1. INTRODUCTION

1.1 INFRASTRUCTURE PLANNING AND CHARGING FRAMEWORK

In June 2011, the Sustainable Planning Act 2009 (SPA) was amended by the Sustainable Planning (Housing Affordability and Infrastructure Charges Reform) Amendment Act 2011 to implement a capped infrastructure planning and charging framework for local governments and distributor-retailers in South-East Queensland (previous capped framework).

On 4 July 2014, the SPA was further amended by the Sustainable Planning (Infrastructure Charges) and Other Legislation Amendment Act 2014, to provide for the current infrastructure planning and charging framework (current capped framework).

Under the current capped framework, provisions relating to local governments were retained in SPA whilst those applicable to distributor-retailers were transitioned to the South-East Queensland Water (Distribution and Retail Restructuring) Act 2009 (SEQ Water Act).

Given that the current capped framework applicable to both local governments and distributor-retailers is materially the same, this paper focuses only on local governments although references to the equivalent distributor-retailer provisions have been provided for ease of reference.

On 25 May 2016, the Planning Act 2016 (Planning Act) was assented to but has yet to commence. It adopts the current capped framework for local governments subject to a limited number of changes (future capped framework).

1.2 THEMES OF THE PAPER

This paper has four themes:

  • First, it considers the key elements of the current capped framework as compared with the previous capped framework.
  • Second, it considers the key changes of the future capped framework arising from the Planning Act.
  • Third, it considers some suggested improvements to the current capped framework which are not addressed in the future capped framework under the Planning Act.
  • Finally, it offers some conclusions about the impact of the previous, current and future capped frameworks.

2. LEGAL AND PRACTICAL IMPLICATIONS OF THE CURRENT CAPPED FRAMEWORK

2.1 KEY ELEMENTS OF THE CURRENT CAPPED FRAMEWORK

The current capped framework comprises the following key elements:

  • Infrastructure scope
  • Identification of trunk and non-trunk infrastructure
  • Infrastructure planning instrument
  • State infrastructure charging instrument
  • Local infrastructure charging instrument
  • Infrastructure charge
  • Development charge
  • Conditions for trunk and non-trunk infrastructure
  • Conversion applications for non-trunk infrastructure conditions
  • Offsets and refunds for trunk infrastructure and development charge
  • State infrastructure provider powers
  • Infrastructure agreements.

2.2 INFRASTRUCTURE SCOPE

The current capped framework, similar to the previous capped framework, is based on a definition of development infrastructure and includes water cycle management infrastructure, transport infrastructure, public parks infrastructure and land for specified local community facilities (SPA, s627; SEQ Water Act, Schedule).

However, unlike the previous capped framework, development infrastructure no longer includes the local function of State-controlled roads in relation to the transport infrastructure component of development infrastructure (Schedule 3 of the SPA (28 May 2014 reprint) (28 May SPA)).

2.3 IDENTIFICATION OF TRUNK AND NON-TRUNK INFRASTRUCTURE

The current capped framework, similar to the previous capped framework, empowers a local government to identify development infrastructure as trunk infrastructure in a local government infrastructure plan (called an LGIP). Development infrastructure that is not identified as trunk infrastructure in the LGIP (LGIP unidentified infrastructure) will generally be non-trunk infrastructure (SPA, s627; SEQ Water Act, Schedule).

However, unlike the previous capped framework, the LGIP unidentified infrastructure can also be made trunk infrastructure in the following circumstances:

  • Necessary infrastructure condition – The LGIP unidentified infrastructure is required by way of a necessary infrastructure condition, where the LGIP unidentified infrastructure services development consistent with the assumptions about the type, scale, location or timing of future development stated in the LGIP (SPA, s647; SEQ Water Act, s99BRCR).
  • Conversion application – The LGIP unidentified infrastructure which is the subject of a condition for non-trunk infrastructure becomes trunk infrastructure by the approval of a conversion application.

2.4 INFRASTRUCTURE PLANNING INSTRUMENT

The current capped framework requires a local government to include an LGIP in its planning scheme if it intends to levy charges for or impose conditions requiring the provision of trunk infrastructure under Chapter 8 of the SPA (SPA, s628A). An LGIP under the current capped framework is similar to a priority infrastructure plan (PIP) under the previous capped framework.

The current capped framework provides a number of mechanisms for transitioning the various existing infrastructure planning instruments of local governments to the current capped framework. Until 1 July 2016 or a later date decided by the Minister (being before 1 July 2018) (SPA, s997) (the cut-off date), the following applies for local governments which have not included an LGIP in their planning scheme:

  • Local government with a PIP – For a local government that had a PIP under the previous capped framework, the PIP becomes an LGIP (SPA, s982).
  • Local government without a PIP – For a local government that did not prepare a PIP under the previous capped framework, the local government may make a modified charges resolution which identifies trunk infrastructure and states the required standards of service and establishment costs (SPA, ss979 and 996).

Local governments which have not included an LGIP in their planning scheme before the cut-off date (SPA, s628A):

  • No infrastructure charges – Cannot levy an infrastructure charge.
  • Limited conditioning power – Can only impose a condition about non-trunk infrastructure.

2.5 STATE INFRASTRUCTURE CHARGING INSTRUMENT

The current capped framework, similar to the previous capped framework, empowers the Minister to prepare a State planning regulatory provision (called a SPRP (adopted charges)) (SPA, s629(1); cf. 28 May SPA, s648B).

The State Planning Regulatory Provision (adopted charges) dated July 2012 made under the previous capped framework is deemed to be the SPRP (adopted charges) under the current capped framework and it remains the current SPRP (adopted charges) (SPA, s983(1)).

On 29 July 2016, the Adopted Infrastructure Charges Schedule 2016 replaced Schedule 1 of the current SPRP (adopted charges) thereby increasing the amount of the maximum adopted charges for development (SPA, s629(2) and (3); Queensland Government Gazette No. 75, Friday 29 July 2016; Adopted Infrastructure Charges Schedule 2016).

2.6 LOCAL INFRASTRUCTURE CHARGING INSTRUMENT

The current capped framework, similar to an adopted infrastructure charges resolution under the previous capped framework, empowers a local government to adopt a resolution (called a charges resolution) (SPA, s630(1); SEQ Water Act, s99BRCF(1); cf. 28 May SPA, ss648D(1) and 755KA(1)).

In addition to the matters prescribed under the previous capped framework, a charges resolution must provide for the following:

  • Charges breakup – A charges breakup for all adopted charges between the local government and distributor-retailer (SPA, s632(4)).
  • Offset and refund calculation methodology – A methodology for working out the cost of infrastructure for an offset and refund (SPA, s633(1); SEQ Water Act, s99BRCH(1)). The methodology must be consistent with the parameters provided for under the SPRP (adopted charges) or the Statutory guideline 03/14 Local government infrastructure plans (LGIP guideline) (SPA, s633(2); SEQ Water Act, s99BRCH(2)).
  • Conversion criteria – Criteria for deciding a conversion application, which must be consistent with the parameters provided for under the LGIP guideline (SPA, s633A; SEQ Water Act, s99BRCHA).

A charges resolution, similar to an adopted infrastructure charges resolution, may provide for automatic increases in a levied charge from the date it is levied to the date it is paid, which cannot be greater than the maximum adopted charge or the increase by the three yearly PPI index average (SPA, s631(3) to (6); SEQ Water Act, s99BRCG(3) to (6)). It is relevant to note that under the previous capped framework the increase could not be greater than the maximum adopted charge or the increase by the consumer price index (28 May SPA, ss648D (9) and (10) and 755KA(2), (3) and (4)).

2.7 INFRASTRUCTURE CHARGE

The current capped framework empowers a local government to give an applicant an infrastructure charges notice (called an ICN) (SPA, s635(1) and (2); SEQ Water Act, s99BRCI(1) and (2)) which levies a charge by applying the adopted charge (called a levied charge) (SPA, ss627 and 635(6); SEQ Water Act, Schedule and s99BRCI(6)) under a charges resolution in the following circumstances (SPA, s635(1); SEQ Water Act, s99BRCI(1)):

  • Development approval – A development approval has been given.
  • Adopted charge – An adopted charge applies for providing the trunk infrastructure for the development.
  • Development not under a designation – The development is not development under a designation proposed by a public sector entity that is a department.

Under the previous capped framework, an adopted infrastructure charge was levied by way of an adopted infrastructure charges notice (28 May SPA, ss648F and 755KB(3)).

INFRASTRUCTURE CHARGES NOTICE

The requirements for an ICN and an adopted infrastructure charges notice are substantially similar (SPA, s637; SEQ Water Act, s99BRCK; cf. 28 May SPA, ss648F and 755KB(3)). However, an ICN must also state the following:

  • Details of the calculation of the levied charge – How the amount of the levied charge has been worked out (SPA, s637(1)(b); SEQ Water Act, s99BRCK(1)(b)).
  • Details of an offset or refund – Whether an offset or refund applies and if so, the information about the offset or refund including the timing of the refund (SPA, s637(1)(f); SEQ Water Act, s99BRCK(1)(f)). However, this requirement may be waived by the recipient of the ICN (SPA, s637(1A); SEQ Water Act, s99BRCK(1A)). This provides greater certainty to a development proponent about its financial liability for the provision of infrastructure for development without the need for an infrastructure agreement. However, a local government is required to determine its liability for an offset or refund and its amount at the decision stage of the IDAS process; whilst under the previous capped framework this liability would have been determined by the negotiation of an infrastructure agreement.
  • Establishment cost – In order to identify the details of an offset or refund it will be necessary to work out the cost of the trunk infrastructure. This will likely require reference to the establishment cost of infrastructure in the schedule of works in the plans for trunk infrastructure in the LGIP; although the process for determining the establishment cost in these circumstances is by no means clear.

    • It is relevant to note the following features of the definition of establishment cost under the current capped framework (SPA, s627; SEQ Water Act, s99BRCC) are different from the definition under the previous capped framework (28 May SPA, Schedule 3):

    • Existing infrastructure – The value of works is the "current replacement cost" which is reflected in the local government's asset register whilst the value of land is its "current value acquired for the infrastructure" which will be interpreted to mean market value.
    • Future infrastructure – Costs of "land acquisition, financing, and design and construction, for the infrastructure".

    Based on the definition of establishment cost under the current capped framework, the cost of infrastructure stated in an LGIP may not be the establishment cost of infrastructure for the purpose of determining an offset or refund under the current capped framework.

  • Information notice – The decision, the reasons for the decision and details of the appeal rights (SPA, ss627 and 637(2); SEQ Water Act, s99BRCK(2) and Schedule).

Similar to the previous capped framework, the recipient of an ICN may enter into an agreement with the local government about the payment of the levied charge or providing infrastructure instead of paying the levied charge (SPA, s639; SEQ Water Act, s99BRCM). However, the power of a local government to give a land contribution notice in lieu of, or in addition to the payment of infrastructure charges under the previous capped framework has been removed from the current capped framework (28 May SPA, ss648K(3) and (4) and 755MA(4) and (5)).

LEVIED CHARGE

The current capped framework for a levied charge features the following:

  • Additional demand – A levied charge may only be for additional demand placed upon the trunk infrastructure which will be generated by the development (SPA, s636(1); SEQ Water Act, s99BRCJ(1)). A levied charge must therefore exclude demand on the trunk infrastructure from an existing lawful use, a previous lawful use or other lawful development that may be carried out without a further development permit (SPA, s636(2), (3), (3A) and (4); SEQ Water Act, s99BRCJ(2), (3), (3A) and (4)).

    • Under the previous capped framework, an adopted infrastructure charges resolution may provide a discount to an adopted infrastructure charge taking into account the existing usage of trunk infrastructure by the premises on which the development is carried out (28 May SPA, s648D(1)(d)). Other than that, the previous capped framework did not contain any requirements for local governments to take into account a previous lawful use or other lawful development in working out the charges levied for development.

    It is noted that the "other lawful development that may be carried out without a further development permit" includes the following development:

    • Development permit – Development which is subject to a development permit but has not been implemented.
    • Exempt or self-assessable development – Development which is exempt or self-assessable development.

    This is potentially an issue for local governments particularly from an administrative point of view where a local government is required to exclude the demand generated by an exempt or self-assessable development when levying levied charges.

  • Levied charge attaches to the land – A levied charge is payable by the applicant including any person in whom the benefit of the application vests (SPA, ss628(1)(a) and 635(6)(b); SEQ Water Act, s99BRCI(6)(b)), such as an owner of the subject premises to which a development approval applies.

    • Furthermore, a levied charge attaches to the land such that it can be recovered from owners and their successors in title (SPA, s635(6)(b) and (c); SEQ Water Act, s99BRCI(6)(b) and (c); cf. Montrose Creek Pty Ltd & Manningtree (Qld) Pty Ltd v Brisbane City Council (2013) QPELR 47).

INFRASTRUCTURE CHARGE VERSUS DEVELOPMENT CHARGE

A levied charge under the current capped framework has the following important characteristics:

  • Infrastructure charge is not a development charge – A levied charge is an infrastructure charge which has the primary goal of recovering the cost of trunk infrastructure to be provided by a local government to service development (Productivity Commission (2011) Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Assessment, Research Report, Volume 1, April 2011, p198).

    • A levied charge is different to a development charge which is a charge designed to internalise the marginal external costs that are imposed by development and which has the primary goal of influencing the location and nature of development (Productivity Commission (2011) Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Assessment, Research Report, Volume 1, April 2011, p198).

  • Average cost approach not marginal cost approach – The maximum adopted charges in the SPRP (adopted charges) are calculated by reference to an average cost State-wide approach; whilst the adopted charges in a charges resolution upon which a levied charge in an ICN is based are calculated by reference to an average cost municipality-wide approach which is limited to the maximum amount prescribed by the State (Clinch JP and O'Neill E Designing Development Planning Charges: Settlement Patterns, Cost Recovery and Public Facilities, Urban Studies, 15 March 2010, p2152).

    • Importantly, levied charges under the current capped framework are based on an average cost approach and are capped. As such, levied charges do not achieve full cost recovery as was the case with infrastructure charges prior to the introduction of the previous capped framework.

2.8 DEVELOPMENT CHARGE

The current capped framework, similar to the previous capped framework, empowers a local government to impose a condition on a development approval requiring the payment of additional trunk infrastructure costs for development (called an additional payment condition) if it meets the following criteria (SPA, s650(1); SEQ Water Act, s99BRCU(1)):

  • Infrastructure demand – The development is subject to one of the following:
    • generate infrastructure demand of more than that required to service the type or scale of future development that the LGIP assumes;
    • require new trunk infrastructure earlier than when identified in the LGIP;
    • is for premises completely or partly outside the priority infrastructure area (PIA) identified in an LGIP.
  • Additional infrastructure costs – The development would impose additional trunk infrastructure costs on the local government after taking into account levied charges for the development and the provision of trunk infrastructure by the applicant.

The additional trunk infrastructure costs required by an additional payment condition is a development charge which is intended to internalise a local government's marginal external costs imposed by development that is inconsistent with the LGIP.

An additional payment condition is therefore intended to influence the location and nature of development. This is unlike a levied charge the primary purpose of which is cost recovery; albeit under the current capped framework full cost recovery is far from being achieved.

2.9 CONDITIONS FOR TRUNK AND NON-TRUNK INFRASTRUCTURE

The current capped framework, empowers a local government to impose a condition requiring the provision of trunk and non-trunk infrastructure if two statutory criteria are satisfied:

  • Head of power – The condition must expressly identify one of the following heads of power for the imposition of the condition (SPA, s335(1)(e)(iii); SEQ Water Act, s99BRAI(2)(e)):
    • Necessary infrastructure condition – A condition can be imposed requiring the provision of trunk infrastructure if the trunk infrastructure is necessary to service the subject premises and has not been provided or has been provided but is inadequate (SPA, ss645, 646 and 647; SEQ Water Act, ss99BRCP, 99BRCQ and 99BRCR). There are two types of necessary infrastructure conditions:
      • LGIP identified infrastructure – A condition requiring at a stated time, LGIP identified infrastructure or different trunk infrastructure delivering the same desired standard of service, if the LGIP identifies adequate trunk infrastructure to service the subject premises (SPA, s646; SEQ Water Act, s99BRCQ).
      • LGIP unidentified infrastructure – A condition requiring development infrastructure necessary to service the premises at a stated time, if the LGIP does not identify adequate trunk infrastructure to service the subject premises and the development infrastructure services development consistent with the assumptions stated in the LGIP about the type, scale, location or timing of future development (SPA, s647; SEQ Water Act, s99BRCR).
    • Non-trunk infrastructure condition – A condition can be imposed requiring the provision of non-trunk infrastructure for the following limited purposes (SPA, s665; SEQ Water Act, s99BRDJ):
      • Internal network – A network or part of a network internal to the premises.
      • Connection to external network – The connection of the premises to an external infrastructure network.
      • Safety or efficiency of network – The protection or maintenance of the safety or efficiency of the infrastructure network of which the non-trunk infrastructure is a component.
  • Relevant and reasonable requirement – The condition must also satisfy the relevant and reasonable requirement of the SPA (SPA, s345; SEQ Water Act, s99BRAJ). In the case of a necessary infrastructure condition, the relevant and reasonable requirement is deemed to be met if the following are satisfied (SPA, s648; SEQ Water Act, s99BRCS):
    • Necessary to service subject premises – The infrastructure is necessary to service the subject premises.
    • Efficient and cost effective solution – The infrastructure is the most efficient and cost-effective solution for servicing other premises in the general area of the subject premises.
    • Infrastructure on the subject premises – The infrastructure, if provided on the subject premises, is not an unreasonable imposition on the development or the use of the subject premises as a consequence of the development.

This is significantly different from the previous capped framework where a necessary infrastructure condition could only be imposed if the trunk infrastructure is identified in the PIP or an adopted infrastructure charges resolution of the local government (28 May SPA, s649).

Furthermore, the necessary infrastructure condition for LGIP unidentified infrastructure enables a development proponent to seek an offset or refund for the LGIP unidentified infrastructure by the following:

  • first, requesting the imposition of a necessary infrastructure condition on the basis that the design of the infrastructure meets the relevant conversion criteria, including the desired standards of service;
  • second, if a necessary infrastructure condition is not imposed, making a conversion application to convert the infrastructure to trunk infrastructure.

2.10 CONVERSION APPLICATIONS FOR NON-TRUNK INFRASTRUCTURE CONDITIONS

CONVERSION APPLICATION CRITERIA

The current capped framework, unlike the previous capped framework, empowers an applicant for the development approval to make a conversion application to the local government to convert non-trunk infrastructure imposed in a non-trunk infrastructure condition to trunk infrastructure, if the construction of the non-trunk infrastructure has not commenced (SPA, ss658 and 659; SEQ Water Act, ss99BRDD and 99BRDE).

The effect of an approval of a conversion application is as follows:

  • Non-trunk infrastructure condition – The non-trunk infrastructure condition no longer has effect (SPA, s662(2); SEQ Water Act, s99BRDH(2)).
  • Necessary infrastructure condition – The local government may amend the development approval by imposing a necessary infrastructure condition for the trunk infrastructure (SPA, s662(3); SEQ Water Act, s99BRDH(3)).
  • ICN – If a necessary infrastructure condition is imposed, the local government must give an ICN or amend an existing ICN to state whether an offset or refund applies and if so, the details of the offset or refund (SPA, s662(4); SEQ Water Act, s99BRDH(4)).

The conversion application process raises the following issues:

  • Development approval – The conversion application can only be lodged after a development approval takes effect. It cannot be commenced whilst an appeal is on foot for the development approval; presumably on the basis that any issue in respect of the status of the infrastructure will be resolved as part of the appeal.
  • Time limitation – There is no time limit for the making of a conversion application other than before the commencement of the construction. This gives rise to uncertainty to a local government about when development infrastructure may become trunk infrastructure and consequently its liability to an offset or refund which would have a financial implication on the local government. However, this issue has been addressed in the Planning Act, which is further discussed in section 3 below.
  • Conversion – It enables a development proponent to design development infrastructure servicing the proposed development such that it meets the relevant conversion criteria.

CONVERSION APPLICATION ASSESSMENT CRITERIA

A conversion application is to be assessed against the criteria included in a charges resolution (SPA, s633A(1); SEQ Water Act, s99BRCHA(1)) which must be consistent with the parameters provided for under the LGIP guideline (Adopted Conversion Criteria) (SPA, s633A(2); SEQ Water Act, s99BRCHA(2)).

The Adopted Conversion Criteria must be consistent with the following (LGIP guideline, s4.2.1):

  • Planning rationale – The context, planning and infrastructure standards for the relevant area. The context, planning and infrastructure standards are those stated in the applicable LGIP and planning scheme. The relevant area is the area of the local authority and not the priority infrastructure area (LGIP guideline, s4.2), being the local government area for the relevant local government and the geographic area for the relevant distributor-retailer.
  • Default conversion criteria rationale – The principles underlying the default conversion criteria.

The LGIP guideline does not identify the underlying principles of the following default conversion criteria; leaving their determination to local authorities and development proponents until they are determined by the Planning and Environment Court (LGIP guideline, s4.2.2):

  • Capacity to service other developments – The infrastructure has capacity to service other development in the area.
  • Consistency with identified trunk infrastructure – 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.
  • Not consistent with non-trunk infrastructure – The infrastructure is not consistent with non-trunk infrastructure for which conditions may be imposed in accordance with section 665 of the SPA.
  • Most cost-effective option – The type, size and location of the infrastructure is the most cost-effective option for servicing multiple users in the area. The most cost-effective option is defined to mean the least cost option based upon the life cycle cost of the infrastructure required to service future urban development in the area at the desired standard of service.

2.11 OFFSETS AND REFUNDS FOR TRUNK INFRASTRUCTURE AND DEVELOPMENT CHARGE

The current capped framework, unlike the previous capped framework, provides a more defined framework for an offset or refund for trunk infrastructure and a development charge.

NECESSARY INFRASTRUCTURE CONDITION

The current capped framework requires a local government, which has imposed a necessary infrastructure condition requiring the provision of trunk infrastructure, where trunk infrastructure services or is planned to service premises other than the subject premises, to take the following actions:

  • Offset – Offset the cost of the infrastructure against the levied charge, if the cost of the trunk infrastructure is equal to or less than the levied charge (SPA, s649(1) and (2); SEQ Water Act, s99BRCT(1) and (2)).
  • Refund – Refund to the applicant an amount equal to the difference between the establishment cost of the trunk infrastructure and the levied charge, if the cost of the trunk infrastructure exceeds the levied charge (SPA, s649(1) and (3); SEQ Water Act, s99BRCT(1) and (3)).
  • Identification of an offset and refund – Identify in an ICN whether an offset or refund applies and if so the details of the offset or refund (SPA, s637(1)(f); SEQ Water Act, s99BRCK(1)(f)).
  • Recalculation of the establishment cost for trunk infrastructure – Where requested by an applicant, recalculate the establishment cost of the trunk infrastructure using the methodology in the charges resolution and amend the ICN accordingly (SPA, s657; SEQ Water Act, s99BRDC).

ADDITIONAL PAYMENT CONDITION

The current capped framework also requires a local government which has imposed an additional payment condition to refund to the payer the following:

  • Development in PIA – The proportion of the establishment cost of the infrastructure that may be apportioned reasonably to other users of the infrastructure and has been, is or is to be, the subject of a levied charge by the local government (SPA, s654; SEQ Water Act, s99BRCY).
  • Cessation of development approval – Any part of the payment the local government has not spent or contracted to spend on designing and constructing the infrastructure, if:
    • the development approval no longer has effect;
    • a payment has been made; and
    • construction of the infrastructure has not substantially started before the development approval no longer has effect (SPA, s655(1) and (2); SEQ Water Act, s99BRCZ(1) and (2)).

2.12 STATE INFRASTRUCTURE PROVIDER POWERS

STATE-RELATED CONDITION

The current capped framework empowers a State infrastructure provider to impose a condition on a development approval (called a State-related condition) for infrastructure or works to protect or maintain the safety or efficiency of infrastructure associated with State-controlled transport infrastructure, public passenger transport infrastructure, railways, ports and airports only (SPA, s666).

It is relevant to note that a State infrastructure provider’s power to impose a State-related condition is less prescriptive than that under the previous capped framework.

LOCAL GOVERNMENT REIMBURSEMENT

Like the previous capped framework, a local government may be required to reimburse to a State infrastructure provider which has imposed a State-related condition, levied charges for local government infrastructure which has been replaced by the State infrastructure the subject of the State-related condition (SPA, s669).

2.13 INFRASTRUCTURE AGREEMENTS

The current capped framework provides for arrangements for infrastructure agreements, which are materially the same as the previous capped framework but for the following:

  • Public sector entity – A distributor-retailer is declared not to be a public sector entity (SPA, s627) and as such, a distributor-retailer cannot enter into an infrastructure agreement under the SPA other than where a local government or other public sector entity is a party (SPA, s677; SEQ Water Act, s99BRDP).
  • Obligation to negotiate in good faith – A local government, other public sector entities, applicants and other entities have an obligation, where an infrastructure agreement is proposed, to negotiate the infrastructure agreement in good faith (SPA, s671; SEQ Water Act, s99BRDL).

3. PLANNING ACT 2016

The future capped framework under the Planning Act largely replicates the current capped framework subject to a limited number of changes.

Some of the key changes are as follows:

  • State Planning Regulatory Provision (adopted charges) – The matters provided for in a SPRP (adopted charges) have been incorporated into Part 6 (Infrastructure) and Schedule 26 (Maximum for adopted charges) of the Draft Planning Regulation in recognition of the removal of state planning regulatory provisions.
  • Definitions – The definition of the PIA has been amended with the term "non-rural purposes" replaced with the following (Planning Act, Schedule 2; cf. SPA, s627):
    • Residential purposes, other than rural residential purposes;
    • Industrial, retail or commercial purposes;
    • Community or government purposes related to a purpose stated above.
  • Terminology – Key changes in terminology include the following (Planning Act, chapter 4; cf. SPA, chapter 8):
    • Additional demand is now referred to as extra demand.
    • Additional payment condition is now referred to as an extra payment condition.
    • Additional trunk infrastructure cost is now referred to as an extra trunk infrastructure cost.
    • Submissions in the context of seeking a new infrastructure charges notice during the relevant appeal period, are now referred to as representations.
    • Obligations in the context of an infrastructure agreement, are now referred to as responsibilities; the reason for which is not readily apparent given that the concepts of "rights, interests and obligations" are terms readily recognised by contract law.
  • Maximum adopted charge – The maximum adopted charge prescribed in a regulation automatically increases each year by the sum of the three-yearly moving average quarterly percentage increase in the PPI for each financial quarter since the prescribed amount was last prescribed or amended (Planning Act, s112; cf. SPA, s629(2), (3) and (5)).
  • Head of power for necessary infrastructure condition for LGIP identified infrastructure – Unlike the current capped framework which requires both LGIP identified and LGIP unidentified infrastructure to be "necessary to service" the subject premises, under the future capped framework LGIP identified infrastructure may be required "whether or not the infrastructure is necessary to service the subject premises" if "the trunk infrastructure is or will be located on the premises" (SPA, s645(1); Planning Act, s127).
  • Relevant and reasonable requirement – Unlike the current capped framework under which the infrastructure the subject of a necessary infrastructure condition is required to be "necessary to service the subject premises", this requirement has been removed from the future capped framework (SPA, s648(1); cf. Planning Act, s128(4)).
  • Conversion application – A conversion application is now required to be made within one year after the development approval starts to have effect (Planning Act, s139; cf. SPA, s659 and SEQ Water Act, s99BRDE).

4. IMPROVEMENTS TO THE CURRENT CAPPED FRAMEWORK

The previous, current and future capped frameworks, whilst providing certainty to development proponents, have had significant public policy implications in terms of a lack of integration, inequity and economic inefficiency and should be the subject of a significant policy review process to address these matters whilst maintaining certainty for development proponents (Ian Wright The Importance of the Planning and Funding of Development Infrastructure to Queensland's Economic Model, Legal Knowledge Matters July 2014 to June 2015, Colin Biggers & Paisley).

However, in the absence of a more fundamental review of the capped framework, the following suggestions are made to improve the operation of the capped framework:

  • Infrastructure charges as a tax or user charge – The previous, current and future capped frameworks have been characterised by some commentators as establishing a tax regime as opposed to a user charges regime. In our opinion, an infrastructure charge is not a tax but rather a user charge to which a cap has been applied since 2011. The current uncertainty could be resolved by a legislative or policy amendment to the effect that the capped framework is not a tax regime and is otherwise subject to an apportionment principle such that the infrastructure charge is to bear some relationship to the usage of the trunk infrastructure to which the infrastructure charge relates.

    • In this context it is relevant to note that an infrastructure charge which is levied on development can be judicially reviewed where a local government's decision is so unreasonable that no reasonable local government could have levied the infrastructure charge (SPA, s 478; SEQ Water Act, s99BRBO). This may occur in particular circumstances, for instance where the infrastructure charge is for planned infrastructure which does not benefit the development (such as unserviced premises) or the infrastructure charge has no relationship to the development's projected usage of the planned infrastructure (such as where some rural local governments have applied infrastructure charges for intensive industries, such as poultry farms, to effectively prevent their development).

  • Additional demand – In order to minimise the administrative burden for local governments, the provisions under section 636(2)(c) of the SPA relating to "other development" could be amended to exclude the demand generated by exempt or self-assessable development for the purpose of levying levied charges.
  • Establishment cost – The references to the cost of the infrastructure in sections 633 and 649 of the SPA should be amended to the establishment cost of the infrastructure given the following:
    • the offset or refund is determined by reference to the establishment cost of the infrastructure when the details of the offset or refund are included in an ICN;
    • where requested by an applicant, the establishment cost is to be recalculated by the local government using the methodology stated in the charges resolution.
  • Adopted conversion criteria – The LGIP guideline should identify the underlying principles of the default conversion criteria in respect of which the conversion criteria included in a charges resolution must be consistent. This will avoid local authorities and development proponents having to discern these principles until they are determined by the Planning and Environment Court.
  • Definition of establishment cost – The definition of establishment cost should be amended to reference the schedules of works in an LGIP given that it is likely to be the only information available to a local government when an ICN is being prepared.

5. CONCLUSIONS

5.1 KEY ELEMENTS OF THE CAPPED INFRASTRUCTURE PLANNING AND CHARGING FRAMEWORK

A summary of the key elements of the infrastructure planning and charging framework between the previous capped framework, current capped framework and the future capped framework is provided in Table 1.

The current capped framework and future capped framework are materially similar to the previous capped framework other than for the following:

  • Additional demand – A levied charge must exclude demand generated from an existing lawful use, a previous lawful use or other development which may be lawfully carried out without a development permit.
  • LGIP unidentified infrastructure – A necessary infrastructure condition may be imposed requiring development infrastructure which is not identified in an LGIP in specified circumstances. Development infrastructure the subject of the necessary infrastructure condition is trunk infrastructure and the provision of the infrastructure may give rise to an entitlement to an offset or refund.
  • Conversion of non-trunk infrastructure – Non-trunk infrastructure may be converted to trunk infrastructure. If converted, the non-trunk infrastructure becomes trunk infrastructure and the provision of the infrastructure may give rise to an entitlement to an offset or refund.
  • Identified offsets and refunds – A local government must identify an offset and refund in an ICN unless this requirement is waived by the recipient of the ICN.
  • Recalculation of the establishment cost of infrastructure – A local government when requested by an applicant, must recalculate the establishment cost of trunk infrastructure in accordance with the methodology in its charges resolution.

5.2 EFFECTS OF THE CAPPED INFRASTRUCTURE PLANNING AND CHARGING FRAMEWORK

The current capped framework and future capped framework provides certainty for development proponents, reduces the cost of the administration of an offset and refund for development proponents and on balance is less costly to administer than the previous capped framework.

However, the previous capped framework, current capped framework and future capped framework impose the following significant additional financial costs on local governments:

  • Administrative costs – The cost of the determination of ICNs, recalculation requests, conversion applications and appeals; albeit these costs can be recovered to some extent by a local government through a review of its cost-recovery fee schedule.
  • Reduced levied charges – The cost of the reduction of levied charges from higher offset and refund values; has been estimated by the LGAQ as being in the vicinity of $480 million annually (Local Government Association of Queensland Ltd (2013) Discussion Paper: Infrastructure planning and charging framework review, Submission, August 2013, p10).
  • Inefficient settlement patterns – Capped charges do not provide a price signal as to location with the effect that inefficient settlement patterns are encouraged at unquantified costs of likely social inequity and economic inefficiency.

The short-term benefits of the capped framework in terms of increased certainty do not outweigh the medium to long-term costs such that there will inevitably be a need for fundamental reform of the capped framework.

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