Planning and Environment Act 1987
Standard Development
Contributions Advisory
Committee
Report 2
‘Setting the Levies’
31 May 2013
Planning and Environment Act 1987
Advisory Committee Report pursuant to section 151 of the Act
Standard Development Contributions Advisory Committee
Kathy Mitchell, Chair
Trevor McCullough, Member
Rodger Eade, Member
Chris De Silva, Member
Bryce Moore, Member
Contents
Page
Executive Summary ........................................................................................................... i
1
Introduction..............................................................................................................1
2
1.1 Background .............................................................................................................. 1
1.2 The Advisory Committee ......................................................................................... 1
1.3 Terms of Reference ................................................................................................. 2
1.4 Submissions and Consultation ................................................................................ 4
1.5 Recommendations................................................................................................... 9
Development Settings ............................................................................................. 11
3
2.1 Overview................................................................................................................ 11
2.2 Submissions and Consultation .............................................................................. 11
2.3 Growth Areas......................................................................................................... 12
2.4 Urban Areas ........................................................................................................... 13
2.5 Strategic Development Areas ................................................................................ 14
2.6 Applying the Development Settings ...................................................................... 16
2.7 Recommendations................................................................................................. 18
Defining the Levies .................................................................................................. 19
4
3.1 Overview................................................................................................................ 19
3.2 Submissions and Consultations ............................................................................. 19
3.3 Development Levy System .................................................................................... 20
3.4 Standard and Supplementary Levies ..................................................................... 21
3.5 Standard and Supplementary Allowable Items ..................................................... 22
3.6 Relationship to other Funding Sources ................................................................. 24
3.7 Implementation Principles .................................................................................... 25
3.8 Recommendations................................................................................................. 28
Allowable Items ...................................................................................................... 30
5
4.1 Overview................................................................................................................ 30
4.2 Submissions and Consultation .............................................................................. 30
4.3 Growth Areas......................................................................................................... 31
4.4 Urban Areas and Strategic Development Areas.................................................... 39
4.5 Recommendations................................................................................................. 43
Levies for Growth Areas .......................................................................................... 44
5.1
5.2
5.3
5.4
5.5
Overview................................................................................................................ 44
Submissions and Consultation .............................................................................. 44
Basis for Standard Levy ......................................................................................... 45
Recommended Standard Levies for Metropolitan Melbourne Growth
Areas ...................................................................................................................... 52
Recommended Standard Levies for Non-Metropolitan Growth Areas ................ 54
Standard Development Contributions Advisory Committee Report 2  31 May 2013
6
5.6 Implementing the Standard Levy in Growth Areas ............................................... 58
5.7 Additional Levies in Growth Areas ........................................................................ 60
5.8 Overall Conclusions ............................................................................................... 63
5.9 Recommendations................................................................................................. 63
Levies for Urban and Strategic Development Areas ................................................. 64
7
6.1 Overview................................................................................................................ 64
6.2 Submissions and Consultation .............................................................................. 64
6.3 Review of Previous DCPs ....................................................................................... 65
6.4 Proposed Levies ..................................................................................................... 67
6.5 Contributions to Councils Capital Works Programs .............................................. 69
6.6 Exemptions to the Standard Levy.......................................................................... 71
6.7 Supplementary Levies in Strategic Development Areas ....................................... 72
6.8 Recommendations................................................................................................. 74
Levies for Non-Residential Land Uses ...................................................................... 75
8
7.1 Overview................................................................................................................ 75
7.2 Submissions and Consultation .............................................................................. 79
7.3 Developing an Approach to Non-Residential Levies ............................................. 80
7.4 Preferred Approach ............................................................................................... 82
7.5 Proposed Levies ..................................................................................................... 84
7.6 Recommendations................................................................................................. 88
Valuing and Securing Public Land, and Open Space .................................................. 89
9
8.1 Overview................................................................................................................ 89
8.2 Submissions and Consultation .............................................................................. 89
8.3 Discussion .............................................................................................................. 90
8.4 A New Approach to Securing Public Land in Growth Areas .................................. 91
8.5 Valuing Public Land ............................................................................................... 92
8.6 Securing and Transferring Public Land .................................................................. 92
8.7 Open Space in Growth Areas ................................................................................ 93
8.8 Recommendations................................................................................................. 97
Apportionment ....................................................................................................... 98
10
9.1 Overview................................................................................................................ 98
9.2 Submissions and Consultation .............................................................................. 98
9.3 Approach to Apportionment ............................................................................... 100
9.4 Recommendations............................................................................................... 102
Works in Kind ....................................................................................................... 103
11
10.1 Overview.............................................................................................................. 103
10.2 Submissions and Consultation ............................................................................ 103
10.3 Discussion ............................................................................................................ 104
10.4 Recommendations............................................................................................... 106
Developer Delivered Infrastructure and GAIC ........................................................ 107
11.1 Overview.............................................................................................................. 107
Standard Development Contributions Advisory Committee Report 2  31 May 2013
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11.2 Submissions and Consultation ............................................................................ 107
11.3 Discussion ............................................................................................................ 108
11.4 Recommendations............................................................................................... 109
Using Permit Conditions for Infrastructure ............................................................ 110
13
12.1 Overview.............................................................................................................. 110
12.2 Submissions and Consultation ............................................................................ 110
12.3 Discussion ............................................................................................................ 110
12.4 Recommendations............................................................................................... 112
Administration and Implementation ..................................................................... 113
14
13.1 Overview.............................................................................................................. 113
13.2 Submissions and Consultation ............................................................................ 115
13.3 Collection of Levies .............................................................................................. 117
13.4 Regulatory Implementation ................................................................................ 117
13.5 Decision Making and Dispute Resolution ............................................................ 125
13.6 Development Levy Plan ....................................................................................... 126
13.7 Indexation ............................................................................................................ 127
13.8 Contingencies ...................................................................................................... 128
13.9 Recommendations............................................................................................... 129
Conclusions and Recommendations ...................................................................... 130
14.1 Response to the Terms of Reference .................................................................. 130
14.2 Consolidated Recommendations ........................................................................ 133
Appendix A
Terms of Reference
Appendix B
Stakeholder Consultation
Appendix C
Written Submissions – Stage 2
Appendix D
Dwelling Approvals and Projections
Appendix E
Implementation Mechanisms
Appendix F
Sample Development Levy Plan
Appendix G
Overview of Implementation Processes
Standard Development Contributions Advisory Committee Report 2  31 May 2013
List of Tables
....Page
Table 1
Comparative Analysis of Typical Development Contributions ................................ 7
Table 2
Proposed Development Settings ........................................................................... 18
Table 3
Framework for the Development Levies ............................................................... 28
Table 4
Growth Areas Community and Recreation Levy – Allowable Items ..................... 32
Table 5
Growth Areas Transport component - Allowable and
Supplementary Items ............................................................................................ 37
Table 6
Growth Areas Drainage Levy - Allowable Items .................................................... 38
Table 7
Urban Areas Standard Levy – Allowable Items ..................................................... 41
Table 8
Strategic Development Areas Supplementary Levy – Allowable
Items ...................................................................................................................... 42
Table 9
Breakdown of DCP rates by infrastructure category for all DCPs
approved (or pending approval) 2008 - 2012 by Region in 2012$ ....................... 47
Table 10
Breakdown of DCP rates by infrastructure category for all DCPs
approved (or pending approval) in 2012 by Region in 2012$............................... 47
Table 11
Overview of amount of land being secured by Region, 2008 - 2012 .................... 48
Table 12
Average land value per NDHa for all DCPs approved (or pending
approval) in 2012$................................................................................................. 48
Table 13
Total DCP rates being collected for all DCPs approved (or pending
approval) 2012 in 2012$ (including Clause 52.01 contributions) ......................... 49
Table 14
Holding Costs for land in Growth Areas ................................................................ 51
Table 15
Components of the Growth Areas Standard Levy................................................. 53
Table 16
Standard Levy for Metropolitan Growth Areas..................................................... 53
Table 17
Ballarat West and Armstrong Creek DCP costs per hectare ................................. 55
Table 18
Possible basis for Larger Non-Metropolitan Growth Areas .................................. 56
Table 19
Summary of DCPs from Regional Cities, per NDHa ............................................... 57
Table 20
Recommended Levies for Residential Development in Growth
Areas ...................................................................................................................... 63
Table 21
Current Metropolitan DCPs ................................................................................... 65
Table 22
Indicative Levy Revenue for Victorian LGAs .......................................................... 70
Table 23
Indicative Levy Revenue as percentage of Capital Expenditure ........................... 71
Standard Development Contributions Advisory Committee Report 2  31 May 2013
Table 24
Recommended Levies for Urban Areas and Strategic Development
Areas ...................................................................................................................... 74
Table 25
Equivalence Table from the DCP Guidelines, 2007 ............................................... 76
Table 26
Non-Residential Levy Amounts by DCP Area and Development
Type ....................................................................................................................... 77
Table 27
Proposed Standard Levies for Non-residential Uses in
Metropolitan Melbourne ...................................................................................... 86
Table 28
Proposed Standard Levies for Non-Residential Uses in NonMetropolitan areas................................................................................................ 87
Table 29
Recommended Levies for Non-Residential Development .................................... 88
Table 30
External Apportionment for the Development Settings ..................................... 102
Table 31
Legislative Reforms.............................................................................................. 119
Table 32
Issues for the new Overlays ................................................................................ 122
Table 33
Issues for a new Ministerial Direction ................................................................. 123
Table 34
Issues for Guidelines and Practice Note .............................................................. 124
Table 35
Response to the Terms of Reference .................................................................. 130
List of Figures
Page
Figure 1
Metropolitan Growth Area residential rates average total cost
included in DCP and Clause 52.01 by Growth Area, 2008 - 2012 in
2012$ ..................................................................................................................... 49
Figure 2
GAA Preferred Approach to Open Space Planning ............................................... 95
Standard Development Contributions Advisory Committee Report 2  31 May 2013
List of Abbreviations
CIL
Community Infrastructure Levy
DCP
Development Contributions Plan
DCPO
Development Contributions Plan Overlay
DLP
Development Levy Plan
DLS
Development Levy Scheme (Note – this term refers to a concept developed in Report 1,
which the Committee is no longer supporting)
DPCD
Department of Planning and Community Development (Note - on 3 June 2013 the
planning functions of DPCD were transferred to the new Department of Transport,
Planning and Local Infrastructure)
DSE
Department of Sustainability and Environment
GAA
Growth Areas Authority
GAIC
Growth Area Infrastructure Contribution
GFA
Gross Floor Area
GLA
Gross Leasable Area
GLAR
Gross Leasable Area for Retail
GLFA
Gross Leasable Floor Area
ISAC
Infrastructure Standing Advisory Committee
LGA
Local Government Area
LPPF
Local Planning Policy Framework
MSS
Municipal Strategic Statement
NDA
Net Developable Area
NDHa
Net Developable Hectare
PAO
Public Acquisition Overlay
PPV
Planning Panels Victoria
PSP
Precinct Structure Plan
PTV
Public Transport Victoria
SAC
Standing Advisory Committee
SPPF
State Planning Policy Framework
The Act
Planning and Environment Act 1987
UGB
Urban Growth Boundary
UGZ
Urban Growth Zone
VIF
Victoria in Future
VPP
Victoria Planning Provisions
Standard Development Contributions Advisory Committee Report 2  31 May 2013
Executive Summary
Complex, time consuming, costly and inequitable, these are some words that describe the
existing development contributions system that operates in Victoria. Contributions vary
markedly in different Growth Areas, there is a lack of consistency in application and there
are lengthy debates and hearings to implement the system. In urban areas outside the
Growth Areas there is currently no simple and effective way to capture contributions for
infrastructure required to service new development and increasing development to facilitate
growth.
In the Growth Areas of Melbourne developers are required to pay upwards of $20,000 per
lot in local and State development charges to assist in the provision of infrastructure. Yet
the vast majority of development in urban areas incurs no development charges.
The Minister for Planning has provided the opportunity to review the current development
contributions framework and to introduce a new system – one that reduces the complexity,
one that is clear and transparent, one that provides for standard levies across a range of
development settings. A new system is sought that can be applied fairly, consistently and
efficiently throughout Victoria – in Growth Areas and urban areas, in both a metropolitan
and non-metropolitan context.
In May 2012, the Minister announced a preferred framework for a new development
contributions system in Victoria. This was set out in A New Victorian Local Development
Contributions System – A Preferred Way Forward, prepared by the Department of Planning
and Community Development (DPCD).
In September 2012, the Minister appointed the Standard Development Contributions
Advisory Committee (the Committee) to review and report on the new system. The purpose
of the Committee is to provide advice, in accordance with the Terms of Reference, to inform
the Minister’s decision on the final framework for a new Victorian development
contributions system and for the establishment of standard levies.
On 17 December 2012, the Committee submitted Report 1, Setting the Framework to the
Minister, and it was released on 26 January 2013 for stakeholder review. Report 1 set out a
proposed approach to assigning standard levies in different Development Settings and
invited comments on the detail of the framework.
Report 2, Setting the Levies reviews the feedback provided in consultations and submissions,
and it proposes refinements to the levy framework and sets standard levies for each
development setting.
The Committee undertook significant consultation, inviting public submissions and meetings
with key stakeholders in both stages of its work. The Committee received 69 written
submissions in response to the framework set out in Report 1 and engaged with over 800
people from over 100 organisations in the preparation of Report 2.
In summary, the Committee is proposing a new Development Levy System, using Standard
Levies that can be applied in all Victorian municipalities, in three Development Settings:
Growth Areas; Urban Areas; and Strategic Development Areas, as set out in Table A.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page i
Table A
Summary of Recommended Levies in each Development Setting
Setting
Standard Levy
Standard Levy
Residential
Non-residential
Residential
Retail
$268,000 per net
developable
hectare
$161,000 per net developable hectare
Residential
Retail
$210,000 per net
developable hectare
$126,000 per net developable hectare
OR
$63,000 per net developable hectare
Additional Levies
Growth Areas
Metropolitan
NonMetropolitan
Commercial and Industrial
$80,000 per net developable hectare
Commercial and Industrial
$120,000 per net
developable hectare
Supplementary Levy
available only in specific
circumstances for
transport or public land
Supplementary Levy
available only in specific
circumstances for
transport or public land
Drainage Levy available
Urban Areas
Metropolitan
Residential
Retail
$3,000 per dwelling
$46 per square metre, Gross Floor
Area
Not available
Commercial and Industrial
$16 per square metre, Gross Floor
Area
NonMetropolitan
Residential
Retail
$1,500 per dwelling
OR
$36 per square metre, Gross Floor
Area
$3,000 per dwelling
Commercial and Industrial
Not available
$13 per square metre, Gross Floor
Area
Strategic Development Growth Areas
Metropolitan
Residential
Retail
$4,500 per dwelling
OR
$46 per square metre, Gross Floor
Area
$6,000 per dwelling
Commercial and Industrial
$16 per square metre, Gross Floor
Area
NonMetropolitan
Residential
Retail
$4,500 per dwelling
OR
$36 per square metre, Gross Floor
Area
$6,000 per dwelling
Commercial and Industrial
$13 per square metre, Gross Floor
Area
Supplementary Levy
available only in specific
circumstances for
drainage, transport or
public land
Supplementary Levy
available only in specific
circumstances for
drainage, transport or
public land
Notes to Table A:
 Growth Area Standard Levy include all public land contributions, including Clause 52.01 contributions
 In Urban Areas, the Residential Standard Levy applies to the net increase in dwellings or lots.
 The Non-Residential levies apply to all new floor space, based on Gross Floor Area, above 100m2
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page ii
The proposed Development Levy System responds to the identified deficiencies of the
current system in a number of ways. Recent Growth Area Development Contributions Plans
have increased significantly in cost over recent years, with some now over $300,000 per net
developable hectare. The proposed system pulls back on the expectation that all
infrastructure will be fully funded and it places clear limits on the scope and standards of
infrastructure that can be included in levies by defining Allowable Items.
The recommended Growth Areas Standard Levy of $268,000 per net developable hectare for
residential development in metropolitan Melbourne represents a more constrained budget
that can be reduced further where land costs are lower, or infrastructure demands are less
than normal benchmarks.
In making any comparisons between existing per hectare rates for Development
Contribution Plans (DCP) and the proposed new Standard Levy for Growth Areas, it must be
borne in mind that the proposed Standard Levy incorporates all public land, including all
contributions for open space previously required via Clause 52.01 of the VPP. This
sometimes adds up to $30,000 per hectare in current DCPs.
The other important factor that should be considered in any comparison is that the new
Development Levy System can be expected to deliver substantial savings in approval time
and consequent holding cost savings, conservatively estimated by the Committee at $15,000
to $30,000 per hectare in Growth Areas.
The recommended Standard Levies in Urban Areas and Strategic Development Areas redress
some of the existing inequities between Growth Areas and infill development by making it
easier for Councils to introduce levies on development in all urban and township areas.
A Standard Levy is proposed as the default in each development setting as set out in Table A.
Standard Levies will be applied per net developable hectare for Growth Areas, or per new
net dwelling increases for Urban Areas and Strategic Development Areas - in the
metropolitan and non-metropolitan context.
A Standard Levy will apply for non-residential uses, applied on a per net developable hectare
basis in Growth Areas and on a per square metre basis for new gross floor areas (above 100
square metres) in Urban Areas and Strategic Development Areas.
For genuine ‘exceptional’ circumstances, the flexibility to use Supplementary Levies is
available in Growth Areas and Strategic Development Areas, but only where specific criteria
can be met. This is a different approach to that proposed in the Committee’s Report 1
where what was then termed as a Development Levy Scheme or the DLS was proposed to be
much more broadly available as an alternative to a Standard Levy.
Lists of Allowable Items are recommended for each infrastructure category and
Development Setting in order to set clearly defined limits on what funds can be expended on
each Standard Levy. The list of Allowable Items has been expanded, at least in part in
response to submissions, and the approach is more flexible than proposed in Report 1.
The new system will continue to operate as a contribution towards infrastructure, and not
full cost recovery, and will continue to ensure the principles of need, nexus, equity and
accountability are front and centre in the new Development Levy System.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page iii
The Committee has recommended a new approach to securing and valuing public land in
Growth Areas, and has proposed a revised approach to works in kind. The Committee makes
comment on the relationship of the proposed levies to the State Growth Areas
Infrastructure Charge.
Each of the Committee’s recommendations, as set out throughout the Report and
summarised in Chapter 14, is aimed at simplifying the Development Levy System and
providing improved certainty for all parties involved. The Committee has provided detailed
advice on the implementation of the levies including advice on legislative changes, planning
controls and practice notes.
The Committee thanks all stakeholders for their input and assistance in developing the new
Development Levy System, and it commends this report to the Minister for Planning.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page iv
1
Introduction
1.1
Background
The Minister for Planning announced in May 2012 that the Victorian Government had
identified a preferred framework for the Development Contributions System in Victoria. The
new framework was set out in A New Victorian Local Development Contributions System – a
Preferred Way Forward (A Preferred Way Forward), prepared by DPCD in July 2012.
The objective of the new system is to provide fairness, certainty and a simplified approach
for Councils, developers and the community through the use of pre‐determined standard
development levies.
In September 2012, the Minister for Planning appointed an Advisory Committee (the
Committee) to review and report on the new system in accordance with prescribed Terms of
Reference. The Committee undertook targeted consultation in October and November
2012.
On 17 December 2012, the Committee submitted its Report 1 Setting the Framework to the
Minister for Planning, the Hon Matthew Guy, who released it on 26 January 2013.
The Committee’s Report 1 set out a proposed approach to assigning standard levies in
different Development Settings and invited comments on the detail of the framework.
The Committee’s Report 2, Setting the Levies (this report) reviews the feedback provided in
submissions, it proposes refinements to the levy framework and it sets a series of standard
levies tailored for each development setting.
1.2
The Advisory Committee
The Advisory Committee comprises:
 Ms Kathryn Mitchell, Chief Panel Member, Planning Panels Victoria - Chair;
 Mr Chris De Silva, Director, Mesh Liveable Urban Communities;
 Professor Rodger Eade, Senior Sessional Panel Member, Planning Panels Victoria;
 Mr Trevor McCullough, Senior Panel Member, Planning Panels Victoria; and
 Mr Bryce Moore, Director, Moremac.
The Committee encompassed the qualifications required in the Terms of Reference and the
biographies of the Committee members were publicly available on the Planning Panels
Victoria website. All members completed conflict of interest declarations, and any potential
conflict matters were properly considered and dealt with.
The Committee is assisted by:
 Ms Jessica Cutting, Senior Project Manager, Planning Panels Victoria, who was
responsible for stakeholder engagement and management, as well as assisting the
Committee in all aspects of its work;
 Mr Andrew Natoli, Lawyer who was engaged by DPCD to assist the Committee,
particularly in relation to legal issues;
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 1 of 135



Ms Mandy Elliot, Consultant, and Sessional Member of Planning Panels Victoria, who
was engaged by the Committee to assist with reviewing and summarising the
submissions received for Stage 1;
Mr Wolfgang Haala, Sessional Panel Member, Planning Panels Victoria, engaged by
the Committee to assist with reviewing and summarising the submissions received
for Stage 2; and
Mr Stuart Morris QC of the Victorian Bar who provided legal advice on aspects of the
operation of the proposed new system.
Additionally, Ms Anne Larkins of Dench McLean Carlson was engaged by DPCD to provide
probity oversight of the Committee processes.
Further, the Committee engaged Urban Enterprise in March 2013 to undertake research on:
 Analysis of recent DCPs (from 2008 – 2012) in metropolitan and non-metropolitan
settings;
 Benchmarks for converting standard levies to non-residential uses; and
 Holding costs of broad acre land per net developable hectare.
Urban Enterprise provided this information to the Committee in the report: DCP
Benchmarking, Development Contributions in Metropolitan Melbourne and Key Regional
Growth Areas, in April 2013
1.3
Terms of Reference
The Minister for Planning issued Terms of Reference (dated 25 September 2012) to provide
the framework for the Committee’s work (Appendix 1). The purpose of the Committee is to
provide advice to inform the Minister for Planning’s decision on the final framework for a
new Victorian local development contributions system and for the establishment of standard
levies. Specifically, the Committee is to provide advice on the implementation of the new
system, including:
 Recommended operational arrangements for the new system.
 Recommended scope of works that should be included in each infrastructure
category.
 Recommended standard development contributions levies for each
infrastructure category and development setting.
The Terms of Reference note that the new system should:
 Ensure guaranteed delivery of land required for infrastructure in the long
term.
 Ensure delivery of works in kind by developers can be provided as an
alternative to a cash payment to achieve efficiencies and deliver
infrastructure earlier.
 Ensure the development contribution requirement clearly articulates the
infrastructure contribution obligation.
Further, the Terms of Reference state that in setting standard development levies, the
Committee should seek to ensure that levies:
 Are simple to implement and administer.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 2 of 135
 Are based on the basic and essential local infrastructure required to support
the development of land and support the foundation of new communities.
 Do not unreasonably affect housing affordability for new home owners.
 Retain a nexus to the development which triggers the levy.
The Committee was required to prepare two reports as part of a two stage process for the
Minister for Planning. Stage 1 was completed in December 2102 and details of Stage 2 Setting the Standard Levies for the New System - are provided below. The Terms of
Reference note this report is to include:
 A schedule of standard levies for each category of infrastructure for each
development setting including levies for residential and non‐residential
development.
 A review of the appropriateness of standard levies for a range of
infrastructure categories.
 A schedule of standard transport infrastructure rates (fixed rate for each
item) for transport infrastructure for each of the defined Development
Settings. If appropriate, different rates for transport items may be required
for each Metropolitan Growth area corridor and for different regions of
Victoria, including:
- Roads – per linear metre, by type.
- Signalised intersections – per item, by type.
- Roundabouts – per item, by type.
- Pedestrian operated signals – per item.
- Culverts – per linear metre, by type.
- Pedestrian paths – per linear metre.
- Cycle paths – per linear metre.
- Shared paths – per linear metre.
- Standard bridges – per square metre by type (e.g. vehicular or
pedestrian/cycle over creek, road or railway).
 A definition of non‐standard transport infrastructure for which a standard
construction cost cannot be determined and which will need to be
individually costed (e.g. larger, more complex structures).
 The level of justification required to access the levies for each development
setting.
Report 2 Setting the Levies is to be completed and provided to the Minister for Planning on
31 May 2013. This report is to be read in conjunction with Report 1 Setting the Framework.
Chapter 1 and 2 of the Committee’s Report 1 provide background and a historical context of
the development contributions system in Victoria, and is not repeated here.
In preparing this report, the Committee has refined its thinking on the proposed
Development Settings (Chapter 2), Defining the Levies (Chapter 3), and the Allowable Items
(Chapter 4). Chapters 5, 6 and 7 then set out in detail the recommended levies for Growth
Areas (Chapter 5), Urban and Strategic Development Areas (Chapter 6) and Non-Residential
Areas (Chapter 7). Chapters 8, 9, 10, 11 and 12 provide the Committee’s final position on
valuing public land, apportionment, works in kind, developer delivered infrastructure and
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
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Growth Area Infrastructure Contribution (GAIC), and the use of permit conditions for
infrastructure. The operation of the proposed Development Levy System is brought
together in Chapter 13 – Administration and Implementation. The overall conclusions in the
form of a summary to the response to the Terms of Reference, and the consolidated
recommendations are provided in Chapter 14.
The Committee has included a series of Appendices (E, F and G) that provide indicative
examples of how implementation of the recommendations might be realised through a
proposed Development Levy Overlay, Practice Note, Development Levy Plan, and an
overview of implementation processes. These have been prepared to provide guidance
only, and are by no means definitive. More work will need to be undertaken to finalise
these in due course.
1.4
Submissions and Consultation
As with Report 1, the Committee sought to engage with as many sectors as possible in
finalising its work, including Councils, State agencies and authorities, developers, and
industry stakeholders. The methods used to promote engagement included a call for
submissions on Report 1 (through direct mail to those engaged in the Stage 1 consultation, a
direct request through the findings made in Report 1 {paragraphs 59 and 60 of Chapter17}
plus information through the website). Any individual, Council or stakeholder organisation
that requested a meeting with the Committee was provided with the opportunity to do so.
In addition to reviewing the 69 submissions received in response to Report 1, the Committee
convened a number of briefings, industry forums and presentations, and reviewed interstate
experience with development contributions. The industry forums were exceptionally well
attended and the format provided very positive engagement between the Committee and
stakeholders. The full list of stakeholders involved in the Stage 2 process is provided in
Appendix B. The emphasis on key issues varied depending upon the stakeholder(s), a
summary of which is outlined further.
(i)
Government and Council briefings
The Committee held briefings with State Government authorities and agencies (GAA, DPCD,
VicRoads, Local Government Victoria, VCAT, Places Victoria, Metropolitan Planning Strategy
Advisory Committee and Planning Panels Victoria) to discuss its findings on Stage 1, and key
issues and the way forward for Stage 2.
The Committee held two workshops with the Growth Areas Authority (GAA) to discuss the
detailed application of Standard Levies to Growth Areas and review current approaches to
Precinct Structure Plans (PSP) and DCPs.
The Committee met twice with VicRoads to discuss implementation issues, particularly in
relation to the Draft Arterial Road Protocol in Growth Areas and the development of
appropriate standards for roads.
The Committee had four meetings with Places Victoria and DPCD to discuss possible
approaches to development levies in the Fishermans Bend redevelopment area.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 4 of 135
The Committee convened roundtables with Growth Area and other metropolitan Councils as
two separate forums. These included the Growth Area Councils (Cardinia, Casey, Greater
Geelong, Hume, Melton, Mitchell, Whittlesea and Wyndham) and the metropolitan Councils
(Darebin, Frankston, Glen Eira, Manningham and Yarra).It also met with Casey City Council
Officers, and City of Melton Developers Group in separate forums.
The key issues raised at these various forums included:
 Growth Area Council concern about unfunded liabilities and gaps in funding if a
Standard Levy is introduced that is ‘too low’;
 Public land acquisition and the conflicts between the Planning and Environment Act
1987 and the Land Acquisition and Compensation Act 1986;
 Whether the DLS proposed in Report 1 will be used as the default by the Growth
Area Councils, especially for non-standard items;
 How roads will be dealt with and whether VicRoads will assist in the development of
protocols and standards;
 Need to keep the non-residential levy as simple and as easy to manage as possible;
 Libraries need to be added to list of Allowable Items;
 The need for open space contributions from Clause 52.01 of the VPP and Section 18
of the Subdivision Act 1988 to be better defined and clarified;
 Urban levies supported, whether it be a $value range or a single figure, so long as
nexus is demonstrated;
 Need for clear guidelines to provide assistance for Councils in delivering on the
proposals and how to determine the charge area(s); and
 Criteria needed to identify Strategic Development Areas – large and small.
(ii)
Regional and metropolitan briefings
The Committee actively sought to engage regional Victorian Councils in considering the
review and submission process, and in this regard it used the resources of DPCD to convene
regional forums. Additionally, it held a briefing with DPCD staff at Spring Street. There were
approximately 240 attendees at six forums, which included the following regions:
 Barwon South West (Geelong);
 Grampians (Ballarat);
 Metropolitan Melbourne;
 Gippsland (Traralgon);
 Loddon Mallee (Bendigo); and
 Hume (Shepparton).
The Committee notes that almost without exception, all municipal Councils and some State
agencies were represented at the regional forums, where the key issues raised included:
 Overwhelming support for an Urban Levy;
 Better clarification on how the Strategic Development Areas can be defined;
 Land should be included as an Allowable Item;
 Funding for State infrastructure in areas of growth which do not have access to GAIC;
 How to deal with open space with regard to the requirements of Clause 52.01 of the
VPP and the Subdivision Act 1988 provisions;
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






Whether the Urban Levy should be fixed or have a range from which Councils could
choose a dollar value;
Whether the introduction of an Urban Levy might act as a disincentive for investment
in some areas;
How to best deal with drainage in the regional context;
The desirability for the Committee to propose a simple way to introduce the Urban
Levy into Planning Schemes that does not include a full Planning Scheme Amendment
process;
Release of the Committee’s Report 2 for public comment before it is finalised;
Acceptance of the nexus principle for setting and collecting levies, and the need for
Councils to be accountable for any levy collected; and
Transitional arrangements from the current system to the new.
The Committee asked representatives at these meetings their opinion of what the dollar
figure the Urban Area Standard Levy might be, and the responses varied from $2,000 to
$15,000. Most responses suggested a figure in the order of approximately $5,000. It was
suggested that anything higher than $8,000 might be problematic.
(iii)
Industry forums
Members of the Committee met with representatives of the following organisations as part
of an industry roundtable, and/or attended as guest speakers at specially convened industry
forums at:
 Housing Industry Association of Victoria;
 Municipal Association of Victoria;
 Planning Institute of Australia;
 Property Council of Australia;
 Urban Development Institute of Australia; and
 Victorian Planning and Environmental Law Association.
In total, there were approximately 420 attendees at these combined sessions. The key
issues to emerge from these meetings and forums included:
 Support for the review of the development contributions system;
 Support for the introduction of urban and non-residential levies, so long as the levies
were ‘manageable’;
 Concern that the introduction of the Development Levy System (‘DLS’ as proposed in
Report 1) might be a DCP in another form;
 Defining what is an ‘exceptional circumstance’ where a DLS would be required, and
who can make that call;
 Incentives for the use of the proposed Standard Levy over a DLS;
 Support for a fast tracked introduction of the new system that reduces cost, timing
issues and scope creep;
 The need to have clarification around the changing requirements of VicRoads;
 Clarification around the GAIC and when funds should be made available; better
definition of State infrastructure; and more opportunities to get additional funding;
 How works in kind might be included in the new system;
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(iv)
Setting parameters for accountability and review on a regular basis (it was suggested
every 2 to 3 years);
The land component is a key issue for keeping costs manageable, work needs to be
undertaken to better manage this;
Impact of increasing land and development contributions costs on housing
affordability;
Streamlining the open space levy and use of Clause 52.01 with the proposed new
system;
Whether there should be a difference in the metropolitan and non-metropolitan
levies for all settings;
Minimise any opportunity for double dipping, especially in the context of open space;
Need for better mediation and dispute mechanisms; going to VCAT is not the answer
(due to the time it takes);
Whether passive and active open space requirements should be merged;
The extent of legislative changes required could be onerous to implement the new
system; and
Clear guidelines will be necessary for the introduction of the new system, with a fast
track process for Councils to implement.
Interstate briefings
Members of the Committee met with a number of key stakeholders in Queensland and New
South Wales in March 2013 to discuss the development contributions systems currently
operating in those States (see Appendix B5 for list of stakeholders). These meetings enabled
the Committee to gain an appreciation of what works well, what is under review, and what
lessons could be learned from each State. This proved to be a very valuable and important
level of consultation. In this regard, the Committee provides the following comparative
summary of the key development contributions operating in those States and its comparison
with Victoria:
Table 1
Comparative Analysis of Typical Development Contributions
State
Infill Areas (Urban Areas)
Greenfields/Growth Areas
(incl. state infrastructure
levies)
Non-Residential
Victoria
$0 (in most areas)
Typically $10,000 to
$20,000 per lot (including
GAIC)
Lower rates in some
Growth Areas and site
specific agreements
(section 173)
$30,000 to $40,000 and up,
per lot
High per square metre
rates for different uses
$200 to $3,600 in a small
number of Councils plus
open space contributions
Queensland
$20,000 per lot up to 2
bedrooms
$28,000 per lot 3 bedrooms
plus
New South Wales
0.5% of development cost
above $100,000 and 1% of
development cost above
$200,000 OR
Triggered by change of use
DCs ‘capped’ at $30,000
per lot
But more typically between
$50,000 and $60,000 per
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
0.5% of development cost
above $100,000 and 1% of
development cost above
$200,000
Page 7 of 135
DCPs capped at $20,000
per lot
(with state charges
sometimes on top of this)
(v)
lot including average
$10,000 state
infrastructure levy
Where specified in a DCP –
typically $50 per sq m
Non-residential briefings
The Committee is required to make recommendations on the introduction of a levy for nonresidential land uses. It convened two briefings about this aspect of its Terms of Reference,
with representatives of MacroPlan Dimasi, BMDA, Charter Keck Cramer, Urbis, MAB, GPT
and Colonial First State Global Asset Management at these briefings. Particular issues raised
included:
 Principles of equity and a level playing field for all uses if a levy is introduced (i.e. it
should not just be applied to the higher order centres);
 Nexus, transparency and accountability;
 How the levy might be able to promote white collar employment on greenfield
location and its effect on land prices;
 The basis upon which a levy might be struck – flat rate across the spectrum – net
addition in leasable floor area or the capital cost of development;
 Definition of catchment or charge areas – whole of municipality?
 Need to define site works as a consequence of a proposal, and ensure there is no
opportunity for ‘double dipping/counting’ in application of the levy;
 Trigger for introduction – planning permit, building permit, change of use (but not
refurbishment or fit out);
 Road testing and rigour in application of the mechanism; and
 Need to ensure the levy does not act as a disincentive for development and growth.
(vi)
Written submissions
The Committee received a total of 69 written submissions in response to Report 1, and the
list of parties who made written submissions is provided in Appendix C. The key issues
raised in these submissions are generally referred to in the remaining Chapters of this report
as appropriate.
Overall, the submitters were very supportive of the review of the development contributions
system and the general thrust of the Committee’s findings in Report 1. The Moreland
Council submission said:
Moreland Council officers would like to congratulate the members of the
Advisory Committee on their efforts in progressing a simplified development
contributions framework that will allow all Councils and the wider community to
benefit from contributions towards required infrastructure.
Moorabool Council noted that:
Moorabool, together with the other Peri Urban Group of Councils, have long
advocated for the introduction of an off-the-shelf development contributions
scheme. The Committee is to be congratulated on the headway it has been able
to make in articulating a practical and implementable approach for such a
scheme.
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Yarra Ranges Shire Council had a similar view and said:
Yarra Ranges commends the approach and accessibility of the Committee to
Local Government in developing its report which is comprehensive and
demonstrates that the Committee has considered the range of views expressed
during the first round of consultation.
There were no submissions that did not provide a level of support for the review. Many non
Growth Area Councils noted that implementation of the proposed new system would
provide an opportunity to fund infrastructure that is needed and overdue, and that the new
system allows entry into a new level of funding opportunity.
The Committee has been well supported by key stakeholders and practitioners throughout
its review of the development contributions system. There has been overwhelming support
for a new system and the Committee is aware that the planning and development industry
eagerly awaits this final report. Many submitters have requested that this report be
released for further public review prior to adoption of the various levies by Government.
The Committee is particular grateful for the level of support that it has received by all
stakeholders and for the high level of support and commitment to this review shown by
those with an interest in it. It has demonstrated to the Committee a strong willingness for
change and innovation, and the Committee is strengthened by the support it has received
from local and State Government, and the industry in general.
The Committee held a confidential briefing with a range of stakeholders prior to the release
of Report No 1 in 2012. This briefing was beneficial for the Committee as it assisted to
confirm its primary findings in terms of its initial thinking with regard to Development
Settings, development levies, applying the levies and implementation steps.
The Committee considered whether to undertake a similar briefing towards the end of its
Stage 2 process, but determined that providing its key findings in relation to the
recommended levies in advance of consideration by Government was not appropriate.
The Committee believes however, that its work to date will benefit from further input from
key stakeholders prior to the finalisation of the review by the State Government. It also sees
some merit in retaining the SDCAC to work with DPCD in the statutory implementation of
final recommendations.
(vii)
Acknowledgements
The Committee wishes to take the opportunity to thank all stakeholders and submitters for
the very high standard of submissions and presentations made to the Committee
throughout both Stages of its work.
The Committee also wishes to thank the organisations and individuals in NSW and
Queensland who assisted in the Committee’s benchmarking and collection of information.
1.5
Recommendations
The Committee makes the following recommendations:
 That the Standard Development Contributions Advisory Committee be retained to
provide advice to the Minister for Planning and DPCD on all aspects of the
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
proposed Development Levy System and its statutory implementation through the
Victoria Planning Provisions.
That the Minister for Planning convene an Implementation Reference Group
comprising representatives of the GAA, Councils and peak industry bodies to assist
the DPCD and the Standard Development Contributions Advisory Committee in the
statutory implementation of the Government’s final approved framework.
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2
Development Settings
2.1
Overview
In A Preferred Way Forward the Government proposed five Development Settings as follows:
 Growth Areas;
 Regional Settlements;
 Rural Settlements;
 Established Areas; and
 Strategic Redevelopment Sites.
In Report 1, the Committee proposed that these be simplified to three Development Settings
as follows:
 Growth Areas;
 Strategic Development Areas (large and small); and
 Urban Areas.
The Committee proposed that provision be made for small scale and large scale Strategic
Development Areas but did not propose criteria to distinguish between these.
In the consultations that have been undertaken subsequent to the release of Report 1 and
the submissions that have been received, considerable comment has been made on the
proposed Development Settings.
From this and the Committee’s further deliberations, the following key issues have been
identified:
 The appropriateness of the Development Settings proposed and whether in the quest
for a simpler system the proposed settings oversimplify what is an essentially
complex set of circumstances in which development levies will be applicable;
 Whether large scale and small scale Strategic Development Areas are appropriate
and if so, the appropriate criteria to distinguish between them;
 Whether there is a need to distinguish metropolitan settings from those in rural and
regional areas;
 Whether activity centres can be appropriately accommodated within the proposed
Development Settings; and
 The way in which the areas covered by the proposed Development Settings should be
defined.
2.2
Submissions and Consultation
Many of the submissions commented on the proposed Development Settings. There has
been overwhelming support for the proposed three Development Settings, including from
Manningham, Boroondara, Glen Eira, Frankston, and Hobsons Bay Councils. A number of
others submitters gave in-principle support but have made further comments relating to the
definition of one or more of the settings or their applicability in particular situations.
Support for the three proposed settings was not however unanimous, and Urban Land
Developments submitted that in trying to define a simple system there should not be an
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over simplification. They argued that, in Ballarat in particular, there needs to be recognition
that regional cities have different characteristics and property markets that are significantly
different from Melbourne or Geelong.
Others such as the GAA pointed out that the way in which the levies are defined may result
in there being little difference between a growth area and a large scale Strategic
Development Area. A significant number of submitters commented on the need to clearly
define the settings and a number of examples were given where it is not clear what
Development Setting might be appropriate. These included Colac Otway Shire who
questioned whether a rezoning outside an existing township boundary could be an urban
area; Boroondara Council who questioned whether a site could be included in two
Development Settings simultaneously i.e. a municipality wide levy as part of a defined Urban
Area and then a particular site within that being defined as a Strategic Development Area.
Ballarat and Surf Coast Councils submitted that there should be specific quantifiable criteria
which would indicate the appropriate Development Setting for a particular defined area. A
number of submissions pointed out that there were very wide variations in what the Urban
Area setting would need to accommodate. This issue is dealt with in Chapter 6.
A number of submitters supported the concept of allowing for both large scale and small
scale Strategic Development Areas but many Councils including Latrobe, Manningham, Surf
Coast, Glen Eira, Frankston, Golden Plains, as well as Public Transport Victoria and the GAA
commented on the need to clearly distinguish between small scale and large scale Strategic
Development Areas. Ballarat Council submitted that there needs to be clarity about what a
Strategic Development Area is. Manningham Council acknowledged the Committee’s
concern about the confusing range of terminology used in describing strategic development
through MSS’s. A number of submitters supported the proposed extension of the
application of Growth Areas beyond those currently using this term. These included Latrobe
and Ballarat Councils. Latrobe Council also raised the issue of whether new residential areas
which are not designated Growth Areas would be Urban Areas or small scale Strategic
Development Areas.
Latrobe Council sought clarification of what is defined as a regional city, noting that Report 1
refers to the 10 cities of the regional cities network whereas the SPPF refers to four Major
Regional Cities, and 15 Regional Cities and Centres. East Gippsland Council submitted that
the terminology used in defining the Development Settings was too vague, particularly with
respect to rural municipalities.
It would be fair to say however, that most submissions commented on the proposed
Strategic Development Areas and the uncertainty about how ‘large’ and ‘small’ could be
defined. This is explored further in Chapter 2.5.
2.3
Growth Areas
Upon review, the definition of Growth Areas in Report 1 seems to have been generally
accepted.
Mitchell Council noted that the Committee defined Growth Areas as land in (or planned to
be in) the Urban Growth Zone (UGZ). It submitted that any confusion surrounding this
definition would be removed for Melbourne by referring to land within the Urban Growth
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Page 12 of 135
Boundary (UGB). The Committee considers that this may add clarity in the designated
Melbourne ‘growth’ municipalities, but add uncertainty in those municipalities which abut
the UGB but are not designated Growth Areas, and which don’t have large parcels of land
suitable to be zoned UGZ. It could create confusion in regional areas where a UGB is not
always used to define the boundaries of a city.
The Committee considered broader definitions for Growth Areas than those defined by the
UGZ in order to pick up smaller growth fronts that are not yet designated UGZ. The
Committee concluded however, that this could create considerable overlap with the
Strategic Development Areas setting, and the UGZ definition is therefore simpler and less
ambiguous.
As discussed later in this Report, the levies and implementation processes for Growth Areas
are quite specific and are aimed at large scale green field development typical of that found
in the UGZ.
2.4
Urban Areas
An issue often raised in submissions and consultation was the need for the Urban Area
setting to accommodate a wide range of different development scenarios in existing urban
areas throughout the State, including dual occupancy development, small apartment
developments at relatively high density, development of previously undeveloped land
scattered throughout country townships, and brownfield re-development of previously nonresidential land. The Committee acknowledges that the infrastructure requirements of each
of these development scenarios could be quite different, ranging from areas serviced by
adequate existing infrastructure to areas where a wide range of new infrastructure may be
required to service new development. It is the differing infrastructure needs which are the
important factor here, not the different development scenarios as such. The Committee is
firmly of the view that this challenge is best met by the Standard Levies proposed.
A further issue raised by Moyne and Wodonga Councils was whether newly identified Urban
Areas outside the existing urban area of rural towns or low density residential development
(Rural Living Zone or Low Density Residential Zone) can be included in the Urban Areas
setting and levied.
The Committee believes that the Urban Areas setting could apply in any residential,
industrial or commercial zoned areas, including ‘fringe’ zones such as Low Density
Residential and Rural Living Zones, provided that there is a demonstrable need for
infrastructure to support growth in these areas (see Chapter 6).
The Committee considers that, in each case, this should be reviewed at the discretion of the
Council. The revised definition below provides for the Urban Area setting to apply in all
residential, industrial and commercial zones, except the UGZ. The Committee believes
however, that the boundaries of the areas designated as Urban Areas or Strategic
Development Areas need not coincide with zone boundaries and should reflect planning
units in which growth is anticipated, and there will be common infrastructure needs.
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2.5
Strategic Development Areas
In Report 1, the Committee proposed that areas where significant development or
redevelopment is anticipated could be designated as Strategic Development Areas. It
proposed that provision be made for large scale and small scale Strategic Development
Areas, but did not specify how the two would be distinguished. From submissions and
consultation and from its further deliberations, the Committee has identified the following
issues to be addressed:
 The threshold between large and small scale Strategic Development Areas;
 The definition of what should constitute a Strategic Development Area and therefore
the threshold between an Urban Area and a Strategic Development Area;
 Using the DLS1 in Strategic Development Areas instead of section 173 agreements;
and
 The type and level of justification required for a Standard Levy and the incentives to
use it.
Many submitters commented on the need for the Committee to clearly distinguish between
what will constitute a small scale as opposed to a large scale Strategic Development Area,
but relatively few provided suggestions as to how this should be approached. Those
commenting on this aspect included Latrobe, Glen Eira, Golden Plains, Frankston and
Hobsons Bay Councils, and Public Transport Victoria.
There was broad support from those consulted and in submissions for the application of
either a Standard Levy or a DLS to Strategic Development Areas, although relatively few
commented on the application of a DLS only to large Strategic Development Areas. Those
who did comment on this included the GAA, Moorabool, Hume and Bayside Councils, and
PEET Limited. PEET submitted that distinguishing between small and large Strategic
Development Areas could be based on:
 Where a site is a key strategic site and integrates a number of land owners;
 Where land is in larger holdings; and
 Where development is proposed to be at a greater density than the norm.
The GAA submitted that the distinction between large and small Strategic Development
Areas should be based on:
 The size of the area;
 The anticipated population; and
 The extent of existing infrastructure.
Hobsons Bay Council submitted that the number of dwellings proposed to be developed
could be used as the basis for distinguishing between large and small Strategic Development
Areas. It suggested that a social impact assessment be required where a DLS is proposed.
There was little disagreement with the Committee’s proposal that there will need to be a
higher level of justification for a DLS, compared with a Standard Levy. Hobsons Bay Council,
1
This relates to the DLS as discussed in Report 1, which the Committee is now not pursuing.
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in particular, submitted that the requirements for the justification of the different levies
should be specified in the Planning Scheme.
There were a number of requests for clarification by the Committee for what could be
included in a Strategic Development Area, in particular whether Activity Centres of various
classifications could be Strategic Development Areas.
Boroondara Council submitted that restricting Strategic Development Areas to sites that are
identified in either the MSS or the SPPF was restrictive. Manningham Council acknowledged
that the array of confusing terminology used in Planning Schemes with respect to strategic
development, as identified by the Committee, was an issue. Manningham Council submitted
that the use of Section 173 agreements could provide the flexibility required where ‘non
typical’ infrastructure needs arise. Surf Coast Council submitted that that if infrastructure
provision ratios are used in Strategic Development Areas, they need to be varied from those
applied in metropolitan Melbourne to make them applicable in rural settings.
A number of submitters accepted that a Standard Levy should be applied as a default. These
included Latrobe and Port Phillip Councils and PEET. Glen Eira Council submitted that the
take up of the DLS option may be limited because of the onerous requirements for the
preparation of a DLS. Ballarat Council accepted that where a DLS is applied, a higher level of
justification should be required. Glen Eira Council submitted that the strategic justification
required for the imposition of a DLS in a Strategic Development Area is unclear in Report 1.
Hume Council submitted that a DLS must be a ‘real’ option capable of being used where
required. Moorabool Council submitted that the concept of a Standard Levy is strongly
supported, but that if the Standard Levy is set too low, this will result in more pressure to
develop and apply a DLS. The Master Builders Association did not support a DLS in
‘exceptional circumstances’ as proposed by the Committee in Report 1, but submitted that if
it is able to be available, that strict criteria be met before it can be accessed.
There was some questioning by submitters and stakeholders regarding where the decision to
develop and apply a DLS should be made. Hume Council questioned whether this should be
DPCD. Hobsons Bay Council submitted that a single fixed Standard Levy in Strategic
Development Areas may not accommodate the differing development situations likely to be
occurring in such areas.
The Committee has given considerable thought to possible approaches to defining the large
and small Strategic Development Areas, and it now proposes an alternative approach. The
Committee proposes that a Standard Levy should be applied to all Strategic Development
Areas regardless of their size. Whilst the quantum of the levy would be higher than for
Urban Areas, the level of justification for such a levy would also be higher. The revenue
collected from this levy should be able to be spent on any item which is included in the list of
Allowable Items. This is consistent with the approach which is proposed for all Development
Settings.
The Committee further proposes that where it can be justified, a Supplementary Levy (see
Chapter 3) can be applied for larger development opportunities with local infrastructure
needs which are demonstrably higher than what could be funded from the Standard Levy.
By default, these become what the Committee had previously referred to as large scale
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Strategic Development Areas, hence the terminology ‘small or large scale’ becomes
redundant.
The rationale for Supplementary Levy in Strategic Development Areas is discussed in Chapter
6 and the items of infrastructure that may be funded through a Supplementary Levy are
addressed in Chapter 4, Allowable Items.
The Committee therefore concludes that:
 The Strategic Development Area setting is an appropriate alternative to allow for
higher levies to be applied for areas of more intense development;
 The distinction between small scale and large scale Strategic Development Areas is
not necessary; and
 A Supplementary Levy should be available in the Strategic Development Areas, where
it can be justified.
2.6
Applying the Development Settings
The Committee concludes that the three proposed Development Settings will apply equally
to metropolitan and non-metropolitan areas (although there is some variation in the
quantum of levies to apply – see Chapters 5 and 6).
The Growth Area setting will apply to UGZ zoned land. Ultimately, land in the UGZ may be
subsequently rezoned to other zones, and at that time the Urban Areas (or in some cases
Strategic Development Area) Development Setting may be applied. This may enable the
collection of further development levies, but only where further new dwellings are created
by subsequent subdivision or the construction of additional non-residential floor space
triggers the collection of the levy. This is not expected to occur until the PSP has run its
course.
Some submitters commented on the need for guidance in determining which of the
Development Settings are appropriate in a particular circumstance, and some have
suggested that clear guidance be given using quantifiable indicators. Whilst the Committee
recognises the need to ensure that there is a reasonable level of consistency in the way the
Development Settings are applied, it is reluctant to be overly prescriptive. As has been
highlighted in submissions and consultations, there is wide variation in the size, nature,
complexity, and context of various types of development and existing development
throughout the State.
Ultimately, the Committee is of the view that these decisions are best made by Local
Government on a strategic basis, moderated through the decision making process proposed
in Chapters 5 and 6. The designation of Development Settings should be done at a broad
strategic basis and Planning Authorities should not have discretion to vary or waive levies on
a site by site basis. The Committee believes that site by site discretion is open to possible
corruption and should be prevented.
The planning scheme should make it clear which levy applies to any particular land and
multiple levies cannot be applied to any land. The levies proposed in Chapters 5 to 7 are all
struck on the basis of them providing appropriate infrastructure for a site in a single
proposed Development Setting. Allowing more than one setting to apply would effectively
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be double dipping. As indicated in Chapters 5 and 6 where a Supplementary Levy is
permitted, more than one Supplementary Levy may be applied.
The Committee considers that most Councils will adopt the Urban Areas Development
Setting in the first instance, except where designated areas of major growth or
redevelopment are clearly identified. For land where the strategic case can be made, and
the need for additional infrastructure demonstrated, the Strategic Development Area setting
could apply. For land in the UGZ the Growth Area setting may be applied. Further
discussion about where to apply each setting and the appropriate levy to apply, is contained
in Chapters 3, 5, 6 and 7.
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2.7
Recommendations
The Committee makes the following recommendations:
 That three Development Settings are adopted as follows, and as set out in Table 2:
 Growth Areas;
 Urban Areas; and
 Strategic Development Areas.
Table 2
Proposed Development Settings
Development
Setting
Definition
Growth Areas
Land which is in, or planned to be included in, or is appropriate to be included in the
Urban Growth Zone, in both metropolitan and non-metropolitan areas.
In Melbourne’s Growth Areas this will be land where planning is coordinated by the
GAA. In regional cities and other non-metropolitan areas the Council is generally the
planning authority
Urban Areas
Areas of existing or planned infill urban development in a city, town or settlement. It
includes all urban land, metropolitan and non-metropolitan, other than those
designated as Growth Areas or Strategic Development Areas.
May be applied to land in all residential, industrial and commercial zones, except the
UGZ.
The Urban Areas setting is the ‘default’ setting and applies to areas where the impact of
expected development on infrastructure requires gradual increase in capacity of existing
infrastructure to cater for growth.
Can be applied with minimal strategic justification.
Strategic
Development
Areas
For some urban land outside Growth Areas, the Strategic Development Areas
Development Setting may be applied. This includes all urban land, metropolitan and
non-metropolitan, other than those designated as Growth Areas, and may be applied to
land in all residential, industrial and commercial zones except the UGZ.
This Development Setting may be applied to key sites or broader areas within a
municipality where significant development or redevelopment is proposed to occur and
will generally be sites or areas where more significant intensification is planned and
social and physical infrastructure needs are high.
It is applicable where the scale of development necessitates new infrastructure in its
own right or more extensive upgrades to infrastructure than would normally be
expected of infill development.
It may include green field or brown field development, substantial urban renewal
projects, activity centres or identified growth fronts not large enough to be zoned UGZ.
Strategic justification for applying the Strategic Development setting would be drawn
from the MSS or supporting structure plan, framework plan, settlement plan or similar,
and would need to clearly demonstrate why the area has a higher infrastructure
requirement.
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3
Defining the Levies
3.1
Overview
Having confirmed the Development Settings, the next step for the Committee is to define
the levies to apply in each setting. Based on submissions and consultations, the
Committee’s Report 1, and its further deliberations in this Chapter, the Committee proposes
the structure of what it refers to as the new Development Levy System. This includes:
 Standard Development Levies and how and where they may be varied,
 How the proposed Development Levy System relates to other sources of
infrastructure funding; and
 Key issues in applying and implementing the levies.
3.2
Submissions and Consultations
Submissions generally supported the levy structure proposed by the Committee in Report 1,
although there was a general call for a more detailed definition of each of the levies and how
they will be applied.
Specifically submissions commented on a number of matters including the level of
justification which is likely to be required in order to apply a Standard Levy. Boroondara
Council submitted that the justification should not be onerous or too costly, and Brimbank
Council acknowledged that the Standard Levy needs to be supported by a structure plan or
the equivalent strategic planning. Warrnambool Council suggested that existing long term
capital plans required by each Council could be used to justify the levy, and East Gippsland
Council submitted that the ‘triggers’ for the Standard Levy should not be set too high and so
exclude smaller rural Councils from being able to access them.
There were a number of submissions that commented on how the Standard Levy could be
applied in Urban Areas. Manningham Council submitted that a range was needed to
accommodate different situations, and Frankston Council suggested that it would need the
ability to have the levy at different levels in different areas of the municipality because of
differing needs. Charter Keck Cramer pointed out that the same levy applied in areas of low
land value was likely to have a distorting impact on the development market by encouraging
development to move to areas of high land value. It argued that these are areas where
existing infrastructure is likely to be better provided and therefore more attractive to end
purchasers. Latrobe Council argued for a single set levy so that there was certainty and
transparency in application at the local level. Other submitters and stakeholders suggested
that a single levy would avoid political issues at the local level.
There were a number of submissions which raised issues about the process for approval of
the Standard Levy for Urban Areas. Warrnambool Council sought clarification on whether
the levy would be set by Council, and sought advice on whether developers or other parties
would be able to argue for the levy to be lowered in particular circumstances. Other
submitters such as Golden Plains and Ballarat Councils sought information on
implementation, and Latrobe Council suggested that the Standard Levy be implemented by
way of an overlay and a schedule.
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3.3
Development Levy System
In response to submissions to Report 1, and upon further deliberation, the Committee
favours a consistent approach to the conditions under which levies will apply to the various
Development Settings.
The Development Levy System will be implemented through a Development Levy Plan,
which in turn will include details of the development levies, land to which the levies will
apply, implementation, reporting and accountability requirements. Development Levy Plans
may be prepared for each of the Development Settings. In this regard, a Development Levy
Plan could be prepared for both the Urban Areas and Strategic Development Area as one
document, with the Development Levy Plan for Growth Area prepared as a separate
document, due to the complexity of detail in such a plan. The Committee prefers that the
Development Levy System be implemented through a new Development Levy Overlay,
although it recognises that other mechanisms could also be used.
In specific circumstances where it can be justified, a Supplementary Levy for drainage, public
land or transport will be available in the Growth Areas or Strategic Development Area
Development Settings. In advocating this, the Committee accepts that there may be
exceptional circumstances where this may be necessary, but sees it as the ‘exception’ rather
than the ‘norm’.
The development levies recommended by the Committee will have the following features:









A Standard Levy is proposed in each Development Setting;
The Standard Levy once applied, cannot be increased and may be reduced only in the
Growth Area setting;
Application of the Standard Levy, which will vary between Development Settings, will
require minimum justification;
In non-metropolitan areas, two Standard Levy options will be available in the Urban
Area and Strategic Development Area settings;
In very limited circumstances, a Supplementary Levy may be applied in Growth Areas
and Strategic Development Areas, but not in Urban Areas;
One or more Supplementary Levies may be applied where they are permissible, and
can be justified;
The Standard Levy will be capable of delivering an acceptable standard and quantum
of infrastructure;
Some levies vary between metropolitan and not metropolitan areas; and
Levies are applied to residential, and retail, commercial and industrial land uses.
What the Committee is now proposing varies from the DLS that was canvassed in Report 1.
That DLS was offered as an alternative to a Standard Levy whereas Supplementary Levies are
now proposed as an ‘add-on’ to the Standard Levy. This has the significant advantage of not
requiring the full re-work and costing of all infrastructure requirements, but rather just for
the supplementary items.
The Committee is strongly of the view that the Standard Levy should be the default levy and
that introduction of one or more Supplementary Levies should not be a ‘choice’ of the
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planning authority, but rather should require a form of approval that requires justification of
the reasons for its inclusion. This is addressed in detail in Chapters 5.7 and 6.7.
The following sections of this Chapter describe the proposed levies and how each is to be
applied. Table 3 in Chapter 3.8 summarises the proposed framework for Development
Levies.
3.4
Standard and Supplementary Levies
Standard Levies are proposed to apply as the default levy for a planning unit or charge area
in each Development Setting. The Committee has recommended a Standard Levy for each
setting which cannot be varied, except in Growth Areas, where under some defined
circumstances, it may be reduced. Supplementary Levies may be available in particular
circumstances.
(i)
Growth Areas
The Standard Levy will apply to all land in the planning unit – usually as a designated Precinct
Structure Plan Area. The Standard Levy will be applied for the Community and Recreation,
Transport and the Public Land components in Growth Areas.
Supplementary levies can be applied for the following items:
 Items of transport infrastructure contained in the supplementary Allowable Items; or
 Public land where certain pre-conditions are met (see Chapter 5.7); or
 In circumstances where there is diverse land ownership, the Planning Authority may
utilise a Supplementary Levy to implement items of fully developer funded
infrastructure. In this situation the Supplementary Levy may be seen as a convenient
mechanism to manage contributions to shared items of fully developer funded
infrastructure.
The Drainage Levy may also be applied in addition to the Standard Levy where the Council is
the responsible drainage authority (non-metropolitan areas).
More than one Supplementary Levy may be applied across a planning unit or a number of
planning units, and the cost of supplementary items should be apportioned across relevant
planning units as appropriate, and where consistent with the approach to apportionment
recommended in Chapter 9.
A Supplementary Levy is not available for Community and Recreation infrastructure items.
This is consistent with the view expressed in the Committee’s first report that Community
and Recreation component should be a capped.
Land for Community and Recreation items is, however, included in the public land
calculation undertaken in the Precinct Structure Plan (PSP) process, and as such land for
larger, higher order community or recreation facilities may be included in the public land
component if the need is justified at the PSP stage. The additional land for a district facility,
in such circumstances, may need to be apportioned over a number of planning units and
funded through a Supplementary Levy if the specific conditions as proposed in Chapter 5 are
met. The Committee is recommending that land for open space must be included in the
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Growth Area Standard Levy and additional land cannot be obtained through Clause 52.01 of
the Victoria Planning Provisions or Section 18(8) of the Subdivision Act 1988.
(ii)
Urban Areas
As noted in Chapter 2, a major challenge in setting a Standard Levy for Urban Areas is
accommodating the wide range of development scenarios to which Councils may wish to
apply it.
The Standard Levy is the default levy for all residential, industrial or commercial land in
Urban Areas throughout the State except for land in, or proposed to be included in the UGZ.
Councils must define the land to which to apply an overlay (or similar) introducing the
Standard Levy in an Urban Area.
In non-metropolitan areas, provision is made for applying the levy at one of two differing
rates. Not applying the levies may be justified where no growth is projected or in areas
where a Council may wish to encourage a particular form of development consistent with its
MSS, economic development strategy, Activity Centre strategy, settlement plan or other
local policy.
A Supplementary Levy is not available in the Urban Area Development Setting.
(iii)
Strategic Development Areas
Strategic Development Areas may be identified and the relevant Standard Levy applied
where it can be demonstrated that development of the land will have a higher impact on
infrastructure needs that would normally be expected in an Urban Area setting. The
relevant land would be identified in the Development Levy Plan and will require a higher
level of strategic justification than for the Urban Area levy.
Supplementary Levies may be applied in a Strategic Development Area and the conditions
under which they may be applied are set out in Chapter 6.7.
As for Growth Areas, any Supplementary Levies may be apportioned to the relevant planning
unit in proportion to the benefits accrued. More than one Supplementary Levy may be
applied to a planning unit if it can be justified. Supplementary Levies are not available for
Community and Recreation infrastructure.
(iv)
Non- Residential Land Uses
Levies for non-residential uses in the following categories are proposed:
 Retail
 Commercial and Industrial
Uses defined as being in these categories together with the Committee’s approach to setting
these levies and the details on the levies proposed are set out in Chapter 7.
3.5
Standard and Supplementary Allowable Items
The lists of Allowable Items included in the Committee’s first report has been reviewed and
updated in the light of comments received from submitters. The Committee’s approach to
Allowable Items is discussed in more detail in Chapter 4.
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(i)
Community and Recreation
The Community and Recreation components of the Growth Area Standard Levy are regarded
as a maximum or capped amount, with Supplementary Levies not available. The reason for
this is that while there is proposed to be some flexibility within other infrastructure
categories, there were a number of submitters from Stage 1 who commented on the ‘scope
creep’ that had occurred in the recent past. In addition, increasing standards for
infrastructure provision, which some submitters thought exceeded that which is needed for
a new community which is establishing itself, was also a key issue. The Committee is well
aware of the amount of time spent on submissions on interpretation of ‘basic and essential’
in recent PSP Panel Hearings. The Committee acknowledges that ‘needs’ in this area are
difficult to define and manage, and it believes that the most appropriate approach is to let
Councils define their own priorities, and work to a capped budget in this infrastructure
category.
The Committee confirms its position in Report 1 that the existing Community Infrastructure
Levy (CIL) be discontinued. The Committee has taken the view that, given that no
Supplementary Levies area available, the Allowable Items for Community and Recreation
should be broad, allowing maximum flexibility for Councils to apply the funds collected to
best meet local needs without being overly prescriptive.
Public open space contributions (land or cash in lieu) have been excluded from the Allowable
Items in Urban Areas and Strategic Development Areas to avoid doubling up with the
provisions of Clause 52.01 of the Victoria Planning Provisions or Section 18 of the Subdivision
Act 1988.
(ii)
Transport, Drainage and Public Land
For the transport and public land infrastructure components, a Supplementary Levy is
available in metropolitan Growth Areas and Strategic Development Areas, together with
public realm works in Strategic Development Areas. A variable Drainage Levy is available in
non-metropolitan Growth Areas and is not considered as a Supplementary Levy. Allowable
Items are now shown as either Standard or Supplementary to distinguish which can be
funded from Standard and Supplementary Levies.
In response to submissions from a number of Councils, land has now been included as an
Allowable Item in the Urban Areas Standard Levy where need for the land can be clearly
demonstrated. It is recognised that land for new facilities may be needed in some Urban
Areas to both consolidate existing facilities and to add capacity. It is recognised that the
Standard Levy should be able to be applied to the component of such works that is
attributable to growth.
(iii)
Non-Metropolitan Areas
The Committee has been persuaded that the cost of construction of most infrastructure
items in non-metropolitan areas varies slightly compared to metropolitan areas. More
importantly, the scope of development for Community and Recreation items varies
significantly. Land costs also vary more significantly. Standard Levies for all three
Development Settings are proposed to be more flexible in non-metropolitan areas to
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accommodate these cost variations and the relatively wider set of growth scenarios. These
details are set out in Chapters 5 and 6.
3.6
Relationship to other Funding Sources
The Committee notes that there is some confusion in a number of the submissions about the
relationship of development levies to other existing mechanisms for funding infrastructure.
The Committee makes the following comments in an effort to clarify.
(i)
On-site infrastructure
Developers in all Development Settings will continue to bear responsibility for providing and
funding on-site infrastructure. This includes such items as local drainage, local connector
streets, footpaths and landscaping.
(ii)
Off-site direct impact infrastructure
Developers will be required to comply with the conditions of any permit requiring the
provision of off-site infrastructure where this is required by the responsible authority or
referral authority to mitigate the direct impacts of the proposed development. However,
consistent with A Preferred Way Forward and the Committee’s Report 1, Section 173
agreements must not be used to supplement the proposed levies. These arrangements
remain unchanged and will continue to operate alongside the Development Levy System.
These ‘direct impact’ conditions or agreements are the primary means by which State
agencies obtain contributions to State infrastructure such as roads or tram routes impacted
by development. Examples include requirements to construct roadworks or traffic signals to
VicRoads requirements, or requirements to construct a new or upgraded tram stop.
Every effort will need to be made to ensure that there is no duplication between permit
conditions and development levies. This is discussed further in Chapter 12.
(iii)
Council rates, charges and grants
The Committee recognises that Council rates and charges and grants from other sources
continue to make up a large proportion of funding for community infrastructure.
(iv)
State funded infrastructure
State funded infrastructure is not proposed to be included in any of the Standard or
Supplementary Levies.
In Growth Areas, the GAIC applies and the legislation (Planning and Environment Act 1987
Clause 46IA) currently prevents the inclusion of land in a DCP where the development
agency is not the municipal Council. The Committee considers that this should continue to
avoid any potential double dipping.
For consistency and simplicity, State owned infrastructure is not included in the Urban Area
or Strategic Development Area levies. The Committee believes that to do so would create
complexities in the collection and distribution of funds that would not justify the benefits.
In the future the State has the policy options of introducing a state infrastructure levy for
non-Growth Areas or perhaps adding a Supplementary Levy for Strategic Development Areas
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for State infrastructure. The Committee sees any recommendation on this as outside the
scope of its current Terms of Reference.
3.7
Implementation Principles
Statutory implementation is dealt with in Chapter 13, but some of the key principles guiding
implementation are dealt with here.
(i)
Applying the levy – justification and documentation
Growth Areas
The planning authority will be required to produce a Development Levy Plan listing works to
be funded by the Standard Levy. The expenditure budget for each infrastructure category
will be required to be set out. The amount and percentage of net per developable hectare
(NDHa) of land proposed for public purposes as well as the ‘cash’ in lieu rates must also be
set out.
The planning authority (or Council where the Council is not the planning authority) may
apply to prepare a Supplementary Levy for infrastructure items that meet the description of
a supplementary allowable item proposed in Chapter 4. In order to apply for a
Supplementary Levy, the planning authority or Council must demonstrate that the
supplementary item cannot be funded from within the Standard Levy. The process to apply
Standard Levies and to approve Supplementary Levies is addressed further in Chapters 5, 6
and 13 and is shown diagrammatically in Appendix G.
Supplementary Levies will only be approved where it can be demonstrated that there is a
clear nexus between the infrastructure item and the proposed development.
Work on preparing a Supplementary Levy should be done as part of the PSP planning
process. The levels of justification required are addressed in Chapters 5 and 6.
Urban Areas
All Councils will be required to determine through a Development Levy Plan, the areas to
which Urban Area development levies will apply. This should include the justification of the
levies and an explanation of the nexus between the planning unit and the infrastructure
items to be funded from levies.
The level justification in the Development Levy Plan for the Standard Levy in an Urban Area
is intended to be clear and to an appropriate level of detail to demonstrate broad nexus. By
‘broad nexus’ the Committee intends that it is not necessary to show that new households
are each likely to be users of each item of the proposed infrastructure. Rather, it will be
necessary to demonstrate that the population growth and/or growth in retail, commercial,
industrial and tourism activities is likely to justify the type and quantum of infrastructure
proposed. The Committee considers that the level of documentation provided for Section
94A development levies in the Central Sydney Development Contributions Plan 2013 (the
Sydney Plan) is generally appropriate, as it provides high level strategic justification and a list
of proposed projects against which collected funds can be spent.
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The Development Levy Plan should include a statement of the expected level of growth in a
planning unit, whether it be the entire municipality or a defined area. The justification for
this may be documented by population projections, plans for industrial or retail growth,
plans to grow tourism or other similar policy positions of Council. Such support will
generally be able to be drawn from existing Council strategies, policies or other documents.
The Committee expects that Councils will be able to undertake this work in-house and will
not have to expend funds to prepare such a plan. Some Councils requested that there be an
‘allowable item’ for preparation of Development Levy Plans or similar. The Committee
considers that preparation of the plan will not be onerous, and therefore does not
recommend that preparation of the Plan should be an Allowable Item.
The Development Levy Plan should include a list of infrastructure items or types (likely to be
drawn from Council’s five or ten year capital works program) which provide a contribution to
increasing the capacity of infrastructure to cater for planned growth. The list should include
estimates of cost and the proportion of the total cost of the project attributable to
increasing capacity (as opposed to asset replacement). The infrastructure listed in the
Development Levy Plan will then form the basis against which Council should report the
collection and expenditure of revenue raised through the levies. It is expected that the
infrastructure list would be reviewed and updated on a regular basis as priorities and needs
change. This would be done as part of the Council annual budget process and should also be
reported as part of the Council Annual Report.
To assist Councils understand how this might work, Appendix E shows a draft Development
Levy Overlay that illustrates how the levies may be implemented into the Planning Scheme.
A sample template for a Development Levy Plan is attached as Appendix F. The aim is to
make the process simple and to draw from work already done by Councils as part of their
normal planning and budgeting processes.
It is proposed that the initial application of the Standard Levies for Urban Areas in a
Development Levy Plan be fast tracked and where appropriate be implemented by the
Minister exercising his powers under Section 20(4) of the Planning and Environment Act
1987, or a Council Amendment under Section 20(2).
Strategic Development Areas
The justification and documentation for the Strategic Development Areas Standard Levy is
proposed to be similar to that for Urban Areas Standard Levy. However, more detailed
justification is required to define the area to be covered and the reasons why the
infrastructure requirements for the area are greater. Justification should include a
demonstration of the higher intensity of development and why this creates a greater impact
on infrastructure than would be expected in an Urban Area setting.
The justification and identification of Strategic Development Areas should be included in the
Development Levy Plan as indicated in the template at Appendix F.
As for Growth Areas, the Supplementary Levy in Strategic Development Areas will only be
available for items not included in the Standard Levy and which are not capable of being
funded from within the Standard Levy. Supplementary Levies will require a higher level of
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justification and detailed documentation. Allowable Items for a Strategic Development Area
Supplementary Levy are discussed in more detail in Chapter 4.4.
(ii)
Works in kind
Works in kind are encouraged in Growth Areas and Strategic Development Areas in order to
facilitate more efficient infrastructure delivery. The Committee supports the use of works in
kind credits where appropriate, and this is discussed in more detail in Chapter 10.
Works in kind are not proposed to be permitted in Urban Areas where the provision of
infrastructure will be more reliant on other sources of funding over a broader area, with
individual developments only making a smaller proportionate contribution to a particular
item.
(iii)
Using Levy revenue flexibly
Growth Areas
In order to better align revenue streams from levies with the timing of expenditure
requirements, it is proposed that Councils be able to transfer money collected between
infrastructure categories, provided that the amount collected and spent is recorded and
reported. Over the life of a Development Levy Plan, Councils are required to be accountable
for spending revenue raised by the levy, generally in accordance with the Development Levy
Plan and PSP.
Urban Areas
In order to keep the levy system as simple and flexible as possible, Councils are encouraged
to apply the Urban Area Standard Levy over a broad area. This will maximise the flexibility of
Councils to collect and spend funds on projects anywhere in the planning unit (which can be
the whole municipality, especially in inner and middle ring metropolitan municipalities)
without the need for complex administration.
In Urban Areas it is recognised that there may be some considerable separation between
where and when funds are collected, and where and when they are spent. Councils are to
be accountable for funds spent against a prioritised list of infrastructure over the life of the
Development Levy Plan.
Strategic Development Areas
As with Urban Areas, in Strategic Development Areas expenditure of funds should be
generally in accordance with the prioritised infrastructure list in the Development Levy Plan.
Reporting and accountability requirements will be the same as for Urban Areas
Supplementary Levies
Supplementary Levies, where applied, are required to be spent only on the infrastructure
items they were collected for, and will be required to be accounted for separately.
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3.8
Recommendations
The Committee makes the following recommendations:
 That the framework for the Development Levies be adopted as set out in Table 3.
Table 3
Framework for the Development Levies
Levy
Application
Allowable Items
Applies to all land in designated as Growth
Areas in the relevant Planning Scheme.
Allowable Items on which the Standard
Levy may be spent are discussed in
Chapter 4 and are in the categories of:
Growth Areas
Growth Areas
Standard Levy
Includes capped Community and
Recreation, standard Transport and
standard Public Land components.
Growth Areas
Supplementary
Levy
A Supplementary Levy may be applied in
Growth Areas but is limited to additional
items of public land or transport
infrastructure not included in the
Standard Levy where it can be
demonstrated that there is need and a
clear nexus to the development AND the
supplementary item cannot be
accommodated within the Standard Levy.



Community and Recreation
‘Standard’ Transport items
‘Standard’ Public Land
Allowable Items to which a
Supplementary Levy may apply are
discussed in Chapter 4 and are in the
categories of:


It is not available for Community and
Recreation infrastructure which is as a
‘fixed’ or ‘capped’ Levy.

There may be more than one
Supplementary Levy applying to a
planning unit, each covering
infrastructure, the costs are apportioned
over more than one PSP area.

Transport infrastructure not in
the Standard Levy and which
meet the exceptional
circumstances criterion
Variations to Public Land
requirements which meet the
criteria proposed in Chapter 5
Items which might normally be
developer provided
infrastructure but which are most
efficiently collected through a
levy.
Drainage in Non-Metro Areas
Urban Areas
Urban Areas
Standard Levy
Standard Levy is applied to all areas
designated as Urban Areas in the relevant
Planning Scheme.
Applies in infill areas with incremental
impact on infrastructure.
Allowable Items on which the Standard
Levy may be spent are discussed in
Chapter 4 and are in the categories of:





Community and recreation
Transport
Drainage
Public realm
Land, with the exception of land
for open space.
The Standard Levy may not be spent on
State infrastructure.
Excludes open space contributions that
are provided from Clause 52.01 of the VPP
or s18 of the Subdivision Act 1988.
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Levy
Application
Allowable Items
Strategic Development Areas
Strategic
Development
Areas
Standard Levy
A Standard Levy for a Strategic
Development Area may be applied where
the area is designated as such in the
relevant Planning Scheme. These are
areas where the scale of development has
a higher impact on infrastructure needs.
Allowable Items on which the Standard
Levy may be spent are discussed in
Chapter 4 and are the same as proposed
for Urban Areas above.
New facilities are more likely to be
warranted in their own right.
Excludes open space contributions that
are provided from Clause 52.01 of the VPP
or s18 of the Subdivision Act 1988.
Strategic
Development Area
Supplementary
Levy
A Supplementary Levy may be applied in a
Strategic Development Area but is limited
Allowable Items where it can be
demonstrated that there is need and a
clear nexus to the development.
May be available where there are
‘extraordinary’ items of Council
infrastructure that are able to be funded
through the Standard Levy.
May be more than one Supplementary
Levy applying to a planning unit,
apportioned to different infrastructure
items.
Allowable Items to which a
Supplementary Levy may apply are
discussed in Chapter 4 and are in the
categories of:




Transport infrastructure not in
the Standard Levy and which
meet the exceptional
circumstances criterion
Items which might normally be
developer provided
infrastructure but which are most
efficiently collected through a
levy.
Drainage
Public realm infrastructure not in
the Standard Levy
Note to Table 3:
State owned infrastructure is not included in any of the levies.
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4
Allowable Items
4.1
Overview
The Committee introduced the concept of Allowable Items in Report 1. The concept of
Allowable Items is intended to define infrastructure items to support the development of a
new community. The Committee prefers this more specific description of the scope of items
of infrastructure that are allowable under each levy rather than rely on the broader
interpretation of what was previously identified as ‘basic and essential’. Allowable Items will
also be used to identify the infrastructure projects that can be applied in the Urban and
Strategic Development Areas.
4.2
Submissions and Consultation
The Committee proposed draft lists of Allowable Items for each levy scenario in Report 1,
and sought feedback on these lists. Submissions received in response were generally
supportive of the concept of specifying Allowable Items, and commented that this would
assist in preventing scope creep. The most common themes that emerged from Council
submissions on Allowable Items included that there is a general need to broaden the
definitions, especially for community and recreation. Suggested additions to the list of
Allowable Items included:
 Land in Urban Areas;
 Libraries;
 Synthetic surfaces;
 Indoor recreation;
 Lighting, fencing and pathways;
 New and replacement facilities; and
 Public realm works.
Submissions from the Bus Association of Victoria, Public Transport Victoria and VicRoads all
proposed that land for public transport facilities should be included as an Allowable Item.
The Committee has taken the view that where required, land for public transport facilities
will be provided either as a planning permit condition (where a development has a direct
impact on services) or via a Public Acquisition Overlay. Similarly, a submission was received
from the CFA proposing that emergency service land and infrastructure be included in the
Allowable Items. As noted in Chapter 3, the Committee believes that the current legislation
effectively prevents funds being included in a Development Levy for State infrastructure in
Growth Areas, and the Committee believes that this principle should be applied consistently
across all Development Settings at this point in time.
More specific responses to Allowable Items lists for individual levies are discussed where
relevant further in this Chapter.
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4.3
Growth Areas
(i)
Community and Recreation Component of the Standard Levy
The vast majority of submitters and stakeholders supported the concept of having a fixed or
capped Community and Recreation levy in metropolitan Growth Areas. Some Councils
queried why this levy should be fixed when others were variable, and argued that the cost
and scope of Community and Recreation items varied considerably from place to place. As
discussed later in this Report, the evidence is that whilst the nature of projects and the
scope of works does vary, the cost of community and recreation facilities in recent DCPs has
had a level of consistency and is tending to ‘converge’ to a more standard level.
The majority of submissions from Growth Area Councils argued that the Allowable Items for
Community and Recreation should be broadened to allow Councils to apply funding to
facilities on a local needs basis. There was widespread support for the inclusion of libraries,
and several Councils called for the addition of synthetic surfaces to the list.
Greater Geelong Council questioned why there needed to be any restriction on how levy
funds are spent given that it was a fixed levy, as Council would, in any case be required to
make up any shortfall in funds to provide basic facilities. The Committee supports the
general thrust of this comment, although it believes that there needs to be guidance to
ensure that there is consistency in approach and some assurance that a basic level of service
will be provided.
Developers and property industry representatives were mainly concerned about putting
limits on the quantum of funds collected for Community and Recreation items, and clearly
justifying the land set aside for community facilities, as well as for active and passive
recreation. There was strong support from developers for a fixed or capped levy and leaving
it up to Councils to determine how they spend any revenue raised from the levy.
The Committee agrees that Community and Recreation Allowable Items in the Growth Areas
Standard Levy should be very broad in scope. As the levy for Community and Recreation
infrastructure is capped, with no opportunity to add a Supplementary Levy, the Committee
believes that it is not necessary to be too restrictive in defining the items that the revenue
raised by the levy can be spent on. The Committee believes that the relevant Council should
be given scope to tailor the provision of community facilities and recreation facilities to meet
the needs of each particular community. In noting this, the Committee does not support the
proposition that there should necessarily be a ‘standard’ of development for the type of
facility to be provided. The Committee recognises that there needs to be a high degree of
scope to provide facilities that respect local characteristics and emerging needs.
The Committee does consider, however, that there needs to be a level of consistency and
rigour in Council plans to deliver infrastructure to the community. The Committee proposes
that a Development Levy Plan should be prepared with each PSP and that the GAA should (in
conjunction with Growth Area Councils) develop guidelines for the design and
implementation of community and recreation facilities. The PSP should enable the creation
of a prioritised list of works and a land budget for all proposed community and recreation
facilities, including planned passive and active open space.
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It is proposed that the Development Levy Plan be approved as part of the PSP process (albeit
as part of a Section 20(4) process if the Standard levy is adopted), and that Councils be held
accountable to report against progress on the Development Levy Plan as part of the annual
reporting process. The proposed revised Allowable Items for the Growth Areas Community
and Recreation components of the Standard Levy are shown in Table 4.
Table 4
Facility
Growth Areas Community and Recreation Levy – Allowable Items
Allowable Items1
Land included in
Standard Public
Land levy?
Construction
funded from
Standard
Levy?
Yes
Yes
COMMUNITY FACILITIES
Community
facilities
Community facilities typically incorporating some
of the following:
Multi-purpose community rooms
Kindergarten/pre-school/3 year old group
Childcare, including occasional childcare
Maternal and child health
Adult Education
Community arts and cultural facilities
Neighbourhood House
Adult day care/planned activity group
Business accelerator
Community learning centre/Library
Youth Services
Performing arts
Delivered meals facility
Kitchen/s
Ancillary space including storage, toilets,
amenities, circulation space, waiting rooms, foyer,
office space etc
Outdoor space, playground, car parking,
landscaping
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Facility
Allowable Items1
Land included in
Standard Public
Land levy?
Construction
funded from
Standard
Levy?
Local and district sports facilities including, but not
limited to, Football ovals, Soccer pitches, Cricket
ovals, Rugby fields, Tennis courts, Basketball
courts, Netball courts, Bowls lawns, Bocce lawns,
Baseball diamonds, Softball diamonds, Hockey
fields, and other local sports2 facilities which may
include:
Yes
Yes
Yes
Yes
Yes
Yes3
OPEN SPACE
Local and district
sports facility







Earthworks, levelling and preparation of
playing surfaces
Turf, drainage and irrigation
Synthetic playing surfaces
Goal posts, score boards, fencing, lights,
practice facilities
Coaches and interchange shelter/seating
Buildings for indoor sports
Pavilion, clubhouse, change rooms (player
and umpire), toilets, seating, first aid,
kiosk
Higher Order
Parks and Open
Space Reserves4
(including
drainage
reserves)
Improvements to parks and open space reserves
including, but not limited to:
Regional sports
facility
Higher order facilities such as Aquatic Centres,
Velodromes, Ice Skating Rinks







playgrounds
car parking and internal roads
bicycle facilities and pedestrian paths
seating
landscaping
BBQ and picnic facilities
lighting
Notes to Table 4:
1.
2.
3.
4.
Councils can direct funds collected via the capped Community and Recreation infrastructure levy to
construction for the items listed in the tables as indicated. Land for these facilities should be included in
the public land category. Public land is to be set aside in accordance with the PSP.
Other sports may be appropriate, depending on local needs and the demographics of the area.
An apportioned contribution to the construction of these higher order facilities may be allowable in some
circumstances but only if it can be demonstrated that the proposed regional sports facility is clearly
justified in the PSP and other lower order items are able to be accommodated from within the levy.
This does not include Local and Neighbourhood Parks that would be treated as developer funded works.
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(ii)
Transport Component of the Standard Levy
As discussed in Chapter 3, it is proposed to have a component of the Standard Levy for
Transport infrastructure in Growth Areas, but to allow under specific circumstances, access
to a Supplementary Levy for ‘exceptional’ items of infrastructure not normally contained in a
Standard Levy. This approach requires defining what is to be contained in the Standard Levy
and what is allowable in a Supplementary Levy.
Standard Levy
The Committee concluded in Report 1 that it is impractical to develop a schedule of standard
transport infrastructure rates for transport infrastructure as required in paragraph 23 of the
Committee’s Terms of Reference. The level of variation in local conditions means that the
use of set standard per metre or per item rates for road works is not helpful. (See the
discussion in Chapter 7.6 of Report 1.)
The Committee prefers to set an overall ‘budget’ for the Transport component of the
Standard Levy and for the definition of what is to be funded from the Standard Levy to be
defined in terms of:
 The type of works;
 The scope of works; and
 The standards to apply.
The type of works included in the Transport component of the Standard Levy can generally
be described as road and intersections works on Council arterial roads. This is described in
general terms in Table 5 which sets out the Allowable Items for the Transport infrastructure,
and makes the distinction between Council roads and declared VicRoads roads.
The scope and standards of works are a little harder to define, and these issues have caused
much debate in previous growth area PSP and DCP Panel Hearings. The Committee’s Report
1 identified issues with the current system in the interpretation of the VicRoads Draft
Arterial Road Protocol, particularly the issue of defining ‘interim works’. VicRoads, in its
submission and in follow up discussion with the Committee, acknowledged the current lack
of clarity. It proposed that in order to improve the level of certainty, the principles of the
Draft Arterial Road Protocol be directly incorporated into growth area design guidelines, and
that these guidelines, if necessary, be incorporated into the Planning Scheme. The
Committee generally supports this approach. The form of the principles, and in particular
the definition of ‘interim works’ does, in the opinion of the Committee, need some further
work.
Design Guidelines for Roads in Growth Areas
The Committee believes that the Standard Levy should be applied to the ‘typical’
configuration of roads that would normally be required in a Growth Area and that the scope
of the work should be sufficient to cater for a ten year period. The Committee agrees that
the concept of ‘interim works’ as it appears in the current Draft Arterial Road Protocol is a
useful one but the definition needs further review. As highlighted in the Committee’s first
report, the definition that seems to have evolved of ‘works required to cater for 80% build of
a development’ is problematic and, in some cases, unfair. The Committee believes that a
better working definition of ‘interim road works’ would be:
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
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Works to a level required to provide safely for traffic generated by the
development for ten years after commencement of development.
The Committee further believes that there would be value in the definition of interim works
being further discussed and agreed between VicRoads, GAA, Councils and developers.
The GAA publication PSP Notes – Our Roads: Connecting People sets out guidelines and
principles for developing road networks in Growth Areas. The PSP Note, amongst other
things, sets out typical spacing of arterial roads, typical cross sections and provides guidance
on the design principles and elements that should be provided. The Committee considers
that a modified form of this document, incorporating a clear definition of ‘interim works’
should form the basis for defining what can be funded from the Transport component of the
Growth Area Standard Levy.
The Committee recommends the creation of Growth Areas Road Design Guidelines (Design
Guidelines) to bring together:
 A clear definition of the responsibilities of the Planning Authority, VicRoads and
developers in planning for roads in Growth Areas (from the Draft Arterial Road
Protocol);
 A definition of ‘interim works’ (based on the Draft Arterial Road Protocol but
modified as discussed above);
 The guidelines currently set out in the GAA PSP Note, (including access requirements,
kerbs, street lighting, nature strips, footpaths, bicycle facilities, parking);
 Typical road cross sections (from the GAA PSP Note);
 Typical intersection designs (currently being developed by VicRoads); and
 Design standards (perhaps based on the Infrastructure Design Manual recently
developed by a number of Councils and incorporating any VicRoads requirements.
The Committee has not attempted to prepare these Design Guidelines as part of its work,
but rather recommends that the Design Guidelines be produced by the GAA in close
consultation with VicRoads, Growth Area Councils and developers.
Land for State infrastructure
The Committee identified in Report 1 the uncertainty about whether land for future
VicRoads arterial roads or for public transport corridors can be funded from a Development
Levy. Since the introduction of the GAIC in July 2010, Section 46IA of the Act specifies that
growth area DCPs cannot include a development agency that is not a municipal council. As
stated in Report 1, the Committee believes that it is clear that land required for an arterial
road that is the responsibility of VicRoads at the time of preparing a PSP should be identified
in a Public Acquisition Overlay (PAO) and funded separately. The Committee believes that
this also applies to other State infrastructure such as public transport corridors.
It was noted in submissions that it is current practice in some DCPs that land for State
infrastructure has been included. The Committee believes that this is not good practice and
leads to further confusion about the status of land and how it will ultimately be transferred.
VicRoads and PEET submitted that in these situations it would be useful for the transfer of
the land to be recognised as a credit against the GAIC. This is further discussed in Chapter
11, but in summary the Committee believes this proposal may have some advantages.
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Supplementary Levies
As discussed in Report 1, the Committee acknowledges the variable nature of road works in
different Growth Areas. In order to cater for genuine ‘exceptional’ circumstances, the use of
Supplementary Levies is proposed.
The purpose of Supplementary Levies is not to allow for differences in soil conditions or
climatic conditions. The Committee is not convinced that there is sufficient evidence that
there is any significant difference in costs of construction from one growth corridor to
another. Whilst one area may encounter rocks, another encounters sandy ‘soft spots’.
Overall, the Committee’s review of actual costs reveals a high level of consistency in per
metre road construction costs between Growth Areas.
Nor is it the purpose of Supplementary Levies to provide for differences in construction
standards applied by Councils. The Committee considers that if a Council wishes to impose a
higher construction standard than that set out in the proposed Design Guidelines, it should
accommodate any additional costs from within the Standard Levy or from Council funds.
Supplementary Levies should only be applied where the development creates (either in its
own right or contributes in part) the need for higher order additional infrastructure or the
scope of the infrastructure is clearly over and above that capable of being funded from a
Standard Levy. Examples may include:
 A bridge across a river would create an infrastructure project not normally
encountered in a typical scenario. In this example a bridge may create benefits over
a wider area and the cost may need to be apportioned accordingly; or
 If the spacing of secondary arterial roads was required (for topographical or other
reasons) to be substantially less than the typical 1.6 kilometre grid, or if an additional
primary arterial was required.
Chapter 5 sets out the proposed process for determining whether a Supplementary Levy is
warranted or not in a Growth Area.
Table 5 sets out Transport infrastructure Allowable Items for Standard and Supplementary
Levies in Growth Areas.
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Table 5
Growth Areas Transport component - Allowable and Supplementary Items
Category
Allowable Items
Land in Public
Land levy?
Construction in
Standard Levy?
Interim as per Design Guidelines, including
upgrade to existing to restore to predevelopment operating conditions
Yes
Yes
Ultimate as per Design Guidelines
Yes
Yes
Interim as per Design Guidelines, including
upgrade to existing to restore to predevelopment operating conditions
Yes
Yes
Ultimate as per Design Guidelines
No *1
No
Interim as per Design Guidelines, including
upgrade to existing to restore to predevelopment operating conditions
Yes
Yes
Ultimate as per Design Guidelines
Yes
Yes
Interim as per Design Guidelines, including
upgrade to existing to restore to predevelopment operating conditions
Yes
Yes
Ultimate as per Design Guidelines
No1
No
TRANSPORT - Standard Levy
Arterial road Council
Arterial road –
VicRoads
Intersections with
Council arterial
roads
Intersections with
VicRoads arterial
roads
TRANSPORT - Supplementary Levy
Roads
Council primary or secondary arterial road
infrastructure demonstrably over and above the
‘Standard’ expectations of scope and spacing set
out in the Design Guidelines
Apportioned in
Supplementary
Levy
Apportioned in
Supplementary
Levy
Bridges
Bridges for Council arterial roads over and above
the ‘Standard’ expectation set out in the Design
Guidelines
Apportioned in
Supplementary
Levy
Apportioned in
Supplementary
Levy
Developer funded
local or collector
roads
Local or collector road projects that are fully
developer funded but, for expediency, are
managed through a Supplementary levy
Yes
Yes
State owned
infrastructure
State road or public transport infrastructure
No1
No (GAIC)
Note to Table 5:
1.
Land required for VicRoads arterials should be reserved via a Public Acquisition Overlay. It has also been
suggested that there may be merit in enabling GAIC credits for land required for State infrastructure
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Drainage Levy in Growth Areas
(iii)
The Drainage Levy will only apply in non-metropolitan Growth Areas where Council is the
drainage authority. The Committee considered whether drainage should be removed as an
Allowable Item, and instead have drainage scheme funds collected as a special rate or
charge under Section 163 of the Local Government Act 1989, or as tariff under Section 259 of
the Water Act 1989.2
The feedback from rural and regional Councils, including Greater Geelong, Ballarat and
Greater Shepparton, is that the current DCP system is a more convenient and more easily
implementable system than the alternatives. All would prefer to see access to a Drainage
Levy retained in the Development Levy System.
The Committee supports the retention of a Drainage Levy but, given the wide variability of
such levies, recommends that the Drainage Levy should be an additional levy available
where the Council is the relevant drainage authority for the head works required in the
Growth Area.
Table 6
Growth Areas Drainage Levy - Allowable Items
Category
Allowable Items
Land in Public
Land levy?
Construction in
Drainage levy?
As specified in drainage plan for the catchment
Yes
Yes
DRAINAGE LEVY
In areas where a
Council is the
drainage authority
(iv)
Includes retarding basins and stormwater
treatment
Public Land Component of the Standard Levy
The Public Land requirements are proposed to be determined as part of the PSP and
developed in conjunction with the Development Levy Plan. The Allowable Items of public
land for community facilities, passive and active recreation and transport to be funded from
the Standard Levy are set out in the Allowable Items list for each infrastructure category.
A review of completed PSPs in Growth Areas shows that the proportion of land in the
planning unit that is typically required for public land is around 15%, including all areas of
open space that would be otherwise required under the Subdivision Act 1988 or Clause
52.01 of the Planning Schemes. The Committee recognises that this proportion will vary
across different PSPs. It proposes that a Supplementary Levy may be employed where the
product of the percentage of public land and the per hectare value substantially exceeds the
Public Land component of the Standard Levy and the additional cost cannot be
accommodated within the overall Standard Levy, as discussed in more detail in Chapter 5.
(v)
Costs of plan preparation
Currently the cost of preparation of PSPs and DCPs is included as an item to be funded under
some DCPs, particularly in Growth Areas. The Committee understands and accepts this
2
Department of Sustainability 2013 – Submission to Environment and Natural Resources Committee
Inquiry into Rural Drainage within Victoria
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practice. The Committee is of the view that up to 1% of the funds raised through a Growth
Area Standard Levy should be able to be spent on the preparation of the PSP.
4.4
Urban Areas and Strategic Development Areas
(i)
Urban Areas
A number of Councils submitted that the scope of Allowable Items in the Urban Areas
Standard Levy should be broadened. The most common item raised (Mornington Peninsula,
Moreland, Boroondara, Yarra Ranges, Bayside, Darebin, and Whittlesea Councils, and the
MAV) was the need to include land where required in conjunction with expansion of
facilities (excluded in Urban Areas in the Committee’s Report 1).
Several Councils, including Bayside and Greater Geelong, argued that it is legitimate for
Councils to seek to consolidate land when planning to replace facilities and to expand
capacity. This often requires the construction of a new facility on a new site to replace
several older facilities. Examples of this included child care centres, where smaller centres
are no longer viable, libraries and maternal and child health centres.
The Committee accepts this argument and agrees that the additional capacity component of
new facilities and infrastructure should be allowable, including a contribution to land. The
nexus between any nominated infrastructure item and growth will need to be made in the
Development Levy Plan and the proportion of any project linked to growth needs to be
nominated. The Committee believes that this process will preserve a high level of nexus and
accountability in the Levy and it is therefore not necessary to be overly restrictive in defining
Allowable Items.
Several submitters and industry stakeholders pointed out the potential for overlap between
the proposed levy and the ability to collect open space contributions (land or cash in lieu) via
Clause 52.01 of the VPP (typically between 5 and 10% of land value) or Section 18 of the
Subdivision Act 1988 (up to 5% of land value). Open space contributions may be required on
subdivision, but are only able to be levied once. This adds a further complication as
subdivision contributions may have already been paid on earlier subdivision and further
contributions would therefore not be payable.
The Committee considered the merits of incorporating subdivision open space contributions
into the Standard Levy but has not pursued this for a number of reasons, including:
 Use of a levy not based on land value would be significantly different from the
current method of collecting open space contributions;
 Any new method of including open space contributions would need to be complex to
retain a similar basis of collection as currently exists, and avoid doubling up on
contributions; and
 A change in arrangements has not been canvassed in any of the work done by the
Committee and hence no submissions have been received in relation to the matter.
The Committee has concluded that the most appropriate way to treat open space
contributions in the Urban Areas and Strategic Development Areas levies is to specifically
exclude open space contributions as an Allowable Item.
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The Committee is however, comfortable that improvements to open space such as paths,
seating and playgrounds that improve the capacity and useability of parks and reserves are
legitimate Allowable Items in a Levy. It is noted that it is common practice that open space
contributions from s18 of the Subdivision Act 1988 or Clause 52.01 of the Planning Schemes
are used for open space enhancement, particularly in inner city areas where purchase of
new areas of open space may be more difficult and expensive. The Committee notes that
this may cause some overlap, but believes that it is not an undesirable outcome and need
not be prevented.
A number of Councils, including Hume, Ballarat, Bayside, Cardinia, Wodonga, Maribyrnong
and Wyndham argued that libraries should be included in the list of Allowable Items. The
Committee has no objection to this on the basis that the levies are effectively capped and
Councils should be able to determine their own priorities for the community facilities most
needed by the community.
The Committee has included drainage as an Allowable Item as it is recognised that Council
will have responsibility for considerable local drainage infrastructure (that in many cases it
will have assumed responsibility from an earlier developer) which may require increased
capacity as part of renewal programs.
As mentioned in Chapter 3, the Committee has not included any State infrastructure in the
levies. Contributions to State roads and State owned public transport are therefore not
included in the Allowable Items. In some cases Council own and maintain bus and tram
shelters on Council land. These items have been included as Allowable Items. Table 7 shows
the proposed list of Allowable Items for Urban Areas.
The Committee does not believe that it is appropriate to include any allowance for planning
costs in items to be funded by the Urban Areas Standard Levy as the level of work that is
required to implement a Standard Levy is minimal and utilises existing strategic work and
capital works planning.
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Table 7
Urban Areas Standard Levy – Allowable Items
Facility
Allowable Items
Included in
Standard Levy?
Community Services
Contribution to expanding or upgrading space for:
Yes




Sporting facilities
Multi-Purpose Community Centre/Library
Kindergarten/Pre-School/Occasional childcare
Maternal and Child Health consulting room
Other community services facilities
Upgrade or extension of sporting facilities including:




Additional outdoor sporting fields or courts
Upgrading surfaces, installing synthetic surfaces,
installing irrigation or installing lights to increase
usage
Additional or upgraded change rooms
Additional courts for indoor facilities
Park and reserve
improvements (inc.
drainage reserves)
Upgrades to:
Drainage
Upgrades to existing Council drainage assets

Yes
Yes
Playgrounds, lighting, car parking, internal roads,
bicycle, pedestrian paths, seating, landscaping,
BBQs, picnic facilities
Yes
Stormwater treatment projects to improve water quality
including Water Sensitive Urban Design treatments and
wetlands
Roads
Road widening and intersection upgrades on Council roads
including Council local roads, collectors and arterials
Yes
Installation of traffic management items to reduce the
impact of increased traffic
Improvements to bicycle and pedestrian connectivity
Public realm
Urban design elements that improve pedestrian access or
enable higher density living
Yes
Creation of high quality public spaces – including paving,
seating, landscaping, lighting
Land
Land required as an integral part of providing any of the
Allowable Items
Yes
Public transport
Council owned bus, tram shelters on Council land
Yes
Facility
Items not allowed
Included in
Standard Levy?
State owned
infrastructure
VicRoads arterials
No
Public open space
Land or cash contributions as defined in Clause 52.01 of the
Victorian Planning Provisions and Section 18 of the
Subdivision Act 1988.
State owned public transport facilities and services
No
Note to Table 7: Projects included in the Development Levy Plan may be expansions or upgrades to existing
facilities or may be part of a new or replacement facility.
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(ii)
Strategic Development Areas
It is proposed that the Allowable Items for Strategic Development Areas should be the same
as for Urban Areas. The distinction is in the extent of infrastructure required to support
development. In a Strategic Development Area, a higher level of facility may be required or
a new stand alone facility may be warranted in its own right as a consequence of the extent
or intensity of the development.
Councils will be required to nominate in the Development Levy Plan, the specific additional
items of infrastructure that are needed and demonstrate that the additional infrastructure
requirement (over and above that of an Urban Area) justifies the higher levy. The
requirements for applying the Strategic Development Area Standard Levy are discussed in
Chapter 6.
As with Growth Areas, it is considered by the Committee appropriate to include a proportion
of the cost of underlying strategic planning for Strategic Development Areas as an allowable
item. This should be limited to 1% of the revenue raised through the Standard Levy.
Table 8
Strategic Development Areas Supplementary Levy – Allowable Items
Facility
Allowable Items
Land in
Levy?
Construction
in Levy?
Drainage
New drainage scheme where Council is the drainage authority
(non-metropolitan areas)
Yes
Yes
Roads
New Council owned roads not funded directly by developers
Yes
Yes
Works on Council arterial roads and intersections to restore
network capacity to pre-development conditions
Yes
Yes
Public Realm
Projects
Specific larger scale public realm improvement works as part
of urban renewal projects
Developer
funded local or
collector roads
Local or collector road projects that are fully developer funded
but, for expediency, are managed through a Supplementary
Levy
Yes
Yes
Facility
Items not allowed
Land in
Levy?
Construction
in Levy?
State owned
infrastructure
State road or public transport infrastructure
No (PAO)
No
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4.5
Recommendations
The Committee makes the following recommendations:
 That the Allowable Items as set out in Tables 4, 5, 6, 7, and 8 be mandated through
a Ministerial Direction or the Victoria Planning Provisions as a basis for the
Standard Levies to be applied as part of the Development Levy System.
 That new Design Guidelines be produced by the GAA in close consultation with
VicRoads, Growth Area Councils and developers to bring together:
 A clear definition of the responsibilities of the Planning Authority, VicRoads
and developers in planning for roads in Growth Areas (from the Draft
Arterial Road Protocol);
 A definition of ‘interim works’ (based on the Draft Arterial Road Protocol
but modified as discussed);
 The guidelines currently set out in the GAA PSP Note, (including access
requirements, kerbs, street lighting, nature strips, footpaths, bicycle
facilities, parking);
 Typical road cross sections (from the GAA PSP Note);
 Typical intersection designs (currently being developed by VicRoads); and
 Design standards (based on the Infrastructure Design Manual recently
developed by a number of Councils and incorporating any VicRoads
requirements.
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5
Levies for Growth Areas
5.1
Overview
The Committee has considered various submissions regarding the principle of whether it was
conceptually possible to introduce a Standard Levy for Growth Areas in metropolitan and
non-metropolitan locations.
In arriving at the view that it was possible to introduce standard levies for Growth Areas, the
Committee then considered two possible methods for setting a Standard Levy in Growth
Areas including:
 Using averages of recent DCP costs, and
 Calculating ‘bottom up’ levies based on infrastructure requirements from a typical
area of growth area development.
The Committee prefers the first approach. The second approach presents considerable
difficulties in terms of defining a typical area and typical infrastructure. The variability in
standards across Growth Areas is also problematic, making it difficult to arrive at consistent
costings. The recent costs analysis approach has generated outcomes which the Committee
believes are consistent and robust.
The analysis has provided the Committee with the basis to support introduction of a
Standard Levy for Growth Areas with an ability to reduce the Standard Levy where
circumstances warrant, and to increase the overall levy via the use of one or more
Supplementary Levies where circumstances warrant and sufficient additional justification
can be provided.
5.2
Submissions and Consultation
Written submissions and feedback from consultation generally supported the concept of
applying Standard Levies in Growth Areas, provided that genuine ‘exceptional
circumstances’ were able to be recognised.
There was a strong level of support from the development industry for Growth Area
Standard Levies in order to increase the level of certainty in development costs, provided
that they were set at a low enough level that did not affect the overall viability of
development.
Council submissions generally supported Growth Area Standard Levies in principle, provided
that they were set at a high enough level that did not unreasonably create infrastructure
funding gaps. This highlights the Committee’s challenge, to find a levy that is fair to all
parties. This requires a compromise between the wishes of the key players.
A number of submissions from Councils commented that under the system for the DLS
proposed in Report 1, they would want to do the detailed work to determine a DLS in
preference to a Standard Levy in order to reduce the chance of funding gaps. Developers,
including PEET, commented on the need to incentivise the use of Standard Levies to prevent
the additional work and time required for a DLS.
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Councils requested that a level of flexibility be provided between infrastructure categories
within the Standard Levy, arguing that it is impractical to administer separate ‘buckets of
money’ for the same planning unit.
There was strong support from all regional Councils for the retention of a levy for drainage in
non-metropolitan Growth Areas, with a strong preference for it not to be part of the
Standard Levy, due to the wide variety of costs in different areas.
The HIA supported Standard Levies for Community and Recreation, and Transport
infrastructure costs, and a variable levy for public land.
The Committee asked many of the groups and individuals to nominate what they thought
was an appropriate level for a Growth Area Standard Levy and, almost without exception,
the responses were qualified or submitters were not prepared to commit. Only the
submission from Whittlesea Council ventured a suggested rate based on its recent
experience. Whittlesea nominated a figure of $355,000 per net developable hectare, but
included in this some State funded infrastructure that is more appropriately funded by the
GAIC and added a ‘contingency’ of 20% on top of the average total that it arrived at. The
Committee believes that allowing for contingencies in this way is not appropriate as the base
for the figure was actual average costs. Adjusting for this, and allowing for State funded
items, the Whittlesea suggestion equates more to $250,000 to $280,000 per net
developable hectare.
There was general support for Standard Levies being applied on a per hectare basis,
although some submitters argued that, particularly for Community and Recreation facilities,
the nexus was greater if a per dwelling rate was applied.
5.3
Basis for Standard Levy
(i)
Introduction
In Report 1 the Committee indicated that it proposed to base the setting of the Standard
Levy for residential uses in Growth Areas using a bottom up approach using the cost of
‘typical’ infrastructure. Early in its Stage 2 investigations and deliberations, two things
became clear. Firstly, the proposed approach would involve significant data challenges and
some conceptual issues around defining ‘typical’ infrastructure. Secondly, a further
examination of recent DCPs (2008 – 2012), having made some adjustments to make them
more directly comparable, showed a greater degree of commonality than the Committee
first expected.
The analysis undertaken and the observations made are based on data which the Committee
commissioned Urban Enterprise to produce, focusing on all DCPs approved (or nearing
approval) since 2008 within metropolitan Growth Areas. This report titled DCP
Benchmarking dated April 2013, provided all DCP values indexed to July 2012 dollars.
The DCP Benchmarking report provides the ‘full’ per net developable hectare DCP levy
amount currently applying to each DCP area. This amount includes uncapped CIL (converted
to a per hectare charge using the dwelling density) and the total public land contribution
included in both the DCP and from Clause 52.01 contributions.
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In analysing the data set from 2008 to 2012, the Committee has observed a convergence in
the methods by which PSPs have been formulated, including infrastructure needs, costing
and apportionment. Average land values and the area of land that is being set aside for
public purposes have also converged to a point where there is increased predictability
associated with these costs.
The detailed examination of the most recent metropolitan DCPs revealed the following:
 The types of projects included in the various DCPs are generally consistent (i.e. only
higher order roads are included, standard provision ratios for community and active
recreation are generally accepted and applied);
 The scope of projects are generally consistent;
 The costing methods are generally consistent (i.e. a Quantity Surveyor costing based
on detailed plans such as Functional Layout Plan), however, discrepancies remain in
terms of calculation of total cost i.e. rate applied, contingency allowance etc; and
 The land valuation method applied is usually a site specific valuation to establish the
‘market rate’ rather than applying a lower broad hectare rate.
The metropolitan DCPs approved since 2008 form the largest and most relevant source of up
to date DCP data. These documents represent the latest generation of DCPs approved under
the current legislation. It is significant that the DCPs that have been prepared and approved
in this period reflect contemporary practice in terms of the integration of activity centre and
employment planning. The Committee notes that the geographic location and conditions
found within the recent PSP areas are likely to be encountered in future PSP areas, such as
less developed transport networks compared to earlier DCPs.
The proposed approach to the introduction of a Standard Levy for Growth Areas relies on
analysis of:
 Components of DCP rates inclusive of DCP and Clause 52.01 land costs (2008-2012)
and for 2012;
 Amount, value and type of land being secured for public purposes;
 Gross and net developable area of PSPs;
 Overall average DCP rates for Growth Areas 2008-2012; and
 Overall average DCP rates for Growth Areas in 2012.
(ii)
Components of DCP rates
In terms of amounts of funds collected for the three infrastructure categories, Table 9 shows
that over the period 2008-2012, the land cost (which includes all land in the DCP and
secured through Clause 52.01) is consistently the highest proportion of total cost per
infrastructure category with the balance of contributions being split fairly evenly between
the Community and Recreation, and Transport construction categories. On average the split
is 30% Community and Recreation construction; 29% Transport construction and 41% for
securing land for a public purpose.
There is a consistent trend in the data over recent years that shows that spending on
Community and Recreation infrastructure has become roughly equal to spending on
transport infrastructure. This is shown in Table 9 and reflects the change in provision
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
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standards of community and recreation infrastructure and a shift of priorities towards
community and recreation infrastructure since earlier DCPs.
Table 9
Breakdown of DCP rates by infrastructure category for all DCPs approved (or pending approval)
2008 - 2012 by Region in 2012$
Infrastructure Category
All DCP areas
DCP areas in
the north
DCP areas in
the south east
DCP areas in
the west
Average $
value for all
DCP Areas
Community and Active
Recreation Construction
30%
35%
30%
24%
$72,000
Transport Construction
29%
19%
26%
39%
$72,000
Public Land (incl. Clause
52.01)
41%
45%
43%
36%
$101,000
Source: Figures derived from data in the DCP Benchmarking report, Urban Enterprise 2013
Table 10 presents the same data but just for 2012 and demonstrates that the average
proportions for each infrastructure category are similar in 2012 as over the period 2008 to
2012, demonstrating the convergence that has occurred. In 2012, these equate to $80,000
per hectare for Community and Recreation construction, $77,000 per hectare for transport
construction and $111,000 per hectare for land.
Table 10
Breakdown of DCP rates by infrastructure category for all DCPs approved (or pending approval)
in 2012 by Region in 2012$
Infrastructure Category
All DCP areas
DCP areas in
the north
DCP areas in
the south
east
DCP areas in
the west
Average $
value for all
DCP Areas
Community and Active
Recreation Construction
30%
31%
37%
27%
$80,000
Transport Construction
29%
23%
22%
37%
$77,000
Public Land (incl. Clause
52.01)
41%
46%
41%
36%
$111,000
Source: Figures derived from data in the DCP Benchmarking report, Urban Enterprise 2013
(iii)
Amount, value and type of land being secured for public purposes
The Committee has analysed the land budget of all PSPs/DCPs approved (or pending
approval) since 2008 to determine the total amount of land required for a public purpose
(this includes all land funded by the DCP and Clause 52.01 contributions). Table 11 shows
that on average, 54 hectares of land is required for public purposes but that this amount has
varied between PSPs in the three main growth corridors.
Table 11 shows that the average gross area for PSPs is 464 hectares of which 334 hectares
(or 72% of total site area) comprises the net developable area (NDA). The allocation of land
to each category is 26% for Transport, 6% for community facilities, and 68% towards open
space.
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When examined separately, that is the land take for 2012 as a proportion of the total NDA, it
is important to note that whilst the total amount of hectares shown in Table 11 varies, when
it is converted to a proportion of NDA, the variation reduces considerably as demonstrated:
 70.91 hectares in the south is equal to 18.0% of NDA;
 45.98 hectares in the north is equal to 13.9% of NDA; and
 43.99 hectares in the west is equal to 15.8% of NDA.
Average Land take of
ALL DCPs and 52.01 for
2008-2012
463.64
334.33
% of total land take
Total
Land
Required (Ha)
(Ha)
Open
District
Space
Passive Open
Space (Ha)
Active
Open
space (Ha)
Community
Land (Ha)
NDA (Ha)
Transport Land
(Ha)
Overview of amount of land being secured by Region, 2008 - 2012
Total PSP Area
(Ha)
Table 11
13.89
3.22
19.91
13.65
3.29
53.96
26%
6%
37%
25%
6%
100%
Average of South
(Casey-Cardinia)
543.07
393.63
17.04
5.63
26.82
19.07
2.35
70.91
Average of North
(Hume, Mitchell &
Whittlesea)
465.57
330.22
10.55
2.50
16.75
10.43
5.75
45.98
Average of West
(Wyndham & Melton)
382.51
278.62
13.66
1.43
15.78
11.05
2.07
43.99
Source: Figures derived from data in the DCP Benchmarking report, Urban Enterprise 2013
The average land value being determined per Region for all DCPs approved (or pending
approval) between 2008 - 2012 in 2012 dollar figures is set out in Table 12 below. The
overall average for 2008 to 2012 is $801,000 per hectare, increasing to $816,000 per hectare
in 2012. Whilst it is acknowledged that the valuation methodologies vary among the DCPs, it
is important to note that there is significantly less variation in land value between the
Growth Areas in 2012 than between 2008 and 2012, again demonstrating some
convergence.
Table 12
Average land value per NDHa for all DCPs approved (or pending approval) in 2012$
Average land values per NDha 2008 –
2012 (in 2012$)
Average land value per NDHa in 2012$
All Areas
$801,000
$816,000
North
$980,000
$800,652
South east
$746,000
$789,000
West
$742,000
$841,035
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Analysis of overall DCP rates
(iv)
Figure 1 shows that the total amount of contributions being collected has steadily risen in
the period from 2008 - 2012. However, what is more important to note is that there is
significantly less variability between the metropolitan Growth Area municipalities in terms of
the total amount collected in 2012.
Figure 1
Metropolitan Growth Area residential rates average total cost included in DCP and Clause
52.01 by Growth Area, 2008 - 2012 in 2012$
$400,000
Total DCP & 52.01 Rate per Ha
$350,000
$300,000
$250,000
North
$200,000
South East
$150,000
West
$100,000
$50,000
$0
2008
2010
2011
2012
Year DCP Approved
Source: Figures derived from data in the DCP Benchmarking report, Urban Enterprise 2013
The average contribution for each of the three growth corridors in 2012 is set out in Table
13, which shows the average across all metropolitan Growth Areas in 2012 is $268,000 per
NDHa. The range is from $205,000 to $308,000 per NDHa. It might be argued that 2012 was
a coincidental ‘one-off’, but the Committee is convinced that there are strong logical reasons
based around more uniform standards and approaches that underpin this convergence.
Table 13
Total DCP rates being collected for all DCPs approved (or pending approval) 2012 in 2012$
(including Clause 52.01 contributions)
DCP Area
Average Total contribution payable per NDHa in 2012 $
All Areas
$268,000
North
$283,000
South east
$257,000
West
$256,000
Source: Figures derived from data in the DCP Benchmarking report, Urban Enterprise 2013
In summary, the main conclusions that can be drawn from this analysis as they influence the
Committee’s proposal for a Growth Areas Standard Levy are:
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




There has been a significant adjustment in the quantum of funds that are being
collected for community infrastructure in the period from 2008 - 2012;
There is general consistency in the quantum of funds that are being collected for the
three infrastructure categories (30% Community and Recreation construction, 29%
Transport construction and 41% Public Land) from 2008 - 2012;
There is increasing consistency in the average value of land that is being collected for
public purposes;
The average value of land that is being collected for public purposes was
$816,000/ha in 2012; and
The average land take for public purposes is 15-18% of the NDA.
The Committee is of the view that the analysis indicates some important general trends
about the composition of DCPs for the period from 2008-2012. The trends are significant
not only in terms of the relative consistency in approach and quantum of funds that are
being collected, but also in terms of the indirect expression of priorities for infrastructure
funding and delivery in Growth Areas. As discussed previously, this is particularly evident in
relation to increased expenditure on Community and Recreation construction.
The Committee is persuaded that there is a reasonable basis in the data from recent DCPs to
establish a Standard Levy rate for Growth Areas, but in coming to this conclusion is mindful
that there are examples of recent DCPs that are both substantially lower and substantially
higher than the recorded averages. It is also acknowledged that there is some variability
between infrastructure categories.
In acknowledging this variability, the Committee is of the view that the Growth Areas should
not all be the same in terms of the type of infrastructure projects, or of vision. That should
be properly determined during a PSP process, taking into account the relevant conditions
and aspirations for the area in question. The Development Levy Plan should be seen as an
implementation tool rather than a strategic planning instrument in its own right.
The Committee believes that a Standard Levy for Growth Areas is highly desirable and should
have the following characteristics:
 A mandatory Standard Levy per net developable hectare for all metropolitan Growth
Areas;
 An ability to seek a Supplementary Levy for specific transport construction and public
land projects, but only in certain circumstances where set standards and quantum of
infrastructure provision cannot be met without additional contributions and the
additional projects cannot be funded within the Standard Levy;
 A capped Community and Recreation component of the Standard Levy that cannot
be increased via a Supplementary Levy. Funds can, however, be redirected from the
community and recreation component to other infrastructure categories (Transport
and Public Land) if savings can be identified;
 An ability of the Planning Authority (with the consent of the local Council) or
developer to lower the Standard Levy if the total cost of the required infrastructure is
less than the Standard Levy.
 No opportunity to challenge the Standard Levy via Panel or other processes;
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 50 of 135



An ability for Councils to spend funds on infrastructure projects from a list of
Allowable Items;
An ability for Councils to pool funds to assist in infrastructure delivery but with a
requirement to ultimately reconcile infrastructure expenditure within the
infrastructure categories; and
A template for preparation of a Development Levy Plan that sets out infrastructure
and land requirements.
The Committee is of the opinion that setting a Standard Levy and the necessity to
accommodate variability are not mutually exclusive. The proposed Standard Levy should
accommodate the majority of future PSPs, whilst allowing for variability in certain
circumstances.
The Committee is of the view that the recommended approach involving introduction of a
Standard Levy for Growth Areas would deliver significant benefits including:
 Certainty for Councils and the development industry; and
 Removal or significant reduction of the need for external review with associated time
and cost savings.
(v)
Holding Costs
The DCP Benchmarking report prepared for the Committee by Urban Enterprise includes an
analysis of holding costs incurred by developers in Melbourne’s Growth Areas. The analysis
was based on information provided by developers who are working on projects within the
Growth Areas. The analysis concluded that based on an average land cost of $723,481 per
hectare, the per annum holding costs is $57,619 per hectare, or approximately 8% of the
total value of the land. This figure is made up as shown in Table 14.
Table 14
Holding Costs for land in Growth Areas
Item
Cost
Average per hectare land cost
$723,481
Interest paid on debt component (Assumes equity to debt of 25%)
$39,773
Council rates
$2,528
State land tax
$15,318
Total holding costs per annum
$57,619
Total holding cost as a percentage of land cost
7.96%
Source: DCP Benchmarking report, Urban Enterprise 2013
The assumptions used in arriving at this figure are fairly broad, but nevertheless it provides a
useful indication of the order of magnitude of holding costs being experienced by developers
in Growth Areas.
Holding costs are relevant with respect to the delays that are currently being experienced in
the process of applying DCPs. Some developers and Councils the Committee spoke to
estimated that the current system of DCPs adds between 12 and 24 months to the process
of getting land to the market.
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One of the main aims of the new Development Levy System is to significantly reduce
approval times. It is difficult to estimate just how much time would be saved under the new
system, and clearly it depends what form the system finally takes. The Committee believes
that it is reasonable to anticipate (conservatively) at least three to six months time saving
through the new system, although it believes much greater savings are achievable. If these
conservative time savings can be delivered, then reduced holding costs of between $15,000
and $30,000 per hectare are achievable.
5.4
Recommended Standard Levies for Metropolitan Melbourne Growth
Areas
Based on the analysis as set out previously, the Committee carefully considered the basis
upon which a standard levy could be established. During this process the Committee was
mindful to ensure that:
 The Standard Levy would be high enough to ensure that the majority of
infrastructure requirements could be funded without the need to introduce
Supplementary Levies;
 The Standard Levy would not be so high as to result in an overall unnecessary
increase that would cause affordability problems; and
 The Standard Levy was struck at a rate that could provide for increases and decreases
in legitimate circumstances.
With these objectives in mind, the Committee tested the range of DCP rates from 2008-2012
of $205,000 to $308,000 per NDHa. The outcome of this process led the Committee to
conclude that the lowest and highest DCP rates were the outcome of PSP/DCP processes
that were not typical and that in both instances some divergence from a typical condition
was warranted.
With reference to the analysis on the preceding section however, the Committee is
persuaded that the 2012 average rate is more representative of the typical condition. In
terms of potential use of the 2012 average as opposed to the 2008-2012 average, the
Committee is of the opinion that the 2012 average is a more reliable and relevant basis for
introduction of the Standard Levy for Growth Areas as the 2012 average rate:
 Would have accommodated 8 of the 12 recently approved DCPs; and
 Recognises significantly less variation between the main growth corridors in 2012.
On this basis the recommended Growth Areas Standard Levy is $268,000 per net
developable hectare.
The recommended Growth Area Standard Levy of $268,000 has then been divided into the
three main infrastructure categories as set out below in Table 15. It is recommended that
the Standard Levy for Growth Areas be comprised of:
 A capped Community and Recreation component of $80,000 per NDHa;
 A variable Transport construction component of $77,000 per NDHa; and
 A variable Public Land component of $111,000 per NDHa.
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Table 15
Components of the Growth Areas Standard Levy
Infrastructure Category
Capped or Variable
Average $ value of
infrastructure Category
in 2012 $ per NDHa
Average % of
Infrastructure
Category
Community and Recreation
Capped
$80,000
30%
Transport Construction
Variable
$77,000
30%
Public Land (incl. 52.01)
Variable
$111,000
40%
Based on an average net developable area of 343 hectares, this equates to a total
infrastructure and land contribution of $91.6M or $17,866/lot at an average density of 15
lots/ha as set out below in Table 16.
Table 16
Standard Levy for Metropolitan Growth Areas
Infrastructure Category
Average $ value per
hectare of NDA of
infrastructure in 2012$
Revenue raised
assuming average NDA
of 334ha in 2012$
Value of per lot
equivalent @ 15
lots/ha
Community and Recreation
Construction
$80,000
$27.44M
$5,333/lot
Transport Construction
$77,000
$26.41M
$5,133 /lot
Public Land
$111,000
$36.74M
$7,400/lot
Total
$268,000
$91.62M
$17,866/lot
In recommending the Standard Levy for metropolitan Growth Areas of $268,000 (2012 dollar
figures), the Committee is of the opinion that the Standard Levy will accommodate the
typical Growth Area conditions. The Committee remains supportive of the need to
accommodate potential for the Standard Levy to be decreased or increased where particular
circumstances warrant. The Committee is also supportive of the concept that there should
be some variation within and between Growth Areas in infrastructure provision to meet
local circumstances and priorities and that this objective can be met via introduction of the
allowable items concept.
In making any comparisons between existing per hectare rates for DCPs and the proposed
new Standard Levy, it must be borne in mind that the proposed Standard Levy incorporates
all public land, including all contributions for open space previously required via Clause 52.01
of the VPP (in addition to any land required for open space purposes in the relevant DCP).
This can typically add up to $30,000 per hectare to current DCPs.
The other important factor that should be considered is that, as discussed in Section 5.3 (v),
the new Development Levy System could be expected to deliver substantial savings in
approval time and consequent holding cost savings conservatively estimated by the
Committee at $15,000 to $30,000 per hectare.
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5.5
Recommended Standard Levies for Non-Metropolitan Growth Areas
(i)
Overview
In developing Standard Levies for Growth Areas in non-metropolitan areas the Committee
has examined the commonalities and differences between metropolitan and nonmetropolitan areas. In particular, the Committee has sought to arrive at rates for the
Standard Levies in non-metropolitan locations that:
 Recognise the differing circumstances in regional locations, particularly in relation to
the need to deliver affordable development;
 Recognise some differences in cost structures, particularly relating to land cost;
 Have some relativity to metropolitan Growth Areas;
 Are easy to implement;
 Will be able to deliver Allowable Items to support the establishment of new
communities;
 Are flexible enough to respond to genuine ‘exceptional’ circumstances; and
 Do not disadvantage regional areas in comparison to metropolitan areas.
There is limited data available for DCPs approved for regional growth areas since 2008,
however the Committee believes that there is sufficient data and experience available to
draw conclusions and set base rates as a starting point, acknowledging that the rates will be
able to be refined as further development occurs.
Notwithstanding the limited data set (which is indicative of limited application of DCPs
throughout regional Victoria for a range of reasons), the Committee is mindful of the
relationship between the scale and rate of development in regional locations and the
infrastructure provision thresholds that are reached (or not) by comparison to metropolitan
Growth Areas. In discussion with a number of regional Councils there was often a comment
made that it costs just as much, if not more, to deliver infrastructure in regional locations.
The Committee does not take issue with this comment in terms of the actual cost of
provision of necessary infrastructure but in arriving at an assessment of what infrastructure
is required, the Committee is of the view that the following are substantive matters that
need to be considered in arriving at recommended standard levies for non-metropolitan
Growth Areas:
 The scale of planned/projected growth is typically substantially less than in
metropolitan locations;
 The lesser scale of planned/projected growth causes fewer provision triggers to be
reached for higher order/shared infrastructure;
 Land costs are highly variable throughout regional Victoria and the highest costs are
still substantially less than the average land values in the metropolitan Growth Areas;
and
 There is often an existing level of infrastructure provision in regional locations that
has the capacity to be augmented to accommodate additional needs.
In observing these underlying differences between metropolitan and non-metropolitan
Growth Areas, the Committee is aware that some regional locations such as Armstrong
Creek in Geelong and Ballarat West are of a scale that is comparable to some of the
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
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metropolitan Growth Areas, whereas others are substantially smaller in scale. For this
reason the Committee is of the view that it is not possible, or appropriate, to set one
Standard Levy for all non-metropolitan Growth Areas.
In contemplating whether one or more standard rates could be set for regional locations, the
Committee has reviewed the following recent DCPs for larger regional Councils as presented
by Urban Enterprise in two reports: Indicative Standard Levies for Local Development
Contributions, May 2012 and DCP Benchmarking, April 2013:
 Warrnambool – North Dennington (2008 under review);
 Shepparton – Mooroopna West (2009);
 Geelong – Jetty Road (2011);
 Geelong - Armstrong Creek East (2012);
 Geelong – Armstrong Creek West (2013);
 Warrnambool – North of the Merri River (2012); and
 Ballarat – Ballarat West (2012).
(ii)
Large Regional Councils
The recent DCPs for Ballarat and Geelong (the only areas in the UGZ outside the
metropolitan area) are summarised in Table 17.
Table 17
Ballarat West and Armstrong Creek DCP costs per hectare
DCP
Community and
Recreation
Transport
Public Land
(excl drainage)
Total (excl
drainage)
Drainage (incl
drainage land)
Ballarat West
$105,281
$65,231
$37,721
$208,233
$90,831
Armstrong Creek East
$106,326
$31,535
$23,284
$161,145
$70,139
Armstrong Creek West
$126,653
$34,482
$51,648
$212,783
$85,817
Average
$112,753
$43,749
$37,551
$194,054
$82,262
The public land figures in this table have been adjusted to include open space required
under Clause 52.01 and the Subdivision Act 1988. Drainage costs include land required for
drainage.
The observations from this limited data set are that:
 The cost of construction of open space and community facilities are higher in these
non-metropolitan areas than in metropolitan DCPs due to specific community and
recreation provision strategies involving embellishment of regional or higher order
active open space and comparatively higher construction costs for community
centres, including provision for Council provided child care in Armstrong Creek in
particular;
 Transport construction costs are lower than in metropolitan DCPs. In Armstrong
Creek this is due to a higher reliance on connector roads that are outside the DCP
system;
 Land costs are considerably lower than metropolitan DCPs, and appear to vary by a
greater degree, as indicated by the difference in the two Armstrong Creek land
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
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

components, noting that Armstrong Creek East has a significantly higher proportion
of encumbered land that is being used for drainage and recreation purposes;
There is a level of consistency of the overall cost of these DCPs, excluding drainage
costs; and
Drainage costs are a high proportion of the overall cost of DCPs in non-metropolitan
areas.
As discussed earlier, the Committee believes that drainage in non-metropolitan areas is best
dealt with as a separate Drainage Levy and not included in the Standard Levy.
The limited data set would appear to indicate that a Standard Levy of $210,000 per net
developable hectare (excluding drainage but including all forms of open space) in these large
regional Growth Areas would be an appropriate budget to cover the vast majority of cases
and deliver the majority of Allowable Items to support the establishment of new
communities.
To assess the appropriateness of a Standard Levy of $210,000 per NDHa, the Committee
tested application of the community and recreation and transport components of the
metropolitan standard levy of $80,000 per NDHa and $77,000 per NDHa respectively and
adjusted the average land value to $400,000 NDHa. The results of this analysis are set out
below in Table 18.
Table 18
Possible basis for Larger Non-Metropolitan Growth Areas
Community and
Recreation
Transport
$80,000/ha
$77,000/ha
Public Land
Total
(inc 52.01 but excl.
drainage)
$50,0001/ha
$207,000/ha
Note to Table 18
1
Based on an average land value of $400,000/ha
The Committee is of the view that a Standard Levy of $210,000 per NDHa represents a fair
budget to work to, bearing in mind that Supplementary Levies would be available in genuine
cases, and the overall levy can be lowered if the Development Levy Plan does not identify
sufficient costs to warrant the full Standard Levy. (This is discussed further in Chapters 5.6
and 5.7.)
A Standard Levy of $210,000 in non-metropolitan Growth Areas for larger regional centres
represents a 22% reduction on the metropolitan Standard Levy of $268,000 per NDHa. The
Committee considered whether there should be a corresponding reduction in the budgets
for each infrastructure category and, if so, on what basis should the budgets be set. Given
the apparent higher level of variation in the infrastructure categories in non-metropolitan
areas, the Committee is reluctant at this time, to impose the same restrictions on
expenditure for the infrastructure categories as in the metropolitan Growth Areas. It may be
that, in the future, expenditure targets or limits could be set for each category but for the
time being, the Committee believes that $210,000 per hectare represents an appropriate
overall budget for Community and Recreation, Transport and Public Land in larger regional
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
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Growth Areas. In this context the Committee notes that a standard rate of $210,000 per
hectare equates to $14,000 per lot at an average density of 15 lots per hectare.
The Committee believes that this Standard Levy will be appropriate to apply to UGZ zoned
land in the largest regional Councils such as Ballarat, Geelong and possibly Bendigo (however
it is noted that the scale of development is lower on a comparative basis for the individual
Growth Areas which may indicate that the ’middle growth regional Councils’ rate or the
Strategic Development area rate may be more appropriate in Bendigo). The Committee is
firm in its view however, that this rate would only be applied in locations that have planned
growth that is comparable to metropolitan Growth Areas and where the UGZ applies. With
specific reference to the City of Greater Geelong this would not include other smaller scale
growth areas outside of Armstrong Creek (e.g. Leopold and Lara).
While the Committee is reluctant to set budgets for individual infrastructure categories in
the larger regional growth areas, the Committee is of the view that the metropolitan
averages (that is, $80,000 Community and Recreation, and $77,000 Transport) should be
used as a guide in applying the levy and in assessing any request for introduction of a
Supplementary Levy for transport or public land.
(iii)
Middle Growth Regional Councils
To date the UGZ has only been applied in Geelong and Ballarat, but there are other nonmetropolitan growth locations such as Warrnambool, Shepparton, Latrobe, Mildura and
others which could conceivably be candidates for use of the UGZ in the future. The
Committee believes that there is value in having a Growth Area Standard Levy to apply to
those anticipated situations, although notes that, in most cases the Strategic Development
Area Standard Levy, with the possible addition of a Supplementary Levy for drainage in some
circumstances, will generally be adequate in most regional cities.
The only data available is from DCPs in smaller growth areas that did not have the UGZ
applied, but nevertheless they provide some indication of the order of magnitude that may
be appropriate in middle growth non-metropolitan Growth Areas. Table 19 shows
information from recent regional city DCPs.
Table 19
Summary of DCPs from Regional Cities, per NDHa
DCP
Total average DCP levy (excl
drainage)
Drainage
Warrnambool – North Dennington
$89,456
$18,551
Shepparton – Mooroopna West
$90,944
N/A
Warrnambool – North of the Merri River
$108,014
$23,012
Geelong – Jetty Road
$82,349
$0
Average
$92,691 per ha
This limited data set suggests that the infrastructure provision triggers are not reached to
the same extent where the extent and intensity of development is lower. There are also
examples of lower land costs and also lower costs of providing transport infrastructure,
community facilities and recreation and open space. In arriving at an appropriate Standard
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Levy to apply to land that may have the UGZ applied, the Committee believes that a figure
higher than the average for these DCPs would be appropriate. This view takes into account
the general absence of Community and Recreation projects from the approved DCPs.
Taking into account the limited data set and the lower land values, the Committee proposes
$120,000 per NDHa, excluding drainage. At this level, the Committee is confident that it
would be an appropriate budget to cover the vast majority of cases and deliver the key
Allowable Items to support the establishment of new communities. As with larger regional
Council levies, the Committee believes that this amount represents a fair budget to work to,
bearing in mind that Supplementary Levies would be available in genuine cases (if required
but in the first instance an attempt should be made to accommodate all infrastructure types
including drainage within the Standard Levy), and the overall levy can be lowered if the
Development Levy Plan does not identify sufficient costs to warrant the full Standard Levy.
In this context the Committee notes that the Standard Levy of $120,000 per NDHa (excluding
drainage) equates to $8,000 per lot at an average density of 15 lots per hectare.
As for the Large Regional Councils Standard Levy, the Committee does not propose any
restrictions on the budgets for infrastructure categories for Medium Growth Regional
Councils. The Committee recommends that the Medium Growth Regional Standard Levy be
kept under review and revised if necessary once further experience is gained with growth
area developments in non-metropolitan areas.
The Committee believes that this Medium Growth Regional Standard Levy will be
appropriate to apply to UGZ zoned land in the middle level regional Councils such as
Warrnambool, Shepparton, Mildura and Latrobe.
(iv)
Strategic Development Areas in Non-Metropolitan Municipalities
The Committee considered whether there should be a third tier Growth Area Standard Levy
for non-metropolitan areas further ‘scaled down’ from the medium growth regional levies.
It concluded that it was not necessary, as the Strategic Development Area Standard Levy, at
$6,000 per dwelling (or $90,000 per hectare at 15 dwellings per hectare), is available and
provides adequately for infrastructure in smaller growth fronts in non-metropolitan (and
metropolitan) areas.
It is noted that, at $90,000 per hectare, the Strategic Development Area Standard Levy
would have covered three of the four examples of regional growth fronts in Table 19 and will
be appropriate for most smaller-scale growth fronts.
5.6
Implementing the Standard Levy in Growth Areas
A number of submitters lodged submissions and raised concerns directly with the
Committee in relation to the affordability implications of increasing levies in Growth Areas.
Whilst the reasons for the increasing levies are varied, most submitters (developers and
Councils) raised concern in relation to scope creep, the unforseen cost implications of
Government policy and transference of funding responsibilities between agencies and levels
of Government.
In response to some of these concerns, developers have requested the introduction of
standardised project descriptions and costings for the typical types of infrastructure that is
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required in Growth Areas. Key items for which standard costings of infrastructure have been
requested include standard lineal rates for various types of roads, intersections, community
centres (of varying types) and construction of playing fields and pavilions. This is also in line
with the requirements of the Terms of Reference of the Committee.
As indicated earlier in this Chapter, the Committee has not embarked on this exercise for
both data and conceptual reasons. In recognition of this variability, and the desire to avoid
attempting to predetermine infrastructure needs on the one hand, but in response to
escalating costs on the other, the Committee has recommended the introduction of a
Standard Levy for Growth Areas to be spent on a list of Allowable Items.
The introduction of a Standard Levy changes the way in which infrastructure planning will
occur. In the current situation, the process commences with a PSP where infrastructure
needs are identified and planned. However the introduction of the Standard Levy provides a
‘revenue envelope’ within which priorities for infrastructure from the list of Allowable Items
must be determined in a Development Levy Plan. Infrastructure not able to be included in
the priority list will be funded from other sources, or its provision delayed, or not included in
the infrastructure list in the PSP.
In this way, the PSP commences with a ‘budget’ for infrastructure provision with the
flexibility to determine infrastructure expenditure priorities taking into account local
conditions and other strategic objectives (provided that the infrastructure is within the list of
Allowable Items). What must be emphasised, however, is the significance of the change in
approach and the basis for the recommended changes.
In arriving at a recommended Standard Levy for Growth Areas of $268,000 per hectare (in
2012 dollars), the Committee has concluded that a rate at this level is capable of achieving
an acceptable standard of infrastructure provision in Growth Areas, but that it is not
necessary or desirable to specify precise infrastructure requirements or standards for
Growth Areas.
In terms of affordability, this conclusion takes into account GAIC and other charges including
the recently announced vegetation and threatened species offsets that will collectively
contribute to the cost of delivery of land in Growth Areas.
Where PSPs and the associated DCPs have in the past enabled identification of a list of
infrastructure requirements and costings from a bottom-up perspective (in accordance with
the requirements of the Planning and Environment Act 1987), the new approach will require
Planning Authorities to work to a budget for infrastructure provision with one capped
infrastructure category (Community and Recreation construction capped at $80,000 per ha)
and two variable infrastructure categories (Transport construction and Public Land). In this
way, the list of Allowable Items will support identification of local priorities. Infrastructure
priorities and standards will be considered within a Standard Levy which the Committee
believes should not impact significantly on affordability.
Importantly, assessment of overall affordability implications should not rest solely with the
Planning Authority. The Committee is of the view that other referral authorities should
progressively have regard to and take into account the possible affordability implications of
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their requirements. Likewise affordability should be considered when assessing whether
there is sufficient justification to pursue introduction of a Supplementary Levy.
At this point, it is important to highlight that the Committee has recommended a significant
review of the current methods associated with identifying, valuing and securing land for a
range of public purposes. As set out in Chapter 8, the review has been recommended to
reduce the risks associated with the process that currently threatens successful
implementation of the current DCPs. It will define a more transparent and equitable
approach toward land valuation and compensation.
The infrastructure priorities are to be set out in a Development Levy Plan for each planning
unit. The level of work required to produce the Development Levy Plan in Growth Areas will
be greater than in Urban Areas. In Growth Areas sufficient work will need to be done to
identify and cost each item of infrastructure and specify the public land requirements (or
land budget). It is expected that this will involve the use of functional layouts and/or
quantity surveyor assessments for buildings, roads and other construction so that there is a
reasonable level of certainty in determining what can be accommodated in the Standard
Levy, and whether there is a case for a Supplementary Levy. More detailed plans and cost
estimates will be required to provide greater certainty for Councils and developers in
negotiating works in kind agreements.
5.7
Additional Levies in Growth Areas
(i)
Supplementary Levies
In the Committee’s Report 1, it was suggested that there may be an option to prepare a DLS
as an alternative to the Standard Levy, and that the DLS would effectively take the form of a
modified DCP.
In this report, the Committee has confirmed that the Standard Levy for Growth Areas as
proposed would be mandatory, and that any variation to the Standard Levy would take the
form of either a reduction to the Standard Levy, or the introduction of one or more
Supplementary Levies. The important distinction is that the Supplementary Levy is not an
alternative to the Standard Levy, but rather an additional levy available only under specific
circumstances. The Planning Authority cannot of its own volition simply choose to pursue
the introduction of one or more Supplementary Levies.
It is proposed that through the PSP process, the Planning Authority (in conjunction with the
relevant Council where the Council is not the Planning Authority) will determine the
necessary infrastructure requirements and costings as per the current typical PSP approach.
The Planning Authority will be required to assess infrastructure requirements in relation to
the ‘budget’ provided by revenue raised by the overall Growth Area Standard Levy and
within the three infrastructure categories. This process assumes that if savings can be
identified within one infrastructure category that funds can be redirected from one category
to the other within the overall ‘budget’ of $268,000. The only restriction to this is that the
total money allocated to Community and Recreation construction must not exceed the fixed
cap ($80,000 per hectare).
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Where a reasonable standard of infrastructure provision cannot be achieved within the
Standard Levy, the Planning Authority may make an application to pursue introduction of
one or more Supplementary Levies. The Committee proposes that such applications be
referred to an Infrastructure Standing Advisory Committee (ISAC3) for advice on whether
authorisation should be granted to proceed with the Supplementary Levy/s via a full
Planning Scheme Amendment process. The ISAC will be required to assess the validity of the
request for exhibition purposes. During the assessment process, the ISAC will meet with the
Planning Authority (and relevant Council), and developers to consider:
 Whether there are physical or other conditions that warrant introduction of one or
more Supplementary Levies for particular items;
 Whether the Standard Levy could achieve an acceptable level of infrastructure
provision without introduction of a Supplementary Levy/s;
 Whether other infrastructure could be provided at a lesser standard/cost to avoid
introduction of a Supplementary Levy/s;
 The standard and costing of the Supplementary Levy project/s to ensure that they
have been reasonably defined and costed; and
 The affordability implications of the inclusion of a Supplementary Levy.
In making its assessment, the ISAC will have the ability to seek further information in relation
to any matter that it considers relevant to make this assessment. In making its assessment
and providing advice, the ISAC will either recommend:
 Rejection of the request for authorisation and further recommend that the
Development Levy System proceed without inclusion of a Supplementary Levy; or
 Rejection of the request for authorisation and recommend that the Supplementary
Levies be reduced in scope; or
 Approval of the request for authorisation of a Supplementary Levy.
What must be noted, however, is that the authorisation process does not guarantee that the
Supplementary Levy/s will be ultimately approved, as authorisation will only achieve
approval to exhibit an Amendment. Should an Amendment that includes one or more
Supplementary Levy/s be exhibited, the entire Development Levy System will be the subject
of more detailed analysis and review. A further ISAC or Panel Hearing will be held to
consider not only the merits or otherwise of the Supplementary Levy, but also critically
examine whether the additional items can be accommodated within the Standard Levy. This
approach is more onerous than the process associated with an Amendment that only seeks
to apply the Standard Levy, where the Levy amounts will not be subject of external review
and submission. (See Appendix G for a flowchart that summarises the proposed process.)
(ii)
Reducing a Standard Levy
A Planning Authority may seek to reduce the Standard Levy where the Development Levy
Plan clearly shows that the cost of infrastructure and land requirements are below the
3
The Committee has discussed the concept of an Infrastructure Standing Advisory Committee (ISAC) as
an example of the type of review body it is advocating to assist in the introduction and implementation
of the new Development Levy System. This is but one example of how it might operate, and there may
be other forms or models which DPCD might want to explore. For consistency throughout the
remainder of the report, the Committee will continue to refer to the ISAC.
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Standard Levy. The Planning Authority will be required to provide reasons why a reduction
is proposed.
Where an application is referred to the ISAC, that Committee will meet with the Planning
Authority and developer to consider:
 Whether there are physical or other conditions that warrant reduction of the
Standard Levy;
 Whether the reduced Standard Levy could achieve an acceptable level of
infrastructure provision; and
 The affordability implications of a reduced Standard Levy.
If requested in making its assessment and providing its advice, the ISAC will either
recommend:
 Rejection of the request for authorisation and further recommend that the Standard
Levy be applied; or
 Approval of the request for authorisation.
Once authorised for exhibition, an Amendment that includes any reduction to the Standard
Levy will not be subject of submission.
The process for seeking approval of a Supplementary Levy is further dealt with in Chapter 13
(Administration and Implementation) and included in the draft Practice Note included in
Appendix E and the Overview of Implementation Processes at Appendix G.
(iii)
Drainage Levy
The Drainage Levy is available as an additional levy in non-metropolitan areas where the
Council is the responsible authority for drainage head works. Drainage has been excluded
from the Standard Levy due to the wide variation in costs of drainage schemes and the
difficulty in aligning drainage scheme boundaries to planning unit boundaries.
The level of justification for applying the Drainage Levy will simply be the existence of a
catchment drainage plan. It will not be necessary to demonstrate any relationship to the
Standard Levy and the calculation of the quantum of the levy is independent of the Standard
Levy. The Drainage Levy is available at the discretion of the Planning Authority and should
be based on the catchment drainage plan.
(iv)
Developer funded works
A separate Supplementary Levy may also be struck for fully developer funded works in some
circumstances where it is desirable to use the Development Levy System to administer funds
and coordinate works in kind. Examples might include where local collector roads are the
joint responsibility of multiple landowners and a mechanism is needed to collect and
distribute funds for construction.
In these cases, the work must be fully funded by developers and the separate levy will be
available only at the discretion of the Planning Authority and by agreement of the owners of
the majority of the land.
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5.8
Overall Conclusions
The Committee concludes that the Standard Levy should be mandatory in all future PSPs,
and there should be a requirement to actively work towards an infrastructure budget that is
known from the outset once the net developable area has been calculated.
The requirement to work to a known budget will ensure that overall affordability levels are
vigilantly maintained and that any increases or reductions are assessed and treated as
exceptions rather than a choice. Where the Planning Authority seeks to pursue a
Supplementary Levy/s, there will be significantly increased information and assessment
requirements involving both the ISAC authorisation process and the prospect of a further
ISAC and/or Panel Hearing.
The Committee is of the view that the Planning Authority should make every effort to utilise
the Standard Levy before contemplating lodgement of an application to pursue a
Supplementary Levy. In terms of the ISAC assessment process, it is likely that the process
will be iterative and will require the ISAC to fully and carefully consider the basis of the
request.
5.9
Recommendations
The Committee makes the following recommendations:
 That the levies for residential development in Growth Areas be adopted as set out
in Table 20.
Table 20
Recommended Levies for Residential Development in Growth Areas
Setting
Standard Levy
Additional Levies
Residential
Growth Areas
Metropolitan
$268,000 per net developable
hectare
Supplementary Levy available only in specific
circumstances for transport or land
Developer funded works levy
Growth Areas
Nonmetropolitan
Large Regional Councils
$210,000 per net developable hectare
Supplementary Levy available only in specific
circumstances for, transport or land
OR
Drainage Levy available
Middle Growth Regional Councils
Developer funded works levy
$120,000 per net developable hectare
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6
Levies for Urban and Strategic Development Areas
6.1
Overview
The Committee has reviewed three possible methods for setting levies in Urban Areas and
Strategic Development Areas including:
 Using averages of historical DCP costs;
 Examining relativities to the Growth Areas levies; and
 Building up levies from typical infrastructure requirements for a typical Council.
The Committee reviewed capital works data provided by Local Government Victoria and
quickly concluded that the wide variability in the type of infrastructure included in Councils
capital works programs and the variation in needs for new infrastructure makes it
impractical to attempt to build up a picture of a ‘typical’ levy from current data.
The Committee has therefore relied on an analysis of previous DCPs and comparisons with
proposed Growth Area levies to formulate a recommended levy for Urban Areas and
Strategic Development Areas. In arriving at the recommended levies, the Committee has
also considered:
 Benchmarking with other states; and
 The impact of the proposed levies on Councils annual capital works program.
6.2
Submissions and Consultation
Councils supported the introduction of a Standard Levy in Urban Areas and strongly
supported the concept of the levies being available with a lower level of justification than
exists under the current DCP system. Councils and other stakeholders submitted that
development in existing Urban Areas was getting somewhat of a ‘free ride’ by generally not
contributing to the upgrade of infrastructure in those areas. Submitters generally accepted
that allowing for a Standard Levy in Urban Areas as well in Growth Areas was more
equitable.
The Housing Industry Association however, opposed the application of Standard Levies in
Urban Areas, arguing that to do so would adversely affect small developers and builders,
further exacerbating housing affordability issues and discouraging the supply of housing in
inner areas. The HIA argued that it is “not equitable to charge small scale urban infill
developments a contribution towards the provision of infrastructure upgrades that benefit a
much broader area”. The Committee can understand the thrust of this argument, but
believes that new development should pay a share of costs in proportion to likely usage.
Notwithstanding there was general support for the levy being applied on a per dwelling basis
for residential development, that is, for an increase in net dwellings on a lot – not for
replacement dwellings or renovations.
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6.3
Review of Previous DCPs
(i)
Urban Enterprise reviews
The Urban Enterprise report Indicative Standard Levies for Local Development Contributions
May 2012 reviewed 24 metropolitan and 14 non-metropolitan DCPs completed between
2006 and 2012. The work reviewed greenfield and infill DCPs, concluding that infill
development typically generates infrastructure costs at approximately 25% of the cost of
equivalent greenfield development. Based on this approximation, a fixed infill levy of $3,629
per dwelling can be derived in Urban Areas excluding drainage and land cost. In regional
areas the fixed levy derived using the same methodology was $3,660 per dwelling including
drainage but excluding land cost.
A further report by Urban Enterprise, Review of Local Infrastructure Charges for Regional
and Rural Councils June 2012, analysed 10 non-metropolitan DCPs completed between 2005
and 2011 and reported that average contributions were $2,671 per dwelling for infill areas
and $6,867 per dwelling for Growth Areas. This analysis included development
infrastructure and community infrastructure and included allowance for land for roads,
community facilities and open space.
(ii)
Existing urban DCPs
Table 21 provides a review of existing DCPs in planning schemes in metropolitan areas:
Table 21
Current Metropolitan DCPs
Range
Most typical
Charge areas
Comments
$193 to $2,285 per
dwelling
$200 to $600 per
dwelling
12
10 year plan proposed
based on very detailed
list of projects
Darebin (2004)
$128 to $3,626 per
unit for works
greater than
$100,000
$500 to $1500
225
Very complex charge
area system, due to
expire in 2014.
Manningham
(Doncaster Hill)
$2,139 per dwelling
1
Maribyrnong
$450 per dwelling
1
Community Services
charge only
Nillumbik
$2,066 to $16,382
per dwelling
4
3 separate DCPs, more
akin to a Strategic
Development Area
Moreland
(on exhibition
2013)
(iii)
Proportion of Growth Area levies
Another approach to arriving at an appropriate levy in Urban Areas would be to apply a levy
that is proportionately reduced from the Growth Areas levy. Using the 25% comparison
figure adopted by Urban Enterprises in Indicative Standard Levies for Local Development
Contributions May 2012 this would lead to a figure of $268,000 divided by 15 dwellings per
hectare x 25%, that is - $4,467 per dwelling. This effectively ‘discounts’ all elements of the
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Growth Areas levy equally by 75%. The Committee considers that the infrastructure
components should be looked at individually to give a more accurate comparison.
The components of the metropolitan Growth Areas levy are as follows:
 Community and Recreation $80,000 per hectare = $5,333 per dwelling;
 Transport $77,000 per hectare = $5,133 per dwelling;
 Public Land $111,000 per hectare = $7,400 per dwelling; and
 Drainage $0 (applies to non-metropolitan only).
The Committee considers that it is reasonable to assume the 75% reduction for the
Community and Recreation and Transport components. This allows for the pre-existence of
a reasonable degree of these facilities and infrastructure in established Urban Areas. Land is
generally not required for infrastructure upgrades in established Urban Areas and the
Committee believes a much greater reduction could apply. A 95% reduction is suggested as
more appropriate for land. Some allowance for drainage upgrades is also appropriate to be
added, as in Urban Areas Councils will have assumed responsibility for drainage assets that
in Growth Areas are initially provided as fully developer funded items.
This leads to a derived levy using this method of:
 Community and Recreation = $5,333 per dwelling x 25% = $1,333;
 PLUS Transport = $5,133 per dwelling x 25% = $1,027;
 PLUS Public Land = $7,400 per dwelling x 5% = $370
 PLUS Drainage = Allow (say) $300 based on existing urban DCPs.
 This gives a TOTAL of $3,030 per dwelling.
This equates to a figure of around 17% of the total Standard Levy for Growth Areas based on
15 dwellings per hectare, or 23% based on 20 dwellings per hectare in the established Urban
Areas.
(iv)
Levies in other States
As noted in Chapter 1, the Committee looked at development levy systems in New South
Wales and Queensland. In NSW, development levies are typically charged at 1% of the cost
of development or, if a Council wants to prepare a more detailed contributions plan, levies
are capped at $20,000 per dwelling in established Urban Areas. A recent NSW government
White Paper (April 2013) proposes a review of infrastructure contributions and suggests the
use of a ‘standard rate’ system where Councils can apply to increase the standard rate
where justified. There is nothing in the White Paper in relation to the quantum of any
proposed new standard rates.
Under the most commonly used Section 94A system, Councils in NSW typically have a lower
rate for smaller developments (e.g. Up to $100,000 development cost = Nil; $100,000 to
$200,000 development cost = 0.5% of development cost; greater than $200,000 = 1% of
development cost) and, in some cases, identify particular areas such as activity centres or
higher Growth Areas at a higher percentage (e.g. Gosford City Centre = 4%; Parramatta and
Newcastle City Centres = 3%).
The NSW Section 94A levies equate to between $2,000 and $3,000 per dwelling for a typical
$200,000 to $300,000 new house build, increasing up to $8,000 to $12,000 per dwelling for
the same type of development in activity centres such as Gosford.
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In Queensland, levies in infill areas are capped at $20,000 per lot for dwellings up to 2
bedrooms and $28,000 per lot for dwellings for 3 bedrooms or more. The Committee was
advised that many Councils, even in rural areas with low growth levels, charged the
maximum levy as a default. In other municipalities, local variations have been made to
encourage certain types of development. For example, Brisbane City Council has waived
development charges for developers wanting to build a 5 star hotel in Central Brisbane.
Development contributions in Queensland can also be triggered by a change of use. It is
noted that the Queensland Government is in the process of reviewing development charges.
6.4
Proposed Levies
(i)
Metropolitan Urban Areas
As can be demonstrated from the discussion above, there are a number of possible ways to
look at an appropriate level for levies in Urban Areas and Strategic Development Areas.
There is no one method of coming up with a scientifically defensible ‘right answer’.
Based on the previous work done on existing DCPs, the Committee’s own enquiries,
comparisons with the Growth Area Standard Levies and the limited benchmarking, the
Committee considers that the Urban Area levy in metropolitan areas should be somewhere
in the range of $2,700 to $3,600 per new dwelling. One of the challenges of trying to come
up with a Standard Levy that can be broadly applied is to arrive at a figure that is appropriate
in most cases. For that reason the Committee favours a levy that is at the lower end, but not
at the bottom of the range, and proposes a metropolitan Urban Areas Standard Levy of
$3,000 per dwelling for any net increase in the number of dwellings on a lot. This includes
houses, units, apartments, and townhouses, irrespective of size, location and the number of
bedrooms. The Committee has acknowledged however, that there should be some
exemptions to this, and these are provided for in Chapter 6.6.
The Committee is of the view that infrastructure planned for and included in the capital
works programs of the vast majority of metropolitan Councils, and the clear nexus with
population growth, justify a levy at this level.
The Committee believes that in metropolitan Melbourne, there is clear evidence that urban
consolidation is placing increasing demands on infrastructure. Unless there is a convincing
case to the contrary, a levy of $3000 per new dwelling is justifiable, and should be regarded
as the default Levy. In most existing areas there is currently no levy on new dwellings. The
Committee notes that some of the existing DCPs in metropolitan municipalities are charging
significantly less than $3,000 per dwelling. The Committee considers that this is more a
function of the complexity of the current system and perhaps an unwillingness to set a levy
too high when neighbouring Councils have no levy. Further, the Committee considers that
the low existing levies do not go far enough to assist with infrastructure delivery in any
meaningful way.
The Committee is conscious that there is a large inequity in the current system with Growth
Area developers paying upwards of $15,000 per dwelling and developers in in-fill areas
generally paying very little or nothing in most cases. A broad based levy in the Urban Areas
and access to a higher levy in Strategic Development Areas goes some way to addressing this
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inequity and ensuring that the standard of infrastructure delivery in in-fill areas is not
significantly worse than in new Growth Areas.
The Committee looked at the option of having a range of levies for different Councils, with
the levy to apply to each level based on average land value in the Municipality. It was
suggested to the Committee that this may provide better relativity between the levy and the
cost of building a dwelling. The Committee elected not to have a range for a number of
reasons. Firstly, the infrastructure requirement generated by an expensive dwelling is no
greater than for a less expensive one. The nexus is based on population increase. Secondly,
it would be difficult, and in some cases unfair, to assign an average land value to an area
when the land values within a municipality can vary greatly. Thirdly, having a Standard Levy
that is fixed removes any chance of political influence at the local level.
The Committee also considered whether the Urban Areas Standard Levy should be
calculated on a per bedroom basis as it is in Queensland. The Committee felt that this
introduced a level of complexity that is unwarranted and potentially open to misuse.
(ii)
Non-Metropolitan Urban Areas
The Committee received submissions that there are circumstances in regional and rural
areas where a lower levy might be appropriate in smaller scale Urban Areas or townships.
Reasons why a lower levy might be appropriate include:
 Some smaller settlements have spare capacity in existing facilities because certain
items of infrastructure are already provided or readily accessible, even though
population levels are below those which would trigger the need for such
infrastructure in Melbourne or regional cities. This may include infrastructure such
as community halls and sports ovals;
 There are only small increases in population in some rural townships. These cannot
be seen in the same context as much of the urban consolidation occurring in larger
centres. The growth may be such that the extent of impact on infrastructure is lower
and therefore a higher levy cannot be justified;
 New dwellings may be constructed in some townships which are experiencing overall
population decline and it may be considered anomalous to impose a levy in such a
situation;
 The proposed default levy of $3,000 as a percentage of the typical house/land
package is likely to be much higher in many rural townships and a lower levy (or
waiving the levy) maintains some equity with respect to the percentage of the house
land package; and/or
 Where population growth is low but there are some infrastructure needs, and the
Council believes that a levy of $3000 per dwelling may result in investment being
directed elsewhere.
For these reasons the Committee proposes the additional option in non-metropolitan areas
of a $1,500 per new dwelling levy. The option of this lower levy, along with the option of
waiving the levy in certain circumstances, will provide non-metropolitan Councils with the
flexibility to deal with the needs of smaller settlements without compromising the growth of
larger centres, where the $3,000 per dwelling option will still be available.
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(iii)
Strategic Development Areas
The Committee believes that the Strategic Development Area Standard Levy should provide
the opportunity to fund the infrastructure needs of developments that range from
significant intensification of use to new greenfield development (or brownfield) which does
not have the scale to be considered a Growth Area. The Committee feels that the quantum
of the levies for Strategic Development Areas should similarly occupy this middle ground
between the Urban Area and Growth Area Standard Levies. Based on the analysis and
benchmarking discussed above, and the relativity to the levy for other Development
Settings, the Committee considers that Strategic Development Area Standard Levies could
be in the range $4,500 to $12,000 per net new dwelling. Bearing in mind that a higher level
of justification will be required to demonstrate that the higher levies are warranted, and
Supplementary Levies are available in Strategic Development Areas for exceptional
circumstances, the Committee believes that levies should be set towards the lower end of
this range.
The Committee proposes a Standard Levy for Strategic Development Areas of $4,500 and
$6,000 per new dwelling. To justify the lower of these two levels, the demonstrated level of
infrastructure needed must be significantly in excess of what could be funded by the
application of a Standard Levy of $3,000. To have a Levy of $6,000 approved, demonstrated
infrastructure needs will need to be significantly in excess of the revenue that the $6,000
levy would generate given that revenue from the Levy is expected to be only a contribution
to infrastructure needs.
The Committee recognises that this sets a higher bar for accessing the Strategic
Development Area Standard Levy, which it considers to be appropriate.
6.5
Contributions to Councils Capital Works Programs
The Committee has reviewed the level of revenue that would be generated by the new
Urban Areas Standard Levy at the recommended rates. For the purposes of this review, the
Committee has grouped each Local Government Area (LGA) based on its location and the
volume of new development (Refer to Appendix D).
In order to understand the impact a Standard Levy may have, the Committee has considered
data on the number of dwelling approvals (past and projected) for each Victorian LGA. The
Committee has used the annual building approvals for dwellings by LGA since 2008 based on
ABS data. This is the number of dwellings approved per year based on building permit data
from the Building Commission. While this does not illustrate net increase in dwellings
because it does not account for demolitions and replacement dwellings, it is considered
appropriate as only a small number of dwelling approvals involves the demolition and
replacement of a dwelling.
The Committee has also considered the Victoria in Future dwelling projections which include
dwelling projections for a 5 year and 20 year period for each LGA in Victoria.
Based on the proposed rate for the Urban Areas Standard Levy, Councils could raise
substantial additional funds to support infrastructure upgrades. Table 22 shows average
annual levies based on applying $3,000 per dwelling for metropolitan Councils, peri-urban
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
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and larger regional centres. An average of $1,500 per dwelling has been applied for the
other regional areas. Metropolitan Growth Area Councils and Geelong and Ballarat have
been excluded from this analysis as they would distort the figures.
Table 22
Indicative Levy Revenue for Victorian LGAs
LGA Group
Average
Levy
Assumed
Annual
Average
Dwelling
Approvals
2008-2012
(ABS, 2011)
Approx.
Annual 20082012
Development
Contribution
Annual
Average
Projected net
change in no.
Dwellings (VIF
2011-2016)
Approx.
Annual 20112016
Development
Contribution
(per
dwelling)
(per LGA)
(per LGA)
(per LGA)
(per LGA)
City of Melbourne
$3,000
3,432
$10.3m
2,607
$7.8m
Inner City
$3,000
998
$3m
638
$1.9m
Inner-Middle
$3,000
1,011
$3m
775
$2.3m
Middle Ring
$3,000
750
$2.3m
452
$1.4m
Outer
$3,000
756
$2.3m
666
$2m
Outer Peri-urban
$3,000
703
$2.1m
447
$1.3m
Regional Centres
$3,000
357
$1.1m
364
$1.1m
Regional LGAs
$1,500
362
$543.2k
346
$518.4k
Regional LGAs without
significant Growth
$1,500
70
$104.6k
69
$103.8k
Note to Table 22:
This data takes into account all dwellings, not the net increase in dwellings which the Committee proposes will
be subject to the Standard Levy
The Committee has considered how much revenue the Urban Areas Levy would raise as a
percentage of each Council’s annual Capital works program. Table 23 is based on the ABS
Capital Asset Outlay 2011-2012 obtained from Local Government Victoria and the number of
dwelling approvals in 2012. It illustrates that Councils may be able to raise between 1% to
14% of capital works programs from the new Urban Areas Standard Levy. This is considered
reasonable given that the large majority of capital works in existing areas will be
replacement or upgrading of infrastructure, the benefits of which will go largely to existing
residents. The Committee acknowledges that the level of development will vary significantly
from year to year and that capital expenditure is also ‘lumpy’.
Whilst it is theoretically possible under the current DCP system to raise these levies, the
current system is difficult and time consuming to implement and, in practice, is seldom used.
The level of funds raised from the new levies should allow Councils to bring forward
proposed projects, or implement new projects that fall within the Allowable Items, that
would not have been possible under the existing approach.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
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Table 23
Indicative Levy Revenue as percentage of Capital Expenditure
LGA Group
Average Levy
Assumed
ABS Capital Asset
Outlay 2011 2012
Dwelling
Approvals in
2012
Development
Contributions
2012
% of Annual
Capital
Expenditure
(per dwelling)
(per LGA)
(per LGA)
(per LGA)
(per LGA)
City of Melbourne
$3,000
$136,926,000
6522
$19,566,000.00
14%
Inner City
$3,000
$26,113,617
709
$2,126,000
8%
Inner-Middle
$3,000
$48,706,563
1286
$3,859,000
12%
Middle Ring
$3,000
$36,599,043
817
$2,451,900
8%
Outer
$3,000
$35,741,989
707
$2,119,800
6%
Outer Peri-urban
$3,000
$28,212,378
586
$1,759,000
6%
Regional Centres
$3,000
$24,376,476
303
$910,000
4%
Regional LGAs
$1,500
$17,515,890
315
$472,666
3%
Regional LGAs without
significant Growth
$1,500
$11,404,014
64
$95,275
1%
Source: Victoria in Future projections and data provided by Local Government Victoria
The data for each Victorian LGA is provided in Appendix D. It should be noted that the
information on capital expenditure and estimated levies is based on a 2012 ‘snapshot’ of
data and therefore is indicative only. The Committee nevertheless believes that the
information is useful in showing the order of magnitude of revenue that might be able to be
collected through the new Development Levy System.
6.6
Exemptions to the Standard Levy
The trigger point for the obligation to pay the Standard Levy in residential areas is proposed
to be the creation of a dwelling. Unless exempted this would include both the construction
of a new dwelling and the modification of an existing dwelling to create a new dwelling.
The following development and uses are proposed to be exempt from the Standard Levy:
 An extension to an existing dwelling that does not create a new dwelling;
 The replacement of an existing dwelling;
 Building a single dwelling on a vacant lot which has not previously been built on;
 A dependant persons unit;
 Residential aged care facility; and
 Social or affordable housing projects undertaken by a State agency (such as the
Office of Housing or Places Victoria) or recognised Housing Associations.
Other exemptions may be considered and applied upon finalisation of the legislation to
introduce the Development Levy System.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
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6.7
Supplementary Levies in Strategic Development Areas
The Committee has proposed that a Supplementary Levy can be applied in Strategic
Development Areas where it can be demonstrated that the infrastructure costs to be
incurred as a result of the proposed development exceed the amount of revenue to be
generated by the Strategic Development Area Standard Levy by a significant margin. This
would usually occur because of the scale and complexity of the development, such as
Fishermen’s Bend, Moonee Valley Racecourse and the Amcor site.
The Committee has found the task of identifying the circumstances where a Supplementary
Levy might be justified in Strategic Development Areas to be particularly challenging. The
key reasons for this is the wide variety of development scenarios this Development Setting
needs to be able to accommodate, and the fact that there are no readily definable
benchmarks for what scale of infrastructure could be covered by the Standard Levy, or even
what proportions of the revenue collected might be allocated to particular infrastructure
categories. Both of these factors are better defined in the Growth Areas Development
Setting. The second of these two factors is the reason flexibility is given to what
infrastructure types the revenue collected from the Standard Levy is expended upon.
Whichever approach is used to identifying infrastructure upon which a Supplementary Levy
might be based, there is a clear first step to this process. A Structure Plan would be
prepared for the planning unit, including an infrastructure plan which provides strategic
justification for the infrastructure proposed and a list of items of infrastructure from the list
of Allowable Items for the Supplementary Levy for the Strategic Development Areas. It
should be noted that in Strategic Development Areas this does not include items of
Community and Recreation infrastructure. Where it is intended that a Supplementary Levy
apply, the ‘non-normal’ items of infrastructure which will add significantly to the total cost
should be strategically justified in terms of:
 Need generated by the development;
 Nexus to the development;
 How the infrastructure is aligned with the target market of the development
(particularly for works in the public realm); and
 Affordability in relation to the market niche for the development.
Costs of the infrastructure must then be apportioned to the Strategic Development Area in
proportion to projected usage (if applicable).
The Committee considered a number of approaches to defining the conditions under which
a Supplementary Levy might be applied and these can be broadly termed:
 Meeting defined conditions;
 When exceptional circumstances apply;
 Defined proportions applied to the main infrastructure categories;
 Where there are abnormal costs; and
 Applied to new infrastructure only.
The Committee is recommending the first approach, that is a Supplementary Levy might
apply if certain conditions are met. These are proposed to be as follows:
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
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
One or more items of strategically justified infrastructure are of such scale and/or
cost that funding of the infrastructure, appropriately apportioned to the
development, demonstrably cannot be provided from the revenue proposed to be
raised by applying the maximum Standard Levy; plus one of the following two
conditions:
1. The location of the development is such that the item(s) of infrastructure is
required for efficient access to, or operation of, the community the development
serves; OR
2. The strategically justified item(s) of infrastructure are required to ensure that the
development implements a clearly defined vision which serves a specialist market
or need that cannot be appropriately met from the Standard Levy.
Where these conditions are met in proposing a Supplementary Levy the Planning Authority
should indicate:
 The total amount of funds to be raised from the Supplementary Levy proposed for
each item of infrastructure, and the Levy for each category of land use to which it is
proposed apply the levy;
 The proportion of the cost of each item of infrastructure to be funded from the
Standard Levy (if any), the Supplementary Levy, and other sources of revenue; and
 How the conditions set out above are met for each item of infrastructure.
In addition, infrastructure items considered to be normally fully funded by the developer
may be funded through a Supplementary Levy where there is fragmented ownership of the
area and this is the most efficient method of funding such infrastructure.
The other approaches considered by the Committee and the reasons why they have not
been used are as follows:
Exceptional circumstances
The Committee is of the view that most infrastructure should be able to be funded from the
Standard Levy and that it is only in ‘exceptional circumstances’ that a Supplementary Levy
might apply. However the Committee was counselled strongly by VPELA against the use of
this term as a criterion. The reason for this is that it is a term which is very difficult to define
and consequently, this approach is not proposed.
Proportions of infrastructure expenditure
The Committee examined the possibility of defining an approach based around the costs of
particular infrastructure categories being significantly above the norm for that category.
This approach was not pursued for two reasons, firstly the proportion of expenditure on
infrastructure types varies widely between developments in areas that the Committee views
as most likely to be considered as Strategic Development Areas; and secondly there is no
supportive data upon which to base such ‘norms’.
Abnormal costs
Intuitively, significantly above normal costs would seem to be a reasonable basis for a
Supplementary Levy. However because of widely varying types of infrastructure and
infrastructure needs, there is again no easily definable ‘norm’ around which such an
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 73 of 135
approach is readily based. Strategic Development Areas are somewhat different from
Growth Areas in this respect.
New infrastructure
In Chapter 2, the Committee indicated that one characteristic which differentiates Strategic
Development Areas from Urban Areas is that the former is likely to be of a scale that more
likely will give rise to the need for new infrastructure in its own right. Whilst not resiling
from this description, the Committee is of the view that there may be other situations where
significant costs are incurred from adding to existing infrastructure, for example the addition
of an extra traffic lane to an existing arterial road, major intersection works or enhancing
existing public space by significant high quality public realm improvements. For these
reasons this approach was not pursued.
6.8
Recommendations
The Committee makes the following recommendations:
 That the levies for residential development in Urban Areas and Strategic
Development Areas be adopted as set out in Table 24.
Table 24
Recommended Levies for Urban Areas and Strategic Development Areas
Setting
Standard Levy
Supplementary Levies
Residential
Urban Areas:
Metropolitan
$3,000 per dwelling
Not available
Urban Areas:
NonMetropolitan
$1,500 per dwelling
Not available
Strategic
Development
Areas:
$4,500 per dwelling
Metropolitan
Strategic
Development
Areas:
NonMetropolitan
OR
$3,000 per dwelling
OR
$6,000 per dwelling
Available only in specific circumstances for
drainage, transport or land or Developer
funded items
Subject to justifying additional projects
with clear nexus to the planning unit
$4,500 per dwelling
OR
$6,000 per dwelling
Available only in specific circumstances for
drainage, transport or land or developer
funded items
Subject to justifying additional projects
with clear nexus to the planning unit
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 74 of 135
7
Levies for Non-Residential Land Uses
7.1
Overview
The Terms of Reference require the Committee to provide:
Advice on how development contributions should be applied to residential and
non‐residential development, including retail, commercial and industrial
development, in each of these Development Settings.
The Committee determined not to deal with this issue as part of its Stage 1 process, as it was
keen to consult more widely about a non-residential levy and receive specific submissions on
this aspect.
It is proposed by the Committee that residential levies be set as follows:
 Growth Areas: per net developable hectare;
 Strategic Development Areas: per net increase in dwellings; and
 Urban Areas: per net increase in dwellings.
The issue addressed here is how the levies set could apply to a wide range of non-residential
uses in addition.
The overarching principle adopted by the Committee is that non-residential development
should be levied in proportion to the demand for infrastructure that the development
generates a demand for.
The current development contributions system provides for levies to be applied to some
non-residential uses. The Development Contributions Guidelines 2007 applies levies to a
‘demand unit’ where one dwelling is one demand unit. The Guidelines include a table to
convert a range of other uses to the common base of a demand unit. This equivalence table
is reproduced as Table 25.
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Page 75 of 135
Table 25
Equivalence Table from the DCP Guidelines, 2007
Infrastructure Category
Road
Drainage
Parkland
Community
Facilities
Residential
1 dwelling = 1
demand unit
1 dwelling = 1
demand unit
1 dwelling = 1
demand unit
1 dwelling = 1
demand unit
Retail premises
19 m2 fl. space = 1
demand unit
300 m2 site area =
1 demand unit
not applicable
not applicable
Office/ service
industry
121 m2 fl. space =
1 demand unit
360 m2 site area =
1 demand unit
not applicable
not applicable
Industry (other than
service industry)
67 m2 fl. space = 1
demand unit
540 m2 site area =
1 demand unit
not applicable
not applicable
Primary schools
3.42 students = 1
demand unit
540 m2 site area =
1 demand unit
not applicable
not applicable
Secondary schools
3.48 students = 1
demand unit
540 m2 site area =
1 demand unit
not applicable
not applicable
Tertiary institution
5.06 students = 1
demand unit
540 m2 site area =
1 demand unit
not applicable
not applicable
Hospitals
0.67 beds = 1
demand unit
540 m2 site area =
1 demand unit
not applicable
not applicable.
Land Use
Source: DCP Guidelines, as amended.
The Guidelines state that these equivalence ratios may need to be altered to suit local
conditions. The equivalence ratios assume that non-residential uses generate no demand
for recreation and community infrastructure. In the consultation undertaken for Report 1,
the Committee was informed that this is not the case in the City of Melbourne, where
workers who reside in other areas can place significant demand on City of Melbourne
community and recreation infrastructure. The Committee notes that this may be the case in
other major employment nodes, including Activity Centres. Equivalence ratios have not
been used in the preparation of growth area DCPs since 2010.
Table 25 above includes equivalence ratios for schools. The Committee notes that
development levies are not imposed on state schools. The Government has recently
determined that development levies should not be imposed on private schools in Growth
Areas as set out in a Ministerial Direction issued in January 2012.
To assist in developing Levies for non-residential development uses, the Committee
commissioned Urban Enterprise to provide detailed documentation of the comparative
approach to levies for non-residential uses in Growth Area DCPs prepared since 2008.
Part of the data presented as part of that work is set out in Table 26.
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Page 76 of 135
Table 26
Non-Residential Levy Amounts by DCP Area and Development Type
Year
DCP
2012
Residential
DIL
Levy
(per Ha)
Development Type
(As defined by
each DCP)
Developm
ent Units
in DCP
Area
Non-Residential
Development
Levy Payment
($2012)
Payment
made per
unit
2008
Cardinia Road
Precinct Cell 1
Retail
350m2
$80,814
266.3m2
Non-Retail/Peripheral
Commercial
150m2
$80,814
1696.2m2
2008
Cardinia Road
Precinct Cell 2
Retail
17500m2
$49,203
266.3m2
Non-Retail/Peripheral
Commercial
7500m2
$49,203
1696.2m2
2008
Cardinia Road
Precinct Cell 3
Retail
3500m2
$41,142
266.3m2
Non-Retail/Peripheral
Commercial
1500m2
$41,142
1696.2m2
2008
Cardinia Road
Precinct Cell 5
Retail
350m2
$82,891
266.3m2
Non-Retail/Peripheral
Commercial
150m2
$82,891
1696.2m2
2008
Cardinia Road
Precinct Cell 6
Retail
7000m2
$83,588
266.3m2
$199,084
Non-Retail/Peripheral
Commercial
3000m2
$83,588
1696.2m2
2010
Cranbourne
West Area 1
$24,415
Business AC
7.98ha
$120,268
1 ha
Industry
341.55ha
$74,668
1 ha
2010
Cranbourne
West Area 2
$200,997
Activity Centre
7.45ha
$127,000
1 ha
2010
Cranbourne
East
$156,136
Employment
33.96ha
$101,353
1 ha
2010
Taylors Hill
West
Retail
900m2
$118,745
295m2
$223,427
Non-Retail/Peripheral
Commercial
200m2
$118,745
1882m2
2010
Toolern Area
4 (Employ.)
$0
Employment
498.75ha
$89,962
1 ha
2011
Clyde North
$257,720
AC/Employment
5.87ha
$110,372
1 ha
2011
Officer
$284,441
Differential Rate
14.25ha
$190,081
1 ha
2011
Cranbourne
North (Sg 2)
$227,562
Employment
37.19ha
$100,581
1 ha
2012
Manor Lakes
$123,517
Activity Centres
10.33ha
$123,517
1 ha
2012
Merrifield
West
$219,151
AC/Mixed Use
12.4ha
$219,151
1 ha
2012
Diggers Rest
$209,043
35.4ha
$102,259
1 ha
2012
Lockerbie
North
$254,858
Activity Centre
11.4ha
$254,858
1 ha
2012
Ballarat West
$247,562
Commercial & Ind.
37.77ha
$163,834
1 ha
2012
Armstrong
Creek East
$207,613
Activity Centres
6.5ha
$103,569
1 ha
2012
Armstrong
Creek West
$234,747
Activity Centres
2.17ha
$120,075
1 ha
$176,712
$141,072
$167,961
$207,772
Retail/Employment/
Non-Govt School
Source: DCP Benchmarking report, Urban Enterprise 2013
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 77 of 135
The following observations are made about this data:






It is based on DCPs prepared by different organisations including the GAA, Urban
Enterprise, and SGS Economics and Planning;
Equivalence ratios were used in many DCPs up to about 2010. As a result of the way
in which the impact of commercial traffic is accommodated using equivalence ratios,
resulted in much higher per hectare levies both in absolute terms and relative to the
relevant residential levy;
The DCPs prepared by Urban Enterprise use each of the approaches i.e. equivalence
ratios and a per hectare approach;
The more recent DCPs base the charge for non-residential uses on per hectare of site
area;
The per hectare rate applied to non-residential uses has varied greatly and shows
greater variance than the residential rate; and
Whilst based on very few observations, the rate applied to ‘employment’ uses
appears to be high compared with the retail rate when compared with that proposed
in the equivalence ratios in the guidelines.
In recent years, the GAA has used the approach of attributing the usage of various
infrastructure items on an item by item basis, based on its assessment of the likely usage of
that infrastructure by non-residential uses. It then applies a common per hectare rate to
each use, with uses such as employment generally paying a lower rate by virtue of the lesser
number of infrastructure items which it assessed as creating a need for. The general rule of
thumb is that non-residential uses are not levied for community infrastructure. This said, it
is noted that using either approach, non-residential uses have been levied for some items of
community infrastructure where these have been included as development infrastructure.
In the Armstrong Creek East DCP prepared by Urban Enterprise, recreation and community
infrastructure is charged against residential development only, on a per hectare basis, but all
other infrastructure is charged against all development on a uniform per hectare basis. This
is broadly consistent with the GAA approach.
It is not simple to make a direct comparison between these two approaches. To do so
requires assumptions to be made about site coverage for the various uses. Urban Enterprise
have estimated this in Table 26 where it has assumed a site coverage of 50% for all nonresidential uses in order to convert site area to gross floor area (GFA). This is perhaps easier
to do in the case of Activity Centres, but site coverage varies widely for other uses, and
conversion to GFA becomes much more variable when multiple level development is
involved. The Committee notes that there has been little comment made in submissions
about either of the methodologies outlined above.
In the proposed new scheme, the challenge is to ensure that all users pay their fair share for
the delivery and use of infrastructure. Based on the above and the lack of evidence that the
current approach is fundamentally flawed, the Committee sees its challenge as refining the
current approach, making it consistent with the new approach to development levies and
then extending it to each of the proposed Development Settings and to the approaches to
setting levies in a way that is both fair and consistent. In particular, how Standard Levies
which have been initially developed as a levy on residential development should be applied
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 78 of 135
to non-residential development and to situations where there is a mix of residential and
other uses.
7.2
Submissions and Consultation
Several submissions commented on the proposal to set levies for non-residential uses, but
apart from a level of general support, little else was noted in many of these. Some Councils
indicated support for the non-residential levy, with Cardinia requesting the opportunity to
provide feedback on the proposed rate. There were more detailed submissions from the
Shopping Centre Council of Australia, Colonial First State, MAB and the City of Yarra.
The Shopping Centre Council proposed a separate levy for shopping centres of $50-$75 per
square metre of incremental Gross Leasable Area for Retail (GLAR). It submitted that the
cap of $180 per square metre levied in Queensland is too high and is open to abuse. It
further submitted that activity centre development should not be levied for community and
recreation infrastructure. This approach was generally supported by the Shire of Baw Baw.
The Shopping Centre Council further submitted that there should be equity of burden across
all users, with no ‘free riders’ who do not contribute to infrastructure. It submitted that the
levy should be clearly related to infrastructure for which shopping centres generate a
demand and that there should be accountability for delivery of that infrastructure.
MAB’s written submission was supplemented in a meeting between the Committee and its
Chief Operating Officer, Mr David Hall. In its written submission, MAB emphasised that nonresidential development should be levied for essential servicing infrastructure such as roads
and intersections only, and that the funds collected should be accounted for separately, so
that there is no cross subsidisation of infrastructure which serves residential development.
Mr Hall emphasised that he would prefer to see levies developed on a site by site basis as
MAB are often providing key enabling infrastructure for which credit is not given. Mr Hall
reminded the Committee that for the new approach there needs to be consistency with
broader government policy, particularly where it relates to encouraging employment
development in Growth Areas. The Committee is cognisant of the need to encourage job
growth as an integral part of the growth area planning process. Whilst not specifically
provided for in its Terms of Reference, the Committee is aware that the new system should
align with other proposed changes to the planning system and government policy more
broadly.
The non-Council submitters generally suggested that community and recreation uses not be
included in the levy. As indicated in Chapter 5.4 of Report 1, the City of Melbourne
submitted that because a number of those working in the City of Melbourne add to the
demand for some community and recreation infrastructure, there is a case for community
and recreation levies to be imposed on non-residential uses. Its further submission on
Report 1 reiterated that position. The Committee accepts that this is a valid point that is
likely to extend to other major employment nodes.
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7.3
Developing an Approach to Non-Residential Levies
In considering the approach that should be used to derive levies for non-residential uses, the
Committee started by identifying the factors which it believes should underpin the approach
to the levy charged. These have been derived from the characteristics of the new system as
described in A Preferred Way Forward, the purpose of development levies, submissions
made to the Committee and the Committee’s own deliberations. These include:
 That the approach should help to achieve or at least be consistent with proposed
planning outcomes. This is an important principle that should be adhered to when
considering the size and implementation of levies.
 That the basis for the levy is a fair proxy for the impact that the use may have on the
local infrastructure in relevant infrastructure categories. Generally it is population
and cars or mode of transport that are the basis of the impact. Neither of these is
easily measurable ahead of time and so a proxy for the impact they are likely to
generate is needed.
 An approach that is both simple to understand and to implement.
 The approach has a high level of transparency. The Committee is of the view that
this is not the case in many situations at the moment where section 173 agreements
are used as the basis of collecting contributions towards infrastructure from nonresidential uses.
 An approach that can be applied fairly and equitably across both a wide range of
non-residential uses and Development Settings. Whilst different approaches could
be proposed for different settings, the Committee is of the view that for simplicity it
is desirable to have the same approach, if possible. This will minimise complexity in
mixed use developments.
 An approach that is appropriate to a range of developments of significantly different
magnitude. The approach must be able to be applied fairly and equitably across all
developments ranging from an extension to a major retail centre to extensions of
shop and offices.
 An approach that does not introduce significant distortions into the property market.
The Committee acknowledges that the levy however applied, will send price signals
to the property market which has the potential to both impact viability and to
influence behaviour of investors and decision makers. The Committee believes that
where possible distortions should be minimised, but at the very least they need to be
understood.
 An approach that can be readily linked to a trigger for the imposition of the levy.
Whichever approach is adopted, it must be readily and simply implementable.
 The approach does not result in double or multiple dipping over time.
 Non-residential development should only be levied for infrastructure for which they
generate a demand. In the current system non-residential uses are generally not
levied for community and recreation infrastructure although the Committee accepts
that there may be cases where this is justified.
 If different approaches are proposed for different Development Settings, the
outcomes should be consistent. Ideally the same approach should be used across all
possible Development Settings but if this is not achievable it is necessary to ensure
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that outcomes in terms of the amount of levy payable between the Development
Settings is relatively consistent so that distortions of the market are not inadvertently
introduced.
The Committee acknowledges that it is not likely to be able to propose an approach that will
meet all these factors, and is faced with the task of proposing a mechanism which is at best
sub-optimal. The same comment may be made about existing approaches described above.
The Committee has assessed three likely bases upon which the levy on non-residential uses
may be charged. These three are at best only ‘indicators’ of the impact on infrastructure of
non-residential uses. The three bases and their potential as proxies for infrastructure
demand is described further below.
(i)
Site Area
This is effectively the approach currently used by the GAA in Growth Areas where it
identifies each item of infrastructure which the non-residential use generates a demand for.
This approach has not been widely contested. It does have shortcomings across different
non-residential uses. It is considered by the Committee that site area is not a good proxy for
impact on demand for infrastructure across a wide range of non-residential uses. For
example a retail centre and a warehouse occupying similar site areas are going to generate
significantly different impacts on infrastructure.
(ii)
Floor space
A number of measures could be used but it is probably Gross Floor Area which is the
appropriate proxy for the users of that floor area. The issue of intensity of use is again
evident here when comparing different non-residential uses. The Shopping Centre Council
submitted that the measure should be the GLAR, but the Committee believes that for
simplicity the same measure should be applied across all non-residential uses. It considers
that Gross Floor Area is a measure more suited. An increase in floorspace has the advantage
of a clear trigger of a building permit, albeit this has some administrative difficulties
associated with it. Floor space may not be a good measure in Growth Areas where it may
not be known with any degree of certainty early in the planning process
(iii)
Value of Development
The value of development has been put to the Committee by some industry experts as a
viable and preferable alternative. The Committee notes that it is used in the Central Sydney
Development Contributions Plan 2013. The major issue here appears to be the value of what
development? It has been put to the Committee that significant proportions of expenditure
in retail centres in particular do not result in any increase in use and therefore generate no
increased impact on infrastructure. Examples given include some fit out to accommodate
change of use, repair, updating services, and replacement of plant involving building works.
The Committee acknowledges that not all development expenditure will result in an increase
in use, and therefore increased demand for infrastructure.
In the Central Sydney Development Contributions Plan, this is accommodated to at least
some extent by both included and excluded items, and also a floor level of development,
beneath which the levy is not imposed. A variant suggested to the Committee was the net
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increase in value of a development attributable to works that have been undertaken, as this
will be a more accurate proxy of the likely increase in usage than a gross value of
development figure. The Committee notes this, but observes that it is a figure that can only
be reliably arrived at after development is completed, and whilst it may be feasible to
calculate it for major retail developments, it would be administratively cumbersome for a
range of other uses, particularly smaller developments.
Whichever approach is used, it is noted by the Committee that the workability of the scheme
is to a significant extent impacted by the infrastructure provided by the developer as part of
the development costs. In Growth Areas this is now relatively clearly defined and
understood, although the provision of infrastructure to mitigate off-site impacts is regularly
contested in the growth area context. Having clear guidelines as to the distinction between
developer provided – development levy funded infrastructure and infrastructure funded by
the State or other sources is integral to a workable development levy system and is further
addressed in Chapter 11.
7.4
Preferred Approach
The Committee addresses a series of issues which form the basis of its proposed approach.
It then summarises its proposed approach.
(i)
Basis of the Levy
At a conceptual level, the Committee’s preferred approach is to charge on the basis of floor
area of development across all Development Settings as it believes that this is the most
appropriate proxy for impact on development. Different rates would need to be applied to
different uses. However the Committee is persuaded that site area is a more pragmatic
indicator in Growth Areas, particularly Melbourne’s Growth Areas. For at least some PSPs
likely to be developed in the next few years, an indicative floor area and proposed use may
well change significantly by the time development occurs, and for this reason the Committee
proposes to use hectares of site area as the GAA has done in recent DCPs. For the other
Development Settings it is proposed that the levy be based on Gross Floor Area.
(ii)
Categories of Non-residential Use to be Levied
As will be observed from Table 26, different approaches have been taken in recent DCPs to
define the categories of non-residential use as the basis of charges. Some could be zone
based, while others more generally describe the types of uses proposed. Consistent with the
approach taken in defining Development Settings, the Committee proposes not to use zones
as the basis for determining the settings. The reason for this is that increasingly many zones
are proposed to provide flexibility of use, therefore charging anomalies are likely to arise if
this approach is used. The Committee proposes the following use categories be used to
determine the categories for the non-residential uses to be levied:
 Retail (that is generally the uses listed under the retail premise group in Clause 75 of
the Planning Scheme).
 Commercial and industrial (that is generally the uses listed under the following
groups in Clause 75 of the Planning Scheme, and specifically:
 Industry
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


Office
Transport terminal
Warehouse
Because warehousing is a significant use in some Growth Areas and tends to have a large
footprint, often with minimal employment and impact on some infrastructure, consideration
was given to creating it as a separate category and this could be revisited at the first review
of the new system.
In developments where there is a mix of uses, the per hectare rate for each category of use
should be applied in proportion to proposed floorspace for each use by the Planning
Authority. It is acknowledged that this means that residential use will be treated differently
in mixed use settings. It is difficult to assess the extent to which this might generate
anomalous outcomes, as actual outcomes will vary depending on the proportion of space
proposed for each use in different developments.
The Committee acknowledges that there will be some exemptions to application of the
Standard Levy for non-residential uses, some of these are likely to include:
 Nursing homes;
 Child care centres;
 Education centres;
 Leisure and recreation
 Places of assembly and worship
These exemptions will need to be refined and set out in detail once the Development Levy
System is in place.
(iii)
Which categories of infrastructure should non-residential uses be levied for?
The Committee proposes that levies for non-residential uses in Growth Areas be based on
the demand for transport infrastructure and associated land with a very minor allowance for
some community and recreation infrastructure. The Committee accepts the point made by
the City of Melbourne and others that non-residential uses can increase the demand for
some community and recreation facilities. The Committee agrees with the argument put by
the Shopping Centre Council that there should be a nexus between the use and the
infrastructure funded but makes the point that as in residential areas, a broader view be
taken when determining nexus. In Strategic Development Areas the proposed Standard Levy
is not tied to any infrastructure category. This allows for some discretion in infrastructure
funded by the levy.
MAB argued that revenue collected from non-residential uses should be accounted for
separately so that developers could clearly see that the revenue collected is spent on
infrastructure that the development generates the demand for. The Committee
acknowledges the principle espoused by MAB, but believes that this would place an
unnecessary administrative burden on Councils, with only a minimum benefit in terms of
increased transparency. It may also result in some funds not being expended as not enough
is collected to fund the identified infrastructure.
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(iv)
Relationship between the residential levy and the levy proposed for nonresidential uses
As can be seen from the data presented in Table 26 the levy charged for non-residential uses
varies between some 45% and 900% of the residential levy on a per hectare basis. Figures in
excess of 100% of the residential levy are related to the use of equivalence tables discussed
above. There is a distinct group of DCPs, generally more recent ones where the nonresidential levy is some 50% of the residential levy on a per hectare basis.
As indicated in Chapter 5, for DCPs prepared for metropolitan Growth Areas since 2008,
transport infrastructure accounted for between 19% and 39% of the proposed expenditure,
with the overall average being 29%.
Public land accounted for between 36% and 45% of proposed expenditure with an average
of 41%. In neither case have these averages varied greatly over time.
If the Committee makes the bold assumption that on average transport infrastructure
accounts for some 50% of the public land proposed, this provides some 50% of the proposed
expenditure being on transport infrastructure and associated land. This is broadly consistent
with many of the more recent DCPs represented in Table 26. It is noted that a number of
activity centres have been levied at 100% of the residential rate per hectare in the recent
past.
7.5
Proposed Levies
(i)
Metropolitan Areas
The Committee’s preferred approach to applying the proposed Standard Levies to nonresidential uses is to base these on contributions made in recent DCPs using the data
outlined previously. The Committee proposes this approach because it is both consistent
with the approach underpinning the proposed residential levy, and it believes that it is a
simpler approach which is evidence driven, but without the need for case by case analysis.
In proposing this approach, the Committee is aware that in Growth Areas in particular, this
will not take into account the variances between cases observed in Table 26, but points out
that in this Development Setting in particular, the proportion of non-residential uses that
comprise the total development is usually small, so any impact on overall revenue generated
will be similarly very small.
In proposing different rates for different non-residential uses across all Development
Settings, the Committee identifies three key drivers:
 The levies for industry and commercial uses should be relatively lower than for retail,
because of the lower need for infrastructure usually generated, as represented in the
equivalence ratios in the existing DCP guidelines.
 The need to ensure that there is a price signal, albeit probably a relatively weak one,
which supports job growth in the industrial and commercial areas in Growth Areas.
This is a key aspect of Government and planning policy.
 The need to ensure that job generating uses are encouraged or at least not
discouraged in the Growth Areas.
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For the job generating uses, the challenge is to balance the need to levy a fair and
reasonable contribution towards the infrastructure for which a need is generated, and the
desire to encourage job generating development, particularly in Growth Areas. The
Committee emphasises that it has consciously recommended rates which broadly align with
recent DCPs, but are set at levels which are deliberately low, so that there is minimum
impediment to job generating development. The Committee notes that its proposed levy for
retail uses at the lower end of the range proposed by the Shopping Centres Council when
considering that the proposed levy is based on GFA, but the Shopping Centres Council has
expressed its position in terms of GLAR, which is generally about 70% to 75% of GFA.
In its deliberations, the Committee examined the options of a lower levy for non-residential
uses in Urban Areas compared with Strategic Development Areas or the same levy in each
Development Setting.
The case for a lower levy could be based around the following:
 In most Urban Area settings, there will have been a prior use on the site and
infrastructure can be assumed to have been provided to accommodate that use.
 It cannot be assumed that the new non-residential use in an Urban Area necessarily
leads to a significant intensification of use, unlike the situations where the residential
levy is applied only to a new increase in dwellings.
The case for the same or a similar levy could be based around the following:
 The new Commercial and Industrial zones recently announced allow greater
flexibility in the location of some uses and they should be treated the same or similar,
irrespective of their setting.
 The same levy in each of the two Development Settings sends no potentially
distorting price signal to the market and removes the potential pressure for some
areas to be included in one Development Setting or the other.
On balance, the Committee is of the view that it is more appropriate to apply the same levy
for non-residential uses in both the Urban Area and Strategic Development Area settings. It
believes that this is a fair outcome that will result in less distortions or perverse behaviour.
The Committee is concerned that small and marginal additions to Gross Floor Area should
neither be discouraged nor in many cases will they add in any measurable way to an impact
on infrastructure. For this reason the non-residential levy is proposed to apply to net
increase in Gross Floor Area for increases in excess of 100 square metres. However, when
determining the levy for development over 100 square metres GFA, it is calculated on the
total increase in GFA.
The proposed Standard Levy for non-residential uses in metropolitan areas is set out in Table
27. In proposing levies at relatively low levels, the Committee is conscious that developer
provided infrastructure will continue to be provided in each of the development setting and
where both residential and non-residential uses are proposed. The levies proposed are in
addition to this and are a contribution to other infrastructure which the development will in
part generate the need for. As indicated in Chapter 10, works in kind will continue to be a
feature in each of settings except Urban Areas where they will not be permitted in lieu of the
Urban Area Standard Levy. As indicated in Chapter 12, section 173 agreements will not be
permitted to supplement the proposed levies.
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The Committee is conscious that in the recent past there have been a limited number of
PSPs for areas that are predominantly or totally commercial and industrial, and that in such
areas the proposed Standard Levy of $80,000 per net developable hectare may not cover the
costs of the transport infrastructure which may reasonably be attributed to the planning
unit. For this reason the Committee proposes that in these circumstances a Supplementary
Levy should be available. The Committee prefers this approach rather than propose a higher
Standard Levy which may act as a disincentive to employment related development.
Recent examples of 'employment precinct' developments such as in the Craigieburn, Toolern
and Cranbourne West PSPs would legitimately have DCP costs over $80,000 per hectare. For
larger employment only precincts such as these (as opposed to mixed residential and
employment precincts), the cost of roads and public land may well exceed $80,000 per net
developable hectare and a Supplementary Levy may be necessary in these cases.
Table 27
Proposed Standard Levies for Non-residential Uses in Metropolitan Melbourne
Use
Growth Areas
Residential Levy (Growth Areas)
$268,000/NDHa2
Retail Levy (% of Growth Area residential levy)
60%3
Retail levy per NDHa
$160,800/NDHa
Implied Levy per square metre (35% site
coverage)
$45.94/square
metre4
Proposed Retail Levy
$161,000/NDHa
Commercial and Industrial Levy (% of Growth
Area residential levy)
30%5
Commercial and Industry Levy per NDHa
$80,400/NDHa
Implied levy per square metre. (50% site
coverage)
$16.10/square
metre6
Proposed Commercial and Industrial Levy
$80,000/NDHa
Strategic
Development
Areas1
Urban Areas1
$46.00/square
metre GFA
$46.00/square
metre GFA
$16.00/square
metre GFA
$16.00/square
metre GFA
Notes to Table 27:
1.
In both Urban Areas and Strategic Development Areas the levy is applied to a net increase in floorspace
above a threshold of 100 square metres GFA. Where the threshold is exceeded the levy is applied to all of
the net increase in floorspace not just the amount above the threshold. Where there is an existing use,
the levy will only be applied to additional floorspace which is constructed.
2.
The proposed residential Standard Levy for Growth Areas.
3.
Based on the 50% that transport and related land has comprised on average in recent DCPs, with some
recognition that these uses generate some demand for community and recreation infrastructure.
4.
Assumes 3,500 square metres of retail use on a 1 hectare site which paid $80,400 per hectare which is
$16.10 per square metre.
5.
This is set at a lower level than residential on the basis that the impacts on infrastructure are highly likely
to be lower in most instances. It is acknowledged that this will not always be the case. The lower levy is
also consistent with attempts to provide create jobs in Growth Areas.
6.
Assumes 5,000 square metres of industrial or commercial use on a 1 hectare site which paid $81,000 per
NDHa which is $16.08 per square metre.
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Where a residential Standard Levy is supplemented as a result of the application of a
Supplementary Levy, the case for extending that Supplementary Levy to non-residential uses
should be made as part of the process to approve a Supplementary Levy. If relevant, it
should include a specific proposal for a Supplementary Levy on particular non-residential
uses. The funds raised may only be expended on the identified infrastructure. Otherwise,
where a Supplementary Levy is applied it will not be extended to non-residential uses.
(ii)
Non-Metropolitan Areas
The residential levy in non-metropolitan areas is proposed to be lower than for metropolitan
Melbourne, mainly because of lower land costs and observed lower costs in other
infrastructure categories. Based on this logic, the levy for non-residential uses should also
be proportionately lower. Proposed Standard Levies for non-residential uses in nonmetropolitan areas are set out in Table 28. These have been factored down in proportion to
the higher of the two residential levies on the basis of proportionately lower land costs.
The Committee proposes that only one level of levies for non-residential uses apply in nonmetropolitan areas despite there being two possible levels at which the Residential Standard
Levy may be applied. Whilst an argument might be made for two levels for non-residential
uses, the Committee points out that it has proposed non-residential levies at levels which
are low and in particular low as a percentage of likely development costs, compared with the
residential levy. It is for these reasons the Committee has opted for the simplicity of a single
level for non-residential levies.
Table 28
Proposed Standard Levies for Non-Residential Uses in Non-Metropolitan areas
Use
Growth Areas
Residential Levy (Growth Areas)
$210,000/NDHa
Strategic
Development
Areas
Urban Areas
$36.00/square
metre GFA
$36.00/square
metre GFA
$13.00/square
metre GFA
$13.00/square
metre GFA
$120,000/NDHa
Retail Levy (% of Growth Area residential levy)
60%
Retail levy per NDHa
$126,000/NDHa
Implied Levy per square metre (35% site
coverage)
$36.00/square
metre
Proposed Retail Levy
$126,000/NDHa
Commercial and Industrial Levy (% of Growth
Area residential levy)
30%
Commercial and Industry Levy per NDHa
$63,000/NDHa
Implied levy per square metre. (50% site
coverage)
$12.60/square
metre
Proposed Commercial and Industrial Levy
$63,000/NDHa
Note to Table 28:
The points and caveats made in notes to Table 27 are applicable to this Table.
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7.6
Recommendations
The Committee makes the following recommendations:
 That Levies should be charged in each of the Development Settings for two
categories of non-residential uses as follows:
 Retail
 Commercial and industry
 That the Levy be charged per net developable hectare in Growth Areas and per net
increase in Gross Floor Area in Urban Areas and Strategic Development Areas,
above 100 square metres.
 That the Levies for non-residential development be adopted as set out in Table 29.
Table 29
Recommended Levies for Non-Residential Development
Setting
Non-residential1 Standard Levy
Growth Areas
Metropolitan
$161,000 per NDHa Retail
$80,000 per NDHa Commercial and Industrial
Non-metropolitan
$126,000 per NDHa Retail
$63,000 per NDHa Commercial and Industrial
Urban Areas
Metropolitan
$46 per square metre GFA Retail
$16 per square metre GFA Commercial and Industrial
Non-Metropolitan
$36 per square metre GFA Retail
$13 per square metre GFA Commercial and Industrial
Strategic Development Areas
Metropolitan
$46 per square metre GFA Retail
$16 per square metre GFA Commercial and Industrial
Non-Metropolitan
$36 per square metre GFA Retail
$13 per square metre GFA Commercial and Industrial
Note to Table 29:
1
Where the levy is expressed per square metre it refers to per square metre of net additional Gross Floor
Area, above 100 square metres GFA.
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8
Valuing and Securing Public Land, and Open Space
8.1
Overview
Chapter 11 of Report 1 sought to partially respond to the Committee’s Terms of Reference
that seeks:
A simple methodology for valuing the public land infrastructure component.
The Committee made the following findings in Report 1:
 A detailed review of the issues relating to land valuation and transfer should be
conducted as part of the Stage 2 report.
 The review of land valuation in Stage 2 should seek to identify available options to:
 Simplify and give certainty to the process of securing land for public purposes;
 Ensure that there is an equitable approach toward the valuation of land for
public purposes; and
 Ensure that the principles of the recommended levy framework cannot be
undermined.
The Committee takes the recommendations forward in the context of Public Land in Growth
Areas.
Additionally, the Committee responds to submissions that sought clarification on how open
space is dealt with, particularly with regard to distinctions between active and passive open
space, and encumbered and unencumbered land.
8.2
Submissions and Consultation
Inconsistency and lack of certainty associated with the process by which land is identified,
valued and ultimately secured for public purposes has been identified as the most significant
risk to successful implementation of a development contributions plan.
Several submissions, including that of the Property Council, commented on the process of
valuing and securing public land, with general support for a review of the process to achieve
a fair and equitable approach where the total cost of public land is spread across a planning
unit.
The rising cost of land was highlighted as a concern with the GAA, Master Builders
Association, and Cardinia and Melton Councils being among the submitters supporting
setting an agreed consistent process for setting aside and valuing public land. PEET and the
UDIA requested a better definition of “fit for purpose” and submitted that encumbered and
unencumbered land should be part of any review of this issue. The UDIA considered there
should be a sliding scale relating to encumbered land for open space. Melbourne Water
raised the possibility of adding land for retardation and water quality treatment at predevelopment valuations.
The rising cost of land over time was raised in many submissions, with support for
mechanisms to secure land at the earliest possible time. Greater Geelong Council submitted
that options for low interest loans be considered. There were varying suggestions about
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intervals for revaluation, ranging from PIA providing an example of quarterly revaluation,
with the Property Council suggesting every two years. Wyndham Council submitted that the
most desirable outcome would be a return to valuation based on common values for both
contributions and compensation, but noted that this would require an amendment to the
Land Acquisition and Compensation Act 1986.
The varying methods of acquisition were canvassed, with the use of the Public Acquisition
Overlay being supported by VicRoads, PEET, and Greater Shepparton Council, however
VicRoads submitted that this also raised issues about the timing of budget allocation and
availability of contribution funds early in the life of a scheme. The GAA does not support the
use of Public Acquisition Overlay except where land is required for State infrastructure.
There was generally a strong desire amongst submitters to simplify the process, avoid
double dipping, provide a fair and equitable distribution of contributions across a planning
unit and provide for the potential for early acquisition to lower the cost of land.
To assist the Committee in this matter, it met with VCAT (Deputy President Dwyer), and then
separately with two Valuers (Mr Brian Dudakov of Urbis and Mr Bradley Papworth of Charter
Keck Cramer) as part of discussion forums.
8.3
Discussion
In terms of threats to successful implementation of the Development Levy System, the
Committee has taken into account issues raised in consultation and through the written
submissions, as well as the experience of its own members. It has determined that a
significant threat to successful implementation of the Development Levy System is the
uncertainty and risk associated with the process by which land is secured for a public
purpose.
The Committee has observed that the uncertainty and risk is associated with how land that
is required for a public purpose is identified, valued and secured (i.e. under which Act). The
complexity associated with the process by which land is secured for a public purpose is
increased by the common introduction of land ‘equalisation’ schemes. In simple terms,
equalisation schemes seek to apportion the cost of land that is required for a public purpose
on an equitable basis across all landholdings within the PSP area.
Whilst the concept of equalisation schemes is relatively simple, there is very significant risk
associated with such schemes if affected landowners seek to challenge the ‘compensation’
value that is set out in the scheme. The shift toward inclusion of equalisation schemes is a
significant departure from the site specific approach that has commonly been adopted via
the Subdivision Act 1988. The shift toward an ‘equalised’ approach toward land required for
public purposes has been driven by more holistic approaches to the preparation of PSPs,
however this shift in methodology and philosophy has not been not fully recognised or
supported by the relevant Acts.
In summary, issues associated with the system that currently operates include:
 There is no single head of power that is used to secure land;
 There is no consistent or prescribed land valuation methodology;
 There is no clear list of land allowed to be acquired for a public purpose;
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


Land value and resultant contributions are calculated and levied differently under the
various Acts;
There is no single clear requirement as to how a land contribution is satisfied; and
Timing of payment differs depending on the Act that is utilised.
It is clear that assumptions made during formulation of a DCP (under the current system)
that require calculation of a project value/s (notwithstanding indexation), are at risk of being
exceeded should a compensation claim be triggered.
The Committee considers that the risks are very significant for all parties and is of the view
that the process by which land is valued and secured for a public purpose requires a
complete review. It is recommended that this review be undertaken concurrently with
introduction of the Standard Levy for Growth Areas. In this way the threats associated with
the current system could be overcome providing increased confidence in application of the
Standard Levy for Growth Areas.
8.4
A New Approach to Securing Public Land in Growth Areas
In response to the limitations of the current system, the Committee recommends legislative
changes to simplify the process of valuing and securing land in Growth Areas and creating
greater certainty for all parties. This may take the form of a new division to the Planning and
Environment Act 1987 and changes to related legislation, including the Subdivision Act 1988
and the Land Acquisition and Compensation Act 1986, to support the implementation of the
new approach.
It is recommended that legislative changes be enacted to give effect to the following main
features of a new approach to valuing and securing public land in Growth Areas:
 Specify that the Standard Levy is comprised of a capped Community and Recreation
component and variable Transport Construction and Public Land components;
 Provide for a Planning Scheme to specify a Public Land component and a
Construction component within the Standard Levy;
 Provide for a Planning Scheme to specify potential for Supplementary Levy/s for the
variable transport construction and public land infrastructure but only under specific
circumstances;
 Specify that levies for Public Land may only be gathered for purposes set out in the
list of allowable public land contributions;
 Specify that a levy for the provision for public land be expressed as a percentage of
the net developable area of total land and an equivalent a dollar per hectare value;
 Specify that the levy for the provision of public land can be discharged by the
provision of land, money or a combination of the two;
 Specify that the levies in Growth Areas are triggered by the subdivision of land;
 Specify the requirement for adoption of a standardised process for both the
valuation of land that is required to be set aside for public purposes and
compensation for this requirement; and
 Specify that the Planning Authority cannot pursue additional land or cash
contributions under s18 of the Subdivision Act 1988 or clause 52.01 of the VPP (for
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contribution of public land in addition to any land that is required under the
Development Levy Plan).
8.5
Valuing Public Land
Integral to the new approach to Public Land in Growth Areas will be the specification and
adoption of a standard method for valuing land that is required to be set aside for a public
purpose. Whilst the Committee is mindful that the PSP process occurs as a result of rezoning
land typically from non-urban to urban, that generally results in a significant increase in the
value of the land, the Committee considers that the valuation methodology should have the
following main features:
 A site specific approach to identification and valuation of land but not a full before
and after compensation based assessment in recognition of the limitations in
available information at the time of preparing a PSP;
 A prescribed process for preparation of a valuation report and direct notification to
affected landowners at the time of preparation of a PSP (as part of the Amendment
notification);
 Provision for review by an independent valuer (acting as an ‘umpire’) appointed by
the Valuer General should the affected landowner disagree with the outcome of the
valuation;
 Once the value of land is determined (with or without the need for review by an
independent valuer) such value should be fixed via approval of the PSP and cannot be
challenged subsequently;
 The defined value of each parcel of land that is required for a public purpose once
fixed is not subject to annual re-valuation but an annual index is applied to the
specified value of the land and the balance of the levy.
The Committee is of the view that the recommended methodology will fairly recognise the
specific circumstances associated with land that is required for a public purpose and will
fairly compensate affected landowners. The Committee recommends that the valuation
methodology be formalised via Ministerial Direction or equivalent similar mechanism.
Again, changes may be required to other related legislation to ensure consistency.
8.6
Securing and Transferring Public Land
In order to secure land for public purposes via a Levy, it will be necessary for a Levy
percentage and dollar value to be specified. The Committee recommends that the following
process be adopted to enable the Levy for public land to be determined and administered:
 The PSP or equivalent plan will determine the type, amount and location of all land
required for a local public purpose;
 The combined area of the land that is required for a local public purpose will be used
to establish the contribution percentage (generally 15-16% of the net developable
area);
 The valuation report/s will determine the cash rate of the Levy to be charged for
public land per net developable hectare;
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

The valuation report will determine the amount of ‘cash in lieu’ payments required
where the development area has less than the percentage of public land required by
the Levy for public land;
The valuation report will determine the ‘compensation’ value where more than the
specified public land levy area is required to be set aside for public purposes at the
time of subdivision.
The Levy for public land will set the percentage of the NDA of the area covered by the
respective Development Levy Plan. The legislative changes should provide that the
development applicant can only satisfy the Levy for public land by:
 Providing to Council all land identified in the PSP and the Development Levy Plan for
a public purpose on their site up to the percentage nominated in the Levy; or
 Providing the monetary value for the Levy if none of the public land is contained on
the site or if the land to be developed contains less than the percentage of the public
land specified in the Development Levy Plan.
Where a property has an amount of land required for public purpose that exceeds the
percentage set in the Development Levy Plan, the development proponent must provide to
Council all land up to the percentage set in the Development Levy Plan and Council must
purchase the additional land in excess of the percentage from the land owner.
The Committee is of the view that the recommended reforms to the process by which land is
identified and secured for public purposes will provide greater certainty and equity for all
landowners. The recommended reforms to the process will also significantly reduce the
level of risk for Councils and will increase the likelihood and confidence that they will be able
to apply the Standard Levy in Growth Areas without the need for Supplementary Levies in
the vast majority of cases.
8.7
Open Space in Growth Areas
(i)
Overview
As discussed in Chapter 5, public land, including land for passive and active open space
constitutes the most expensive component of the DCPs that have been approved in the
period from 2008 - 2012.
During this period, the area of land that has been set aside for public open space has
increased on average to 10 - 12% (unencumbered land) of the NDA for passive and active
open space purposes. In some PSP areas, significant areas of encumbered land (typically
drainage and conservation land), has also been set aside in addition to the unencumbered
open space. This additional undevelopable land has typically been transferred into public
ownership without any form of open space credit or at a significantly reduced value as a DCP
project.
During the period from 2008-2012, ratios of active open space provision have become more
formalised. Growth Area Councils have typically sought to achieve service provision
efficiencies by requiring dual oval sporting fields as a minimum, with sufficient area to
accommodate parking and other amenities. During this period, Growth Area Councils have
also sought contributions for district or regional active open space in addition to local active
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open space, and have applied more standardised requirements in relation to the area and
distribution of passive open space.
Taking into account the increasing land area requirements and associated costs, developers
have requested that consideration be given to introduction of open space credits for
encumbered land. Open space credits are sought in recognition of the potential open space
uses and value that encumbered land can offer for both passive and active purposes. There
has also been some suggestion that the distinction between passive and active open space is
problematic or redundant, and should be removed.
(ii)
Submissions and Consultation
Growth Area Councils, the GAA and developers raised issues about the confusion that exists
in the current system around the assignment of open space in Growth Areas, and have called
for clarification and simplification of the approach.
(iii)
Discussion
In reflecting on submissions, discussion with various developers and Growth Area Councils
during the consultation phase, and its own experience, the Committee is of the view that
encumbered land can, and often does, have secondary open space purposes. The often
cited example of a watercourse with extensive adjacent land that is flood affected in the
1:100 year or 1:20 year flood events that can, at other times, be used for a range of active or
passive open space purposes is commonly encountered in both metropolitan and regional
areas.
In arriving at this view, however, the Committee is mindful that whilst the more recent PSPs
have typically included open space contributions of 10 - 12%, in the preceding 10 year period
open space contributions were substantially lower. There were few examples of PSPs that
sought to define and seek contributions toward establishment of a well developed and
connected open space network. As a consequence, open spaces were typically fewer in
number and piecemeal in their distribution.
In recognition of the limitations of such an approach, the Committee is supportive of the
general thrust of more recent PSPs that have sought contributions for establishment of well
developed and connected open space networks that will ultimately achieve a range of
benefits. Notwithstanding this general support, the Committee is concerned with the
principle of typical contributions of 10 - 12% (of unencumbered land) becoming viewed as a
minimum standard, irrespective of the circumstances, which may include provision of
significant areas of encumbered land.
For these reasons the Committee has considered various ways of giving partial or reduced
open space credits for encumbered land. Having considered various options, however, the
Committee is not inclined to recommend introduction of partial or reduced open space
credits for encumbered land as part of this current process for the following reasons:
 The types of encumbered land vary widely throughout the Growth Areas;
 The value and possible open space uses of encumbered land varies widely
throughout the growth areas;
 Calculation and administration of partial credits (particularly where open space
equalisation schemes apply) is highly problematic; and
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
Making provision for credits for encumbered land is open to abuse if the suitability of
the land is not determined from the outset.
In recognition of these limitations but with the intent of recognising the possible benefits of
use of encumbered land for open space purposes, the Committee favours the approach set
out below.
The GAA Precinct Structure Plan Guidelines include a diagram that depicts the preferred
approach to open space planning. This diagram (Figure 2) recommends that planning for
establishment of an integrated open space network should have regard to a combination of
quantitative and qualitative indicators. The intent of this diagram is to recognise that
quantitative indicators (usually expressed as a land area requirement per head of
population) should not be used as the sole basis for planning for an open space network.
Importantly, proper regard to the qualitative indicators such as the site conditions, land
ownership patterns, proximity to existing facilities and role in achievement of related
strategic objectives, for example, will result in an open space network that fully responds to
its context and is capable of meeting future needs.
Figure 2
GAA Preferred Approach to Open Space Planning
Source: GAA Precinct Structure Plan Guidelines Part 2 – Page 35
Where this process identifies encumbered land (such as a broad floodplain for example) that
is suitable for open space purposes, it should be possible to reduce the unencumbered land
contributions. In this way the following benefits can be achieved:
 The secondary value of the encumbered land is recognised via a reduction in the
unencumbered contributions;
 There is no need to introduce or administer complex partial or reduced credits for
encumbered land;
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

The encumbered land is properly assessed for open space purposes and can form
part of the planned open space network; and
All landowners receive a benefit via reduced land area and/or financial contributions.
The Committee is of the view that this is the appropriate way to plan for an open space
network that properly responds to its context. It is noted that in coming to this conclusion,
the potential to achieve some combined use of encumbered and unencumbered land for
open space purposes must be given careful and deliberate consideration in order to achieve
the benefits above. Clearly, suitability of the encumbered land will be the primary criterion
that should be used to determine the potential use of encumbered land.
From the Committee’s perspective, possible use of land that is set aside to protect
vegetation or cultural values if combined with a reduced passive open space area should
provide a positive open space setting and as such form a complementary use. This outcome
is, however, reliant on acceptance that public access will be possible within the
‘conservation’ land (for passive purposes). The Committee is of the view that this outcome
will reinforce the value that retained vegetation, for example, can offer within an urban
development context and will support creation of diverse Urban Areas that have a sense of
place.
In terms of the importance of the open space network in contributing to creation of a
positive sense of place in Growth Areas, the Committee offers the general observation that
standardised active and passive requirements (in terms of land area, general location and
configuration) can result in a ‘sameness’ of outcome. Notwithstanding maintenance and
service provision efficiencies that may be able to be achieved in standardised configurations,
the Committee encourages Planning Authorities to consider other possible open space
planning options that may assist in creating diverse urban environments, including more
distributed passive open space areas, particularly in higher density locations.
(iv)
Conclusions
In response to the request for consideration of introduction of partial or reduced open space
credits for encumbered land, the Committee does not support the introduction of such
credits at this time for the following reasons:
 The types of encumbered land vary widely throughout the growth areas;
 The value and possible open space uses of encumbered land varies widely
throughout the growth areas;
 Calculation and administration of partial credits (particularly where open space
equalisation schemes apply) is highly problematic; and
 Making provision for credits for encumbered land is open to abuse if the suitability of
the land is not determined from the outset.
Notwithstanding this view regarding introduction of encumbered land credits, the
Committee considers that some encumbered land has potential to be utilised for open space
purposes and suggests that Planning Authorities and the GAA give further consideration to
the following:
 Plan for open space networks in Growth Areas having regard to a range of qualitative
and quantitative indicators;
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

8.8
Deliberately assess the potential use of encumbered land for open space purposes
and where possible seek to reduce the requirement for unencumbered land for open
space purposes in recognition of the potential to use some encumbered land if such
land is deemed as suitable for open space purposes; and
Consider other possible open space planning options that may assist in creating
diverse urban environments including more distributed passive open space areas
particularly in higher density locations.
Recommendations
The Committee makes the following recommendations:
 That the Planning and Environment Act 1987 (and other legislation if required) be
reviewed to enable improvements to the process of the valuation and securing of
public land in Growth Areas as set out in this Report.
 That the valuation methodology for land in Growth Areas be formalised via
Ministerial Direction or equivalent, and include the features as set out in Chapter
8.5 of this Report.
 That a revised process be adopted to enable the components of the public land levy
in Growth Areas to be properly determined and administered.
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9
Apportionment
9.1
Overview
A Preferred Way Forward identified that cost apportionment would not normally be
necessary under the proposed system as the cost is to be apportioned across the whole of a
planning unit.
Chapter 10 of Report 1 responded to the Committee’s Terms of Reference that seeks:
The circumstances, if any, in which a simple apportionment of development
contributions levies is needed. For example, the ability to apportion standard
rates may need to be retained for transport infrastructure located on or across
the boundary of a contribution area.
In this regard, the Committee made the following findings:
 External apportionment should be minimised by the careful choice of planning unit
boundaries.
 External apportionment should not be permitted for lower order community and
recreation infrastructure.
 External apportionment will generally only be permitted for larger and more complex
planning units.
 Where external apportionment is to occur, it should be in proportion to external
usage.
In Report 1, the Committee noted that generally the planning unit or the area to which the
levy applies should be chosen so that internal apportionment is not required. The
Committee recognises that apportionment of costs external to the area under consideration
is appropriate in certain circumstances.
In its Stage 2 considerations, the Committee has identified the following key issues:
 The changes that need to be made to the approach to apportionment proposed by
the Committee in Report 1; and
 The approach that should be taken to decision making and disputes on external
apportionment of costs.
9.2
Submissions and Consultation
Relatively few of those who made submissions on Report 1 or those with whom the
Committee consulted, commented on the proposed approach to apportionment. Those
who did comment either supported the approach proposed by the Committee or provided
conditional support.
SKM submitted that some internal apportionment should be permitted particularly within
the Urban Areas setting, as failure to allow this is likely to result in some cross subsidisation
between areas in some municipalities, particularly if a municipality wide levy is imposed.
The Committee agrees with SKM that need and nexus are key principles, but comments that
to ensure flexibility, nexus should not be interpreted too tightly and the provision for
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multiple planning units within a municipality could minimise cross-subsidisation where it is a
significant issue, for example in a rural municipality with two or more discrete townships.
Melton Council supported the approach proposed by the Committee and in particular would
like the ability to prepare a ‘global’ DCP along the lines used by Wyndham Council for arterial
roads across an entire growth fronts, as this obviates the need for external apportionment in
many instances. The Committee believes that its proposed approaches to permitting
Supplementary Levies in Growth Areas and Strategic Development Areas and for certain
infrastructure, except Community and Recreation infrastructure, serves this purpose.
Both Ballarat and Greater Geelong Councils submitted that external apportionment is
necessary in non-metropolitan areas to provide for regional drainage infrastructure. The
Committee notes that it proposes an alternative approach to handling the drainage issue in
Chapter 5.
Greater Dandenong Council does not believe that the need for external apportionment will
be minimised by the careful choice of planning unit boundaries, and submitted that planning
unit boundaries should be backed by strategic justification. The Committee concurs with
this latter point and believes that the proposed approach to apportionment and the
provision for multiple Supplementary Levies should meet Greater Dandenong Council’s
concerns.
The HIA generally supported the Committee’s proposed approach to apportionment with
the caveat that funds paid by developers should be reimbursed if growth is not as high as
anticipated, and as a consequence external usage is higher than anticipated. The Committee
notes that reimbursement is a complex issue, particularly if it needs to occur many years on.
In addition, it notes that apportionment to external usage can at best be based on
information at a point in time. In most instances, revisiting it where those estimates are
proven to be inaccurate, it is likely to introduce complexities, where the costs of the
revisiting are likely to exceed any supposed benefits.
The GAA supported the proposed approach, but noted that external apportionment for
transport infrastructure on the edge or adjacent to a planning unit, should be provided for.
The Committee concurs. The GAA believed that drainage in non-metropolitan areas might
be best dealt with by removing drainage from the system and addressing it through other
mechanisms. The Committee believes that drainage should be addressed through a
separate Drainage Levy where this is considered appropriate.
Yarra Council envisaged a mix of Strategic Development Areas interfacing Urban Areas with
complex interactions with respect to cross boundary usage of some infrastructure and as a
consequence the need for flexibility. The Committee believes that its approach to defining
these Development Settings in which there is provision for some Strategic Development
Area infrastructure to be located in adjacent areas, together with its proposed approach to
apportionment should provide the flexibility required to address complex development
scenarios as envisaged by Yarra Council.
The issue of disputes arising with respect to external apportionment of costs is not
addressed directly here as it is considered by the Committee to be an issue best addressed in
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the broader context of resolving disputes arising in the implementation of the new system.
As such it is addressed in Chapter 13 of this report
9.3
Approach to Apportionment
The Committee has amended the principles which it set out in Report 1, in line with the
approach to Development Settings and the Standard Levies which it now proposes.
(i)
Broad Principles
Set out here is discussion of a number of underpinning principles which the Committee
believe should guide the application of external apportionment. The Committee is firmly of
the view that external apportionment should be minimised. This may be achieved by
choosing boundaries for a planning unit which internalise as much infrastructure as possible.
In Report 1, the Committee indicated that it regards the Wyndham Council approach to this
where it has overarching DCPs for arterial roads across multiple planning units as a good
approach. This minimises external apportionment. The Committee accepts that external
apportionment will continue to be required for some higher order infrastructure and in
these instances, every effort should be made to minimise the apportionment to existing
development. This inevitably results in a Council having to fund this proportion and thus
becomes another unfunded liability. A Supplementary Levy can be applied where higher
order infrastructure, other than Community and Recreation infrastructure, provides clear
and readily identifiable benefits across a number of proposed planning units. An example is
a proposed arterial road network. This approach, whilst minimising the need for external
apportionment, does not obviate the need for it. It is acknowledged that applying a
Supplementary Levy across multiple planning units is only achievable in a limited range of
circumstances in some growth area settings. Consequently external apportionment is
permitted for higher order infrastructure items.
In proposing this approach, the Committee is aware that significant inequities can exist in
the amount of major transport infrastructure which is apportioned to a planning unit.
External apportionment, where it is to occur, should be in proportion to the projected
external usage. Where applicable, external usage should be based on standard population
thresholds for the provision of individual infrastructure items. Where no such thresholds
exist, external apportionment should be justified by relevant usage data within and outside
the planning unit.
Where out of sequence development is proposed by a developer, a Supplementary Levy may
be applied in accordance with the Arterial Road Protocol (in future the Growth Area Road
Design Guidelines), if applicable, to ensure appropriate arterial road connection to the
nearest existing development or approved PSP area.
Where infrastructure is required external to the planning unit, and it can be demonstrated
that it is only required because of the development in the planning unit, full costs should be
apportioned to the planning unit regardless of any minor or incidental benefits which may
flow to users external to the planning unit.
A single planning unit in a proposed PSP area or structure plan area should generally be the
norm. Multiple planning units will need to be justified. Where external apportionment is to
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occur, the total cost that is to be apportioned should be adjusted for any grants or
contributions, or as a result of co-located infrastructure and should be deducted before
costs are apportioned.
(ii)
Infrastructure specific external apportionment guidelines
The Committee notes that in a number of Development Settings, apportionment will not be
required or permitted. These circumstances are set out below. Where apportionment is
permitted, it will be guided by the following:
Arterial Roads, Intersections and Roundabouts
Where these works are internal to a planning unit i.e. not on a boundary, there should be no
external apportionment.
Where these works are on the boundary of a planning unit and adjacent to another existing
or proposed planning unit, the cost should be shared equally (adjusted for the length of
common frontage where necessary). Intersections at the corner of a planning unit may be
externally apportioned up to 75% as appropriate. Where the boundary of the planning unit
abuts a growth boundary or an existing area, the cost may be fully apportioned to the
planning unit. The Committee acknowledges that this raises equity issues, but this approach
is consistent with some recent GAA prepared DCPs and has been generally accepted by
Panels on the basis that future residents of the planning unit will also use road infrastructure
external to the planning unit to which they will make no contribution.
Community and Recreation Infrastructure
Apportionment is permitted for high order infrastructure which serves a wider community
only. External apportionment should be in proportion to the projected external usage.
When calculating likely external usage it should be assumed that this will only occur when
the population threshold for the provision of an infrastructure item is higher than the
projected population of the planning unit. External usage should be in proportion to the
difference between the two.
Public Land
Where there is external apportionment of higher order infrastructure in the two
infrastructure categories discussed above, any public land associated with the provision of
those infrastructure items should also be apportioned using the same proportion to external
users as the infrastructure item itself.
External apportionment for each of the proposed Development Settings is proposed to be as
set out in Table 30.
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Table 30
External Apportionment for the Development Settings
Development
Settings
Standard Levy
GROWTH AREAS
Transport
infrastructure
External apportionment permitted in proportion to projected external usage. It should
not be permitted where the need for the infrastructure is entirely dependent on the
development in the planning unit, even if there is some minor benefit to external users.
Drainage
infrastructure
External apportionment permitted in proportion to projected external usage. It should
not be permitted where the need for the infrastructure is entirely dependent on the
development in the planning unit, even if there is some minor benefit to external users.
Community and
Recreation
infrastructure
External apportionment permitted for higher order infrastructure items only and in
proportion to projected external usage. It should be based on standard population
thresholds for the provision of infrastructure where these exist.
STRATEGIC DEVELOPMENT AREAS
Transport
infrastructure
Funds collected through application of the Standard Levy may be expended either inside
or outside the defined development area but expenditure outside the area must be
justified. External apportionment is permitted based on proportion of projected usage.
External funds will generally be rate revenue or grants, not other planning units. Grants
will generally be deducted before apportionment of external usage.
Drainage
infrastructure
As for transport infrastructure (where relevant).
Community and
Recreation
infrastructure
External apportionment permitted for high order infrastructure items only and in
proportion to projected external usage.
URBAN AREAS
All
infrastructure
External apportionment not permitted.
Where a Supplementary Levy is permitted, external costs may be apportioned and where
this occurs they should be based on both the principles set out in this chapter and the
provisions in Table 30 above.
9.4
Recommendations
The Committee makes the following recommendations:
 That external apportionment be minimised by the careful choice of planning unit
boundaries and the use of Supplementary Levies across a number of planning units.
 That external apportionment not be permitted for lower order community and
recreation infrastructure.
 That external apportionment generally only be permitted for larger and more
complex planning units, and in accord with the conditions set out in Table 30.
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10 Works in Kind
10.1 Overview
Chapter 12 of Report 1 sought to partially respond to the Committee’s Terms of Reference
that seeks:
The circumstances, if any, in which Councils should be able to agree to the
provision of infrastructure or building works in kind (including their valuation) in
lieu of cash.
In this regard, the Committee made the following findings:
 It is essential for the new Development Levy System to retain the potential for
acceptance of works in kind.
 Acceptance of works in kind proposals should be at the discretion of the collecting
agency.
 Accepted works in kind proposals should be documented in a section 173 Agreement
or other suitable form of agreement.
 Credit for the full cost of the infrastructure up to the value specified in the
contributions plan should be provided (on the assumption that the infrastructure is
delivered to the required specifications and standard) to encourage efficiency in
infrastructure delivery.
 The ability to exempt works in kind projects from the requirements of section 186 of
the Local Government Act 1989 should be explored and documented in the Stage 2
report.
10.2 Submissions and Consultation
Several submissions commented on works in kind, with strong support to reinforce this
approach. Melton Council commented that this is a timely opportunity to review and clarify
some the existing issues being experienced. A number of Councils including Latrobe,
Boroondara, and Ballarat expressed the view that works in kind be available at the discretion
of the collecting agency. In contrast, the UDIA, Property Council and PEET suggested that it
should be available wherever possible or as of right, and not at the discretion of the
collecting agency.
Darebin Council’s submission supported the ability to specify the standard, monitor the
construction and approve the quality of works, with the HIA requesting that there be an
agreed standard of works that is consistent across all Council areas. The Master Builders
Association commented that the system should ensure that Councils do not seek to recoup
more than the correct value of works.
Several Council submissions pointed out that DCPs are sometimes currently used to assist
the implementation of developer funded local or collector roads where there are a large
number of land owners or developers involved in a development. In these situations DCPs
are used as a convenient mechanism to collect funds, manage works in kind and implement
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works. The Committee believes that this mechanism should still be available if agreed by
developers and recommends that a levy be available for this purpose.
The Shopping Centre Council welcomed maintaining the ability to credit and offset works in
kind, and submitted that provisions be made for State Agency requirements to be credited
against local contributions.
Whittlesea Council suggested there are still some issues to be addressed, including: impact
on staging and potential conflict with the Council’s capital works program; and if funds are
available, or who pays, in cases where the cost of works exceed contribution liability.
Greater Shepparton and Boroondara Councils asked that work in kind value over $200,000
be exempt from the provisions of section 186 of the Local Government Act 1989 to avoid any
potential breach of that Act.
10.3 Discussion
The Committee believes that there is considerable merit in the widespread use of works in
kind agreements and that this approach should be preferred wherever possible, particularly
in Growth Areas. In this context, the Committee notes that whilst the circumstances in
which works in kind arrangements may be proposed vary considerably, it is generally the
case that greater efficiencies can be gained if infrastructure (to required standards) is
provided by the private sector in association with other works.
In arriving at this general conclusion however, the Committee is of the view that acceptance
of works in kind must be at the discretion of the Collecting Agency as a decision to support a
works in kind proposal is likely to require an assessment of the broader contribution
implications, including the potentially competing interests of other land owners/developers
and the Planning Authority.
With the general objective in mind of simplifying and achieving efficiencies in infrastructure
provision (including land for public purposes) wherever possible, the Committee is of the
opinion that the methodology for preparing Development Levy Plans needs to be reviewed
and that greater regard should be given to the ‘development context’ including the scale and
location of land holdings within the contributing catchment during formulation of the
Development Levy Plan. Early regard to the context within which the Development Levy
Plan is being formulated may enable direct provision responsibilities, particularly for larger
landholdings, to be nominated from the outset.
Once need and nexus for infrastructure provision has been determined, identification and
nomination of direct provision responsibilities for key land holdings will avoid complex
apportionment methodologies where each landholding is theoretically contributing a share
of the cost of every item of infrastructure. The recommended approach will assist in ease of
delivery of necessary infrastructure. Recent DCPs in Growth Areas have included an
Implementation Strategy in an attempt to provide some guidance in relation to delivery,
however the Committee is of the opinion that consideration of delivery strategies should
occur earlier in the formulation process, particularly in Growth Areas.
With the shift to the Levy being a contribution towards delivery of a selection of Allowable
Items in Growth Areas, it will still be necessary for the Planning Authority to identify and cost
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the preferred or necessary infrastructure in the Development Levy Plan. As discussed in
Chapter 5, it is expected that the Development Levy Plan will be based on functional layouts
and/or quantity surveyors assessments for buildings, roads and other construction items.
The Development Levy Plan is effectively the infrastructure plan for the planning unit and is
used to determine what infrastructure items are to be funded via the Standard Levy. In this
sense the Development Levy Plan is essentially a list of works that the Council is committing
to and a budget for how the Levy will be spent. It is recognised that some infrastructure
priorities in the Development Levy Plan may change over time, and the Plan should be
flexible, up to a point, within the overall Standard Levy budget. In particular, the
configuration of Community and Recreation facilities may change within the capped levy
component once local needs are better understood.
While the Committee believes that functional layouts are a satisfactory level of detail for
preparing the Development Levy Plan, it is recognised that developers will generally require
a higher level of design and costing certainty before they are willing to commit to works in
kind agreements. The Committee acknowledges this, and therefore believes that credits for
works in kind should be based on more detailed design and more refined cost estimates
than in the Development Levy Plan. This may take the form of tender documents where a
developer or council intends to put a project out to tender. Where the refined cost estimate
differs from that in the Development Levy Plan, the more refined cost estimate (whether it
be higher or lower) should be used as the basis for the works in kind agreement. Any new
cost estimate (or tender price) will need to be agreed by both the Council and the developer.
In cases where a developer proposes a revised estimate, Council would have the right, as
part of the works in kind agreement negotiation, to undertake their own estimates, modify
the scope of works (to meet the budget), or decline the works in kind offer. The developer
will receive a credit for the agreed amount with no further claims if the actual costs are
greater. In any event, the total revenue collected from the Levy will not change and the
Council will need to adjust the budget for any ‘unders’ and ‘overs’ within the Standard Levy
budget.
The Committee believes this is the fairest approach. While the developer still takes a risk of
over-runs, this risk is much reduced if the more refined cost estimate is used as the basis for
the works in kind agreement. The approach will still provide some incentive for developers
to achieve efficiencies in design and construction as they are able to retain any difference
between the agreed credit amount and the actual cost. Although, in the experience of the
Committee, developers do not seek to deliver works in kind just to capture any margin
between the DCP amount and their actual works cost. It is not a motivation to deliver works
in kind. Developers will generally seek works in kind as a means of positioning their
developments and in many instances as a means of getting projects off the ground. In most
cases they are bringing forward cash flow to do this in order to get projects to the market
earlier. With the bringing forward of cash flow, developers will be trying to do what they
can to offset that impact and will value certainty of outcome more highly than the potential
to pocket the difference.
Credit for land required to be set aside for public purposes should be treated as a works in
kind item wherever possible in Growth Areas. As noted in Report 1, it is desirable that Public
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Land be secured and paid for as early in the life of the levy as possible. The credit value for
land should be determined in accordance with the approach discussed in Chapter 8.
In the other Development Settings, the availability of works in kind arrangements will vary.
In the Urban Areas, the Standard Levy is more likely to be collected and applied to
incremental infrastructure improvements and as such works in kind agreements will be less
valuable. Works in kind agreements should not be available in this Development Setting. In
Strategic Development Areas, there will be the possibility of acceptance of works in kind
arrangements.
In terms of the process by which works in kind arrangements may be considered and with
specific regard to the requirements of the Local Government Act 1989, the Committee
believes that there is merit in providing an exemption for contracts involving ‘works in kind’
agreements from the requirements of section 186 of the Local Government Act 1989.
Section 186(5) provides the ability to exempt certain contracts by regulation and presently
the only contracts that benefit from this exemption are those relating to the provision of
legal services. Given the potential efficiencies and benefits of works in kind arrangements
for delivering public infrastructure, the Committee believes that such an exemption could be
justified. Consideration should be given to amending the Local Government (General)
Regulations 2004 to exempt contracts for the construction of infrastructure that are to
partly or fully satisfy a liability arising under an approved Development Levy Plan.
10.4 Recommendations
The Committee make the following recommendations:
 That acceptance of works in kind is an essential and valuable component of the
Development Levy System for Growth Areas and Strategic Development Areas.
 That acceptance of works in kind agreements in these settings, while preferred, is
to be at the discretion of the Collecting Agency.
 That works in kind credits should be determined based on the most detailed design
and costing information available at the time of negotiating the works in kind
agreement.
 That Section 173 Agreements should continue to be utilised for the documentation
of works in kind agreements.
 That consideration be given to amending the Local Government (General)
Regulations 2004 to exempt contracts for the construction of infrastructure that
are to partly or fully satisfy a liability arising under an approved Development Levy
Plan from the requirements of section 186 of the Local Government Act 1989.
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11 Developer Delivered Infrastructure and GAIC
11.1 Overview
A Preferred Way Forward assumed that there will be three levels of contribution toward
infrastructure provision in Growth Areas:
 Site specific infrastructure that will be directly provided by developers (as set out in
Attachment 4 of A Preferred Way Forward);
 Precinct or growth area based shared contributions for which monetary payments
(and/or works in kind) will be sought from developers as development takes place;
and
 State wide shared contributions for which monetary payments (and/or works in kind)
will be sought from developers in metropolitan Growth Areas as development takes
place (GAIC).
Chapter 13 of Report 1 responded the Committee’s Terms of Reference that seeks:
Clarification of the infrastructure to be directly provided by the developer and
what infrastructure should be provided by the State through other sources such
as the Growth Area Infrastructure Contribution.
In this regard, the Committee made the following findings:
 The framework for the proposed Development Levy System confirms the need for
developer provided infrastructure.
 As part of its Stage 2 work, the Committee will review Appendix 4 of A Preferred Way
Forward to remove any items, such as the construction of a football field, that are
included within the new system as direct developer provided items.
 The affordability implications of GAIC charges should be reviewed within the Stage 2
report.
 The definitions of State and local infrastructure be reviewed as part of the
Committee’s Stage 2 work with reference to the recommended development levy
framework and allowable funding items.
 The Minister’s Direction dated May 2003 be further examined by the Committee
within the context of the recommended development levy framework and the GAIC
provisions as part of its Stage 2 work.
11.2 Submissions and Consultation
Submissions that addressed developer delivered infrastructure and the GAIC highlighted the
need to develop a clearer definition of State and local infrastructure. The Property Council
and HIA submitted that a review of the definition of State Infrastructure is a matter of
priority and that this be done in close consultation with the industry. The UDIA submitted
that the GAIC legislation currently is very vague and does not adequately define ‘State
Infrastructure’. The GAA pointed out that there is a lack of clarity about how regional
pedestrian and bike trails are to be delivered, and it supported local contributions being
applied, as this will result in this infrastructure being delivered in a timely fashion. It
suggested that level 1 and 2 components be local, with level 3 being State.
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Wyndham Council suggested that infrastructure be classified in three clear groups, that is,
State infrastructure being funded by GAIC and regional and local infrastructure both being
funded by development contributions. Hume, Cardinia and Whittlesea Councils provided
examples of uncertainty of the workings and operation of the GAIC and development
contributions, and would like to be involved further to clarify the working of the new levy
system. Greater Geelong Council supported the GAIC being included for long term use in
regional Growth Areas.
PEET sought better integration and transparency between GAIC and development
contributions, and suggested that the GAIC reporting system be similar to development
contributions. PEET also suggested that in-kind land contributions, in lieu of cash be
available for GAIC payment where the infrastructure is to be provided by the State or an
agency other than Council.
MAB, UDIA and GAA all expressed concern that the multiple funding sources and
responsibility hampers the delivery of State and regional road and transport networks, which
again highlighted the need to clarify the relationship between GAIC and development
contributions. MAB expressed concern that there is inequality between competing
employment areas that are subject to GAIC and pre GAIC areas that have significantly lower
development costs, and submitted that a new system address this inequity.
The Bus Association of Victoria argued that at a minimum, the development contribution
system should facilitate land acquisition to reserve corridors for public transport.
VicRoads and PEET raised the potential for GAIC credits to be utilised to secure land for
future VicRoads arterial road widening.
11.3 Discussion
Consistent with the findings of Report 1, the Committee has further reviewed Appendix 4 of
A Preferred Way Forward and believes that the list of developer provided infrastructure is
appropriate, save for the removal of the construction of a football field. As a matter of
principle, developer provided infrastructure should be limited to the actual works necessary
to produce the new lot/dwelling with the Standard and Supplementary Levies to fund the
additional works as provided in the Allowable Items.
There continues to be significant confusion with respect to application of the funds collected
under the GAIC and the potential for overlap with the Standard Levy or Supplementary Levy
as potential funding sources.
The Committee considers that the new proposed framework for Development Levies
reduces confusion and provides clarification through the identification of developer
provided infrastructure and Allowable Items for the Standard Levy and Supplementary Levy.
The Committee notes that some of the existing confusion stems from the desire of
Government Agencies and Growth Areas Councils to gain access to GAIC funds. Developers
also appear to be seeking access to the GAIC for works in kind.
The Committee notes that a review of the GAIC is being undertaken by DPCD and believes
that it would be appropriate for that review to establish guidelines for how the GAIC is to be
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applied and to make those guidelines widely available to address the widespread confusion
and expectation as to how it is managed.
The Committee expects that there will be continuing overlap between some of the
Allowable Items under the Standard and Supplementary Levies, and the GAIC. This is
seemingly inevitable where, for example, a local shared path which ultimately becomes part
of a wider regional and perhaps metropolitan network. The Committee notes that these
Levies are a contribution to the required infrastructure and therefore the GAIC should be
regarded as one of a number of potential funding sources.
The Committee notes that the ability to reserve and secure land where VicRoads is the road
authority is problematic. As discussed in Report 1, the Committee believes that land
required for VicRoads roads should be reserved via a PAO, and not as part of a DCP as is
sometimes the current practice. VicRoads and PEET both suggested the option of enabling
GAIC credits for land reserved for a public purpose under a PAO, with land transferred and
credits attributed at the time that the GAIC is triggered. It was submitted that this would be
an advantage to developers as it avoids ‘sterilising’ the land (in that the developer can do
nothing with the land but is still charged rates and taxes on it) and it would ultimately be an
advantage to the State (VicRoads) in that land would be secured at a lower cost.
The Committee notes that, whilst this could be argued to create a financial liability for the
State, it could also be argued that the liability is created anyway when the PAO is applied
and that a GAIC credit would add certainty and secure the land at a lower price. The
Committee believes that the proposed approach may have merit and suggests that this issue
be taken up in any review of the GAIC.
11.4 Recommendations
The Committee makes the following recommendations:
 That Appendix 4 from A Preferred Way Forward be adopted as the schedule for
direct developer provided infrastructure, save for deletion of the construction of a
football field.
 That the current review of the GAIC establish transparent guidelines for how the
GAIC is to be applied, and that those guidelines be made widely available.
 That any further review of the GAIC consider the merits of enabling GAIC credits for
the transfer of land required for State infrastructure.
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12 Using Permit Conditions for Infrastructure
12.1 Overview
Chapter 14 of Report 1 responded to the Committee’s Terms of Reference that seeks:
The circumstances where Councils and State agencies should be able to require
a developer to enter into an agreement to provide funds for additional off-site
infrastructure required to mitigate the off-site impacts of a proposal through a
permit condition.
In this regard, the Committee made the following findings:
 The existing legislative framework be retained to enable responsible authorities to
mitigate the off-site impacts of individual developments through permit conditions.
 New guidelines for the simplified levy system reinforce the principles which are
currently applied to permit conditions for off-site infrastructure.
 The new guidelines should provide advice and examples of circumstances in which it
is appropriate to use permit conditions to provide additional off-site infrastructure, in
particular for out of sequence developments.
12.2 Submissions and Consultation
Few submissions were made about using permit conditions for infrastructure, with the main
emphasis being the need to limit ‘scope creep’ by agencies and eliminating ‘double dipping’
where a Standard Levy or a Development Levy System is in place (UDIA and Whittlesea
Council). The HIA submitted that any conflict be addressed by clear guidance being provided
about when and how permit conditions can be used. Boroondara Council supported
retaining the existing legislative framework to enable responsible authorities to mitigate the
off-site impacts of individual developments through permit conditions, and it supported new
guidelines as part of the simplified levy system.
12.3 Discussion
(i)
Permit Conditions and section 173 agreements
The Committee’s Report 1 (Chapter 14) described the circumstances in which permit
conditions can currently be imposed to require the provision of off-site infrastructure under
sections 62(5) and (6) of the Planning and Environment Act 1987. In summary, the following
principles were seen to emerge from the legislation and case law in relation to the use of
permit conditions to require the provision of infrastructure:
 The works, services or facilities must be considered necessary as a result of the grant
of a permit;
 The works, services or facilities must be paid for in whole by the developer or in part
where the responsible authority or other public authority is to meet the remaining
amount. This requirement reflects the causal nature of the nexus of the proposed
development with the works services or facilities, which must be deemed necessary to
mitigate its impacts;
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 The above requirements do not preclude the provision of infrastructure that provides
benefits to other land, but the extent to which other land benefits may be reflected in
the reasonable proportion of the cost to be borne by the developer;
 DCPs are the only means by which contributions to the provision of works, services or
facilities can be obtained from more than one developer;
 It is not open for a responsible authority to include a condition in a permit requiring
the provision of works, services or facilities where they are already included in a DCP.
 Responsible authorities may not ‘double dip’ by collecting levies and requiring the
provision of the infrastructure by permit condition; and
 Any permit condition must also meet the other general requirements of validity in
every other respect, including reasonableness, certainty and relevance.
It is important to note that section 62(5)(b) of the Act can only be used to require the
provision of infrastructure though a section 173 agreement where there is a voluntary
agreement 4. In the absence of a voluntary or consensual arrangement it cannot be relied
upon and cannot be used to circumvent Part 3B of the Act.
The Committee supports the continued application of permit conditions for off-site
infrastructure on the basis of these principles, as embodied in the current legislative
framework, in the context of the new Development Levy System.
Given that development levies under the new system will be much more broadly applied
than DCPs, in particular across Urban Areas, it is anticipated that there will be greater
potential for ‘double dipping’ i.e. where impact mitigation conditions are imposed
concurrently with development levies.
Clearly, where infrastructure is proposed to be funded through development levies it should
not be possible to require further provision through a permit condition under the guise of
‘impact mitigation’. Given the existing requirements for such permit conditions, in particular
the more direct or causal ‘nexus’ required, such conditions would fail these tests.
In light of the above the Committee believes that it will be important for any new guidelines
to explain and reinforce the existing principles applying to the use of permit conditions in
this manner. In particular it will be important to emphasise the need to avoid ‘doubledipping’ given that there is likely to be more instances where impact mitigation conditions
and development levies will apply to the same development.
(ii)
Referral authorities
In Report 1 (Chapter 14.4) the Committee briefly discussed the powers of referral authorities
to direct a responsible authority to impose conditions which may include a condition that
the permit applicant provide works, services or facilities on other land (section 62(1)(a)) of
the Act.
Unlike conditions imposed by responsible authorities, conditions imposed at the direction of
referral authorities are not subject to the same requirements of section 62(5)(c) of the Act.
These conditions must still meet the normal validity requirements and are subject to review
on their merits.
4
See Cameron Manor Pty Ltd v Mornington Peninsula SC (Red Dot) [2007] VCAT 1822 (5 October 2007)
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The Committee believes that it is appropriate that responsible authorities continue to have
the power to use permit conditions to require the provision of infrastructure in order to
mitigate off-site impacts of a particular development, whether or not it is affected by a
development levy. Each matter will need to be considered on a case by case basis and it is
simply not possible to anticipate or codify every circumstance in which it will be appropriate
for referral authorities to exercise this power.
The Committee supports the provision of further guidance about the circumstances in which
the use of permit conditions by referral authorities to require the provision of infrastructure
is appropriate.
12.4 Recommendations
The Committee makes the following recommendations:
 That the existing legislative framework be retained to enable responsible
authorities to mitigate the off-site impacts of individual developments through
permit conditions.
 That new Guidelines for the Development Levy System reinforce the principles
currently applied to permit conditions for off-site infrastructure, with particular
regard for the need to avoid overlap or ‘double-dipping’ where Levies also apply.
 That the new Guidelines provide advice and examples of circumstances in which it
is appropriate to use permit conditions to provide additional off-site infrastructure,
in particular for out of sequence developments.
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13 Administration and Implementation
13.1 Overview
This Chapter deals with the key issues relating to the administration and implementation of
the proposed Development Levy System.
The success of any regulatory system is not only determined by the concepts and ideas
which underpin it, but perhaps more critically by how its users interact with its regulatory
architecture and the administrative mechanisms which seek to apply the concepts to the
real world and translate them into action. How the implementation framework of the new
Development Levy System interfaces with Councils, Government agencies, the GAA,
developers and the community will be critical to its success.
Through its consultations and deliberations, the Committee is cognisant that many of the
failings and complexities of the existing development contributions system have their roots
in its implementation, including at a legislative and administrative level. In particular, the
Committee is aware of the onerous requirements of Part 3B of the Act for the preparation
of DCPs and the lack of clear guidance provided in existing Ministerial Directions on the
scope of contributions.
These features have resulted in an overly complex system, not often used outside Growth
Areas and ultimately undermining the effectiveness of the existing system in meeting
planning needs by providing revenue to meet identified infrastructure needs.
Consequently, the Committee believes that it is important for it to provide a detailed level of
consideration to the manner in which the new system should be implemented so as to avoid
the mistakes of the past.
A Preferred Way Forward identifies that similar to the current system, revenue would be
collected by each Council and held in a special account established for this purpose.
Chapter 15 of Report 1 responded to the Committee’s Terms of Reference that seeks:
The appropriate requirements for accountability and reporting of the
contributions by councils.
The appropriate financial and administrative processes for councils to ensure
development contributions funded infrastructure is delivered at the time it is
required. This may include recommendations on funding options for the
delivery of infrastructure in advance of sufficient funds being collected.
An appropriate method for annual indexation of the standard levies and
charges, construction costs and land valuations (for example, by reference to an
appropriate industry index), and for periodic review to ensure that the levies
reflect contemporary infrastructure requirements.
In this regard, the Committee made the following findings:
 To ensure accountability and transparency, Councils should be required to account
for and report annually on the receipt and expenditure of the development
contributions.
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






Council annual reports should detail the following in relation to development levies:
 Any amounts received;
 Any land received;
 Any items of works and facilities received as works in kind;
 Council’s expenditure on infrastructure.
The framework for development levies should include standardised construction and
land indexes and a general index for standard cost rates.
Feedback is sought on the most appropriate standardised indexes for each
development setting.
A standardised timing and process for application of the preferred indexes will be
specified in the Committee’s Stage 2 report.
Project contingencies should generally not exceed 10% of the project value.
There should be a five yearly review of a Development Levy System and the approach
to Standard Levies under the new system.
A decision making and advice mechanism to address a range of Development Levy
implementation issues will be proposed as part of its Stage 2 work.
The implementation framework will need to accommodate the following key components of
the new system:
 Applying the levies – justification;
 Defining the Development Settings;
 Allowable Infrastructure Items;
 Setting the Levies;
 Securing and Valuing Public Land;
 Administration and Expenditure of levies; and
 Transitional matters.
These are addressed below.
Before addressing the implementation in detail the Committee believes that it is important
to set out the key objectives and principles which the implementation framework of the new
system should address.
The Committee believes that the success of implementation of the new Development Levy
System should be measured by the extent to which it is likely to meet the following
objectives, which are:
 To reduce the costs and time associated with the preparation and approval of plans
and levies which are integral to the Development Levy System;
 To improve the transparency and usability of the system for all stakeholders;
 To increase the take-up of development levies by Councils and the overall proportion
of new infrastructure that is funded by new development levies;
 To increase the flexibility and responsiveness of the new system in adapting to
changing community need; and
 To provide the opportunity for all Councils to have access to the new system, with
minimal resourcing imposition.
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In determining the architecture of the new system and its implementation, the Committee
has had regard to the following principles, which arise from A Preferred Way Forward and
the discussion in preceding chapters:
 The new system is to be a clean break from the past and will therefore supersede
DCPs under Part 3B, requiring its own discrete set of provisions within the Act, albeit
existing approved DCPs will remain in force;
 Once the Standard Levies are set for each Development Setting, their quantum or
scope will not be up for debate;
 Councils should be required to 'turn on' the levies and identify the basis for any levy
within the planning scheme through a fast track Planning Scheme Amendment
process; and
 The new system must be implemented in the context of a constrained budget
environment and it should be implementable within existing resources and capacities
of both DPCD and Councils.
The Committee believes the existing framework provides a reasonable starting point for
considering how the new system should be implemented. It is noted that there are aspects
of the existing system which are not proposed to change significantly, and these can be
applied to the new system with minor modifications, e.g. provisions relating to the
administration and collection of levies. There are also mechanisms under the existing
system which have been underutilised and which the Committee believes have the potential
to provide greater clarity and certainty, for example, a revised SPPF, a new Ministerial
Direction, a new Practice Note and the like.
13.2 Submissions and Consultation
A number of submitters, including PIA and the MAV, commented that a simple and effective
implementation process is required to encourage Councils to take up the new system.
Hobsons Bay Council strongly encouraged the Standard Levy system be introduced via a
Ministerial amendment whereas Wodonga Council supported a simplified process outside
the planning system.
The Property Council suggested that an expert advisory group of State and local
government, industry representatives and subject matter experts be appointed to address
matters such as road standards, provision requirements and other implementation issues. It
submitted that such a body develop a suit of guidelines and implementation tools for the
roll-out of the new system. Yarra Council provided examples of matters that should be
covered in Guidelines and practice notes for implementation.
Likewise, Melton, Moreland and Greater Geelong Councils support the establishment of a
steering committee or Advisory Committee to streamline the approval of the levy system
provisions in planning schemes. Moreland Council pointed out that a streamlined
implementation process will make it more likely that Councils will take up Standard Levies.
Moreland Council would like more information about how administrative efficiencies and
reduced costs can be achieved under the new system.
Moonee Valley Council expressed concern that the new approach still appears to be costly
and onerous, like the current system. In particular, the justification required for
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Development Levy Systems, five yearly reviews and whether planning scheme amendments
are required to implement them. Glen Eira Council was not convinced that strategic
justification will be any easier as this requirement has not been made clear. Melton Council
sought clarification about the level of justification will be required and who will assess the
justification.
There was some discussion about indexation in the submissions, with general support for
the indexation of cost as part of the system with a range of mechanisms and timeframes
suggested. Hume Council supported that an indexation process be mandated through
legislation of similar.
SKM submitted that different indices should be used for different components of the
Standard Levy:
 Road projects – VicRoads Roads and Bridge Construction Index, June Quarter;
 Drainage and Community Facilities – Rawlinsons Building Price Index, June quarter,
Melbourne; and
 Land Acquisition- based on two registered valuations, one of which should be
provided by the Victorian Valuer General.
Melton, Surf Coast, Hobsons Bay, Whittlesea, and Maribyrnong Councils, and Public
Transport Victoria were amongst submitters that supported applying the Rawlinson’s
Building Price Index for project construction costs. Wyndham and Frankston Councils
suggested that the ABS Consumer Price Index be used. In relation to other infrastructure
items the following mechanisms were also suggested:
 ABS Non-Residential Building Construction Victorian Index for building costs and
community infrastructure (Wyndham Council);
 ABS Road and Building Construction Index for civil projects (VicRoads, and Cardinia
and Wyndham Councils).
There was a divergence of views from the development industry in relation to contingencies.
These included PEET and Hume Council submitting that it be capped at 10%, the GAA
recommending capping at between 5% and 10%. Some Councils sought higher percentages,
such as Greater Geelong suggesting greater than 10% was required to manage long term
projects and Melton Council which suggested a rate of 20%. Port Phillip was an example of
an inner Council that suggested higher land cost in inner areas should be factored into
setting levies and suggested that the Subdivision Act provided a model.
A number of Councils including Melton, as well as the GAA, supported the cost of preparing
plans (i.e. planning costs) being included as Allowable Items in Standard Levies. The HIA
took the opposing view. In contrast, the Property Council submitted that the developer’s
cost towards development of PSPs and development contribution plans be recoverable via
credits against contributions.
The ability to pool funds between infrastructure categories was supported by a number of
Councils including Boroondara, Frankston, Mitchell and Bayside.
There is support for a dispute resolution mechanism to be part of the new system. The
development industry including the Master Builders, UDIA, Property Council and HIA urged
that a specialist body or Standing Advisory Committee (or the like) be established as part of
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the new system to deal with dispute resolutions or appeals and to govern and review of the
system over time. These submissions have resonated in the Committee’s deliberations on
this issue.
13.3 Collection of Levies
A number of submitters raised issues regarding the arrangements and timing for the
collection of levies, which generally occurs at the subdivision permit stage, with conditions
generally requiring payment prior to a statement of compliance issuing. Consistent with
most submissions on this issue, the Committee agrees that this will continue to be the most
practical approach for the collections of levies and should be the preferred timing for the
collection of levies where subdivision occurs.
The existing DCP provisions (see section 46N of the Act) require Councils to impose permit
conditions requiring applicants to pay development infrastructure levies within a specified
time or to enter into an agreement to pay the levy. Where a permit is not required, the Act
requires the timing to be specified in a DCP.
The Committee is aware of practical issues associated with the collection of the CIL, which
currently occurs prior to the issue of building permits for dwellings (see section 46O of the
Act).
Whilst the new system will dispense with the CIL distinction and collection arrangements, it
is expected that the broader application of levies across urban areas, where growth will be
more incremental, may raise new challenges for the collection of levies. In particular,
Councils will need to consider appropriate triggers for payment of levies where a
development results in an increase in dwellings or commercial floor area but where
subdivision is not initially proposed or where a planning permit is not required.
In these situations it is possible that the most practical trigger point for collection will be
prior to the issue of a building permit for the proposed development. Provisions contained
within section 24 of the Building Act 1993 may need to be amended to reflect the new
system and to support the collection of levies where the timing for payment is prior to the
issue of a building permit.
Consideration may also need to be given to establishing appropriate enforcement
mechanisms in circumstances where a permit condition and planning enforcement
procedures cannot be used to require compliance or payment of a levy.
These issues will need to be addressed in the drafting of the legislative provisions and
overlay to ensure that Councils can adopt the most practical approach to the collection of
levies which is effective and suited to their administrative capabilities.
13.4 Regulatory Implementation
Section 2.2 of the Committee's Report 1 described the implementation of the existing DCP
system which is relevant to the following discussion.
As previously noted, the current system for development contributions is implemented at a
number of different levels within the Victorian planning system and local planning schemes.
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How the Committee considers this might be taken forward is noted below. In setting this
indicative framework out, the Committee is mindful that while it has made a number of
suggestions and recommendations for consideration by the Minister for Planning, the final
legislative requirements will be determined once the new system in its final form is adopted
by Government. For these reasons, the Committee is cautious about putting too much
emphasis on a final legislation package until the final form of the new system is resolved. A
diagram at Appendix G provides an overview of the implementation framework envisaged
for the new system.
The Committee is cognisant that the final implementation arrangements for the
Development Levy Plan, in particular its mechanism for approval, may have significant
implications for the usability of the new system and whether it achieves both the flexibility
and certainty desired by stakeholders.
The Committee is acutely aware of issues arising from the inflexibility of the current system,
but it is also mindful that any new system needs to legally robust, particularly in Growth
Areas where these plans will be relied upon to fund significant infrastructure investment.
For Growth Areas, where PSPs typically include a higher level of detail for infrastructure
projects, it will be appropriate for the Development Levy Plan to reflect this level of detail
when it is approved. However in Urban Areas, where growth is more incremental and the
detail and priority of infrastructure projects less certain, a greater level of flexibility will be
required. The extent to which such information needs to be captured and incorporated into
planning schemes will have some bearing on the workability of the new Development Levy
System across the Development Settings, particularly in Urban Areas.
The implementation arrangements, including the justification and processes required, will
need to accommodate the differences between the Development Settings and be
proportionate to the strategic issues at stake, as the 'one-size fits all' approach of the current
system has clearly failed in this regard.
With these issues in mind, the Committee has made recommendations for establishing a
speedy decision-making and dispute resolution process which could militate against the
inherent inflexibility and time constraints of the planning scheme amendment processes.
(i)
Planning and Environment Act 1987
Part 3B of the Act provides the legislative framework for the preparation and administration
of DCPs. Section 46K of the Act sets out the requirements for the contents of a DCP. It is
clear from A Preferred Way Forward that the new system is to be a clean break from the
past and will likely require its own discrete set of legislative provisions, perhaps as a new
Part to the Act, for example, Part 3BA. Whilst new DCPs will no longer be permitted, there
will clearly be a need for transitional arrangements given the timeframe of existing approved
DCPs and the need for these to be administered and possibly updated over their life.
It is suggested that the existing provisions in Part 3B of the Planning and Environment Act
1987 would need to be retained in relation to all existing Development Contributions Plans
made pursuant to these provisions. These provisions could form Division 1 of the Part. The
Act would need to be amended to prevent new DCPs being made pursuant to these
provisions; but to allow amendments to be made to existing DCPs.
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A new Division of Part 3B of the Act would need to be added to govern arrangements for the
introduction of the proposed Development Levy System and standard levies.
Having regard to the Committee’s recommendations for the new system, it is envisaged that
the package of legislative reforms would address the issues as set out in Table 31:
Table 31
Legislative Reforms
Issue
Purpose of reform
Development Levy Plans and
Establish a new part or division of the Act to provide a new system
for the preparation and approval of Development Levy Plans to levy,
collect and administer contributions towards infrastructure through
local planning schemes. It should provide that a Development Levy
Plan:
Applying the levies - justification

Must identify the planning unit to which the plan applies.

Can apply a Standard Levy and a Supplementary Levy, where
permitted, in respect of the development of land within the
planning unit.

Must identify the infrastructure or classes of infrastructure
that are to be funded by any levies to benefit growth in the
planning unit.

Must identify the strategic basis for the application of the
levies.

Must specify any individual infrastructure items that are
proposed to be funded by a Supplementary Levy.

Must specify when a development levy is payable in respect
of development of land in the planning unit.

May identify methods of indexation which are to be applied
to levies on an annual basis.

May specify whether particular levies can be satisfied
through cash or in-kind works or identified ‘public land’ or a
combination of both.

Must be prepared in accordance with any Ministerial
Directions issued under the new part of the Act.
Defining the Development Settings

Provide a head of power for different Development Settings
and Standard Levies to be defined by a Ministerial Direction.
Allowable Items

Similar to section 46M (2)(a), provide a head of power for a
Ministerial Direction to define the Allowable Items of
infrastructure which may be funded from Standard Levies
across different Development Settings.
Setting the Levies

Similar to the existing sections 46M (2)(a), (b) and (c),
provide a head of power for a Ministerial Direction to specify
Standard Levies for different Development Settings in
respect of classes of infrastructure.

Provide a head of power for a Ministerial Direction to also
direct that specified methods of indexation be applied to
different infrastructure categories funded by the Standard
Levies.
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Issue
Purpose of reform
Securing and valuing public land

Establish a new head of power to provide for authority to
identify and gather contributions for land for public
purposes.

Provide that a DLP can set a Public Land component of the
Standard Levy, comprising a percentage of NDA and dollar
value, and identify ‘public land’ within the planning unit.

Provide that the Public Land component of the Standard Levy
may only be satisfied through in-kind provision of ‘public
land’ or cash or a combination of cash and land where a lot
does not contain sufficient ‘public land’ to satisfy the public
land requirement.

Changes may also be required to the Subdivision Act to
provide a head of power, similar to section 18, to require
land identified as ‘public land’ in a DLP to be set aside on a
plan of subdivision, in a location and up to the amount
specified in the DLP.

Where a DLP applies to land in a Growth Area the provisions
should indicate that it will not be possible to impose any
open space contribution requirements pursuant section 18
of the Subdivision Act or clause 52.01 of local planning
schemes.

Provide a head of power for a Ministerial Direction to specify
a land valuation methodology for determining the cash value
of the Public Land to be included in a DLP.

Similar to section 46P, the new legislation should allow
Councils to accept money or in-kind land or works in
satisfaction of any levy.

Similar to section 46N, the new legislation will need to
provide that a DLP must specify when a development levy is
payable, which will usually be prior to a statement of
compliance in Growth Areas. The DLP will need to specify
the timing for payment where a planning permit is not
required for a development.

Where a planning permit is not required, a Council may
specify that it is payable prior to the issue of a building
permit. Similar to section 24(5) of the Building Act 1993, the
new legislative provisions will need to prevent the issue of a
building permit for buildings and works in respect of which a
levy is payable and has not been paid. These changes will
need to be developed in consultation with the Building
Commission.

Amendments to section 62 of the Act will need to provide for
the imposition of permit conditions to collect development
levies in accordance with an approved DLP, similar to the
existing 62(5)(a).

Section 62 should provide that where a DLP is in place a
section 173 can not be used to require contributions towards
infrastructure included in a DLP.

Similar to section 46Q of the Act, Councils should be required
Administration and expenditure of
levies
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Issue
Purpose of reform
to keep proper accounts of any monetary and in-kind
contributions paid and to refund monies which have not
been expended within the timeframe of the DLP. The new
provisions should require Councils to report this information
annually, including a list of priority projects for year ahead.
Transitional matters
(ii)

Part 3B of the Act should be amended to limit its operation
to the amendment and administration of existing approved
DCPs. It should no longer be possible to prepare a new DCP
under Part 3B the new legislation.

The collection and administrative provisions will need to
continue to apply to existing approved DCPs over their
lifetime.
Victoria Planning Provisions
State Planning Policy Framework
State planning policy for development contributions is set out at Clause 19.03 of the State
Planning Policy Framework (SPPF).
The Committee sees scope for the SPPF to provide clarity about the how the new system
should be applied in planning schemes. The Committee is aware that the SPPF is likely to be
reviewed in the context of the residential and commercial zone reviews, the release of the
Metropolitan Planning Strategy and this current review. The implications of this current
review should be considered as part of the forthcoming SPPF review.
Local Planning Policy Framework
There is no requirement for planning authorities to include strategies or policies for
collecting development contributions in their Local Planning Policy Frameworks (LPPF).
For Urban Area settings or other areas where stand-alone strategic documents like PSPs are
not warranted, the LPPF plays a clear role in identifying the strategic basis for the application
of Standard Levies. Following on from the SPPF review, it is likely that each Council will need
to review its LPPF in this context.
Additionally, the Committee is aware that many municipalities have undertaken a great deal
of strategic planning work over the years. It considers that the introduction of Urban Area
levies and in many cases, Strategic Development Areas levies could be based on that
strategic planning work. In implementing the new Development Levy System, the
Committee is mindful that Councils are concerned about the amount of work that might be
required. In this regard, the Committee is cognisant that its recommendations should
enable most Councils to use in-house resources and its existing Planning Scheme to identify
the Development Settings, and to ultimately apply the levies. The only area (apart from
Growth Areas where a Precinct Structure Plan will be required and that more extensive work
would need to be undertaken in any event) that might require additional strategic
justification is in identifying Strategic Development Areas where none currently exist.
However, the Committee considers that where Council has undertaken strategic reviews for
areas such as Principal or Major Activity Centres, or major redevelopment sites and
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opportunities, and where these are already identified within the Planning Scheme (thus
having been through an Amendment process), no further work need be undertaken to justify
the application of a Strategic Development Area. The only additional work in this case might
be to undertake further research to justify the application of the levy proposed – that is
selection of the $4,500 or $6,000 Levy.
A new Development Levy Overlay
The existing Development Contributions Plan Overly (DCPO) currently performs two
important functions within planning schemes. As an overlay, it maps the area where the
DCP applies and provides notice to landowners/developers whose properties are affected by
a DCP incorporated into a planning scheme. Secondly, it distils the key information from the
DCP i.e. the charges, rates and liabilities for easy reference and application, and avoids the
need to refer to the full incorporated document which are typically voluminous. The existing
Development Contributions Overlay, together with the existing provisions and schedules
would need to be retained for legacy purposes.
The Committee considers there will need to be a similar VPP mechanism to identify areas
subject to a Standard Levy and the amount of levies which are payable in respect of
particular types of development.
It is envisaged that the new overlay could operate and be drafted in a manner similar to the
existing DCPO, which requires conditions to be included on permits to give effect to any
applicable Levy. The new VPP provisions should address the issues as set out in Table 32:
Table 32
Issues for the new Overlays
Issue
Purpose of reform
Applying the levies - justification

Map the planning units where a levy is to apply and identify
the levies that are to apply in respect of different classes of
development. It is anticipated that the same overlay will
apply across all Development Settings within a municipality.

Identify the DLP and the relevant parts of the planning
scheme that provide the strategic basis for the schedule of
levies.

The existing DCPO will need to be retained for current
approved DCPs however it should not be available to be
utilised for any new DCPs.
Transitional issues
(iii)
A new Ministerial Direction
Section 46M of the Act currently provides a broad power for the Minister to issue written
directions to planning authorities in relation to detailed aspects of the preparation of DCPs.
Ministerial Directions are a flexible mechanism which can be approved and amended by the
Minister in response to implementation issues as they arise in the Victorian planning system.
In addition, section 12(2) of the Act requires that planning authorities must have regard to
Ministerial Directions generally in preparing a planning scheme amendment. Notice of any
approved Ministerial Directions must be provided in the Government Gazette (s46M(3)) of
the Act.
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The Committee believes that the flexibility offered by this mechanism is suited to
implementing many of the detailed aspects of the new system, in particular setting the
levies and how they should be applied across each Development Setting. The Committee
has set out a number of matters that could be included in a new Ministerial Direction as part
of the package of proposed implementation mechanisms provide in Appendices E and F.
Having regard to the Committee’s recommendations in the preceding Chapters, it is
envisaged that a new Ministerial Direction would need to address the issues as set out in
Table 33:
Table 33
Issues for a new Ministerial Direction
Issue
Purpose of reform
Defining the development settings

Provide for the definition of various of Development Settings
to which Standard Levies can be applied, in accordance with
the descriptions set out in Chapter 2:



Growth Areas
Urban Areas
Strategic Development Areas

Define the Allowable Items of infrastructure and direct that
only these items can be funded by Development Levies, in
accordance with the tables provided in Chapter 4.

Provide a schedule including diagrammatic specifications for
particular Allowable Items eg. intersection templates and
typical road cross-sections.

Where infrastructure standards are not contained within the
Direction, it should refer users to other relevant documents
e.g. the proposed Growth Areas Road Design Guidelines.

Specify Standard Levies which can be applied with respect to
each of the Development Settings in accordance with the
amounts recommended in Chapters 5 to 7.

Provide that a Supplementary Levy may be applied to a
Standard Levy but only where specified information and
justification can be met eg. see Chapter 5.8 for Growth Areas
and Chapter 6.7 for Strategic Development Areas.
Applying the levies - justification

Provide clear direction as to the level of information to be
included in a DLP for each Development Setting and what
level of justification is required.
Administration and expenditure of
levies

Provide direction about the level of information required to
be included in a DLP with regard to the administration of
levies, which will vary according to the Development Setting.
Valuing public land

Provide direction in relation to the land valuation
methodology that must be followed for determining the cash
value of the public land for the implementation of the
Standard Levy in Growth Areas (see Chapter 8).
Allowable Infrastructure Items
Setting the levies
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(iv)
New Guidelines and Practice Note
The Development Contributions Guidelines (DSE June 2003, as amended March 2007) are a
reference document at Clause 19.03-1 and must be considered by planning authorities as
they relate to planning scheme amendments. It is anticipated that new Guidelines and a
Practice Note will be required to support the implementation of the new system and to
replace the existing guidelines. The Committee has made recommendations in this regard.
The Committee has drafted a Practice Note that could accompany the Development Levy
Overlay – principally so that interested stakeholders gain a better understanding of how the
Development Levy System might all work upon its introduction. Both of these documents
are provided in Appendix D.
It may be appropriate for some aspects of the new Guidelines to be referenced or
incorporated into the VPP, possibly within the SPPF or as a stand alone incorporated
document. Having regard to the Committee’s recommendations in the preceding Chapters,
it is envisaged that the new Guidelines and Practice Note would need to address the issues
as set out in Table 34:
Table 34
Issues for Guidelines and Practice Note
Issue
Purpose of reform
Applying the levies - justification

Overall guidance should be provided for the preparation of a
DLP, including templates, in particular on how and where the
various Standard Levies should be applied.

Guidance should be provided on how to meet the strategic
justification requirements of the Act and Ministerial
Direction in each Development Setting.

Provide clear guidance on what is required to meet the
information and justification requirements of the Act and
Ministerial Direction to support the application of a
Supplementary Levy.

Some guidance should be provided on how to apply the
Allowable Items list to local circumstances and Development
Settings.

New Growth Areas Road Design Guidelines are proposed to
address the design standards and specification of new roads
in Growth Areas (see Chapter 4).
Administration and expenditure

Some guidance should be provided on establishing systems
to account for and administer the Standard and
Supplementary Levies, including the establishment of
systems to monitor their collection and satisfying annual
reporting requirements.
Permit conditions

Some guidance should be provided about when it is
appropriate to use permit conditions to require the provision
of infrastructure to mitigate the direct impacts of a
development (see Chapter 12).
Transitional matters

Guidance should encourage and provide guidance on
conversion of DCPs in preparation to the new system.
Allowable infrastructure items
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13.5 Decision Making and Dispute Resolution
Many submissions called for the Committee to recommend an appropriate mechanism for a
decision making and dispute resolution process that allows for a fast track introduction of
the levy, and in the event of disputes, a process that negates the need to go to VCAT, at least
in the first instance. This was reiterated at various the stakeholder and industry briefings. A
key issue is to determine is whether such a body should have determinative or
recommending powers.
(i)
Infrastructure Standing Advisory Committee
In taking this forward, the Committee considered whether this could be undertaken by
Council or DPCD, but determined that an independent advisory body might be the best
option. For clarity, it has named this body as the Infrastructure Standing Advisory
Committee (ISAC). The Committee considers it should be appointed to comprise members
with expertise and experience in DCPs, Structure Plans, and PSP processes to assist with
implementation and ongoing monitoring and review of the new Development Levy System.
A quorum of members could be assembled fairly quickly so efficient decision making could
be achieved. Advisory Committees by their nature are not determinative, and a further
decision making mechanism may need to be explored.
(ii)
Matters which the body would address
The Committee has identified a range of matters which it believes could fall within the
jurisdiction of such a body. Some of these would currently be considered by a Panel, usually
in the context of a planning scheme amendment. The Committee is of the view that a
number of matters which either go through a full and usually time consuming planning
scheme amendment process could be more effectively dealt with by a truncated process
resulting in an Amendment under section 20(4) of the Act. Other issues raised with the
Committee might fall to VCAT to determine. There is no intention to remove the right of
recourse to VCAT where this is currently available. However it has been put to the
Committee that an efficient decision making body may prevent the need to go to VCAT in
some circumstances.
The key roles of the ISAC, through Terms of Reference to be agreed and signed by the
Minister for Planning could include:
 Reviewing and recommending approval of Development Levy Plans;
 Review of Supplementary Levies;
 Review of the annual indexation process;
 Review of Allowable Items;
 Applying a Standard Levy to a particular planning unit or planning units into a
Planning Scheme. This could be a truncated amendment process with or without
third party participation, eg through a Section 20(4) process;
 Approval of a Supplementary Levy - again a possible truncated Amendment process
concluding with a 20(4) amendment.
The ISAC could assist in reviewing post-approval changes to Standard Levies and
Supplementary Levies. It has been put to the Committee that there are numerous situations
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where a minor amendment is required currently to an approved DCP. This does not warrant
a full planning scheme amendment process but it can become bogged down in negotiations
between stakeholders with no clear circuit breaker where there different positions are
adopted by the various stakeholders. The ISAC could have a role here.
It has been put to the Committee that there are a significant number of disputes that arise
on a range of implementation issues of PSPs and DCPs, particularly with respect to the
timing of infrastructure provision where it relates to staging of development. In some
instances at least it would appear that Councils have the ultimate decision making power but
there is currently no mechanism to resolve disputes where these arise. However there may
be a useful circuit breaking role for the ISAC to play in at least some circumstances.
13.6 Development Levy Plan
The Committee is recommending that the new Development Levy System be realised
through a Development Levy Plan, with legislation requiring all Councils to prepare a
Development Levy Plan for Urban and Strategic Development Areas, and Growth Areas. The
Development Levy Plan for Urban and Strategic Development Areas can be in the one plan,
with the Development Levy Plan for Growth Areas being prepared and developed in
conjunction with Precinct Structure Plans. In summary, the Committee provides some
guidance on how this plan might be prepared.
Council resolves to commence work on adopting the new Development Levy System for all
or part of their municipality – as single planning unit or multiple planning units.
Councils will have to determine the planning unit to which the Urban Area Standard Levy
might apply. Inner City municipalities might resolve that the whole of their municipality is
one planning unit. For a middle or fringe municipality, it might resolve that one part is one
planning unit (based on infrastructure needs) and another part is a second planning unit.
For a municipality such as Yarra Ranges, it might resolve that each major urban area or
township be deemed as separate planning units, due to the generally dispersed nature of
each township. It might resolve that other smaller townships not be included in any levy due
to lack of growth opportunities, unless there was an established nexus with another town.
In regional Victoria, municipalities might resolve that individual towns be separate planning
units and that some townships not be designated as an Urban Area due to the fact that little
growth is anticipated.
If a Council resolves not to prepare a Plan, they will need to seek an exemption from the
Minister for Planning via the ISAC. The exemption should be based on whether there is
sufficient population and housing growth in an area or within the municipality to raise funds
from a levy. It should not based on matters such as lack of staff, already adequate provision
of infrastructure items and the like.
In preparing the Plan, Council identifies the Development Settings (Urban Areas, Strategic
Development Areas or Growth Areas) within its municipality. Council might then have a
preliminary meeting with the ISAC to discuss the requirements for completion of the Plan,
and how it has determined its Development Settings and planning units. Based on strategic
work already in the Planning Scheme, Council prepares a Development Levy Plan and seeks a
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resolution to submit it for approval. The Committee believes that public notice – either
informally or formally is not required.
The ISAC could review the Development Levy Plan in a short time turn around time
(including having a meeting with the Council) and either:
 Recommend the Plan for approval via a s20(4) amendment process; or
 Refer the Plan back to Council for further work (with written comment) for further
review;
In the second instance, the Plan can be resubmitted back to the ISAC, once the further
required work is undertaken to the satisfaction of the Committee.
Once this work is complete, the Committee supports a process whereby the Minister for
Planning through a delegated officer of DPCD approves the endorsed Council Development
Levy Plan which is then gazetted and becomes operational.
To assist Councils understand the extent of work required for a Development Levy Plan, the
Committee has attached an indicative ‘Gumnut’ Plan in Appendix F.
13.7 Indexation
In Report 1, the Committee identified that one of the main failings of many early DCPs was
the inadequate indexation of infrastructure and land costs. The Committee concluded that
the Development Levy System should include standardised construction and land indices,
nominate a general index for standard cost rates, and specify the timing of indexation
reviews.
Some earlier DCPs used the Consumer Price Index to index both construction and land levies.
This has been regarded as inappropriate given that the basket of goods for CPI is very
different and varies in vastly different ways to construction and land costs contained in
DCPs.
The Committee sought feedback on the most appropriate standardised indexes for each
Development Setting and the submissions are summarised in section 13.2 above.
The Committee recognises that it is critically important that the real value of the proposed
Standard Levies is maintained over time. The failure of some of the DCPs approved early to
the middle part of the last decade, to properly adjust for price and value changes has led to
significant funding gaps in them, and a significant funding gap challenge for the Councils
involved. The major problem was that land values increased in many instances much faster
than the Consumer Price Index (CPI) which was used to index price changes. CPI is not
constructed for this purpose and is manifestly inadequate.
In many recent DCPs, this shortcoming has been addressed by the annual revaluation of
land, often on a site specific basis. This is a costly and administratively cumbersome process.
Industry indexes such as those produced by Rawlinsons and Cordell are a better measure
construction cost increases, as is the ABS produced Non-Residential Building and
Construction – Victoria Index. These too have been used in recent DCPs.
The ABS is in the process of fundamentally changing its suite of Producer Price Indexes and
the Committee is unable at this stage to identify appropriate ABS indices. It is firmly of the
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view that ABS indices appropriate to non-residential construction road and to road and
associated civil works should be used for indexation purposes as appropriate when these
become available.
A key indexation issue facing the Committee is maintaining the real value of the proposed
Standard Levies for each of the Development Settings as they are to be applied for new
Growth Areas, and Standard Levies some years into the future. As far as the Growth Area
Standard Levies are concerned, the Committee believes that different indexes should be
used for each of the main infrastructure categories weighted by their approximate
contribution to the metropolitan Standard Levy for Growth Area residential uses as follows:
 Transport (30% weighting), an ABS index which most closely reflects price increases
in the road and civil construction industry;
 Community and Recreation (30% weighting), an ABS index which most closely reflects
price increases in the non-residential building sector; and
 Public Land (40% weighting), the annual change in the median cost of vacant house
blocks across metropolitan Melbourne or regional Victoria, as appropriate, based on
price information from the publication A Guide to Property Values as published by
the Department of Sustainability and Environment (DSE) (based on data from the
Valuer General).
For the Urban Area and Strategic Development Area settings, the Committee recommends
that the ABS index which most closely reflects price indexes in the non-residential
construction industry should be used. This same index should be applied to both the
residential and non-residential Standard Levies.
Indexation of the Standard Levies should be applied annually. The Committee is aware that
the Standard Levies which it has proposed are in 2012$s. Given that the introduction of the
new system may be some time away, there is likely to be a need to index the Standard
Levies to establish levies which will apply at the proposed implementation date for the new
Development Levy System.
The Committee notes that the proposed approach to securing public land overcomes some
of the major challenges of the past by introducing a process to establish the value of the
land at the start of the process and thereafter an annual valuation will not be required. This
assumes that the legislative changes required to implement this new approach to securing
public land are made. It is proposed that the dollar value of the land should then be
maintained by applying an index such as CPI. It is important to recognise that projects are
only indexed with reference to a relevant ABS building price index as set above, until such
time as they are delivered and thereafter, once the value of the project has been
‘crystallised’, the project value should only be indexed by CPI to ensure that the value of
‘money’ is maintained over time.
13.8 Contingencies
The Committee notes the submissions regarding the level of contingencies that should apply.
Contingencies are relevant in calculating the project costs to go into Development Levy
Plans. The Committee notes that in recent Growth Area PSPs there has been a trend to
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specify projects to a higher level of detail. This has reduced the need for contingencies of
the order that was common in earlier DCPs.
In Urban Areas and Strategic Development Areas, expenditure budgets will be drawn from
Council capital works programs. For Urban Areas it is not critical what level of contingency is
used as there is no strict requirement to demonstrate that the total cost of projects exceeds
the levy income at any given time. In Strategic Development Areas the expectation is that
level of specification of projects will be more detailed and therefore the level of contingency
required to be included in costings lower.
The Committee supports the use of contingencies of no greater than 10% when calculating
project costs in the Development Levy Plan and determining the projects to be funded by
the Standard Levy or calculating Supplementary Levies in both Growth Areas and Strategic
Development Areas. The Committee is firmly of the view that these should be included
within the revenue raised by the Standard Levy and are not an add-on to it.
13.9 Recommendations
The Committee makes the following recommendations:
 That the preferred timing for the collection of levies should continue to be at the
subdivision permit stage, but that any legislative changes provide the opportunity
for Councils to adopt collection practices best suited to its Development Settings
and administrative capabilities. This may require changes to other legislation to
support the collection and enforcement of levies where subdivision is not
proposed.
 That the new Development Levy System be implemented generally in the manner
described in Chapter 13.4.
 That DPCD adopt flexible approval mechanisms and processes for Development
Levy Plans in order to accommodate the different Development Settings and to
ensure that they are proportionate to the strategic issues at stake.
 That an Infrastructure Standing Advisory Committee (or similar) be appointed to
assist in the implementation, review and monitoring of the Development Levy
System.
 That indexation of Standard and Supplementary Levies be applied using
appropriate ABS indices and Valuer General’s valuations as set out in Chapter 13.7.
 That once the value of land for a particular planning unit has been fixed (in
accordance with the new approach proposed in Chapter 8), it should be indexed by
CPI.
 That CPI indexation should apply to the value of any completed construction
Projects contained within a Development Levy Plan.
 That contingencies of no greater than 10% apply to the costing of projects included
in Development Levy Plans, and determining the projects to be funded by the
Standard Levy or calculating Supplementary Levies in Growth Areas and Strategic
Development Areas. The contingency is to be included within the revenue raised
by applying the Standard Levy.
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14 Conclusions and Recommendations
14.1 Response to the Terms of Reference
The Committee’s Terms of Reference require it to make findings to the Minister on a
number of matters and a summary of the response to each of these is summarised in Table
35.
Table 35
Response to the Terms of Reference
Terms of Reference
Committee response
Report
Chapter
Any required changes or improvements to the
proposed framework as outlined in the
attached Position Paper, A new Victorian Local
Development Contributions System (July
2012).
The framework proposed by the Committee
adheres broadly to that proposed in the
Position Paper but includes a number of
proposed adjustments and refinements.
2-7
Advice on the definition of the development
settings for which levies will be established.
These may include, but are not limited to,
growth areas (both Melbourne’s growth areas
and similar scale growth areas in some regional
cities), regional settlements, rural settlements,
established areas and strategic redevelopment
sites.
Three Development Settings are
recommended:
2
Advice on how development contributions
should be applied to residential and nonresidential development, including retail,
commercial and industrial development, in
each of these development settings.
The Committee has recommended Standard
Levies for each setting and for residential and
non-residential development.
3-7
Advice on how the new system should operate
in different development settings
Standard Levies, and in some instances the
possibility of applying for a Supplementary
Levy, have been outlined for each of the
proposed Development Settings.
3, 5, 6
The scope of basis and essential infrastructure
to be included in the Standard Levy for each of
the infrastructure categories (community
facilities, open space facilities, transport
infrastructure, drainage infrastructure, public
land).
The Committee is recommending lists of
Allowable Items upon which revenue
collected may be expended.
4
The circumstances, if any in which a simpler
apportionment of development contributions
levies is needed. For example the ability to
apportion standard rates may need to be
retained, for transport infrastructure on or
across the boundary of a contribution area.
General principles upon which apportionment
should be permitted are proposed and
apportionment principles are proposed for
particular infrastructure types.
9
The circumstances, if any, in which councils
should be able to agree to the provision of
Works in kind are to be permitted at the
discretion of the Collecting Agency. Works in
10



Growth Areas;
Urban Areas;
Strategic Development Areas.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 130 of 135
Terms of Reference
Committee response
infrastructure or building works in kind,
(including their valuation), in lieu of cash.
Kind are encouraged in Growth Areas and
Strategic Development Areas but not in Urban
Areas.
A simple methodology for valuing the public
land infrastructure component.
The Committee has recommended legislation
changes to simplify the process of valuing and
securing public land in Growth Areas.
8
An appropriate method for annual indexation
of the standard levies and charges,
construction costs and land valuations and for
periodic review to ensure that the levies reflect
contemporary infrastructure requirements.
The Committee recommends a combination
of ABS indices for construction, and Valuer
General’s valuation for indexing land.
13
Clarification of the infrastructure to be directly
provided by the developer and what
infrastructure should be provided by the State
through other funds sources such as the GAIC.
The Committee generally agrees with the
approach to developer funded infrastructure
as set out in A Preferred Way Forward. The
Committee recommends that aspects of the
GAIC be reviewed and clarified.
11
The circumstances where councils and State
agencies should be able to require developers
to enter into an agreement to provide funds
for additional off site infrastructure required to
mitigate the off-site impacts of a proposal
through a permit condition.
The use of both permit conditions and section
173 agreements for the provision of
infrastructure, particularly to mitigate off-site
impacts is discussed and it is proposed that
new guidelines be developed to reinforce
existing principles.
12
The appropriate requirements for
accountability and reporting of the
contributions by councils.
The Committee proposes that Councils be
required to be accountable through reporting
on the Development Levy Plan through its
Annual Report.
13
The appropriate financial and administrative
processes for councils to ensure development
contributions on funding options for delivery if
infrastructure in advance of sufficient funds
being collected.
The Committee discusses the most
appropriate mechanisms for collection and
administration of funds.
13
A schedule of standard levies for each category
of infrastructure for each development setting
including levies for residential and
non‐residential development.
The Committee has proposed a schedule of
Standard Levies for each development
setting, including residential and nonresidential levies.
5, 6, 7
A review of the appropriateness of standard
levies for a range of infrastructure categories.
The Committee has reviewed this issue and in
general has not supported separate levies for
infrastructure categories. Some guidance is
given on ‘budgets’ for infrastructure
categories as part of the Growth Area
Standard Levy, and a cap of $80,000 per ha is
proposed for Community and Recreation
infrastructure in metropolitan Growth Areas.
5, 6
A schedule of standard transport infrastructure
rates (fixed rate for each item) for transport
infrastructure for each of the defined
development settings. If appropriate, different
The Committee has determined that it is not
practical or useful to attempt to develop
standard rates for transport infrastructure
items due to the wide variation in local
4
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Report
Chapter
Page 131 of 135
Terms of Reference
Committee response
rates for transport items may be required for
each Metropolitan Growth area corridor and
for different regions of Victoria, including:
standards and conditions.









Roads – per linear metre, by type.
Signalised intersections – per item, by
type.
Roundabouts – per item, by type.
Pedestrian operated signals – per
item.
Culverts – per linear metre, by type.
Pedestrian paths – per linear metre.
Cycle paths – per linear metre.
Shared paths – per linear metre.
Standard bridges – per square metre
by type (e.g. vehicular or
pedestrian/cycle over creek, road or
railway).
A definition of non‐standard transport
infrastructure for which a standard
construction cost cannot be determined and
which will need to be individually costed (e.g.
larger, more complex structures).
Report
Chapter
The Committee has instead proposed that
Design Guidelines be developed that provide
benchmarks for what could normally be
expected to be provided by a Standard Levy.
The Committee recommends that the Design
Guidelines be developed by the GAA in
consultation with Councils and the
development industry.
The Committee has recommended Design
Guidelines be developed that provide
benchmarks for what could normally be
expected to be provided by a Standard Levy.
4
The recommended framework provides for
Supplementary Levies to be available where
the scope of works required is clearly greater
than standard.
The list of Allowable Items identifies items
that may be allowable in a Supplementary
Levy.
The level of justification required to access the
levies for each development setting.
The Committee has recommended varying
levels of justification for each development
setting, ranging from simple access to the
‘default’ Standard Levies to more rigorous
justification for Strategic Development Areas
and Supplementary Levies.
3, 5, 6
An analysis of the issues identified by the
Committee.
The report includes detailed analysis of the
key issues raised in these Terms of Reference
and other issues raised in submissions.
2 - 13
A list of persons and organisations consulted.
Lists of all those consulted with are provided
in the Appendices.
App B, C
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Page 132 of 135
14.2 Consolidated Recommendations
The Committee makes the following recommendations:
Implementation
1. That the Standard Development Contributions Advisory Committee be retained to
provide advice to the Minister for Planning and DPCD on all aspects of the proposed
Development Levy System and its statutory implementation through the Victoria
Planning Provisions.
2. That the Minister for Planning convene an Implementation Reference Group
comprising representatives of the GAA, Councils and peak industry bodies to assist
the DPCD and the Standard Development Contributions Advisory Committee in the
statutory implementation of the Government’s final approved framework.
Development Settings
3. That three Development Settings are adopted as follows, and as set out in Table 2:
 Growth Areas;
 Urban Areas; and
 Strategic Development Areas.
Levy Framework
4. That the framework for the Development Levies be adopted as set out in Table 3.
Allowable Items
5. That the Allowable Items as set out in Tables 4, 5, 6, 7, and 8 be mandated through a
Ministerial Direction or the Victoria Planning Provisions as a basis for the Standard
Levies to be applied as part of the Development Levy System.
6. That new Design Guidelines be produced by the GAA in close consultation with
VicRoads, Growth Area Councils and developers to bring together:
 A clear definition of the responsibilities of the Planning Authority, VicRoads
and developers in planning for roads in Growth Areas (from the Draft Arterial
Road Protocol);
 A definition of ‘interim works’ (based on the Draft Arterial Road Protocol but
modified as discussed);
 The guidelines currently set out in the GAA PSP Note, (including access
requirements, kerbs, street lighting, nature strips, footpaths, bicycle facilities,
parking);
 Typical road cross sections (from the GAA PSP Note);
 Typical intersection designs (currently being developed by VicRoads); and
 Design standards (based on the Infrastructure Design Manual recently
developed by a number of Councils and incorporating any VicRoads
requirements.
The Proposed Levies
7. That the levies for residential development in Growth Areas be adopted as set out in
Table 20.
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Page 133 of 135
8. That the levies for residential development in Urban Areas and Strategic
Development Areas be adopted as set out in Table 24.
9. That Levies should be charged in each of the Development Settings for two
categories of non-residential uses as follows:
 Retail
 Commercial and industry
10. That the Levy be charged per net developable hectare in Growth Areas and per net
increase in Gross Floor Area in Urban Areas and Strategic Development Areas, above
100 square metres.
11. That the Levies for non-residential development be adopted as set out in Table 29.
Valuing and Securing Public Land
12. That the Planning and Environment Act 1987 (and other legislation if required) be
reviewed to enable improvements to the process of the valuation and securing of
public land in Growth Areas as set out in this Report.
13. That the valuation methodology for land in Growth Areas be formalised via
Ministerial Direction or equivalent, and include the features as set out in Chapter 8.5
of this Report.
14. That a revised process be adopted to enable the components of the public land levy
in Growth Areas to be properly determined and administered.
Apportionment
15. That external apportionment be minimised by the careful choice of planning unit
boundaries and the use of Supplementary Levies across a number of planning units.
16. That external apportionment not be permitted for lower order community and
recreation infrastructure.
17. That external apportionment generally only be permitted for larger and more
complex planning units, and in accord with the conditions set out in Table 30.
Works in Kind
18. That acceptance of works in kind is an essential and valuable component of the
Development Levy System for Growth Areas and Strategic Development Areas.
19. That acceptance of works in kind agreements in these settings, while preferred, is to
be at the discretion of the Collecting Agency.
20. That works in kind credits should be determined based on the most detailed design
and costing information available at the time of negotiating the works in kind
agreement.
21. That Section 173 Agreements should continue to be utilised for the documentation
of works in kind agreements.
22. That consideration be given to amending the Local Government (General)
Regulations 2004 to exempt contracts for the construction of infrastructure that are
to partly or fully satisfy a liability arising under an approved Development Levy Plan
from the requirements of section 186 of the Local Government Act 1989.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 134 of 135
Developer Delivered Infrastructure and GAIC
23. That Appendix 4 from A Preferred Way Forward be adopted as the schedule for
direct developer provided infrastructure, save for deletion of the construction of a
football field.
24. That the current review of the GAIC establish transparent guidelines for how the
GAIC is to be applied, and that those guidelines be made widely available.
25. That any further review of the GAIC consider the merits of enabling GAIC credits for
the transfer of land required for State infrastructure.
Using Permit Conditions for Infrastructure
26. That the existing legislative framework be retained to enable responsible authorities
to mitigate the off-site impacts of individual developments through permit
conditions.
27. That new Guidelines for the Development Levy System reinforce the principles
currently applied to permit conditions for off-site infrastructure, with particular
regard for the need to avoid overlap or ‘double-dipping’ where Levies also apply.
28. That the new Guidelines provide advice and examples of circumstances in which it is
appropriate to use permit conditions to provide additional off-site infrastructure, in
particular for out of sequence developments.
Administration and Implementation
29. That the preferred timing for the collection of levies should continue to be at the
subdivision permit stage, but that any legislative changes provide the opportunity for
Councils to adopt collection practices best suited to its Development Settings and
administrative capabilities. This may require changes to other legislation to support
the collection and enforcement of levies where subdivision is not proposed.
30. That the new Development Levy System be implemented generally in the manner
described in Chapter 13.4.
31. That DPCD adopt flexible approval mechanisms and processes for Development Levy
Plans in order to accommodate the different Development Settings and to ensure
that they are proportionate to the strategic issues at stake.
32. That an Infrastructure Standing Advisory Committee (or similar) be appointed to
assist in the implementation, review and monitoring of the Development Levy
System.
33. That indexation of Standard and Supplementary Levies be applied using appropriate
ABS indices and Valuer General’s valuations as set out in Chapter 13.7.
34. That once the value of land for a particular planning unit has been fixed (in
accordance with the new approach proposed in Chapter 8), it should be indexed by
CPI.
35. That CPI indexation should apply to the value of any completed construction Projects
contained within a Development Levy Plan.
36. That contingencies of no greater than 10% apply to the costing of projects included in
Development Levy Plans, and determining the projects to be funded by the Standard
Levy or calculating Supplementary Levies in Growth Areas and Strategic
Development Areas. The contingency is to be included within the revenue raised by
applying the Standard Levy.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013
Page 135 of 135
Appendix A Terms of Reference
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Planning Panels Victoria  Department of Planning and Community Development  Level 1, 8 Nicholson Street, East Melbourne 3002
Terms of Reference
Standard Development Contributions Advisory
Committee
Advisory Committee appointed pursuant to Part 7, Section 151 of the Planning
and Environment Act 1987 to report on the finalisation of a new standard levies
system for the provision of basic and essential infrastructure to local communities.
Version: 21 September 2012
Name

The Advisory Committee is to be known as the ‘Standard Development Contributions Advisory
Committee’.

The Advisory Committee is to have members with the following skills:
 Expert knowledge and experience in land use planning in different Development Settings,
including urban renewal and Growth Areas
 Land development experience
 Expertise in the preparation and administration of Development Contribution Plans.
Purpose

The purpose of the Advisory Committee is to provide advice to inform the Minister for Planning’s
decision on the final framework for a new development contributions system and for the
establishment of standard levies.

The Position Paper A new Victorian Local Development Contribution System (July 2012) at
Attachment 1 outlines the policy framework and the Government’s preferred new system.

The Advisory Committee is to provide advice on the implementation of the new system, including:
 Recommended operational arrangements for the new system
 Recommended scope of works that should be included in each infrastructure category
 Recommended standard development contributions levies for each infrastructure category
and development setting.

The new system should:
 Ensure guaranteed delivery of land required for infrastructure in the long term
 Ensure delivery of works in kind by developers can be provided as an alternative to a cash
payment to achieve efficiencies and deliver infrastructure earlier
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
 Ensure the development contribution requirement clearly articulates the infrastructure
contribution obligation.

In setting standard development levies, the Committee should seek to ensure that levies:
 Are simple to implement and administer
 Are based on the basic and essential local infrastructure required to support the development
of land and support the foundation of new communities
 Do not unreasonably affect housing affordability for new home owners
 Retain a nexus to the development which triggers the levy.
Background

The current local development contributions system, based on the preparation of a Development
Contributions Plan (DCP) under the Planning and Environment Act 1987, has been in place since
1995.

Each DCP must identify and justify the total cost of all works, services and facilities proposed to be
funded and apportion the costs for that infrastructure according to the projected share of usage,
taking into account both existing and future development.

Currently, DCPs are often expensive and complicated to prepare because a high level of justification
for the charges and apportionment is required. DCPs can also be inconsistent in their application
across areas and can be restrictive in their administration.

There has been a steady increase in the contributions required under DCPs as community
expectations have changed. For example, in the late 90s, DCP levies in new growth area suburbs
were around $50,000 per hectare. By 2008, this had risen to around $150,000 per hectare and by
2011, to around $250,000 per hectare, with some exceeding $300,000 per hectare.

This is having a significant impact on the cost of development and affordability of housing in these
areas for new home owners. In June 2011 the Minister for Planning established a Stakeholder
Reference Group from industry and Council representatives who provided advice on the possible
models for a new standardised development contributions system.

In May 2012, the Minister for Planning announced a preferred framework for a new Victorian Local
Development Contribution System. The new system will provide a standard contribution levy based
around five infrastructure categories:
 Community facilities
 Open Space facilities
 Transport infrastructure
 Drainage infrastructure
 Public land.

Under the new system a different levy will be set for different Development Settings such as
greenfield development, metropolitan infill development and regional and rural development as well
as a levy for residential and non-residential development including retail, commercial and industrial
development.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Method

The Advisory Committee may inform itself in anyway it sees fit, but must consider:
 The policy framework and issues outlined in the attached Position Paper.
 Recent DCPs approved in across Victoria including in Growth Areas and in regional Victoria.
 Three reports prepared by Urban Enterprise titled:


DPC Levy Analysis (August 2011) at Attachment 2

Review of Local Infrastructure Charges for Regional and Rural Councils (December 2011)
at Attachment 3

Indicative Standard Levies for Local Development Contributions (May 2012) at
Attachment 4.
The Advisory Committee will conduct targeted consultation, workshops or forums to explore the
issues or other matters: including:

Targeted consultation in October 2012; and

A call for submissions in January/ February 2013 in response to Report 1 (which may
include further consultation as required by the Committee).

The Advisory Committee may meet and invite others to meet with them when there is a quorum of
at least two of the Committee members.

The Advisory Committee may ask the Minister for Planning to vary these Terms of Reference in any
way it sees fit prior to submission of its report.
Submissions are public documents

The Advisory Committee must retain a library of any written submissions or other supporting
documentation provided to it directly to it until a decision has been made on its report or five years
has passed from the time of its appointment.

Any written submissions or other supporting documentation provided to the Advisory Committee
must be available for public inspection until the submission of its report, unless the Advisory
Committee specifically directs that the material is to remain ‘in camera’.
Outcomes

The Advisory Committee must produce two written reports for the Minister for Planning.

Report 1: Setting the framework for the new standardised levy system
This report is to provide recommendations on matters required to finalise the features and operation
of the new system including:
 Any required changes or improvements to the proposed framework as outlined in the attached
Position Paper A new Victorian Local Development Contribution System (July 2012).
 Advice on the definition of the Development Settings for which levies will be established.
These may include, but are not limited to, Growth Areas (both Melbourne’s Growth Areas and
similar scale Growth Areas in some regional cities), regional settlements, rural settlements,
established areas and strategic redevelopment sites.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
 Advice on how development contributions should be applied to residential and non-residential
development, including retail, commercial and industrial development, in each of these
Development Settings.
 Advice on how the new system should operate in the different Development Settings.
 The scope of the basic and essential infrastructure to be included in the Standard Levy for each
of the following infrastructure categories:

Community facilities

Open Space facilities

Transport infrastructure

Drainage infrastructure

Public land.
 The circumstances, if any, in which a simple apportionment of development contributions
levies is needed. For example, the ability to apportion standard rates may need to be retained
for transport infrastructure located on or across the boundary of a contribution area.
 The circumstances, if any, in which Councils should be able to agree to the provision of
infrastructure or building works in kind (including their valuation) in lieu of cash.
 A simple methodology for valuing the public land infrastructure component.
 An appropriate method for annual indexation of the standard levies and charges, construction
costs and land valuations (for example, by reference to an appropriate industry index), and for
periodic review to ensure that the levies reflect contemporary infrastructure requirements.
 Clarification of the infrastructure to be directly provided by the developer and what
infrastructure should be provided by the State through other funds sources such as the Growth
Area Infrastructure Contribution.
 The circumstances where Councils and State agencies should be able to require a developer to
enter into an agreement to provide funds for additional off-site infrastructure required to
mitigate the off-site impacts of a proposal through a permit condition.
 The appropriate requirements for accountability and reporting of the contributions by
Councils.
 The appropriate financial and administrative processes for Councils to ensure development
contributions funded infrastructure is delivered at the time it is required. This may include
recommendations on funding options for the delivery of infrastructure in advance of sufficient
funds being collected.
 An analysis of issues identified by the Committee.
 A list of persons and organisations consulted.

Report 2: Setting the standard levies for the new system
This report is to include:
 A schedule of standard levies for each category of infrastructure for each development setting
including levies for residential and non-residential development.
 A review of the appropriateness of standard levies for a range of infrastructure categories.
 A schedule of standard transport infrastructure rates (fixed rate for each item) for transport
infrastructure for each of the defined Development Settings. If appropriate, different rates for
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
transport items may be required for each Metropolitan Growth area corridor and for different
regions of Victoria, including:

Roads – per linear metre, by type.

Signalised intersections – per item, by type.

Roundabouts – per item, by type.

Pedestrian operated signals – per item.

Culverts – per linear metre, by type.

Pedestrian paths – per linear metre.

Cycle paths – per linear metre.

Shared paths – per linear metre.

Standard bridges – per square metre by type (e.g. vehicular or pedestrian/cycle over
creek, road or railway).
 A definition of non-standard transport infrastructure for which a standard construction cost
cannot be determined and which will need to be individually costed (e.g. larger, more complex
structures).
 The level of justification required to access the levies for each development setting.
 An analysis of issues identified by the Committee.
 A list of persons and organisations consulted.
Timing

The Advisory Committee must submit its findings and recommendations in two stages:
 A report detailing the framework of the new system (Report 1) by Monday 17 December 2012
following which it will be will be released for public comment.
 A report detailing the schedule of standard levies (Report 2) by Friday 31 May 2013.
Fee

The fee for the Advisory Committee will be set at the current rate for a Panel appointed under Part 8
of the Planning and Environment Act 1987.

The costs of the Advisory Committee and any necessary research will be met by the Department of
Planning and Community Development.
Project Manager

The Department of Planning and Community Development will provide administrative and
operational support to the Committee.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Appendix B Stakeholder Consultation
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
B1 Stakeholder Consultation (2013)
Organisation
Represented by
Department of Planning and Community
Development, and Places Victoria (various
meetings on 29 January, 22 February, 16
April)
Adrian Salmon, Assistant Director Statutory Approvals, State
Planning Services
Fiona DePreu, Project Director, Central Activities Areas, Urban
Development
Jodi Sneddon, Manager Social Inclusion, Urban Development
Anna Batters, Urban Economic Policy and Projects, State
Planning Strategy and Forecasting
Stephen Leitch, Senior Planning Officer, Statutory Approvals,
Planning Statutory Services
Con Tsotsoros, Assistant Director, Statutory Systems
Jim Papadimitriou, Manager Statutory Systems
John Phillips, Director, Planning and Building Systems
Dan Harper, Manager Funding Programs, Local Government
Victoria
Denise Francisco, Program Manager, Community Support Grants,
Community Development
Charlotte Winterbottom, Program Manager, Community Support
Grants, Community Development
Dan Nicholls, Project Officer, Integrated Investment, Community
Development
Kate Stapleton, Senior Project Manager, Urban Development
Phillip Saikaly, Group Manager, Community Facilitation, Sport
and Recreation
Anna Batters, Senior Planner, Planning Policy, Metropolitan
Planning Strategy
Martina Johnson, Senior Project Manager, Urban Development
Adam Crupi, Senior Planner, Planning Services, Central City
Growth Areas Authority (1 and 15 February)
Peter Seamer, Chief Executive Officer
Mark Knudsen, Director Technical Services
Bruce Hunter, Structure Planning Manager
Lisel Thomas, Infrastructure Planning Manager
Megan Taylor, Senior Precinct Structure Planner
Chris Braddock, Integrated Water Engineer
Tim Peggie, Director, Structure Planning
Ed Small, Director, Corporate Services
Metropolitan Planning Strategy Ministerial
Advisory Committee (4 February)
Roz Hansen, Chair
Chris Gallagher, Committee Member
Bernard McNamara, Committee Member
Brian Haratsis, Committee Member
VicRoads (15 February and 20 March)
Anita Kurnow, Director Network Strategy and Planning
Paul Noisette, Manager Regional Planning Metropolitan North
West
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Organisation
Represented by
Giles Michaux, Team Leader Regional Strategies Metropolitan
South East
John Murphy, Acting Manager Network Strategies
Charlie Broadhurst, Project Director Network South East
Local Government Victoria (20 February)
Mark Grant, Acting Director Sector Development
Colin Morrison, Director Governance and Funding Programs
Paul Roache, Senior Project Manager
Shadow Minister for Planning (28 February)
Brian Tee MP
Victoria Civil and Administrative Tribunal (6
March)
Mark Dwyer, Deputy President
Places Victoria (14 March)
Cameron Brenton, Senior Development Manager
Lee Eklund, Senior Planner
Phillip Roth, Senior Statutory Planner
Non-residential Discussion Forum –
Consultants (14 March)
Brian Haratsis, Managing Director, MacroPlan Dimasi
Bernard McNamara, Principal, BMDA
Robert Papaleo, Director, Strategic Research, Charter Keck
Cramer
James Mansour, Development Consultant, Charter Keck Cramer
Non-residential Discussion Forum – Urbis (14
March)
Sarah Emons, Director, Urbis
Brendan Rogers, Director, Urbis
Sarah Wallbank, Associate Director, Urbis
Shane Robb, Urbis
Richard Johnson, MAB
Paul Neilson, GPT
Seamus Van Der Westhuizen, Regional Development Manager,
Colonial First State Global Asset Management
Casey City Council Officers Forum (26 March)
Peter Fitchett, Director Planning and Development Services
Sophia Petrov, Director Community Development
Liam Hodgetts, Manager Strategic Development
Jo Birkett, Executive Project Officer Community Development
Kelly Reynolds, Kindergarten Coordinator
James Rouse, Acting Manager Community Strengthening
Wayne Mack, Team Leader Transport Network Planning
Ryan Czarnecki, Team Leader Recreation Planning
Kathryn Seirlis, Team Leader Integrated Planning
Country Fire Association (16 April)
Phil Harbutt, Manager Research and Strategy
Greg Esnouf, Deputy Chief Officer, Regional Manager, Northern
and Western Metropolitan Region
Peet Ltd
Penny Forrest, Senior Development Manager, South East Region
Kris Wilson, Development Manager, West Region
Discussion Group with Valuers
Bradley Papworth, Director Residential Subdivision Practice,
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Organisation
Represented by
Charter Keck Cramer
Brian Dudakov, Director Urbis
City of Melton Forum (22 April)
Ten Council officers, led by Bronwyn Pettit (Coordinator Major
Developments) and approximately 25 industry and developer
representatives
MAB Corporation (1 May)
David Hall, Chief Operating Officer
Maxine Cooper, Consultant to DPCD (31 January)
Greg Bursill (28 February)
B2 Small Group Meeting Participants
Metropolitan Councils, 22 February
Yarra
David Walmsley, Manager City Strategy
Peter Mollison, Senior Strategic Planner
Glen Eira
Ron Torres, Manager of Planning & Transport
Rocky Camera, Coordinator Strategic Planning
Darebin
Chris Meulblok, Manager Assets and Property
Frankston
Fiona Johnstone, Acting Coordinator Strategic Planning
Manningham
Vivien Williamson, Manager – Economic and Environmental
Planning
Metropolitan and Non Metropolitan Growth Area Councils, 27 February
Cardinia
John Holland, Manager Strategic Planning
Hilary Rutledge, Coordinator Growth Area Planning
Casey
Liam Hodgetts, Manager Strategic Development
Kathryn Seirlis, Team Leader Integrated Planning
Greater Geelong
Rob Anderson, Coordinator Urban Growth
Shelly Taylor, Project Engineer Development Contributions
Hume
Michael Sharp, Manager Strategic Planning
Aaron Chiles, Growth Areas Planning Coordinator
Melton
Bronwyn Pettit, Coordinator Major Developments
Laura-Jo Mellan, Strategic Planning Coordinator
Mitchell
Stacey Gardiner, Manager Strategic Planning and Environment
Whittlesea
Aidan O'Neill, Coordinator Strategic Land Use Planning
Wyndham
Dean Ellis, Acting Manager Strategic Planning & Transport
Planner
Paul Rickard, Development Contributions Officer
Industry Groups, Wednesday 27 February
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Metropolitan Councils, 22 February
Housing Industry Australia (HIA)
Fiona Nield, Executive Director – Planning and Development
Craig Muse, Chair Planning Committee
Stuart Grigg, Planning Advisor
Planning Institute of Australia (PIA)
Gavin Alford, Victorian Vice President
Jason Black, Planning Consultant and Past PIA National Board
Director
Property Council Australia (PCA)
Danni Addison, Policy Advisor and Public Affairs Manager
Brad Paddon, Residential Developers Committee
Urban Development Institute of Australia
(UDIA)
Martin Musgrave, Policy Officer
Victorian Planning and Environmental Law
Association (VPELA)
Tamara Brezzi, President
Frank Butera, Board Member
B3 Industry Forums
Industry Group
Municipal Association Victoria (MAV) (20
February)
Approximately 90 participants
Property Council of Australia (PCA) (20
February)
Approximately 110 participants
Urban Development Institute Australia
(UDIA) (21 February)
Approximately 80 participants
Planning Institute of Australia (PIA) (4 March)
Approximately 35 participants
Victorian Planning and Environmental Law
Association (VPELA) (14 March)
Approximately 90 participants
B4 DPCD Forums
Regions
Barwon South West Region (21 March)
Approximately 35 participants
Metropolitan Region (22 March)
Approximately 100 participants
Grampians Region (25 March)
Approximately 30 participants
Gippsland Region (26 March)
Approximately 30 participants
Hume Region (11 April)
Approximately 14 participants
Loddon Mallee Region (11 April)
Approximately 16 participants
Planning Panels Victoria (30 April)
Approximately 25 participants
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
B5 Queensland and New South Wales Meetings
Participants
Brisbane City Council (7 March)
Martin Reason, Infrastructure Coordination and Urban Design
Andrea Kenafake, Manager Development Assessment Branch
Toowoomba City Council (7 March)
Dyan Currie, Manager Strategic Planning and Economic
Development (and National President, Planning Institute of
Australia)
Gold Coast City Council (7 March)
Gail Connolly, Director Planning, Environment and Transport
Department of State Development,
Infrastructure and Planning (7 March)
Greg Chemello, Deputy Director-General, Planning Group
Paul eagles, Special Adviser
James Coutts, Executive Director
Queensland Government (7 March)
Rob Molhoek, Assistant Minister for Planning
Greg Chemello, Deputy Director-General, Planning Group
(Department of State Development, Infrastructure and Planning)
Stephen Petith, Southport Electoral Officer
KPMG (8 March)
Paul Low, Director Advisory
Property Council of Australia (8 March)
Kathy McDermott, Executive Director
Chris Mountford, Deputy Executive Director
Local Government Association (8 March)
Greg Hallam, Chief Executive Officer
Housing Industry Association (8 March)
Warwick Temby, Executive Director
Michael Roberts, Assistant Planning and Environment
Urban Development Institute of Australia (12
March)
Stephen Albin, Chief Executive Officer
Urbis (12 March)
David Hoy, Director
Urban Growth NSW (12 March)
Sean O’Toole, Managing Director
Mick Owens, General Manager Development
Shopping Centre Council of Australia (12
March)
Milton Cockburn, Executive Director, Shopping Centre Council of
Australia
Angus Nardi, Deputy Director, Shopping Centre Council of
Australia
Mark Kirkland, Head of Development, AMP Capital Shopping
Centres
Seamus Van Der Westhuizen, Regional Development Manager,
Colonial First State Global Asset Management
Jonathan Bradhurst, Regional General Manager – Development
and Asset Strategy, Federation Centres
Kylie O’Connor, Investment Manager – Australian Prime Property
Fund Retail, Lend Lease
Tim Beattie, Regional Development Manager – Commercial
Property, Stockland
Andrew Robertson, General Manager, Development and Asset
Group, Westfield Group
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Participants
Lillian Fadel, Development Executive, Westfield Group
Campbelltown City Council (12 March)
Paul Tosi, General Manager
Jeff Lawrence, Director – Planning and Environment
City of Sydney (13 March)
Sally Peters, Senior Specialist Planner
Jonathon Carle, Senior Specialist Planner
Department of Planning and Infrastructure
NSW (13 March)
Sam Haddad, Director General
Andrew Jackson, Acting Executive Director, Infrastructure and
Planning Strategies
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Appendix C Written Submissions – Stage 2
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Written Submissions – Stage 2
No
Submitter
No
Submitter
1
City of Stonnington
36
Growth Areas Authority
2
City of Moonee Valley
37
Bayside City Council
3
Rural City of Wangaratta
38
Master Builders Association of Victoria
4
Bus Association Victoria
39
VicRoads
5
Melbourne Water Corporation
40
Cardinia Shire Council
6
SKM
41
Planning Institute of Australia (Victorian Division)
7
Melton City Council
42
Charter Keck Cramer
8
Mornington Peninsula Shire
43
City of Melbourne
9
Moreland City Council
44
City of Wodonga
10
Latrobe City Council
45
Urban Development Institute of Australia (Vic)
11
Urban Land Developments Pty Ltd
46
Property Council of Australia (Victoria Division)
12
Manningham City Council
47
Urban Design and Management Pty Ltd
13
Catholic Education Office Melbourne
48
Darebin City Council
14
Moorabool Shire Council
49
Yarra City Council
15
Bicycle Network Victoria
50
MAB Corporation
16
Boroondara City Council
51
Whittlesea Council
17
Australand Holdings, Commercial and Industrial
Division
52
Housing Industry Association
53
Colonial First State Global Asset Management
18
Surf Coast Shire
54
Macedon Ranges Shire
19
Glen Eira City Council
55
Municipal Association of Victoria
20
Country Fire Association
56
City of Greater Dandenong
21
Frankston City Council
57
Victorian Coastal Council
22
Landmack Developments Pty Ltd
58
City of Greater Geelong
23
Mitchell Shire Council
59
Bass Coast Shire Council
24
Brimbank City Council
60
Shopping Centre Council of Australia
25
Hume City Council
61
Moyne Shire Council
26
City of Ballarat
62
Maribyrnong City Council
27
Golden Plains Shire
63
Sibelco Australia
28
Warrnambool City Council
64
Moira Shire Council
29
Yarra Ranges Council
65
Mildura Rural City Council
30
Hobsons Bay City Council
66
Greater Shepparton City Council
31
Port Phillip City Council
67
Wyndham City
32
Colac Otway Shire
68
33
Public Transport Victoria
Victorian Planning and Environmental Law
Association
34
Peet Limited
69
Casey City Council
35
East Gippsland Shire
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Appendix D Dwelling Approvals and Projections
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Dwelling Approvals and Projections
LGA Name
ABS Capital Asset
Outlay 2011-2012
Dwelling
Approvals
2008-2012
VIF Projected net
change
in
no.
Dwellings 2011-2016
Dwelling
Approvals
2008
Dwelling
Approvals
2009
Dwelling
Approvals
2010
Dwelling
Approvals
2011
Dwelling
Approvals
2012
Wyndham (C)
$96,342,782.00
19,770
19,449
3,326
4,691
5,596
3,790
2,367
Whittlesea (C)
$12,610,000.00
16,356
14,174
2,407
3,397
3,809
3,588
3,155
Casey (C)
$49,366,176.00
12,388
12,906
2,552
2,610
2,597
2,261
2,368
Melton (S)
$34,266,862.00
9,822
10,680
2,238
2,239
2,223
1,675
1,447
Hume (C)
$52,252,541.47
8,286
7,496
1,337
1,788
1,762
1,610
1,789
Cardinia (S)
$24,488,038.32
7,750
8,453
1,270
1,758
1,858
1,736
1,128
Mitchell (S)
$11,378,500.00
2,479
3,641
253
476
657
597
496
$136,926,000.00
17,162
13,035
873
2,718
3,809
3,240
6,522
Stonnington (C)
$29,076,876.57
5,610
3,210
648
556
1,828
1,678
900
Yarra (C)
$26,936,453.00
4,766
3,052
583
511
1,577
1,253
842
Port Phillip (C)
$22,327,522.00
4,587
3,307
646
362
577
2,618
384
Moreland (C)
$29,308,865.05
6,278
4,108
1,001
1,147
1,363
1,119
1,648
Darebin (C)
$20,584,759.00
4,658
3,816
755
931
1,081
869
1,022
Maribyrnong (C)
$96,226,066.00
4,228
3,695
731
814
796
698
1,189
$38,595,665.00
5,152
3,092
902
841
1,388
980
1,041
Growth Area
City of Melbourne
Melbourne (C)
Inner City
Inner-Middle
Middle Ring
Monash (C)
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
LGA Name
ABS Capital Asset
Outlay 2011-2012
Dwelling
Approvals
2008-2012
VIF Projected net
change
in
no.
Dwellings 2011-2016
Dwelling
Approvals
2008
Dwelling
Approvals
2009
Dwelling
Approvals
2010
Dwelling
Approvals
2011
Dwelling
Approvals
2012
Whitehorse (C)
$31,352,996.00
4,769
2,314
699
582
1,232
1,052
1,204
Boroondara (C)
$60,784,157.96
4,620
2,623
786
671
892
940
1,331
Kingston (C)
$28,854,243.00
4,428
3,019
896
654
1,007
1,107
764
Moonee Valley (C)
$22,948,485.10
4,195
2,428
514
923
1,291
705
762
Glen Eira (C)
$34,945,756.00
3,993
2,488
736
615
802
1,025
815
Bayside (C)
$15,198,840.00
3,172
1,347
603
473
663
599
834
Manningham (C)
$54,414,000.00
2,535
1,937
336
556
844
348
451
Hobsons Bay (C)
$32,251,060.66
2,447
1,567
392
414
531
568
542
Banyule (C)
$46,645,229.24
2,204
1,771
399
457
469
450
429
Brimbank (C)
$47,260,016.00
5,521
5,589
1,203
1,515
1,123
969
711
Frankston (C)
$28,107,000.00
4,454
3,165
719
717
1,365
669
984
Greater Dandenong (C)
$42,863,160.00
3,856
3,445
696
632
837
873
818
Knox (C)
$37,819,460.00
2,568
2,057
512
436
516
600
504
Maroondah (C)
$22,660,309.27
2,499
2,388
432
564
462
525
516
Mornington Peninsula (S)
$28,238,390.31
6,214
3,899
1,376
1,138
1,294
1,328
1,078
Yarra Ranges (S)
$38,847,744.98
3,253
2,052
598
616
891
642
506
Nillumbik (S)
$17,551,000.00
1,073
759
268
203
227
200
175
$65,268,959.52
9,036
10,432
1,476
1,634
2,132
1,774
2,020
Outer
Outer Peri-urban
Big 3 Regional Centres
Greater Geelong (C)
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
LGA Name
ABS Capital Asset
Outlay 2011-2012
Dwelling
Approvals
2008-2012
VIF Projected net
change
in
no.
Dwellings 2011-2016
Dwelling
Approvals
2008
Dwelling
Approvals
2009
Dwelling
Approvals
2010
Dwelling
Approvals
2011
Dwelling
Approvals
2012
Greater Bendigo (C)
$50,945,546.36
4,979
4,278
635
997
1,014
1,078
1,255
Ballarat (C)
$55,168,709.00
4,836
4,236
747
1,005
1,120
1,034
930
Latrobe (C)
$23,050,000.00
2,071
2,040
448
526
531
299
267
Greater Shepparton (C)
$26,177,303.90
2,012
2,140
396
454
462
360
340
Wodonga (RC)
$23,961,116.00
1,699
1,566
226
418
412
335
308
East Gippsland (S)
$22,854,000.00
1,937
2,036
370
379
450
385
353
Mildura (RC)
$29,515,437.00
1,731
1,721
265
404
422
327
313
Warrnambool (C)
$20,701,000.00
1,248
1,404
200
239
271
299
239
Baw Baw (S)
$14,909,011.00
2,998
2,665
545
701
726
544
482
Bass Coast (S)
$19,415,663.00
2,547
3,624
510
498
662
508
369
Surf Coast (S)
$22,475,645.00
2,045
2,089
409
408
480
448
300
Macedon Ranges (S)
$18,450,253.13
1,813
1,962
323
387
436
345
322
Moorabool (S)
$16,055,759.00
1,876
1,739
209
450
451
318
448
Wellington (S)
$21,088,910.97
1,535
907
294
330
346
309
256
Murrindindi (S)
$19,988,444.00
1,067
889
95
318
342
176
136
South Gippsland (S)
$14,162,585.00
1,355
795
236
291
312
276
240
Golden Plains (S)
$11,096,745.00
1,060
882
142
182
217
236
283
896
1,093
167
178
225
188
138
Regional Centres
Regional LGAs
Regional LGAs without significant Growth
Moira (S)
$12,496,339.62
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
LGA Name
ABS Capital Asset
Outlay 2011-2012
Dwelling
Approvals
2008-2012
VIF Projected net
change
in
no.
Dwellings 2011-2016
Dwelling
Approvals
2008
Dwelling
Approvals
2009
Dwelling
Approvals
2010
Dwelling
Approvals
2011
Dwelling
Approvals
2012
Wangaratta (RC)
$12,284,812.75
726
540
100
171
187
135
133
Campaspe (S)
$25,918,553.23
692
888
140
150
175
125
102
Colac-Otway (S)
$11,464,485.00
664
762
150
135
146
124
109
Moyne (S)
$11,716,473.00
599
528
114
117
128
116
124
Mount Alexander (S)
$9,169,170.00
585
527
97
108
124
126
130
Hepburn (S)
$16,023,880.00
569
672
114
117
114
120
104
Swan Hill (RC)
$10,970,758.00
499
474
109
128
129
81
52
Horsham (RC)
$29,431,749.00
496
482
78
119
125
84
90
Indigo (S)
$9,529,974.00
472
362
105
92
103
85
87
Glenelg (S)
$9,586,719.17
426
412
108
84
91
71
72
Mansfield (S)
$4,596,000.00
406
430
83
62
79
82
100
Benalla (RC)
$8,033,307.00
370
355
56
93
91
64
66
Alpine (S)
$6,923,000.00
368
246
61
71
76
80
80
Strathbogie (S)
$6,833,445.00
346
234
65
67
71
70
73
Central Goldfields (S)
$5,939,281.00
314
300
41
50
69
77
77
Southern Grampians (S)
$11,461,332.77
258
330
55
52
63
45
43
Corangamite (S)
$11,695,357.00
245
313
61
53
52
36
43
Ararat (RC)
$5,185,381.00
193
272
41
38
48
34
32
Pyrenees (S)
$6,714,000.00
178
210
27
31
37
37
46
Queenscliffe (B)
$2,191,720.00
178
115
49
42
43
22
22
Northern Grampians (S)
$16,929,759.00
167
148
35
42
41
27
22
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
LGA Name
ABS Capital Asset
Outlay 2011-2012
Dwelling
Approvals
2008-2012
VIF Projected net
change
in
no.
Dwellings 2011-2016
Dwelling
Approvals
2008
Dwelling
Approvals
2009
Dwelling
Approvals
2010
Dwelling
Approvals
2011
Dwelling
Approvals
2012
Gannawarra (S)
$24,412,352.00
106
126
32
26
19
15
14
Loddon (S)
$24,633,392.00
98
23
8
16
26
17
31
Towong (S)
$4,060,000.00
97
97
24
24
20
11
18
Yarriambiack (S)
$10,617,126.05
54
20
16
2
9
13
14
Buloke (S)
$10,123,000.00
42
41
12
6
8
8
8
Hindmarsh (S)
$6,561,724.00
37
9
8
8
8
6
7
West Wimmera (S)
$5,213,330.97
27
25
3
8
7
4
5
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Appendix E Implementation Mechanisms
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Practice Note XX
Draft – May 2013
Development Levy System
This Practice Note provides guidance about
the preparation of Development Levy
Systems. It explains what a Development
Levy
System
is
and
the
general
implementation process.
Development Levy System
Before a Planning Scheme Amendment is
drafted, it will be necessary to prepare a
Development Levy Plan that identifies the
how the revenue raised by the Levy will be
spent based on a list of Allowable Items.
Information about preparing a Development
Levy Plan is provided in this Practice Note.
Once prepared, a Development Levy Plan can
provide the basis for, and be implemented
through a Planning Scheme Amendment.



Identify any infrastructure items that
are proposed to be funded by a
Supplementary Levy.
Provide for the procedures for the
collection of a levy in respect to any
development for which a permit is not
required.
Be prepared in accordance with any
Ministerial Direction issued under
Part xx of the Planning and
Environment Act 1987.
Development Settings
In preparing the Development Levy Plan,
Council needs to identify the development
settings to apply to each planning unit. The
three Development Settings are defined in the
table below.
Role of the ISAC
The
Infrastructure
Standing
Advisory
Committee (ISAC) will assist in the
implementation, monitoring and review of the
Development Levy System.
Growth Areas
Specify
The key roles of the ISAC will be outlined in its
Terms of Reference.
Preparing a Development Levy Plan
Development Levy Plans are required to
justify the levy to be applied to a specific area
or precinct.
An Infrastructure Standing
Advisory Committee will be appointed to
provide oversight of the preparation of
Development Levy Plans
The Development Levy Plan is prepared by the
Council or relevant Planning Authority. The
Development Levy Plan must:
 Specify the area to which the plan
applies.
 Set out the infrastructure to be
funded through the plan.
 Identify the strategic basis for the
infrastructure.
Urban Areas
Specify
Strategic Development Areas
Specify
Draft Practice Note, Development Levy System
Standard Levies for Metropolitan Areas
Standard Levies for Non-Metropolitan Areas
The following Levies can be applied to land in
Metropolitan Areas.
The following levies can be applied to land in
Non-Metropolitan Areas.
Growth Areas
Growth Areas
Residential
Residential
$268,000 per net developable hectare
$210,000 per net developable hectare OR
Retail
$120,000 per net developable hectare
$161,000 per net developable hectare
Retail
Industrial/ Commercial
$126,000 per net developable hectare
$80,000 per net developable hectare
Industrial/ Commercial
Urban Areas
Residential
$3,000 per dwelling for a net increase in
dwellings
Retail
$63,000 per net developable hectare
Urban Areas
Residential
$3,000 per dwelling or
$46 per square metre of new gross floor area
$1,500 per dwelling for a net increase in
dwellings
Industrial/ Commercial
Retail
$16 per square metre of new gross floor area
$36 per square metre of new gross floor area
Strategic Development Areas
Industrial/ Commercial
$13 per square metre of new gross floor area
Residential
$4,500 OR $6,000 per dwelling
Strategic Development Areas
Retail
Residential
$46 per square metre of new gross floor area
$6,000 per dwelling or $4,500 per dwelling
for a net increase in dwellings
Industrial/ Commercial
$16 per square metre of new gross floor area
Retail
$35 per square metre of new gross floor area
The Planning Authority must apply the levy as
specified in the table. It cannot be reduced
other than in Growth Areas.
Industrial/ Commercial
$12 per square metre of new gross floor area
Draft Practice Note, Development Levy System
Urban Areas
Justification
A Development Levy Plan must provide the
strategic justification for applying the Urban
Areas Levy. Information will be drawn from
the Victoria in Future population projections,
the Municipal Strategic Statement, structure
plans, framework plans, settlement plans or
other Council documents. It is expected that
most Council’s will already have this
information available.
Exhibition
If the ISAC supports the application of the
Urban Areas Standard Levy, the Planning
Authority when preparing a Planning Scheme
Amendment can request the Minister:
 Exempt
it
from
the
notice
requirements of Section 19 of the
Planning and Environment Act 1987;
and
 Authorise it to approve the
Amendment under Section 11 of the
Planning and Environment Act 1987.
Applying for an exemption
If the Planning Authority resolves not apply
the Urban Areas Levy, they can seek an
exemption from the Minister for Planning via
the ISAC.
An exemption may be granted if the ISAC
considers that there is insufficient population
and housing growth in a municipality to raise
funds from a levy.
An exemption will not be granted for matters
such as lack of staff or already adequate
provision of infrastructure items.
Strategic Development Areas
The Planning Authority may want to apply
Strategic Development Areas Levy to areas
identified as such. The Planning Authority
must prepare or have and existing Structure
Plan.
Justification
A Development Levy Plan will provide the
strategic justification for applying the
Strategic
Development
Areas
Levy.
Information will be drawn from the Victoria in
Future population projections, the Municipal
Strategic
Statement,
structure
plans,
framework plans, settlement plans or other
Council documents.
The strategic justification for applying the
Strategic Development Area Levy must clearly
demonstrate why the area has a higher
infrastructure upgrade requirement.
The Planning Authority will need identify that:
 the Strategic Development Area is
strategically justified; and
 there is a demonstrated need to
additional infrastructure.
Areas identified for growth outside
Melbourne’s Growth Areas and the three
regional centres of Geelong, Ballarat and
Bendigo may fall into the category of Strategic
Redevelopment Areas.
Supplementary Levy
A Supplementary Levy is able to be applied in
Strategic Development Areas where it can be
demonstrated that the infrastructure costs to
be incurred as a result of the proposed
development exceed the amount of revenue
to be generated by the Strategic Development
Area Standard Levy by a significant margin.
This would usually occur because of the scale
and complexity of the development.
In the Development Levy Plan, the ‘nonnormal’ items of infrastructure which will add
significantly to the total cost should be
strategically justified in terms of:
 Need generated by the development;
 Nexus to the development;
 How the infrastructure is aligned with
the target market of the development
(particularly for works in the public
realm); and
 Affordability in relation to the market
niche for the development.
Infrastructure items considered to be
normally fully funded by the developer may
be funded through a Supplementary Levy
where there is fragmented ownership of the
area and this is the most efficient method of
funding such infrastructure.
Draft Practice Note, Development Levy System
In proposing a Supplementary Levy the
Planning Authority should illustrate:
 The total amount of funds to be raised
from the Supplementary Levy
proposed for each item of
infrastructure, and the Levy for each
use to which it is proposed the levy
apply.
 The proportion of the cost of each
item of infrastructure to be funded
from the Standard Levy (if any), the
Supplementary Levy, and other
sources of revenue.
When
considering
whether
the
Supplementary Levy is appropriate, the ISAC
must be satisfied that:
 One or more items of strategically
justified infrastructure are of such
scale and/ or cost that funding of the
infrastructure,
appropriately
apportioned to the development,
demonstrably cannot be provided
from the revenue proposed to be
raised by applying the maximum
Standard Levy.
AND
 The location of the development is
such that the item(s) of infrastructure
is required for efficient access to, or
operation of, the community the
development serves;
OR
 The strategically justified item(s) of
infrastructure are required to ensure
that the development appropriately
serves the infrastructure needs of a
specified specialist market niche.
Exhibition
If the ISAC supports the application of the
Strategic Development Areas Standard Levy
and is satisfied that the area is currently
identified in the Planning Scheme, the
Planning Authority when preparing a Planning
Scheme Amendment can request the
Minister:
 Exempt
it
from
the
notice
requirements of Section 19 of the
Planning and Environment Act 1987;
and

Authorise it to approve the
Amendment under Section 11 of the
Planning and Environment Act 1987.
If the Strategic Development Area is not
currently identified in the Planning Scheme
and/or the Planning Authority has prepared a
new Structure Plan for the area, the
Amendment will need to follow the standard
Planning Scheme Amendment process, with
notification.
The normal Planning Scheme Amendment
process will need to be undertaken if a
Supplementary Levy is proposed.
Growth Areas
Calculating the Levies
The Standard Levy in Growth Areas is made
up of capped Community and Recreation, and
variable Transport and Public Land
components.
When preparing a Development Levy Plan for
Growth Areas, infrastructure requirements
should be developed to meet identified
strategic needs and cognisant of the range of
funding sources available including the
revenue from the Standard Levy.
The Planning Authority (in conjunction with
the relevant Council where the Council is not
the Planning Authority) will determine the
necessary infrastructure requirements and
costings as per the current typical PSP
approach.
The Planning Authority will be required to
progressively assess infrastructure costs
having regard to the overall Growth Area
Standard Levy and the three Levy
components; Community and Recreation,
Transport and Pubic Land.
If savings can be identified within the variable
infrastructure categories (Transport and
Public Land) that funds can redirected from
one category to the other.
The only
restriction of this is that the total revenue
allocated to Community and Recreation must
not exceed the cap ($80,000 per ha).
Draft Practice Note, Development Levy System
Supplementary Levies
The ISAC will need to consider:
 Whether there are physical or other
conditions that warrant introduction
of one or more Supplementary Levies
for particular items;
 Whether the Standard Levy could
achieve an acceptable level of
infrastructure
provision
without
introduction of a Supplementary
Levy/s;
 Whether other infrastructure could be
provided at a lesser standard/cost to
avoid
introduction
of
a
Supplementary Levy/s;
 The standard and costing of the
Supplementary Levy project/s to
ensure that they have been
reasonably defined and costed; and
 The affordability implications of the
inclusion of a Supplementary Levy.
Development Levy Plan. The Schedules to the
Overlay are illustrated in the table below.
Schedule 1
Urban Areas
Schedule 2
Strategic Development Areas
Schedule 3
Growth Areas
The Overlay should generally be applied to
land that is zoned to allow for residential,
business or industrial purposes. The Overlay
does not need to follow zone boundaries but
it should only be applied to zones where
permitted use and development create a
need for local infrastructure. The following
table illustrates what zones the Development
Levy Overlay can be applied to.
Can the DLO be
applied?
Residential Zones
Yes
Industrial Zones
Yes
Business Zones
Yes
Exhibition
Rural Zones1
No
If the ISAC supports the application of the
Growth Areas Standard Levy the Planning
Authority when preparing a Planning Scheme
Amendment can request the Minister:
 Exempt
it
from
the
notice
requirements of Section 19 of the
Planning and Environment Act 1987;
and
 Authorise it to approve the
Amendment under Section 11 of the
Planning and Environment Act 1987.
Pubic Land Zones
No
Special Use Zones2
Yes
Meeting the tests does not guarantee
approval of the Supplementary Levy by the
ISAC.
The approved Development Levy Plan must be
in accordance with the approved Precinct
Structure Plan for the areas
The normal Planning Scheme Amendment
process will need to be undertaken if a
Supplementary Levy is proposed.
Implementation
A new Overlay such as a Development Levy
Overlay (or VPP Implementation tool) will
need to be prepared to implement the
1
May be applied to the Rural Living Zone
2
May not be applied to the Urban Floodway Zone
Monitoring and Review
It is important that the Development Levy
System is regularly monitored and reviewed.
Council’s Annual report will provide an
overview of revenue collected and used, and
Schedules to the Development Levy Overlay
will be reviewed concurrently with Council’s
Municipal Strategic Statement.
Draft Practice Note, Development Levy System
Table A
Summary of Recommended Levies in each Development Setting
Setting
Standard Levy
Standard Levy
Residential
Non-residential
Residential
Retail
$268,000 per net
developable
hectare
$161,000 per net developable hectare
Residential
Retail
$210,000 per net
developable hectare
$126,000 per net developable hectare
OR
$63,000 per net developable hectare
Additional Levies
Growth Areas
Metropolitan
NonMetropolitan
Commercial and Industrial
$80,000 per net developable hectare
Commercial and Industrial
$120,000 per net
developable hectare
Supplementary Levy
available only in specific
circumstances for
transport or public land
Supplementary Levy
available only in specific
circumstances for
transport or public land
Drainage Levy available
Urban Areas
Metropolitan
Residential
Retail
$3,000 per dwelling
$46 per square metre, Gross Floor
Area
Not available
Commercial and Industrial
$16 per square metre, Gross Floor
Area
NonMetropolitan
Residential
Retail
$1,500 per dwelling
OR
$36 per square metre, Gross Floor
Area
$3,000 per dwelling
Commercial and Industrial
Not available
$13 per square metre, Gross Floor
Area
Strategic Development Growth Areas
Metropolitan
Residential
Retail
$4,500 per dwelling
OR
$46 per square metre, Gross Floor
Area
$6,000 per dwelling
Commercial and Industrial
$16 per square metre, Gross Floor
Area
NonMetropolitan
Residential
Retail
$4,500 per dwelling
OR
$36 per square metre, Gross Floor
Area
$6,000 per dwelling
Commercial and Industrial
$13 per square metre, Gross Floor
Area
Supplementary Levy
available only in specific
circumstances for
drainage, transport or
public land
Supplementary Levy
available only in specific
circumstances for
drainage, transport or
public land
Notes to Table A:
 Growth Area Standard Levy include all public land contributions, including Clause 52.01 contributions
 In Urban Areas, the Residential Standard Levy applies to the net increase in dwellings or lots.
 The Non-Residential levies apply to all new floor space, based on Gross Floor Area, above 100m 2
45.##
DEVELOPMENT LEVY OVERLAY (COMMITTEE DRAFT)
Shown on the planning scheme map as DLO with a number.
Purpose
To implement the State Planning Policy Framework and the Local Planning Policy Framework,
including the Municipal Strategic Statement and local planning policies.
To identify areas for the purpose of levying contributions for the provision of public infrastructure
in accordance with an approved development levy plan.
45.##-1
Scope
Clause 45.## applies to:
 the construction of a dwelling where there is a net increase in the number of dwellings; or
 an increase in the floor area a retail, industrial, or commercial use by more than 100 square
metres
Need to list exemptions
45.##-2
Payment of development levy
If an application is made for a permit to carry out that development land covered by this Overlay
the responsible authority must include a condition in the permit that the applicant:
 pay the amount of the levy specified in the relevant schedule to this overlay to the relevant
collecting agency within a specified time or within a time specified by the collecting agency; or
 enter into an agreement with the relevant collecting agency to pay the amount of the levy
within a time specified in the agreement; or
 enter into an agreement with the relevant collecting agency to carry out specified works in kind
instead paying the levy or part of the levy.
If a permit is not required under this Act for the development a person who proposes to carry out
that development of the land must:
 pay the amount of the levy to the relevant collecting agency within three months of the
completion of the development; or
 enter into an agreement with the relevant collecting agency to pay the amount of the levy
within a time specified in the agreement; or
 enter into an agreement with the relevant collecting agency to carry out specified works in kind
instead paying the levy or part of the levy
45.##-3
Preparation of a Development Levy Plan
A development levy plan may consist of plans or other documents.
The development levy plan must:
 Specify the area to which the plan applies.
 Set out the infrastructure to be funded through the plan.
 Identify the strategic basis for the infrastructure.
 Specify any infrastructure items that are proposed to be funded by a Supplementary Levy.
 Provide for the procedures for the collection of a Levy in respect to any development for which
a permit is not required.
 Be prepared in accordance with any Ministerial Direction issued under Part # of the Planning
and Environment Act 1987.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
SCHEDULE 1 TO THE DEVELOPMENT LEVY OVERLAY (COMMITTEE DRAFT)
Shown on the planning scheme map as DLO1.
URBAN AREAS
1.0
Area covered by this development levy plan
This overlay applies to all land identified on the planning scheme map as DLO1
2.0
Levy to be Applied
The levy to be applied is shown in the Table to the Schedule.
Table to Schedule 1
AREA
DLO1
NAME
Gumnut Urban
Area
LEVY
Residential
$X,000 per dwelling
Retail
$XX per square metre, Gross Floor Area
Industrial/ Commercial
$XX per square metre, Gross Floor Area
Urban Area Standard Levy Options
Metro
Residential
$3,000 per dwelling
Retail
$46 per square metre, Gross Floor Area
Commercial and Industrial
$16 per square metre, Gross Floor Area
Non-Metro
Residential
$1,500 or $3,000 per
dwelling
Retail
$36 per square metre, Gross Floor Area
Commercial and Industrial
$13 per square metre, Gross Floor Area
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
SCHEDULE 2 TO THE DEVELOPMENT LEVY OVERLAY (COMMITTEE DRAFT)
Shown on the planning scheme map as DLO2.
STRATEGIC DEVELOPMENT AREAS
1.0
Area covered by this development levy plan
This overlay applies to all land identified on the planning scheme map as DLO2
2.0
Levy to be Applied
The levy to be applied is shown in the Table to the Schedule.
Table to Schedule 2
AREA
DLO2(a)
New Gumnut
Strategic
Development
Area
STANDARD LEVY
SUPPLEMENTARY
LEVY
Residential
As approved in the
DLP
$X,000 per dwelling
Retail
$XX per square metre, Gross Floor
Area
Industrial/ Commercial
$XX per square metre, Gross Floor
Area
DLO2(b)
Name
Strategic
Development
Area
Residential
$X,000 per dwelling
As approved in the
DLP
Retail
$XX per square metre, Gross Floor
Area
Industrial/ Commercial
$XX per square metre, Gross Floor
Area
Each Strategic Development Area to be identified separately (a, b, c).
Strategic Development Area Standard Levy Options
Metro
Residential
$4,500 or $6,000 per
dwelling
Retail
$46 per square metre, Gross Floor Area
Commercial and Industrial
$16 per square metre, Gross Floor Area
Non-Metro
Residential
$4,500or $6,000 per
dwelling
Retail
$36 per square metre, Gross Floor Area
Commercial and Industrial
$13 per square metre, Gross Floor Area
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
SCHEDULE 3 TO THE DEVELOPMENT LEVY OVERLAY (COMMITTEE DRAFT)
Shown on the planning scheme map as DLO3.
GROWTH AREAS
1.0
Area covered by this development levy plan
This overlay applies to all land identified on the planning scheme map as DLO3
2.0
Levy to be Applied
The levy to be applied is shown in the Table to the Schedule.
Table to Schedule 3
AREA
DLO3(a)
Nutbush City
Limit Growth
Area
STANDARD LEVY
SUPPLEMENTARY
LEVY
Residential
As approved in the
DLP
$XXX,000
hectare
per
net
developable
per
net
developable
Retail
$XXX,000
hectare
Industrial/ Commercial
$XXX,000
hectare
DLO3(b)
Name Growth
Area
per
net
developable
Residential
$XXX,000
hectare
per
net
developable
per
net
developable
As approved in the
DLP
Retail
$XXX,000
hectare
Industrial/ Commercial
$XXX,000
hectare
per
net
developable
Each Growth Area to be identified separately (a, b, c).
Growth Area Standard Levy Options
Metro
Residential
$268,000 per net
developable hectare
Retail
$161,000 per net developable hectare
Commercial and Industrial
$80,000 per net developable hectare
Non-Metro
Residential
$210,000 or
$120,000 per net
developable hectare
Retail
$126,000 per net developable hectare
Commercial and Industrial
$63,000 per net developable hectare
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Appendix F
Sample Development Levy Plan
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Gumnut Shire Council
‘From Gum to Nut’
Gumnut Shire Council
Development Levy Plan 2013
Urban Areas Strategic Redevelopment
Areas
Gumnut Shire Council Development Levy Plan
Urban and Strategic Development Areas
1
Background
1.1
The Plan
This Plan is titled Gumnut Development Levy Plan 2013 (The Plan).
The Plan has been prepared in accordance with Section XX.X of the Planning and
Environment Act 1987.
1.2
Purpose
The primary purpose of this Plan is to enable the Shire of Gumnut to apply an Urban Area
Standard Levy to all development included in the Development Plan Instrument to provide
funds to assist the upgrade and development of Council owned community facilities,
recreational facilities, transport infrastructure, drainage infrastructure and public realm assets
to meet the needs of the growing population, expanding tourism industry and growing
industrial, retail and commercial sectors.
The Plan enables the application of the Strategic Development Area Standard Levy to
designated areas and enables Supplementary Levies where applicable.
The Plan helps deliver the objectives of Council’s Municipal Strategic Statement and assists
in meeting the demands for infrastructure as set out in Schedule 1 of this Plan.
Schedule 2 sets out the Expenditure Budget for public works proposed to be funded from
levies collected.
Schedule 3 sets out the strategic justification and expenditure budget for the Newgumnut
Strategic Development Area.
1.3
Transitional arrangements
This Plan replaces the Gumnut South Development Contributions Plan (1994) and the
Gumnut West Drainage Contributions Plan (1999). These Plans cease to have effect as
from the date of approval of this Plan by the Minister.
1.4
Life of the Plan
This Plan has effect from the date of approval by the Minister for a period of five years,
unless amended or replaced by Council (with the Minister’s approval) at an earlier date.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Gumnut Shire Council Development Levy Plan
Urban and Strategic Development Areas
2
The Levies
2.1
Land and development to which the levies applies
The Standard Levies apply to all residential development where there is a net increase in the
number of dwellings, and to non-residential development that results in an increase in gross
floor area of greater than 100 square metres.
The Urban Area Standard Levy applies to the land and development as set out in the
Development Plan Instrument in Schedule 1 to Clause YY.XX of the Gumnut Planning
Scheme.
The Newgumnut Strategic Development Area Standard Levy applies to the land and
development as set out in the Development Plan Instrument in Schedule 2 to Clause YY.XX
of the Gumnut Planning Scheme.
The following plan is reproduced from Clause YY.XX of the Gumnut Planning Scheme.
Plan
2.2
Paying the levies
i)
When are the levies payable?
The levies are payable:


ii)
Where land is to be subdivided and new lots are created, on the certification of the
plan of subdivision;
Where land is not subdivided but new dwellings or new non-residential floor space is
created, on certificate of occupancy.
Indexing the levies
The levies are indexed in accordance with Clause YY.XX of the Gumnut Planning Scheme.
iii)
Payments by instalment
Council may, at its absolute discretion grant approval for levies to be paid by instalment.
This includes where development is to be undertaken in stages.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Gumnut Shire Council Development Levy Plan
Urban and Strategic Development Areas
iv)
Refunds
Council may consider refunds where the development that is the subject of the levy has not
commenced and the planning permit for the development is cancelled or lapses.
2.3
Works in kind
The Standard Urban Area Levy can only be paid by cash payment and no works in kind is
available.
Payment by works in kind or land dedication may be considered in the Strategic
Development Area.
The Council has discretion in determining any applications for works in kind or land
dedication in lieu of levies payable in Strategic Development Areas.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Gumnut Shire Council Development Levy Plan
Urban and Strategic Development Areas
3
Strategic Justification
3.1
Urban Area Levy
i)
Population Projections
Victoria in Future sets out projected population growth for settlements in Gumnut as shown in
the following table.
Locality
Population in 2012
Projected annual
growth
Projected new
dwellings
2012 - 2022
2012 - 2022
Gumnut City Centre
3,500
2.3%
350
South Gumnut
23,000
0.9%
900
Gumnut Waters
19,000
1.2%
990
Gumnut Meadows
17,000
1.5%
1,108
Newgumnut
37,000
2.6%
4,182
Inner Gumnut West
16,000
0.7%
490
Inner Gumnut North
18,000
0.5%
390
Outer Gumnut
4,500
3.2%
626
Backa Gumnut
1,500
1.5%
98
Total
139,500
1.8%
9,134
The population projections are supported in Clause 21.04 of the Gumnut Planning Scheme
which sets out structure plans for each of these settlements and nominates residential
growth areas.
The Gumnut Settlement Plan 2013 provides further support for the nominated residential
growth areas, nominating Newgumnut as the primary growth corridor; significant infill in
Gumnut Meadows, Gumnut Waters and South Gumnut; and low level infill in Inner Gumnut
West and Inner Gumnut North.
Infrastructure in Newgumnut is still developing as the needs of the growing community also
grow. Although the area is well served for open space, new community and sporting facilities
continue to be Council’s greatest challenge in this area. The Urban Areas Standard Levy will
assist in enhancing the limited existing facilities and the Strategic Development Areas
Standard Levy has been approved to provide specific new facilities.
Conversely Gumnut Meadows is well served for sporting facilities, being home to Gumnut
Fields and its regional sporting fields. Community facilities are, however not well developed
and Council has prioritised new child care and community centre facilities in this area over
the next 5 years.
The older inner suburbs of Inner Gumnut West and Inner Gumnut North have an aging
population and existing community facilities need to be re-configured for changing needs.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Gumnut Shire Council Development Levy Plan
Urban and Strategic Development Areas
ii)
Tourism Strategy
The Gumnut Tourism Strategy 2009 continues to highlight the coastal areas of Gumnut as
the prime tourism precinct. Council has developed a program of tourism infrastructure to
facilitate a projected growth in tourist numbers of 4% per annum over the next decade.
iii)
Gumnut Economic Development Strategy
The Gumnut Economic Development Strategy 2007 cites a number of infrastructure upgrade
priorities to facilitate the objectives of the strategy. The Priorities include:
 Developing additional car parking in the Gumnut Central Shopping Precinct.
 Traffic management and streetscape improvements in the Nutgum South industrial
precinct.
 Widening and additional service road access to Southcoast Road.
 Streetscape and pavement replacement at the Gumnut West and Gumnut Meadows
strip shopping centres.
 Gumnut Meadows business park drainage system upgrade.
 Flood mitigation works at Gumnut River office precinct.
Specific works programs will be developed in consultation with the individual chambers of
commerce and traders associations.
iv)
Other Council Policies
The following further Council policies and strategies inform the Council’s capital works
priorities:
Newgumnut Structure Plan 2010;
Gumnut Open Space Strategy 2004;
Gumnut Regional Housing Plan 2011;
Gumnut Aged Care Strategy 2008; and
Gumnut Community Facilities Study 2011.
3.2
Newgumnut Strategic Development Area
i)
Population Projections
Victoria in Future projects population growth for Newgumnut of 2.6% per annum over the
next ten years.
The Gumnut Settlement Plan 2013 identifies Newgumnut as the primary corridor for
residential growth with 4,182 new dwellings projected in the period 2012 to 2022 and 3,050
in the five year period 2013 to 2018. Whilst not an identified Urban Growth Corridor in the
Metropolitan Strategy, Newgumnut represents a substantial growth corridor in its own right.
Development of the area will be progressive in accordance with the Newgumnut Structure
Plan 2010.
Development of this extent can draw on existing sporting and community facilities to some
degree, and the new road and drainage network will be constructed by developers on a
staged basis.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Gumnut Shire Council Development Levy Plan
Urban and Strategic Development Areas
ii)
Structure Plan
The Newgumnut Structure Plan 2010, Chapter 4 – Infrastructure Plan, provides detailed
justification for the new infrastructure requirements as set out in the expenditure budget.
4
Reporting and Accountability
4.1
Monitoring
The Council is responsible for the following administration activities in relation to the Plan:
 Maintain an up to date register of all funds received and spent;
 Separate registers must be kept for each Strategic Development Area;
 Maintain a record of all works completed utilising levy funds;
 Maintain a record of all payment by instalment agreements;
 Maintain a record of all works in kind agreements; and
 Provide public access to all records kept in relation to the Levies.
4.2
Annual reporting
Council’s Annual Report will include a record of all levy funds received and spent, and all
projects completed utilising levy funds.
The Annual Report may be used to update the expenditure budget to ensure alignment with
Councils adopted capital works budget.
4.3
Council review procedures
The Council will review the entire Plan at least every five years to ensure that the Plan is
aligned with contemporary growth projections and Council policies. The revised Plan must
be submitted to the Minister for Planning for approval.
Schedule 2 – the Expenditure Budget – must be reviewed at least every two years to ensure
it is aligned with Council’s most recent capital works priorities. The revised Expenditure
budget may be approved by Council and should be included in the Council’s Annual Report.
Schedule 3 – the Newgumnut Strategic Development Area Levy Plan – must be reviewed at
least every five years. The expenditure budget must be reviewed at least every two years,
can be approved by Council and should be included in the Council’s Annual Report.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Gumnut Shire Council Development Levy Plan
Urban and Strategic Development Areas
Schedule 1 – Expenditure budget – Urban Areas
Standard Levy (updated July 2013)
i)
Completed Works (to 30 June 2013)
Project
Completed
Total
Actual
Cost
Proportion
attributed to
growth
Comments
Roads and traffic
West Road widening
2011
$2.4m
35%
South
Gumnut
calming
traffic
2012
$0.9m
100%
West
Road/North Road
intersection upgrade
2012
$1.8m
40%
In
conjunction
with
developer funded works
Community and Recreation Facilities
Memorial Hall renovation
2011
$1.1m
10%
Extended meeting rooms
AAA recreation centre
2012
$3.0m
25%
Extended gym, occasional
child care centre
2012
$4.2m
10%
In
conjunction
replacement
with
Footpath upgrade Sid St
2011
$0.6m
10%
In
conjunction
replacement
with
Footpath upgrade South
Gumnut industrial park
2011
$3.2m
50%
To facilitate new incubator
sites
North
foreshore
upgrade
2012
$0.7m
80%
From tourism strategy
Drainage
Southern drainage scheme
Public Realm
park
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Gumnut Shire Council Development Levy Plan
Urban and Strategic Development Areas
ii)
Proposed Levy expenditure budget 2013 – 2018 (updated July 2013)
Project
Planned
delivery
Estimated
Cost
(2013 $)
Proportion
attributed
to growth
Comments
Roads and traffic
Southcoast Road widening
2014
$5.4m
15%
North
Gumnut
calming
traffic
2013
$0.9m
100%
Nutgum South industrial
precinct traffic plan
2015
$1.4m
60%
From
Economic
Development plan
Bus shelter upgrade
2013 2015
$0.5m
50%
In
conjunction
replacement program
East
Road/North Road
intersection upgrade
2016
$2.8m
20%
In
conjunction
with
VicRoads funded works
Gum Bay trail
2015 2017
$1.5m
55%
Tourism strategy, bicycle
strategy, part State funded
Gumnut river footbridge
2018
$3.5m
50%
Access to new residential
areas
Traffic light upgrade South
St
2018
$0.4m
40%
Improve access
with
Community and Recreation Facilities
Memorial Hall extension
2014
$1.8m
90%
New adult day care
Gumnut
Meadows
Community Centre
2015
$4.8m
40%
New facility Part State
funded.
Services
Newgumnut as well
Gumnut East maternal and
child health centre upgrade
2015
$1.8m
95%
Consolidating two centres
and extending
Gumnut
North
Senior
Citizens Centre upgrade
2017
$0.9m
75%
Extending to cater for
growing aged population
BBB recreation centre
2015
$1.0m
50%
New bocce rink
Newgumnut park upgrade
2014
$1.8m
70%
Open space strategy
New female change rooms
2015 2017
$2.6m
70%
Playground upgrade
2014 2018
$0.7m
30%
Gumnut West oval lights
2015
$0.9m
60%
Hockey centre artificial turf
2017
$1.8m
80%
Hockey centre lights
2018
$0.7m
80%
2014
$4.2m
10%
Drainage
Western drainage scheme
In
conjunction
replacement
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
with
Gumnut Shire Council Development Levy Plan
Urban and Strategic Development Areas
Project
Planned
delivery
Estimated
Cost
(2013 $)
Proportion
attributed
to growth
Comments
River
flood
mitigation
Gumnut River office park
2016
$2.0m
15%
Economic
Strategy
Development
Gumnut
business park
2017
$5.0m
50%
Economic
Strategy
Development
Footpath upgrade Sid St
2011
$0.6m
10%
In
conjunction
replacement
North
foreshore
upgrade
park
2012
$0.7m
80%
From tourism strategy
Gumnut West shopping
centre
footpath
and
streetscape
2014
$1.6m
25%
Economic
Strategy
Development
Gumnut
Meadows
shopping centre footpath
and streetscape
2015
$1.9m
25%
Economic
Strategy
Development
Gumnut East maternal and
child health centre
2014
$0.8m
60%
Gumnut
Meadows
community centre
2014
$2.0m
40%
Meadows
Public Realm
Land
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
with
Gumnut Shire Council Development Levy Plan
Urban and Strategic Development Areas
Schedule 2 – Expenditure Budget - Newgumnut
Strategic Development Area
In addition to the items in Schedule 1 the following infrastructure items are specifically
attributable to the Newgumnut Strategic Development Area.
Project
Planned
delivery
Estimated
Cost
Proportion
attributed
to growth
Comments
$3.4m
90%
Access between Newgumnut
and Gumnut Meadows
New facility
funded
(2013 $)
Roads and traffic
Newgumnut Arterial Road
extension
2014
Community and Recreation Facilities
Community
2018
$4.5m
100%
Newgumnut reserve Oval 3
2014
$1.4m
80%
Newgumnut reserve Oval 4
2016
$1.1m
80%
Newgumnut soccer facility
2017
$2.0m
40%
District facility
Newgumnut soccer facility
2016
$0.8m
40%
District facility
Newgumnut
centre
2017
$1.3m
100%
Newgumnut
Centre
Part
State
Land
community
Total expenditure budget proportion attributable to the Newgumnut area is $11.98m. Applied
over the projected 3,050 dwellings this represents $3,928 per dwelling. Allowing $3,000 per
dwelling contribution to the items listed in Schedule 2 (which also benefit the Newgumnut
area), the combined works adds to $6,928 per dwelling, well above the threshold required in
Clause YY.XX to justify the Strategic Development Area Standard Levy of $6,000 per
dwelling.
The Standard Strategic Development Area Levy of $6,000 is to be charged. Council will be
responsible for funding the balance of funds required to implement the projects from rates,
grants and charges.
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Appendix G Overview of Implementation Processes
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Overview of Development Levy System
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Development Levy System – Growth Areas
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Development Levy System – Strategic Development Areas
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices
Development Levy System – Urban Areas
Standard Development Contributions Advisory Committee  Report 2  31 May 2013  Appendices