On 1 July 2013 the Queensland Government released a detailed discussion paper on infrastructure charging. This followed an exhaustive process of consultation with stakeholders from the public and private sectors. Submissions in response to the discussion paper which can be found at the following link may be made until Friday 9 August 2013.

This article aims to provide a brief overview of the issues contained in the discussion paper.

The Suggested Transitional Arrangements

The Government proposes that amendments to the statutory infrastructure charging regime will be legislated and commence on 1 July 2014 with Local Governments and distributor retailers to be allowed a transitional period to develop new processes to implement the reforms. The paper proposes that the current regime will apply to development applications that are decided before the new charging regime takes effect, with the reforms applying to development applications that are decided after the commencement of the new framework.

Capped Charges

The discussion paper does not propose any changes to capped charges. Rather, it contains a commitment by the Government to consider the quantum of the current caps and whether they are appropriate once the other reforms have been resolved. This is logical because one of the proposed reforms is to introduce an essential infrastructure list which will limit the scope of infrastructure which can be the subject of the charging regime. The principle behind the essential infrastructure list is that there should be a direct nexus between the development and the infrastructure to be funded. On this basis, for example, higher order arterial roads that are used by the whole community would not be funded by a Local Government infrastructure charge.

Definition of Trunk Infrastructure and Offsetting

The discussion paper also addresses the current inadequate definition of trunk infrastructure. Local Governments are able to condition development approvals to provide infrastructure which is, in reality, trunk infrastructure (such as a link in an external road network) without being obliged to provide an offset for the cost of the work. This is a result of the current definition which states that the trunk infrastructure is infrastructure identified in the Priority Infrastructure Plan and all other infrastructure is non-trunk infrastructure. The Government has suggested that there be a test which can be universally applied to determine if works that have been conditioned are in effect for trunk infrastructure and thus qualify for an offset against the standard infrastructure charges.

New Methodology for PIPs

One of the consequences of the introduction of capped charges has been reduced detail in Priority Infrastructure Plans. This in turn has caused difficulties in the application of offsetting and crediting requirements. It is suggested in the paper that this could be addressed through new infrastructure plans which comply with mandated methodology and standardised formats. It is canvassed in the paper that Local Governments might be allowed to opt out of these requirements but if they do so they would be subjected to lowered caps which would reduce the amount they could charge for infrastructure.

Option to Move to Planned Charges

The paper also suggests that Local Governments could be given a mechanism to move from capped to planned charges where the Local Government is able to demonstrate that the capped regime potentially adversely affects the Local Government’s long term financial viability. The paper canvasses an approach under which an independent third party would test the financial sustainability of the Local Government under a capped regime as well as the financial feasibility of development in the Local Government’s area should the Local government move to a planned approach to infrastructure charging.

Credits

Credits are applied when a development application is made to alter or intensify an existing lawful use. In those circumstances the amount of the infrastructure charge will usually be discounted by the amount of the charge that would be applied to the existing use, so that the infrastructure charge only applies to the changed component of the use. The circumstances in which this happens vary considerably between Local Governments and the paper suggests that the methodology for applying credits be tightened up so that it is consistently applied across all jurisdictions.

Appeals and Dispute Resolution

Appeals against adopted infrastructure charges may only be made about the reasonableness of the charge or an error in the calculation of the charge. The paper suggests that an applicant’s appeal rights could be expanded to include the right to appeal the methodology used to calculate the charge, whether infrastructure which is conditioned is trunk or non-trunk, whether an infrastructure condition is reasonable and relevant and also the right to appeal the calculation of charge reductions (such as credits, offsets and refunds). The paper also proposes to establish an early dispute resolution process requiring parties to mediate prior to an appeal being lodged with the Planning and Environment Court.

Infrastructure Agreements

Infrastructure agreements allow Local Governments and developers to negotiate and agree specific arrangements for the infrastructure networks that support developments. This provides flexibility in the infrastructure charges framework. However, considerable issues have been identified by stakeholders with respect of the infrastructure agreement process. The paper suggests that amendments be made to the infrastructure agreement provisions in the Sustainable Planning Act 2009 to improve clarity and transparency in relation to local infrastructure provisions and also the establishment of advisory guidelines to support infrastructure agreement negotiation. It is also suggested that Local Governments would be prevented from conditioning development approvals requiring an applicant to enter into an infrastructure agreement.

Distributor Retailer Resolutions

Infrastructure charges are set by Local Governments and distributor retailers in adopted infrastructure charges resolutions and distributor retailer board decisions. There is no State Government oversight of the charges which are set, however, those charges cannot exceed the capped amount. To ensure compliance and equity in the system, the paper suggests that a third party review/endorsement process be established to monitor resolutions and board decisions.

Submissions

Submissions in response to the discussion paper may be made until Friday 9 August 2013. Feedback received on the discussion paper will inform the development of the Government’s long-term framework for infrastructure charges. Following this, the next step in the process will be development of draft legislative provisions and guideline information.