In brief

The much awaited infrastructure charges reforms proposed by the Queensland State Government have been announced. The big news, in terms of a change to the cap on charges, is that there is no news. The current cap on charges remains unchanged. However, the announced reforms:

  • propose a 'fair value charges' scheme which will see participating local governments levy lower infrastructure charges in return for access to State Government funding for catalyst infrastructure, however further details are required before the impact of this change can be properly understood, and
  • seek to provide certainty in relation to matters such as offsets and refunds which have previously been subject to negotiation with the relevant local government or distributor-retailer, by way of the legislative amendments set out in the Sustainable Planning (Infrastructure Charges) and Other Legislation Amendment Bill 2014 (Qld).

Proposed reforms

The State Government’s 'long-term' proposed reforms to infrastructure charging can be summarised in the following two parts:

  1.  A proposed 'fair value charges' scheme which will unlock access to State Government funding for catalyst infrastructure where a local government adopts and applies the 'fair value charges' in its local government area. However, this part remains a policy announcement as the State Government is yet to release the necessary detail for its proposal.
  2. The Sustainable Planning (Infrastructure Charges) and Other Legislation Amendment Bill 2014 (Qld) (Bill) which was introduced into Parliament on 8 May 2014. It makes amendments to the existing infrastructure charging regime in the Sustainable Planning Act 2009 (Qld) (SPA) (and the South-East Queensland Water (Distribution and Retail Restructuring) Act 2009 (Qld) (SEQ Water Act) for distributor-retailers) which are aimed at clarifying, simplifying and resolving some of the issues routinely faced by developers when dealing with infrastructure authorities in relation to the funding and supply of infrastructure for development.

Summary of key proposed reforms

The Bill provides for reforms to infrastructure funding and supply under the SPA which will no doubt be welcomed by the development industry. The below table sets out the key reforms of the reform 'package' including the 'fair value charges' scheme (notwithstanding that further detail is required to properly understand the impact of the proposed reform).

Click here to view table.

The transitional provisions of the Bill provide the following:

  • the unamended SPA will continue to apply to existing infrastructure charges notices (all types) and levied charges,
  • the provisions in the Bill will apply to existing undecided development applications and permissible change applications.

The Bill proposes amendments to the SEQ Water Actto provide for equivalent provisions (to those for a local government under the SPA) for distributor-retailers for infrastructure funding and supply in relation to water approvals (the new approval regime proposed by the Water Supply Services Legislation Amendment Bill 2014).

'Fair value charges' scheme

The State Government is expected to release the details of its proposed 'fair value charges' scheme in the near future. As things stand, there is no mention of the 'fair value charges' scheme in the Bill. Therefore, further legislative amendment will be needed to implement the scheme.

This scheme will give local governments the choice of adopting and applying the 'fair value charges' in its local government area in lieu of the current capped infrastructure charges.

The 'fair value charges' are expected to generally provide a 10% reduction in residential charges and a 15% reduction in retail, commercial and industrial charges.

In return for applying the 'fair value charges' in its local government area, a local government will have access to State Government funding for 'co-investment' in Priority Development Infrastructure which unlocks new development.

Whether participation in this scheme will be taken up by local governments will very much depend on the arrangements set by the State Government in relation to the funding. For example, if the funding from the State Government requires repayment in the future, this will impact on its attractiveness as a genuine alternative to the arrangements in the SPA.

Other matters which may impact on the likely participation in the scheme include:

  • the size of the pool of funds,
  • how the pool of funds will be apportioned, and
  • whether an application is guaranteed to receive funding if it meets particular criteria (or whether it will be at the State Government’s discretion).

It is also foreseeable that certain local governments will find the 'fair value charges' scheme more or less attractive depending on:

  • the level of development in its local government area,
  • the level of catalyst infrastructure that is needed in the foreseeable future, and
  • the financial trade-offs between participating and not participating in the scheme.

The value of the 'fair value charges' scheme will no doubt be carefully considered by each local government. This is therefore a space to be watched very closely.

Conclusion

It must be said that the Bill does tidy up some of the areas of the current regime for infrastructure funding and supply which have created difficulties for the development industry.

However, we can’t know what the full picture looks like until the State Government releases the details of its 'fair value charges' scheme.

The State Development, Infrastructure and Industry Committee is seeking written submissions on the Bill by 4:00pm on Friday, 16 May 2014 so that it can provide its report to Parliament by Thursday, 29 May 2014.

Submissions may be made either by email to sdiic@parliament.qld.gov.au or by post to:

The Research Director

State Development, Infrastructure and Industry Committee

Parliament House

George Street

BRISBANE QLD 4000