In September last year the Minister for Planning established the Standard Development Contributions Advisory Committee (the Committee) to provide advice regarding a new development contributions system.  ‘Report 1 – Setting the Framework’, was presented to the Minister in December 2012 and was released to the public for comment in January 2013.

Report 1 is the first of two reports to be prepared by the Committee.  The second report ‘Setting the Levies’ is planned for release in May, following a review of the submissions to Report 1.

The Committee proposes a new development contributions system to replace the current development contributions plans (DCP).  The new system would introduce ‘Standard Levies’ for three development settings:

  • growth areas;
  • urban areas;
  • strategic development areas.

Infrastructure items would be separated into four categories for each area:

  • community and recreation infrastructure;
  • transport infrastructure;
  • drainage infrastructure;
  • public land.

Under the proposal, each category would contain a list of ‘allowable items’ for which standard levies could be applied.  It is expected that standard levies would vary for metropolitan and non metropolitan sites.

Variations to the standard levies would be permitted for certain development categories in some development settings.  A development levy scheme (DLS) is an alternative to the standard levies and would propose different levies for ‘allowable items’.  The adoption of a DLS would require substantial justification as the standard levy is expected to be able to be applied in the majority of circumstances.  A DLS would not be permitted in urban areas or small strategic development sites.

The new system is claimed to provide fairness, certainty and a more simple approach for councils, developers and the community, through the use of pre-determined standard levies.  Below is a summary of the main components of the proposed system.

  • Growth areas are defined as the land in metropolitan Melbourne within the UGB and non-metropolitan growth areas in regional cities.
  • Urban areas are the existing or planned urban areas in a town, city or settlement.
  • Strategic development areas are key sites or areas where significant development or redevelopment is proposed (such as Fishermans Bend; the AMCOR site).
  • The development contributions system is based on the net increase of residential and commercial development.
  • The proposed development levies would be introduced on a per hectare basis for growth areas and a per dwelling basis for urban areas and strategic redevelopment areas.
  • Community and recreation items would be combined to form a fixed ‘community and recreation levy’.  This would replace the currently capped $900 community infrastructure levy.
  • The standard levies may be a single figure or a range.
  • Councils would have the option of applying a development contributions scheme to the entire municipality or to selected areas.
  • Structure plans should form the basis of a development contributions system.
  • Application of standard levies is expected to be through a ‘fast track’ process if councils can demonstrate that they meet relevant criteria.  This is expected to include the introduction of a development contributions overlay control via a planning scheme amendment.  The fast track process is likely to exempt an amendment from exhibition.
  • While funding for State significant infrastructure cannot be included in a development contributions system for growth areas (it is picked up through the GAIC), it may be included in large strategic development sites.
  • Indexation of standard levies would occur at regular intervals.
  • Developers are to pay a contribution towards the provision of infrastructure.  The proposed system is not designed to recover the full cost of infrastructure.
  • The new system cannot replace existing DCPs that are still active.
  • ‘In kind’ development would still be encouraged.
  • Councils may still include permit conditions requiring Section 173 Agreements to deal with the provision of some site specific infrastructure items in addition to the standard levies.

Whilst we applaud the objective to make development contributions more consistent, we hope that

Councils will still be required to justify the requirement for the standard levy.  Without proper links to the principles of need, nexus and accountability the new development contributions system could result in an unfair tax.  Furthermore, in out opinion or if the major concerns with supposedly standardised and clearer planning measures, is not so much the measure but the ‘special cases’ that vary the standard or minimal justification.  The new system must be backed up by clear and detailed guidelines on how variations will be considered, evaluated and controlled.