Last week Planning Minister Matthew Guy announced a preferred framework for the reforms to the approach to development contributions. Development contributions plans outline the works or payments that must be made by developers to implement infrastructure such as roads, drainage and water management systems, open space and community facilities in new communities.

The Minister stated that a new model would be adopted which standardises the levy system and provides greater certainty for councils and industry. This system is intended to be straight forward and easy-to-understand, and has been developed following consultation with industry representatives and stakeholders. It is another effort by the Coalition Government to cut red tape and provide greater efficiencies and clarity in the planning system (see previous post regarding the Government’s proposed planning system reforms).

The preferred framework establishes levies for different kinds of development, including infill, greenfield, regional and rural development.  There are also different levies for residential and non-residential development.  The framework is based on five infrastructure categories, including community facilities, open space facilities, transport infrastructure, drainage infrastructure and public land.

The Minister stated that the new system “will assist in reining in rapidly-escalating costs to homebuyers; assisting in maintaining an affordable land supply for Victorian families”. The burden of infrastructure costs on home buyers is a common argument among many industry bodies.

An independent Advisory Committee will be appointed to finalise the details of the proposed reforms and will report to the Minister by the end of 2012.  Until that time, the Minister will not be approving any development contribution plans that include excessive or ambit claims.  The Minister re-iterated that development contributions were a contribution and not intended to fully fund required infrastructure.