysed variations across infrastructure categories: Land costs higher in the south-east, although average land values had normalised in 2012 (post GFC) Transport infrastructure costs higher in the west ‘scope creep’ in community and recreation costs over the years Open space levies have been inconsistently applied

How was the Growth Area Levy Determined? 11 Identified the need to: Achieve consistency in the application of open space costs Limit the scope of community and recreation facilities Provide some flexibility in the allocation of levies between land and transport infrastructure Not leave Councils short Not unreasonably impact on development viability

How was the Growth Area Levy Determined? 12 Looked at: A variable land levy A number of options for applying Supplementary Levies Used averages over time period Verified costs through economic peer review Strategic Development Areas calculated as % of Growth Area levy

Allowable Items Provides for a specified lists for each infrastructure category rather than a broad description of ‘basic and essential’ items No State infrastructure where GAIC applies No public open space included in Urban Areas or Strategic Development Areas (Clause or Subdivision Act to continue to apply) Budget for spending on the basket of goods 13

Commercial and Industrial Levy Two categories selected from complex equivalence tables Based on demand these uses generate for transport infrastructure, with minor allowance for community and recreation Quantum informed by recent DCPs Levies set to minimise possible distortion with non levied areas Set at low level to encourage job creating uses Used per square metre as base, not cost of development 14

Thank You 15