Australia: A summary of parts 1, 2 and 3 of the Infrastructure Planning and Charging Framework Review discussion paper

In its March 2011 final report, the Infrastructure Charges Taskforce made ten recommendations to the former Queensland Labor government. Number 8 of those recommendations was that the government should undertake reforms for infrastructure planning and charging, to take effect beyond 3 years, that would see Queensland deliver a sustainable and simplified planning and charging system.

The current Queensland State government has pursued that recommendation in its release of a discussion paper with respect to the review of the infrastructure planning and charging framework. Public consultation in relation to the discussion paper is due to run from 1 July 2013 to 9 August 2013.

The discussion paper is a sizable document comprising 92 pages inclusive of five appendices. However, its primary contents are split into three parts, namely:

Part 1 – framework fundamentals;

Part 2 – framework mechanism options; and

Part 3 – framework element options.

The purpose of this paper is to present a summary of the above three parts.

PART 1 – FRAMEWORK FUNDAMENTALS

With respect to the infrastructure framework fundamentals, the discussion paper recognizes some issues concerning the proper identification of infrastructure. In particular, it notes that exactly what constitutes infrastructure (and therefore, what might be the subject of charges/conditions) can vary between local government areas. Drilling down then further, what is classified as trunk and non-trunk infrastructure also varies between local government areas.

In relation to these matters, the discussion paper highlights the following reform options:

With respect to the scope of infrastructure:

  1. maintain the status quo, whereby trunk infrastructure is identified through priority infrastructure plans (PIPs)/ water netserv plans (Netserv Plans), and charges are levied/conditions imposed;
  2. the State to devise an 'essential infrastructure list' (which could potentially see the removal of items from the scope of infrastructure, which do not have a clear nexus with a development site), and selecting from that list local authorities would create local government infrastructure plans (LGIP) or Netserv Plans – such that charges/conditions could only arise with respect to those identified essential infrastructure items. Infrastructure agreements and other alternative funding sources would not be precluded;

With respect to the identification of trunk and non-trunk infrastructure the options identified are:

  1. maintain (a variation of) the status quo (whereby trunk infrastructure is identified by the local government in a LGIP or Netserv Plan, and all other infrastructure is considered non-trunk);
  2. pursue a test-based approach to the identification of trunk infrastructure. This would involve the identification of trunk infrastructure in LGIPs and:
    1. a guideline devised at the State level, containing standard specifications for trunk infrastructure (e.g. minimum pipe diameters for specified water infrastructure); and
    2. a regulation based 'test process', to create a safety net of sorts – so that all trunk infrastructure is properly caught, classified and appropriately dealt with in the planning, approval, conditioning and potentially appeal phases.

Also as part of the framework fundamentals, the discussion paper identifies that stakeholders generally have concerns about the level of detail, consistency of baseline assumptions and document amendment processes associated with infrastructure planning tools. The reform objective here is to 'establish a planning process which supports infrastructure contribution, while being less complex to draft and understand'.

Other than maintaining the status quo, the discussion paper puts forward the option of standardized infrastructure planning, which might involve:

  1. mandatory inclusion of infrastructure plans in planning schemes;
  2. standard format and content of such infrastructure plans being set by the State (to include potentially standard methodology for apportioning costs, standard schedule of works and standard demand generation rates);
  3. third party review of infrastructure plans, for their approval;
  4. process changes to facilitate expedited amendments to infrastructure plans;
  5. incentive (in the form of lowered capped charge amounts) to help ensure local governments all have their infrastructure plans completed within a 2 year window.

PART 2 – FRAMEWORK MECHANISM OPTIONS

This part of the discussion paper deals with capped and planned charges.

No reform options are proposed in the discussion paper with respect to capped charges. It would appear that the intention at this stage is for capped charges to remain as the default requirement subject to potential tweaks – including the refinement of charge categories for example. The discussion paper advises that a detailed analysis of the capped charges regime will be undertaken and completed by 31 January 2014.

In relation to planned charges, the discussion paper articulates the stakeholder issues as: "since the commencement of the maximum charges framework, local authorities have identified a need for the ability to set infrastructure charges above the capped maximums where these charges are not financially sustainable. Stakeholders have been critical of a lack of a clearly defined process to facilitate this within the existing framework." Accordingly, planned charges will likely be made available where local governments can demonstrate that in applying the capped charges, they will face 'long-term financial sustainability issues'.

Whilst not in so many words, the discussion paper seems to acknowledge that proving 'long-term financial sustainability issues' may be subjectively very difficult to achieve. Nonetheless, the discussion paper puts forward an indicative two-pronged process of how a local authority might be required to justify (to the Minister) the application of planned charges. One aspect would concern the financial sustainability of the local government itself with respect to the affected infrastructure network(s), while the second would involve an assessment of the proposed development feasibility (to be conducted for an entire local government area, and not site-specific/project-specific levels). No appeal rights are contemplated with respect to the dollar amount of planned charges on the basis that they make individual projects unviable.

PART 3 – FRAMEWORK ELEMENT OPTIONS

Conditions, offsets, refunds, credits and deferred payments are all considered in this part of the discussion paper, as are appeals, dispute resolution and infrastructure agreements.

Although no real changes are at this stage put forward in relation to the conditioning regime, there is a proposition that where unidentified trunk infrastructure is caught by the safety net suggested in the discussion paper, and found to be trunk infrastructure (i.e. 'deemed trunk' infrastructure) – its cost should be offset by the local government.

In relation to offsets, the discussion paper highlights that at present, 'offsets and refunds are determined through a negotiation process and set out in an infrastructure agreement' and 'there are no requirements to provide offsets or refunds for infrastructure which is not identified within a planning scheme'. To address this, there are two reform options (apart from maintaining the status quo) presented in the discussion paper, namely:

  1. facilitate offsets at the actual value where robust procurement processes established by local governments are adhered to (otherwise, defer to offsets based on the planned cost);
  2. have clearer rules about offsets and refunds (including mandatory cross crediting across networks, and a standard process for land valuation set by the state).

In the event that cross crediting across networks is mandated, refunds might cease to be an issue. However, the discussion paper also considers credit banking and their later application in either the same development, or to another site owned by the same developer.

A consistent crediting methodology is explored in the discussion paper, which is recognized as a potential administrative nightmare for local governments.

With respect to appeals and dispute resolution, the discussion paper identifies two reform options (other than maintenance of the status quo), namely:

  1. enforce a mediated dispute resolution process prior to the lodgement (assumingly of infrastructure charge related) appeals;
  2. expand existing appeal rights (in so far that they concern infrastructure matters).

Legislative reform and the creation of a guideline are put forward as part of a reform option concerning infrastructure agreements. As part of this, it is suggested that conditions requiring an infrastructure agreement would be prevented. The discussion paper also flags a time limitation for the negotiation process of infrastructure agreements as a matter for further consideration following the consultation process.

Finally, with respect to deferred payments, the reform objective is suggestive that this matter is still to be more actively debated given that it reads 'to identify the practical implications of deferring the payment of infrastructure charges for ROL applications until settlement'. At present, with respect to reconfiguration of a lot, the payment of infrastructure charges is to be made by the time of plan sealing (although infrastructure agreements can be used to alter this timing). The reform options highlighted in the discussion paper are:

  1. should local governments elect to facilitate deferred payments in their area, move the payment of charges from plan sealing to settlement – notices would be placed on title to advise of outstanding charges and sunset clauses would apply;
  2. via legislative change, mandate that the payment of charges is to occur at plan sealing and no earlier (unless agreed by the local government and the developer).

The issues raised in the discussion paper, and the questions being asked of the public are necessarily broad, given the complexity of this matter and the obvious benefits of 'getting it right'. The reform options presently being considered, do in part themselves, highlight the far-reaching implications of the infrastructure planning and charging framework – in that it touches not only on the obvious like project feasibility, end user costs, local government finances and the orderly development of land and services, but also the less obvious like land valuation and core property matters.

Although the subject matter may not be riveting to some people, given the potential scope of its reform implications, hopefully the discussion paper is widely reviewed and commented on between now and 9 August 2013 – giving the Department of State Development, Infrastructure and Planning enough to run with as it moves towards an improved infrastructure planning and charging framework in Queensland.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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