The provisions of the Sustainable Planning (Infrastructure Charges) and Other Legislation Amendment Act 2014 (Qld) (Amendment Act) which amended the Sustainable Planning Act 2009 (Qld) (SPA) and the South-East Queensland (Distribution and Retail Restructuring) Act 2009 (SEQ Water Act) commenced on 4 July 2014 implementing amendments to the infrastructure charging provisions in the SPA and the SEQ Water Act.
This alert is an update to our article titled 'Infrastructure charges reform: A picture without a frame' dated 14 May 2014 which outlined the key proposed reforms in the Sustainable Planning (Infrastructure Charges) and Other Legislation Amendment Bill 2014 (Qld) (Bill).
Amendments to the Bill
The Amendment Act contains various amendments to the Bill. The key amendments include the following:
- Where a refund applies for an infrastructure offset, the infrastructure charges notice must state when the refund will be given. An applicant’s appeal rights are also extended to the timing for giving the refund.
- Making it clear that cross crediting is mandatory. For example, an infrastructure offset which accrues for the delivery of road infrastructure can be claimed against the whole infrastructure charge (not just the portion of the infrastructure charge which a local government allocates to road infrastructure).
- Requiring a charges resolution or a board decision to include criteria for deciding a conversion application which must be consistent with parameters under a guideline made by the Minister and prescribed by regulation.
Statutory Guideline 03/14: Local government infrastructure plans (Guideline) commenced on 4 July 2014. The purpose of Part C of the Guideline is to set out the parameters that regulate:
- the development of the local authority’s (local government or distributor-retailer) methodology for determining the cost of offsets and refunds, and
- the development of local criteria for assessing a conversion application.
Part C of the Guideline also sets out:
- the default methodology for determining the cost of offsets and refunds until a local authority includes a methodology in their charges resolution or board decision, and
- the default criteria for assessing a conversion application that is to be used until a local authority includes criteria in their charges resolution or board decision.
Methodology for determining the cost of offsets and refunds
Until a local authority adopts its own methodology for determining the cost of offsets and refunds (which must accord with the parameters of being clear, cost effective and time efficient), it must follow the default methodology.
The default methodology for works effectively involves the following process:
- the applicant providing the local authority with its cost estimate,
- the local authority may accept the applicant’s cost estimate or provide the applicant with its own cost estimate,
- if an agreement as to the cost estimate cannot be reached between the parties, the local authority must refer the matter to an independent assessor for determination, and
- if the parties cannot agree on the independent assessor to be appointed, the establishment cost of the infrastructure is determined by calculating the average of the applicant’s cost estimate and the local authority’s cost estimate.
It should be noted that even under this process, the value of an offset or refund will still only ever be the pre-construction estimate, it will not be the actual cost incurred by the applicant for providing the infrastructure. This is at odds with the ‘actual costs’ terminology which has been used to described this reform.
The default methodology is similar for land except that it involves land valuations.
Default conversion criteria
Until a local authority includes criteria for assessing a conversion application (i.e. an application to convert non-trunk infrastructure to trunk infrastructure where a condition requiring non-trunk infrastructure has been imposed on an approval) in their charges resolution or board decision (which must be based on the default criteria), it must use the default criteria.
Under the default criteria, for infrastructure to be considered trunk infrastructure, each of the following criteria must be met:
- the infrastructure has capacity to service other developments in the area,
- the function and purpose of the infrastructure is consistent with other trunk infrastructure identified in an LGIP, a charges resolution or Netserv Plan for the area,
- the infrastructure is not consistent with non-trunk infrastructure for which conditions may be imposed, and
- the type, size and location of the infrastructure is the most cost effective option for servicing multiple users in the area.
Fair value charges and co-investment scheme
The State Government is still yet to release any detailed information regarding its proposed fair value charges and co-investment scheme.