Australia: Funding infrastructure in Queensland – Fair value charges and the Local Government Co-Investment Fund

HG Infrastructure Charges Reform Series: 11 August 2014
Last Updated: 14 August 2014
Article by David Nicholls, Sarah Macoun and Thomas Buckley

In this Alert of HopgoodGanim's Infrastructure Charges Reform Series, Partners David Nicholls and Sarah Macoun, and Associate Thomas Buckley outline the final component of the State Government's plan to reform the infrastructure charging and planning framework in Queensland – fair value infrastructure charges and the Local Government Co-Investment Fund (LGCF).

Key points

  • $500 million has been allocated towards a LGCF administered by Economic Development Queensland that local governments, distributor-retailers and developers can apply to for funding of key infrastructure projects.
  • The funding will become available after the next State election if the LNP is able to pass its proposed State asset sales.
  • It will only be available where local governments adopt 'fair value infrastructure charges' for their local government areas.
  • Fair value infrastructure charges are proposed to be approximately 10 percent (residential) and 15 percent (non-residential) less than the current maximum infrastructure charges.
  • The proposed arrangements do not represent a change to the current state planning regulatory arrangements governing infrastructure charges. Local governments and distributor-retailers can still charge the maximum amount for an adopted charge if they so choose.
  • The reforms are intended to complement the recent legislative reforms to the Sustainable Planning Act 2009 and the South-East Queensland (Distribution and Retail Restructuring) Act 2009.

Funding catalyst infrastructure

Under the LGCF, the State Government proposes to co-fund the cost of development infrastructure with local governments, distributor-retailers and developers.

Full details of the funding arrangements are yet to be released. However, the 2014-15 State Budget confirms that $500 million has been allocated towards the fund. It is envisaged that funding will be available to all local governments, water distributor-retailers, developers or other state agencies that apply to deliver infrastructure directly. The State would only co-invest in key infrastructure, such as major roads, water, sewerage and stormwater management that will facilitate 'significant economic development'.1

Importantly, the LGCF will only become available after the next State election, when the Government seeks a mandate for its 'Strong Choices Investment Program', which is predicated on the sale of State assets.2

It was proposed that applications for funding could be made to Economic Development Queensland from 1 July 2014, however, full details of those arrangements have not been released. The Premier's July – December 2014 Six Month Action Plan provides a commitment to commence the LGCF in the second half of the year.

Fair value infrastructure charges

The LGCF will only be made available where a local government has adopted 'fair value infrastructure charges' for its local government area. A schedule of the proposed 'fair value' charges has been released in draft form. Those infrastructure charges are approximately 10 percent (residential) and 15 percent (non-residential) less than the current infrastructure charges listed in the State Planning Regulatory Provision (adopted charges) 2012 (SPRP).

Underpinning these charges is an 'essential infrastructure list', which will limit the scope of infrastructure which can 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.

Importantly, the proposed new funding arrangements and fair value infrastructure charges do not represent a change to the current state planning regulatory arrangements governing infrastructure charges. The current SPRP will continue to apply and govern the amount which may be levied for infrastructure networks. Those charges remain the maximum amount for an adopted charge and local authorities will still be entitled to charge those maximum amounts.

The road ahead

Infrastructure funding and delivery has been a core issue in town planning for both local authorities and the development industry. At the heart of this issue is the distribution of the cost of providing development infrastructure.

The proposed fair value infrastructure charges and accompanying State funding program represents a new direction by the Government to address the long-term integration and equity issues faced by the development industry as a whole. Complemented by the recent legislative reforms to the infrastructure charging and planning provisions of the Sustainable Planning Act 2009 and the South-East Queensland (Distribution and Retail Restructuring) Act 2009, the State Government's overall plan is a step in the right direction to ensuring long term sustainability of the industry.

However, it remains to be seen whether the incentives that will be offered will be enough that local authorities adopt fair value infrastructure charges for their areas and whether, once the LGCF is depleted, local authorities revert back to the current maximum infrastructure charges.

Footnotes

1First Reading by Hon. Jeff Seeney to the Sustainable Planning (Infrastructure Charges) and Other Legislation Amendment Bill 2014, 8 May 2014

2Draft Queensland Plan for Secure Finances and a Strong Economy, 3 June 2014

© HopgoodGanim Lawyers

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