Australia: Melbourne @ 5 Million – Growth Areas Infrastructure Levy Requirements

Melbourne @ 5 million, reinforces the State Government's commitment to the principles and directions previously set out in Melbourne 2030. It also confirms that the legislation introducing the Growth Areas Infrastructure Contribution (GAIC) levy (first foreshadowed by the government in 2005) is imminent and likely to be published at the same time as the revised configuration of the Urban Growth Boundary in June – September 2009.

While there is an opportunity for owners and developers of land designated within an Investigation Area to make submissions regarding any changes proposed to the Urban Growth Boundary as a consequence of the Melbourne @ 5 million policy initiative, there does not appear to be a similar opportunity for relevant stakeholders to raise any concerns they might have regarding the government's proposed introduction of the GAIC.

What is the Growth Areas Infrastructure Contribution (GAIC) and who will be affected?

The GAIC is proposed following the government's 2005 policy initiative to introduce a State infrastructure contribution first outlined in "A plan for Melbourne's growth areas" (November 2005).

The GAIC liability will differ depending on when the land was brought within the Urban Growth Boundary. According to the latest policy announcements, the GAIC for land that was brought into the Urban Growth Boundary:

• prior to 2005 will be nil;

• between 2005 – 2008 will be $80,000 per hectare (and will be indexed over time);

• in or after 2009 will be $95,000 per hectare (and will be indexed annually from 2010 using a published Construction Cost Index approved by the Treasurer).

There will be no GAIC liability for:

• land brought within the Urban Growth Boundary prior to 2005;

• land within the designated Investigation Areas that is not included within the Urban Growth Boundary;

• land parcels that have an area of less than 0.4 hectares;

• land which can be shown to have been the subject of a pre-existing binding sale arrangement as at 2 December 2008 (the GAIC will, however, be triggered by any subsequent property transaction); and

• land in respect of which a planning permit had issued for urban development prior to 2 December 2008.

How and when will the GAIC be charged?

The GAIC will be charged on a per hectare basis and will fall due whenever either of the following occurs:

• There is a change in the details of the land title (either as a result of the sale or subdivision of the land); or

• A building permit for major works on the land is issued.

It should be noted that even if a land owner applies to the Titles Office for registration of a staged plan of subdivision, upon registration of the first stage, the GAIC will become payable immediately, in respect to the whole of the land not just the land in that stage.

All transactions occurring in the transition period between 2 December 2008 and the gazettal of the relevant legislation will also be subject to the GAIC.

If land is sold or subdivided during the transition period, the GAIC will fall due to be paid:

• on the date the legislation comes into effect; or

• in the case of the Investigation Areas that are brought into the Urban Growth Boundary following the legislation coming into effect, once the land is brought within the Urban Growth Boundary.

If land is sold or subdivided during the transition period it will be the responsibility of the land owner at the time the legislation comes into effect to pay the GAIC.

The GAIC will be payable only once.

What will it fund?

Melbourne @ 5 million indicates that the GAIC will be allocated as follows:

• 50% to partially offset the costs of important infrastructure projects in the growth areas;

• 50% to be paid into a Growth Areas Development Fund as well as going towards the costs of the Growth Areas Authority.

Local governments will continue to be encouraged to work with the Growth Areas Authority and will be able to apply for funds held by the Growth Areas Development Fund.

The GAIC will only contribute to part of the cost of providing infrastructure and services in growth areas. The balance will continue to be met by State and local government budgets.

It has been made clear that the State government intends to reform local infrastructure charges in the growth areas. The development of a new scheme will be the subject of public consultation with various stakeholders (e.g. the development industry and growth area councils) in early 2009.

Nevertheless, existing local infrastructure charge arrangements are to remain in place pending theState government's review.

When will it come into force?

The GAIC will take effect following the enactment of the relevant legislation (currently being drafted) or once land located in a designated Investigation Area is brought within the Urban Growth Boundary.

This overview is based on recent State government policy announcements and information provided by Growth Areas Authority officers. There is a prospect that these matters will be revised or changed later this year when the relevant legislation comes into effect. 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.