Australia: Infrastructure planning and charging in Queensland: evolution or revolution? - Part 2

Last Updated: 8 April 2012
Article by Ian Wright

This article concludes the discussion in our previous article, Infrastructure planning and charging in Queensland: evolution or revolution? - Part 1.

Spatial planning

Problems of a sectoral focus

In addition to achieving consistency between the planning horizons for land use planning and development management, infrastructure planning and delivery and local government financial planning, it is also critical to review the planning methodology that is underpinning the preparation of planning instruments in particular local government planning schemes.

Planning schemes are generally focussed on land use planning and development management consistent with the traditional sectoral focus of planners. However, the sectoral focus of planners on land use planning and development management whist indispensable has significant limitations.

  • First, sectoral managers have a tendency to focus on cost reduction (that is work process efficiency in the development approvals process) rather than focussing on maximising the difference between costs and benefits as is the tendency of cross sectoral managers. This tendency to focus on cost minimisation is reflected in the desire of planners to:
    • minimise regulation by reducing development approvals and standardising planning schemes;
    • minimise development timeframes as evidenced by RiskSMART, Smart eDA (ePlanning, eAssessment) and privatising development approvals through certification and accreditation;
    • minimise development application fees and infrastructure charges.
  • Second, a sectoral focus has the tendency to result in a lack of co-ordination in the planning and delivery of the necessary infrastructure to support land use planning and development management. Common weaknesses include:
    • A failure to provide sufficient detail on the infrastructure requirements of the plan.
    • A lack of identification of the agencies responsible to deliver specific projects on proposals or who the key partners might be.
    • Insufficient consideration or evidence that the key partners are willing or able to take responsibility for delivering relevant infrastructure requirements.
    • Insufficient consideration of the existing plans, strategies and expenditure commitments of the key partners.
    • The inclusion of overly aspirational and unrealistic policies.
    • A narrow conceptualisation of infrastructure to development infrastructure which excludes other social, environmental and economic infrastructure.(See Baker, M. and Hincks, S., Infrastructure Delivery and Spatial Planning, May 2009, pp.181, 188 and 189.)
  • Third, a sectoral focus has the tendency to result in a lack of integration between policies and programs for land use planning and development management and other Government policies and programs which influence the nature of places and how they function.
  • Fourth, a sectoral focus has the tendency to result in a lack of understanding of the funding and financing of development by the private sector and the funding and financing of infrastructure by the public sector and increasingly the private sector. The tendency of planners to require infrastructure now but pay for it later is not realistic.

Cross sectoral spatial planning

These problems can be minimised by adopting a broader cross sectoral focus based on spatial planning.

Spatial planning is the practice of place making and delivery at all spatial scales which aims to achieve the following:

  • Enable a vision for the future of requirements and places that is based on evidence, local distinctiveness and community derived objectives.
  • Translate this vision into a set of policies, priorities, programs and land allocations together with the public sector resources to deliver them.
  • Create a framework for private investment and regeneration that promotes economic, environmental and social wellbeing for the area.
  • Co-ordinate and deliver the public sector components of this vision with other agencies and processes.

(See Royal Town Planning Institute, Shaping and Delivering Tomorrow's Places: Effective Practice in Spatial Planning, April 2007, p.11.)

A comparison between the sectoral approach of land use planning and development management and the cross sectoral approach of spatial planning is provided in Table 2.

Table 2: Comparison of land use planning and development management and spatial planning

(Source: Communities and Local Government (2006) The Role and Scope of Spatial Planning: Literature Review, HMSO, London; New Zealand Government, Building Competitive Cities: Reform of the Urban and Infrastructure Planning System - A Technical Working Paper, 2010, pp.59-60.)

Return of physical planning

Spatial planning goes beyond traditional land use planning and development management to bring together and integrate policies and programs for land use planning and development management with other policies and programs which influence the nature of places and how they function.

As such spatial planning provides a renewed emphasis on physical planning involving as it does, core competencies related to place making, infrastructure and the physical environment, both built and natural.

It is time for planners to reject the jack of all trades, master of none tag that they have acquired since the traditional focus of physical planning was lost in the aftermath of Jane Jacobs' blistering attack on urban planners in her 1961 seminal work The Death and Life of Great American Cities: The Failure of Town Planning.

The fate of today's urban planner has been summarised thus:

Too busy planning. Too busy slogging through the bureaucratic maze, issuing permits and enforcing zoning codes, hosting community get togethers, making sure developers get their submittals in on time and pay their fees. This is what passes for planning today. We have become a caretaker profession - reactive rather than proactive, corrective instead of pre-emptive, rule bound and hamstrung and anything but visionary. If we live in Nirvana, this could be fine. But we don't. We are entering the unchartered waters of global urbanisation on a scale never seen. And we are not in the wheelhouse, let alone steering the ship. We may not even be on board.

(Source Thomas Campanella, Jane Jacobs and the Death and Life of American Planning, April 2011.)

Suggested reforms

Spatial planning based as it is on physical planning should therefore become the centre around which the other planning specialties orbit such as transport planning, heritage planning, environmental planning and urban design to name but a few.

As a result, planning instruments and, in particular, local government planning schemes should be focused on spatial planning rather than simply land use planning and development management.

Infrastructure charges reforms

Capped infrastructure charges

The Queensland Governments infrastructure charges reform has resulted in the adoption of maximum charges for different classes of development that are to apply uniformly throughout different local government areas.

The maximum adopted charges appear to have been derived from a consideration of infrastructure charges under previous planning scheme policies and priority infrastructure plans of selected local government areas in Queensland. (See Final Report Infrastructure Charges Taskforce, March 2011, pp.62-65.)

At best, it could be argued that the maximum adopted charges are a reflection of the generalised average cost across all local government areas for the supply of trunk infrastructure to service the relevant classes of development. As such the maximum adopted charges have no relationship to the marginal cost of supplying trunk infrastructure to service development in different parts of different local government areas.

The rejection of the marginal cost pricing methodology for financial contributions for trunk infrastructure is contrary to the overwhelming weight of public policy analysis over the last 20 years that is set out in the following landmark reports:

  • Industry Commission Report on Taxation and Financial Policy Impacts on Urban Settlement, 1993.
  • Productivity Commission Report on First Home Ownership, 2004.
  • Australian Future Tax System, 2009, : Report to the Treasurer (Henry Tax Review).
  • Productivity Commission Report on Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Development Assessments, 2011.

The application of maximum adopted charges changed the whole decision making framework that local governments applied to infrastructure charges. As a result, local governments are now required to juggle the issues of financial affordability, the willingness of ratepayers to subsidise urban development and the job creation of the development industry in determining their adopted infrastructure charges.

The adoption of maximum adopted charges which have no relationship to the marginal cost of funding trunk infrastructure to service new development will have the following significant public policy implications:

  • First, the price signal which would encourage economic efficiency and effectiveness has been emasculated such that the cost of funding infrastructure to service development in an outer suburban greenfield area is the same as an infill area.
  • Second, it can result in significant cross subsidies from local government ratepayers and SEQ distributor-retailer customers to landowners and developers.
  • Finally, but not least, the funding of cross subsidies can result in increased rates and user charges to landowners and customers thereby worsening the cost of living pressures especially on those least capable of affording it. As such, this reform will have a regressive impact on taxpayers.

Housing affordability

The infrastructure charges reforms were implemented by amendments to the Sustainable Planning Act made by the Sustainable Planning (Housing Affordability and Infrastructure Charges Reform) Amendment Act. The title of this amendment Act would tend to indicate that infrastructure charges are adversely affecting housing affordability in Queensland and that housing affordability will be improved by the amendments.

The Final Report of the Infrastructure Charges Taskforce supports this when it states that where infrastructure charges are "set too low, local government will under recover money to pay for infrastructure. Set too high, projects will not proceed and housing affordability will be further eroded." (See pp.62-65)

Whilst this statement is literally correct, the Final Report does not acknowledge the findings and recommendations of the Productivity Commission and the Henry Tax Review which:

  • first, endorse the appropriateness of infrastructure charges that relate to the cost of the provision of infrastructure to service development; and
  • second, indicate that infrastructure charges that are not related to the cost of provision of infrastructure to service development such as capped infrastructure charges are inappropriate from a public interest perspective.

In relation to the impact of infrastructure charges on housing affordability, these landmark reports relevantly provide as follows:

  • Industry Commission Report on Taxation and Financial Policy Impacts on Urban Settlement -
An apparent dilemma facing governments is the need to promote efficiency (and relieve fiscal stress) through user pays policies for publicly provided infrastructure, while keeping accommodation 'affordable' and 'accessible' to those on lower incomes. There is apprehension that the reforms of charges and taxation may lead to unacceptable escalation in housing prices ? For the reforms advocated in this report, there do not appear to be grounds for these concerns.(See pp.8-9)
  • Productivity Commission Report on First Home Ownership -
In summary, greater use of upfront development charging is unlikely to have any substantial effect on housing affordability, irrespective of whether infrastructure was previously subsidised ? (See p.165)
The claimed cost savings and improvements in affordability from reducing reliance on developer charges for infrastructure appear overstated. (See p.167)
  • Australian Future Tax System (Henry Tax Review) -


Infrastructure charges can be an effective way of encouraging the efficient provision of infrastructure to areas where it is of greatest value and of improving housing supply. Charging for infrastructure may be a more effective means of allocation resources than regulating land release.
Where land supply is constrained, well-designed infrastructure charges are more likely to be factored in to the price that developers pay for raw land, than to increase the price of housing in the development where the charge is levied. However, where infrastructure charges are poorly administered - particularly where they are complex, non-transparent or set too high - they can discourage investment in housing, which can lower the overall supply of housing and raise its price.

Recommendation 70:

COAG should review infrastructure charges (sometimes called developer charges) to ensure they appropriately price infrastructure provided in housing developments. In particular, the review should establish practical means to ensure that these charges are set appropriately to reflect the avoidable costs of development, necessary steps to improve the transparency of charging and consequential reductions in regulations. (p.167)

In short, there is a case for the review of the previous infrastructure contributions regime to improve its transparency and thereby provide certainty for stakeholders.

However, there is no persuasive evidence that supports the conclusion that existing or proposed infrastructure charges calculated and imposed in accordance with the methodology applicable to priority infrastructure plans (or earlier infrastructure charges plans) do not relate to the cost of provision of necessary trunk infrastructure and as such would operate as a tax.

Indeed, the balance of evidence (in particular the reviews carried out by the Queensland Competition Authority on local government priority infrastructure plans prepared under the previous infrastructure contributions regime) would indicate that the draft priority infrastructure plans appropriately priced trunk infrastructure, and if anything, under-priced that infrastructure.

Furthermore, the implication that the new infrastructure charges regime involving as it does capped infrastructure charges will improve housing affordability is not supported by the reports of the Productivity Commission and the Henry Tax Review.

Rather, it is apparent that capped infrastructure charges will adversely affect housing affordability in those areas (generally inner city suburban areas) with previously lower infrastructure charges which will be increased by local governments in order to offset the capping of higher infrastructure charges applicable to other areas (generally outer fringe or remote greenfield areas).

Therefore, perversely, it is likely that a portion of increased infrastructure charges in some areas will operate as a tax and adversely impact on housing affordability in those areas.

Suggested reforms

It is therefore essential that the infrastructure charges reforms are reviewed to address the adverse public policy impacts on public sector funding and housing affordability. In this regard, a return to the economically efficient and equitable marginal cost pricing methodology previously adopted is strongly recommended.

It is also recommended that the process for making priority infrastructure plans be reviewed to ensure that these documents are prepared and approved in a timely and cost efficient manner.

Conclusions - Back to the future

In summary it is clear that we have forgotten the mistakes of the past and, if not corrected quickly, we are doomed to repeat them.

  • First, there must be a clear linkage between land use planning and development management, infrastructure planning and public sector funding and financing. Land use and infrastructure plans which are based on consistent planning horizons, a common and standard evidence base and committed funding and delivery timeframes by State and local governments is critical.
  • Second, there must be a return to physical planning involving as it does core competencies related to place making, infrastructure and the physical environment. Spatial planning can be used as a tool to enable this shift from traditional land use planning and development management.
  • Third, infrastructure charges to service new development must once again be based on the marginal cost pricing methodology which provides the most economically efficient and equitable mechanism for funding a developer's financial contribution to the public's cost of providing trunk infrastructure to service new development. It is also consistent with over 20 years of established evidence-based public policy.

The mistakes are clear; as are the solutions. The commitment to implement the solutions is the issue. As a profession, urban planners must articulate and champion these matters in the public interest. If not we run the risk as noted earlier that:

We are entering the unchartered waters of global urbanisation on a scale never seen. And we are not in the wheelhouse, let alone steering the ship. We may not even be on board.

(Source: Thomas Campanella, Jane Jacobs and the Death and Life of American Planning, April 2011.)

If this is the case then Churchill was right that "a nation that forgets its past is doomed to repeat it."

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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Ian Wright
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