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NSW Department of Planning, Industry and Environment
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Productivity Commission

In March 2021 the NSW Government accepted the Productivity Review of Infrastructure Contributions in NSW which included 29 recommendations to reform the infrastructure contributions system. These recommendations were based on extensive stakeholder consultation research and modelling.

 

We then started our own stakeholder engagement to determine how best to implement the recommendations.

 

Pre-exhibition engagement

During the pre-exhibition period from 1 July to 27 October 2021, we have engaged and worked closely with stakeholders on how to best implement the recommendations:

  • 75 formal stakeholder meetings were held
    • 46 involved LGNSW and councils
    • 33 involved peaks and industry
  • 1092 interactions with stakeholders occurred through meetings and roundtables
  • 149 engagements with stakeholders were undertaken across 14 technical working group meetings
  • 28,651 stakeholders updated through Newsletters, Outlooks and Bulletins (tailored communications for different stakeholder groups).

 

This extensive consultation is just the start, to ensure the exhibition package reflects the insights, feedback and expertise of the stakeholders that we engaged with.

 

The exhibition package provides the full detail for review by councils, industry and the community. We are continuing engagement during this period with webinars and question and answer sessions during exhibition in addition to ongoing meetings.

 

All submissions will be considered and used to further refine policy.

 

We will continue to work with stakeholders

The engagement will continue and involve:

  • Continuing the conversations and engagement undertaken with local government, industry and peak bodies through the External Advisory Group, Agency Reference Group and technical working groups.
  • Understanding and responding to issues through pre-exhibition engagement with individual councils on specific issues, information and feedback sessions with council General Managers and infrastructure contributions technical experts to inform the exhibition.
  • Seeking feedback on the pack through detailed webinars and question and answer sessions throughout the exhibition period with stakeholders.

 

To ensure council staff have the best possible opportunity to contribute and participate, within caretaker guidelines, there will be two stages of feedback and advice that can be submitted:

  • A six-week consultation period from the start of the exhibition with technical submissions from council staff due at the end of this period (approximately mid-December 2021)
  • Council endorsed submissions due one week after the first meeting of the new Councils in early 2022 (approximately early March 2022).

 

How we listened

We listened to the following concerns and made changes as a result with endorsement from the Productivity Commission:

 
What we heard What we did What changed
What we heard

Productivity Commission recommends essential works list apply to all s7.11 plans. Currently it applies to s7.11 plans where rates exceed $20,000 per lot or dwelling, or $30,000 in specified urban release areas.

 

This means councils will no longer be able to use contributions to fund infrastructure supporting 'general population' growth (such as community facility buildings). It was expected that councils will be able to borrow to finance the infrastructure and repay debt over time through the increased rate revenue proposed as part of the IPART rate reforms.

 

Councils raised concerns about revenue losses and suggest rate revenue from population growth may be lower than originally outlined by PC.

What we did

Reviewed report from IPART on population growth and rates, and its findings.

Discussions with IPART and councils.

What changed

We will defer start of applying essential works list to all 7.11 plans for 3 years.

What we heard

Current s7.12 allows for a contribution to be levied on any development regardless of whether the development facilitates growth or generates demand for infrastructure. PC recommends contributions should fund infrastructure needed to support growth and changes the methodology to create a direct link to development associated with growth.

 

Productivity Commission recommends the rate for residential development for s7.12 plans be increased to the 3% and non-residential retained at 1% of construction costs to incentivise the take-up of s7.12 plans.

 

Local government raised concerns about the negative financial impact of the single levy rates and charging units on low growth councils reliant on section 7.12 levies.

What we did

Case studies and modelling to understand the impact in different local government areas.

What changed

We will apply ‘differential’ rates based on geographical boundaries (Regional NSW and Greater Sydney divided using the three-cities district boundaries).

What we heard

Councils were concerned that s7.12 rates apply to only additional dwellings or additional gross floor area. Concern that knock down/rebuilds and alternations and additions do put pressure on infrastructure.

What we did

Discussions with councils.

What changed

To allow for "knock down rebuilds" to be levied, the charging units have shifted to apply to development instead of “additional” dwellings and “additional” gross floor area.

s7.12 levies will apply to residential and non-residential alterations and additions with separate rates proposed.

What we heard

Concerns from councils that some residential developments (like boarding houses, co-living, group homes) are not separated titles but should contribute to funding infrastructure.

What we did

Modelling on additional rates for these dwellings.

What changed

s7.12 rates have been expanded to include charging units and rates for land uses that could not be levied a per dwelling rate. The land uses include boarding houses, group homes, student accommodation, hotels, motels, serviced apartments, residential care facilities, hostels, backpacker’s accommodation, caravan parks and manufactured home estates.

What we heard

Some regional councils are concerned that they will no longer be able to levy solar and wind farms. Councils contributions revenue will be reduced and negatively impact on their ability to provide local infrastructure for their communities

What we did

Reviewed rate per megawatt with reference to examples of Planning Agreements and amounts negotiated.

What changed

Create a rate of $2,000 per megawatt of generating capacity for solar and wind farm developments with a cap of $450,000.

What we heard

Concerns from industry and councils that the proposed regional infrastructure contribution will impact development feasibility.

What we did

Economic analysis was undertaken to validate the recommend contribution rates.

What changed

The contribution rates for the regions outside of Greater Sydney have been adjusted to $8,000 per dwelling (houses) and $6,000 per dwelling (for all other residential accommodation). The contributions will be phased in over three years. Payments made in the first year discounted by 50% and in the second year discounted by 25%. From the third year no discount will apply.

Page last updated: 11/11/2021