The Planning and Environment Amendment (Infrastructure Contributions) Bill 2015 (Vic) (Bill) introduces a new standardised infrastructure contributions system for levying development contributions towards the provision of infrastructure in growth and and strategic development areas across Victoria.

The Bill is based on the 2012 recommendations of the Standard Development Contributions Advisory Committee and follows a similar proposal of the previous government which lapsed as a result of the 2014 Victorian election.

HOW DOES THE NEW SYSTEM WORK?

The new system (to be called the ‘infrastructure contributions system’)is based on an infrastructure levy that is made up of a standard levy and a supplementary levy.

The standard levies are pre-set levy rates for funding local infrastructure. The proposal is to introduce standard rates for residential, retail and commercial/industrial development for both metropolitan and non-metropolitan locations.

The supplementary levy is an optional levy for use when the standard levy cannot adequately fund the required local infrastructure or where additional infrastructure is required to unlock the growth capacity of the area. The supplementary levy may also be used to fund state infrastructure in growth areas where the Growth Areas Infrastructure Contributions Scheme does not apply.

Under the new system, the standard and supplementary levies may only be used to fund infrastructure items selected from a pre-set list of 'allowable items', such as transport, community and recreation works, services, facilities and land.The mechanism for applying the infrastructure levy is the infrastructure contributions plan. This plan must form part of the planning scheme to become operational.

These reforms are intended to give developers and councils certainty about the level of contributions required, clarity around the types of infrastructure the contributions will fund and reduce costly delays for both developers and homebuyers.

WHERE WILL THE NEW SYSTEM APPLY?

The Bill enables the new system to be used anywhere in Victoria, however initially the new system will only apply to greenfield growth areas and strategic development areas where there are no existing development contributions plans.

DOES THE NEW SYSTEM REPLACE EXISTING DEVELOPMENT CONTRIBUTION PLANS, THE GROWTH AREAS INFRASTRUCTURE CHARGE (GAIC) OR PUBLIC OPEN SPACE CONTRIBUTIONS? 

The new system will not replace existing development contributions plans incorporated into planning schemes.  These will continue to have effect, unless they are at any stage reviewed or replaced. 

The new system will also not replace the GAIC and the new infrastructure contributions plans will not be allowed to cover state infrastructure in growth areas which is funded by the GAIC. 

However, there is scope for the new system to replace public open space contributions which would otherwise be required via the Subdivision Act, so that where appropriate, all public open space contributions are able to be levied via an infrastructure contribution plan (with no separate requirement under the Subdivision Act).

WHAT WILL THE LEVY RATES BE? 

At this stage, the levy rates, indexation mechanisms and application criteria have not been released.

The Department has stated an intention to work with an Implementation Reference Group representing peak industry groups and councils to finalise the details of the new system, once the Bill has been passed. 

WHEN WILL THE NEW SYSTEM COMMENCE?

The new system is expected to be introduced in early to mid-2016, subject to the Bill being passed by Parliament.