In September 2017, the Victorian Legislative Assembly passed the Planning and Environment Amendment (Public Land Contributions) Bill 2017 (Bill). The Bill will implement a land contributions model to simplify the infrastructure contributions system by requiring landowners to contribute land directly.

The Bill introduces a number of key reforms. These include:

  1. Land Contribution Model – the land contribution model allows landowners to transfer land directly as part of their infrastructure contribution.
  2. Land Contribution Equalisation and Credit – the equalisation and credit system ensures landowners contribute equally to provide land for public purposes.
  3. Valuation Methodology – the proposed methodology envisages valuing certain inner public-purpose land and resolving disputes about value.
  4. Indexation of the Community Infrastructure Levy – annual indexation of the levy amount to construct a dwelling specified in an approved development contributions plan.

These reforms build on the existing infrastructure contributions plan (ICP) scheme, relying on monetary levies to acquire land for parks, roads and other public purposes.

The suggested advantages of introducing a land contribution model are:

  • reducing financial risk to councils resulting from escalating land prices
  • securing land for public purposes early in a development’s lifecycle
  • reducing the overall monetary levy paid by developers.

The key amendments introduced by the Bill are explained in further detail below:

Amendment Details
Land Contribution Model The land contributions model is based on the principle that all landowners under an ICP should contribute equally to providing land for public purposes. The model is intended to overcome issues associated with relying on monetary contributions to the ICP scheme and provide certainty for community stakeholders when developing public infrastructure.

Under this model, landowners will meet their public land liability by directly vesting land as part of their infrastructure contribution. The model is confined to securing land necessary for basic and essential infrastructure needs of new developments, such as land for roads and intersections, community facilities, sports ovals, parks and drainage.

Once the Bill is introduced, infrastructure contributions can be made either by:

  • a monetary component being either or both of (a) the standard levy calculated in accordance with the standard levy rate specified in the plan, or (b) the supplementary levy calculated in accordance with the supplementary levy rate specified in the plan; or
  • a land component being any inner public purpose land forming part of a parcel of land in an ICP plan area, or any land equalisation amount relating to the parcel.
Land Contribution Equalisation and Credit Despite the above mentioned principle that all landowners should contribute equally to providing land for infrastructure purposes, in practice the land required for public purposes is not distributed equally among landowners. Inevitably, some landowners will be required to contribute more land than others.

To address this issue, the Bill introduces provisions to ensure overall contributions are proportionate by equalising the contributions between landowners. This means landowners who contribute a greater percentage of their land, will be compensated by way of a land credit amount funded by those contributing a smaller percentage who will pay a land equalisation amount.

In order to facilitate this equalisation process, the Bill establishes a Minister, public authority or municipal council as the collecting agency to whom the monetary component of an infrastructure contribution is payable.

Valuation Methodology To establish a consistent process for determining land equalisation and land credit amounts, the Bill introduces provisions about giving notice and determining disputes about the estimate value of the land required for public purposes.

Under the valuation process, the Valuer-General will assist parties to reach agreement about the estimated value of the land. This process involves a conference, in which the valuers acting for the planning authority and the affected owner, meet and use all reasonable efforts to achieve agreement on the estimated value.

In cases where the parties fail to agree, the Valuer-General is empowered to make an independent determination.

Indexation of Community Infrastructure Levy The Bill amends the Planning and Environment Act to increase the maximum community infrastructure levy to $1,150 per dwelling. This brings the terms of the legislation in line with an order previously made by the Governor in Council in October 2016, increasing the levy to the same amount.

The Bill also provides for annual indexation starting 1 July 2018, of any community infrastructure levy specified in a development contributions plan. Under new section 46LB, the levy amount is to be adjusted in accordance with the formula set out at section 46LC.

The Bill is currently before the Victorian Legislative Council and can be accessed on the Victorian Government Legislation website here.