Australia: Infrastructure planning and charging in Queensland: evolution or revolution? - Part 1

Last Updated: 8 April 2012
Article by Ian Wright

In brief

This article discusses the Queensland Government's reforms to the infrastructure planning and charging frameworks.

Introduction

How we forget

"A nation that forgets its past is doomed to repeat it."

Winston Churchill's words are very pertinent to the current state of infrastructure planning in Queensland particularly in light of the Queensland Government's recent reforms to the infrastructure planning and charging frameworks.

Background to reform

The Queensland Government's reforms to the infrastructure planning and charging frameworks were made in response to the recommendations of the Infrastructure Charges Taskforce which itself was a response to the Queensland Growth Management Summit (p.3).

The reforms were implemented through three legislative instruments:

Significance of reforms

The reform of the infrastructure planning framework implemented by these instruments is considered to be evolutionary whilst the reform of the infrastructure charging framework is truly revolutionary perhaps dangerously so. The paper analyses reforms to the infrastructure planning and charging frameworks in the context of the infrastructure reform agenda of the Australian Government and Queensland Government more generally and concludes as follows:

  • First, that the evolutionary reforms of the infrastructure planning framework will not avoid the mistakes of the past.
  • Second, that the revolutionary reforms of the infrastructure charging framework are repeating the mistakes of the past.

Themes of the paper

This paper therefore has 4 themes.

  • First, the paper summarises the infrastructure planning reform agenda of the Australian Government and the Queensland Government, to provide the policy context for the recent reforms of the infrastructure planning and charging frameworks in Queensland.
  • Second, the paper assesses the leading practice characteristics and shortcomings of Queensland's infrastructure planning framework.
  • Third, the paper considers the public policy implications of the inconsistent planning horizons which currently exist under Queensland's infrastructure planning framework.
  • Fourth, the paper considers the public policy benefits of adopting a broader cross sectoral focus to the preparation of planning schemes based on spatial planning rather than the current sectoral focus of land use planning and development management.

Finally, the paper identifies the adverse public policy implications of the infrastructure charges reforms.

Infrastructure reform agenda

Australian Government reform agenda

The Australian Government has initiated a reform agenda in relation to the planning, assessment, funding and regulation of infrastructure projects of national significance. This is reflected in the following policy documents recently released by the Australian Government:

  • Sustainable Australia - Sustainable Communities: A Sustainable Population Strategy for Australia - This document identifies planning and infrastructure investment as crucial to the objective of ensuring that Australia's population is compatible with economic prosperity, liveable communities and environmental sustainability (pp.26, 27).
  • Our Cities, Our Future: A national urban policy for a productive, sustainable and liveable future - This document identifies the objective of integrated land use and infrastructure as crucial to the policy goal of planning for and delivering an urban Australia that is more productive, sustainable and liveable (pp.6, 7, 19, 29-33).
  • Regional policy agenda (Regional Development Australia) - This agenda identifies that infrastructure investment and access to services is crucial to the sustainability of Australia's regions.
  • National transport infrastructure policies ( National Ports Strategy, National Land Freight Network Strategy, National Aviation Policy and High Speed Rail Study) - These documents identify improved planning and project assessment frameworks as crucial to future investment in Australia's transport infrastructure.
  • National Broadband Network Overview, May 2010 - This document identifies that high speed broadband is essential for Australia's economy, future growth and international competitiveness.
  • Australia's Future Tax System, 2009 - Report to the Treasurer (Henry Tax Review) - This document recommends that the Council of Australian Governments (COAG) review State and local government institutional arrangements to ensure that zoning and planning do not unreasonably inhibit housing supply and housing affordability and also review infrastructure charges to ensure that they appropriately reflect the avoidable costs of infrastructure provided in housing developments(pp.93, 422 and 428).
  • COAG Reform Council's Review of Capital City Strategic Planning Systems - This document identifies the integration and coordination of infrastructure planning with land use planning as an assessment criteria for the COAG review of capital city strategic planning systems which is to report in December 2011.
  • Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Development Assessments - This document recognises the following leading practice characteristics of the Queensland infrastructure planning framework (see pp.185, 223):
    • First, there are detailed infrastructure plans with a level of committed funding from the State budget and committed delivery timeframes.
    • Second, detailed land use planning is supplemented by infrastructure specific planning.
    • Third, priority infrastructure plans which provide a transparent basis for local government decisions about infrastructure funding including the derivation and application of infrastructure charges.

Queensland Government reform agenda

The Queensland Government has also recognised that infrastructure planning and delivery is crucial to the continued development of Queensland and its regions. This is reflected in the following policy documents recently released by the Queensland Government:

Key implications of the public reform agenda

The key implications of the public reform agenda of the Australian and Queensland Governments are as follows:

  • First, change is considerable and constant.
  • Second, there is an increasing focus on decentralised or localised solutions based on local governments or regions (such as the Commonwealth's regional development areas or Queensland's regional plan areas). This is being reflected in the following:
    • a common understanding of local and regional distinctiveness
    • increasing community and stakeholder management
    • devolved responsibilities
    • managing more locally to achieve sustainable outcomes.
  • Third, the public sector agencies are being joined up from the perspective of the user to reduce the public's frustration with having to deal with a variety of public sector entities and to reduce back office costs. This is being reflected in the following:
    • common and standard evidence bases
    • common outcomes
    • common delivery programs and delivery channels and outlets
    • aligned budgets moving to pooled budgets.

Land use planning and development management, infrastructure planning and delivery and local government financial planning have critical roles to play in the implementation of these public sector reforms.

Table 1 summarises Queensland's infrastructure planning framework in terms of land use planning and development management, infrastructure planning and delivery and local government financial planning.

Table 1: Queensland infrastructure planning framework

Assessment of Queensland's infrastructure planning framework

Leading practice characteristics

The Queensland Government states that Queensland leads the nation in linking land use planning and infrastructure delivery. (See Queensland Government (2011) Queensland Infrastructure Plan: Building Tomorrow's Queensland, p.14) This claim is supported by the Productivity Commission which has stated that Queensland has a number of leading practice characteristics in particular the following:

  • First, regional infrastructure plans such as SEQIP and FNQIP (and more recently the Queensland Infrastructure Plan) provide detailed infrastructure plans which have a level of committed funding from the State budget and committed delivery timeframes.
  • Second, planning schemes through their strategic frameworks and structure plans for master planned areas, provide detailed land use planning which is supplemented by infrastructure specific planning through priority infrastructure plans.
  • Third, priority infrastructure plans which provide a transparent basis for local government decisions about infrastructure funding including the derivation and application of infrastructure charges.

(See Performance Benchmarking of Australian Business Regulation: Planning Zoning and Development Assessments, pp.185, 190 193.)

Leading practice undermined

However it is important to note that the Productivity Commission's findings predate the Queensland Government's recent reforms to the infrastructure planning and charging frameworks which appear to significantly undermine some of these leading practice characteristics:

  • First, the local government trunk infrastructure plans in a priority infrastructure plan are not aligned with the land use planning reflected in a strategic framework of a planning scheme. Under the Queensland Planning Provisions version 2.0, the strategic framework is to state strategic outcomes which are consistent with the timeframe of a regional plan (generally 20 years) and where there is no regional plan, a minimum of 25 years (see Module B: Drafting Instructions, p.13). This is not aligned with the planning horizon for local government trunk infrastructure plans in a priority infrastructure plan which are only required to show trunk infrastructure to service urban growth over a 10-15 year period.(See Queensland Government (2011) Statutory Guideline: Priority Infrastructure Plan, November 2011, p.10) This is also inconsistent with the 10 year horizon for a long term financial forecast, long term community plan and long term asset management plan which is required to be prepared by a local government. (See sections 104(4), 124 and 135(2) of the Local Government (Finance, Plans and Reporting) Regulation 2010)
  • Second, a priority infrastructure plan no longer provides a transparent basis for local government decisions about infrastructure funding - including the derivation and application of infrastructure charges. (See Performance Benchmarking of Australian Business Regulation: Planning Zoning and Development Assessment, p.191) As a result of the infrastructure charges reforms, a priority infrastructure plan is no longer to contain an infrastructure charges schedule which states infrastructure charges that are derived from a cost apportionment methodology for the provision of the trunk infrastructure identified in the priority infrastructure plan. Rather the infrastructure charges are stated in an adopted infrastructure charges resolution which has no relationship to the cost of provision of the trunk infrastructure identified in the priority infrastructure plan.
  • Finally, under the Queensland Planning Provisions version 2.0, a planning scheme and in particular its strategic framework is focused on the setting and implementation of policies affecting land use planning and development management (see p.4).This sectoral focus on land use planning and development management excludes the opportunities provided by a broader cross sectoral focus based on spatial planning which would allow a greater linkage between urban development and the cost and sequencing of infrastructure.

Suggested reforms to Queensland's infrastructure planning framework

Given these shortcomings, the following improvements to Queensland's infrastructure planning framework are suggested:

  • First, the claimed linkage between State government regional plans and regional infrastructure plans should be made more explicit and transparent to show the linkage between the timing of State infrastructure and the sequencing of urban development.
  • Second, the different planning horizons of, 20 - 25 years for a strategic framework, 10 - 15 years for a priority infrastructure plan and 10 years for a local government financing plan should be made consistent.
  • Third, the current sectoral focus of a planning scheme and its strategic framework on land use planning and development management should be changed to a broader cross sectoral focus based on spatial planning.
  • Finally, the infrastructure charges reforms should be revisited given that they are inconsistent with the leading practice characteristics for infrastructure planning and charging identified by the Productivity Commission, and will also give rise to significant adverse public policy outcomes as identified in previous Productivity Commission reports (See Industry Commission (1993) Taxation and Financial Policy Impacts on Urban Settlement, Australian Government, pp. 8 and 9; Productivity Commission (2004) First Home Ownership Report, Australian Government, pp. 165 and 167) and the Henry Tax Review (see pp.93, 422 and 428).

The remainder of this paper focuses on 3 of these suggested reforms, namely:

  • achieving consistent planning horizons;
  • broadening the focus of planning schemes; and
  • reviewing the infrastructure charges reforms.

Consistent planning horizons

Problems in the making

The inconsistency between the 20 - 25 year planning horizon of a strategic framework and the 10 - 15 year planning horizon of a priority infrastructure plan will exacerbate the current disconnection between land use planning and development management and infrastructure planning and delivery.

Since the strategic framework will be focused on the year 2031, the planning scheme will have to provide for amended designations (up planning) and zones (up zoning), in order to facilitate development up to 2031.

Unlike the present, development extending beyond the normal 10 year review period of a planning scheme would no longer require discretionary actions such as planning scheme amendments by a local government and approval by the State government to provide for development beyond the 10 year planning horizon. (See section 91 of the Sustainable Planning Act)

Public policy implications

Whilst the rationale for these more permissive planning scheme designations (up planning) and zones (up zoning) is the need to accommodate new housing for the anticipated population growth up to the 2031 planning horizon of the regional plans, it is important to understand the consequences of this approach.

The significant beneficiaries of this approach will be private interests in particular existing land owners, real estate investors and speculators whose net worth will be inflated by the increased designations (up planning) and zones (up zoning).

The significant losers of this approach will be the public interest as local governments become increasingly responsible for the provision of infrastructure and services to accommodate the additional development. This will further exacerbate the funding difficulties and other adverse public policy consequences that will arise from the infrastructure charges reforms which are discussed later in this paper.

In the end it will be current local government's residents who need both improved public services and infrastructure to accommodate their day to day needs, as well as better housing, who will be providing financial support for new residents. Those residents will have to either pay for increased local government rates and user charges to provide for the required infrastructure or accept reduced levels of service for infrastructure as a result of the increased development.

It has been estimated that the State government's infrastructure capping reforms will result in a total additional unfunded infrastructure liability of $625 million over 5 years equating to in excess of $60.00 per ratepayer per annum. (See Local Government Association of Queensland, Impact of Maximum Infrastructure Charges on Queensland High Growth Councils, April 2011.)

Water distributor retailers will also face similar policy implications to local governments. The distributor retailers have only two primary revenue streams being:

  • user charges for water consumption and network access from all users of their networks, and
  • infrastructure charges from developers to service new development.

The distributor retailers have also been established to operate on business lines to achieve full cost recovery. Like local governments, the under recovery of infrastructure charges increases the user charges for consumption and access which have to be paid by all network users.

Suggested reforms

These problems can be avoided by resolving the disconnection between the 20 - 25 year planning horizon of a strategic framework and the 10 - 15 year planning horizon of a priority infrastructure plan.

A possible option would be to ensure that the planning horizon of a priority infrastructure plan is increased to 20 - 25 years consistent with that of a strategic framework. However, this option would merely exacerbate the financial risks already faced by local governments as a result of the expected adverse public policy implications of the infrastructure charges reforms that break the connection between the cost of infrastructure and the infrastructure charge.

An alternative option would be to clarify within the Queensland Planning Provisions that whilst a strategic framework has a planning horizon of 20 - 25 years, the development entitlements in terms of increased designations (up planning) and zones (up zoning) are limited to a planning horizon of only 10 - 15 years consistent with a priority infrastructure plan.

This would ensure that permissive changes to designations (up planning) and zones (up zoning) beyond the 10 - 15 year planning horizon of the priority infrastructure plan, remain at the discretion of a local government and the State government which can, as part of the 10 year review of the planning scheme, evaluate the necessary infrastructure planning and delivery requirements and resulting funding consequences of providing additional development entitlements in a new or amended planning scheme.

Footnotes

1 Queensland Government (2011) Queensland Infrastructure Plan - Building Tomorrow's Queensland, p.7.
2 Section 23 of Sustainable Planning Act.
3 Queensland Government (2010) Queensland Planning Provisions - Version 2.0: Module B Drafting Instructions, p.10.
4 Queensland Government (2010) Shaping Tomorrow's Queensland: A Response to the Queensland Growth Management Summit, p.3; Queensland Government (2011) Queensland Infrastructure Plan - Building Tomorrow's Queensland, p.7.
5 Queensland Government (2010) South East Queensland Infrastructure Plan and Program 2010-2031, p.3.
6 Queensland Government (2011) Draft Statutory Guideline: Priority Infrastructure Plans, July 2011, p.6.
7 Section 104(2) of the Local Government (Finance, Plans and Reporting) Regulation 2010.
8 Section 124, ibid.
9 Section 136, ibid.

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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Authors
Ian Wright
 
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