Infrastructure contribution reference group
General feedback
Introduction
The Municipal Association of Victoria (MAV) has been asked to engage with all councils as part
of our role on the Infrastructure Contribution Implementation Reference Group. As a result, a
summary update of the meeting material was circulated to councils along with the Mesh and
Urban Enterprise information and the MAV’s draft responses to the feedback questions. The
responses below represent the collated responses from councils, feedback from earlier survey
distributed to councils, the MAV’s State Council resolutions as well as the MAV’s perspective.
Composition of the implementation reference group
A number of councils questioned the composition of the reference group and would like to
request that representatives from an inner urban council and a peri-urban council are included.
The MAV concurs with this view as these areas do add some additional complexity. While an
Urban Areas setting is not currently included, Strategic Development Areas will apply to inner
urban areas and may present some unique challenges such as significant apartment
development. Peri-urban areas represent the challenge of high growth and sit somewhere in the
middle of a metropolitan growth area and a regional growth area.
We request that an inner urban and peri urban representative are included as part of the
reference group.
Urban areas
Councils believe a key shortfall of the new Planning and Environment (Infrastructure
Contribution) Bill 2015 is not applying a standard levy for Urban Areas. Simplifying the
infrastructure contributions recovery is critical for council and residents impacted by
development.
At the May 2015 MAV State Council it was moved that:
That the MAV call on the Victorian State Government, as part of the current review of
the Victorian Development Contributions system, to introduce standard Development
Contribution Levies for infill development on larger sites (1hectare and greater) within
urban areas across metropolitan Melbourne.
We are, however, heartened by the Department’s commitment to look at the setting again in
2016. We would appreciate written confirmation of this commitment to enable us to
appropriately advise councils.
Implementation support
The guidelines and support around the implementation of the ICP system will be critical. Many
councils are not regularly involved in the preparation of such plans and will need very clear
guidelines and training to help them best utilise ICPs.
Feedback Sheets – Meeting 1
Do you agree with the criteria for defining a Metropolitan Greenfield Growth Area?
The Planning and Environment Act 1987 defines a growth area to mean ‘an area of land for the
time being declared under section 46AO’. This requires an order to be published in the
Government Gazette. The legislation attaches a growth area to the powers and functions of the
Growth Areas Authority.
The concept appears to have organically grown and the Advisory Committee defines a growth
area as:
‘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.’
The Mesh report adds additional criteria:
1
‘The land will be located within one or more of Melbourne’s declared growth areas.
2
The land will be located within a green-field context, usually adjacent or nearby to
existing urban development.
3
The land will be in the process of undergoing or will be planned to undergo a significant
transition from unserviced rural land use to fully serviced urban land use.
4
The transition from unserviced rural land use to fully serviced urban land use requires
broad scale, co-ordinated infrastructure delivery of various types.
5
The land may be designated for residential, industrial, commercial, retail or employment
land uses or a combination thereof.
6
The land area will be of sufficient scale to provide for delivery of 2 to 4 communities of
approximately 3,000 dwellings (20-40,000 persons) with or without provision for other
land uses.
7
Charges will be levied on a per hectare basis rather than a dwelling basis for residential
development taking into account the likely form of development and as an incentive to
promote delivery of appropriate diversity and density of dwelling types.
8
Charges for non-residential uses will be levied on a per m2 of Gross Floor Area (GFA)
basis for retail; and commercial and industrial uses.
9
The land must be designated as a growth area in the planning scheme (SDCAC Report
2, 2013:28) or be identified in a strategic investigation such as a Growth Corridor Plan,
Regional Framework Plan or municipal growth area plan or equivalent strategic
investigation;
10 In Melbourne’s Growth Areas, this will be land where the planning is coordinated by the
MPA. In regional cities and other nonmetropolitan areas the council is generally the
planning authority (SDCAC Report 2, 2013:18);
11 The land is in, or planned to be in, or is appropriate to be included in the Urban Growth
Zone (UGZ).’
Metropolitan Growth Areas should be consistently defined for all planning purposes. It creates
confusion to define a Growth Area differently in the Act to the definition proposed for
infrastructure contributions. The definition should be confined to:

land that is located within one or more of Melbourne's declared growth areas; and/or

land that is in, or planned to be in, the Urban Growth Boundary and Urban Growth Zone.
The MPA works within these areas, land will always be identified appropriately in planning
schemes and all of the land is planned to undergo significant transition to fully serviced urban
land use.
The Mesh dot points 2, 3, 4, 5, 6, 7, 8, 9 and 10 add additional complexity that is not required.
In particular there seems to be no purpose in defining a size threshold as this would prevent an
ICP from being applied to small land holdings. The criteria about the charging basis are not
critical to the definition.
Do you agree with the criteria for defining a Regional Greenfield Growth Area?
Defining Regional Greenfield Growth Areas is more difficult than Metropolitan Growth Areas.
The first dot point should be:

The land is in an Urban Growth Zone
The Planning Practice Note conceives that the zone may be applied to land adjacent to regional
cities and towns. It is appropriate, particularly in regional cities and large towns that the zone is
used to transition the land to fully serviced urban land.
In the past, however, application of the UGZ in regional areas has been discouraged. For
example Latrobe has not been able to apply the UGZ to designated growth areas such as
Traralgon North and Morwell North West.
The next dot points might be:

Where a strategy has been prepared that clearly identifies that the land is suitable for
future urban development.

Where a strategy has been prepared that clearly identifies land is being transitioned
from under-developed land to fully serviced urban land.
These points would cover circumstances where it is not appropriate, or a council was not
permitted to, apply a UGZ.
At this stage, it is unclear whether the Strategic Development Area development setting could
apply to growth areas in regional cities similar to Traralgon North or Morwell.
Do you agree with the proposed two tier approach for Regional Greenfield Growth Areas
based on the quantum of growth?
Yes, there does appear to be distinct groupings that justify a different approach. It is unclear,
however, what approach will be applied to each tier. The Mesh work suggests that it may be
appropriate to apply the Urban Growth Zone and metropolitan infrastructure benchmarks to Tier
1, however Urban Enterprise have suggested a unique standard levy for Tier 1 that is lower
than the one suggested for Metropolitan Greenfield Growth Areas.
It is considered that some more testing of the thresholds be undertaken. In Latrobe, the
proposed Lake Narracan growth area would be classified as Tier 2 under Mesh’s model, as the
estimated population for the growth area is approximately 10,000 people. However, the DCP
rate for Lake Narracan has been calculated to be well above the suggested standard levy for
Tier 2. The threshold figure for Tier 2 also appears a little high and perhaps should be rounded
to a minimum threshold of 3000 as this would cater for the growth expected in towns such as
Wangaratta.
Do you agree with the circumstances where a supplementary levy can be required?
The criteria appear appropriate to maintain the integrity of the standard levy.
It will be important that a clear, streamlined process is put in place for the ‘seeking of approval’
to ensure councils can continue their strategic work and planning scheme amendments in a
timely fashion.
It is also critical that drainage costs can be recovered for rural and regional councils. It also
needs to be clarified whether there a cap on supplementary items such as drainage.
Do you agree with the proposed justification for a supplementary levy?
The justification generally seems appropriate. The last criteria regarding the implication of the
amendment on general affordability needs further work as it is unclear how this can be
measured.
The justification requirements should be reduced where drainage costs require a supplementary
levy. This is essential infrastructure and should be reviewed to consider whether the costs can
form part of the allowable items for the standard levy for Regional Greenfield Growth Areas
rather than being a supplementary levy.
It needs to be very clear what sort of additional site specific costs might be able to be included
as supplementary levies. For example would arterial roads across a floodplain (that requires the
removal of sub-surface rock) or service relocation costs (power and fibre optic cables) be
permitted? These are real examples of additional costs in Wyndham.
Do you agree with the proposed residential standard levy for Metropolitan Greenfield
Growth Areas?
The methodology to increase the standard residential levy from 2012 rates to 2015 rates
appears sound based on existing DCPs and their indexation methods. Including the costs of
improvements to public open space is supported and appropriate given such improvements are
an allowable item.
It is important to recognise that there have been some changes to how DCPs are prepared
since the DCPs examined as part of the Urban Enterprise brief. The impact of the MPA’s Public
Land Equalisation Method and the new approach to designing interim intersections on ultimate
alignments (an additional 15% to costs) need to be factored in.
Two other areas of concern exist for councils:


An agreed approach for dealing with land value
The hard cap on the community infrastructure
The land value question is addressed in a later question. Community infrastructure levy,
however, was not really canvassed as part of the Meeting 1 discussion and there needs to be a
forum in which councils can express their dismay at the cap and level at which it is set.
The capacity of local government to continue to provide district and regional community
infrastructure such as libraries, aquatic centres and indoor recreation is extremely constrained.
While there are some Federal and State Government grant funding opportunities they are
reducing as a proportion of the total cost.
There is also a constant erosion of the community infrastructure cap through an absence of
indexation and cost increases.
Do you agree with the proposed proportion allocated to each infrastructure component
for the residential standard levy?
The proportions seem reasonable provided cross-subsidisation is permitted as envisaged by
the Advisory Committee and improvements to public open space are added to community and
recreation construction.
Do you agree with the proposed standard levies for retail and commercial/industrial in
Metropolitan Greenfield Growth Areas?
Councils are concerned about the adequacy of the proposed standard levy rate for
commercial/industrial areas. When compared to DCP rates in the Truganina Employment DCP
($189,000), Wyndham North DCP ($284,000), EWEP DCP ($302,450) and Craigeburn North
DCP ($191,000) the $93,500 rate appears problematic.
Urban Enterprise applies a 0.67 multiplier to a base levy of $139,500. This is referred to by the
Advisory Committee, and is derived from the equivalence ratios of the State Government’s 2007
DCP Guideline. This is a misreading of the Guideline which simply states that, on average,
67m2 of industrial floorspace is equivalent to 1 dwelling, in terms of traffic generation. Assuming
40% plot ratios, 67m2 of internal floorspace for an industrial building would require 168m2 of
land. The median residential lot size on Melbourne’s Growth Areas was 445m2 (UDIA) in 2014.
As a result 168m2 of industrial land generates the same traffic as 445m2 of residential land. To
convert residential traffic generation to industrial a 2.65 multiplier should be used rather 0.67.
This would result in a levy of $353,175 k/ha (roads and public land * 2.65).
The same issues will apply to the equivalence ratio suggested for retail.
In relation to the specific components set out, Urban Enterprise uses the same transport
construction values as residential ($96,500). Hume’s analysis shows that $105,476 is the
average for recent industrial DCPs as industrial areas commonly have a higher proportion of
arterial roads.
The Urban Enterprise report assumes a 2% public open space contribution, although it is not
clear whether this is reflective of amounts in the DCPs examined or simply an assumption. The
amount of open space required in the Truganina Employment Precinct was 3.1% which related
to the provision of 10m wide tree reserves and waterway trails as part of the open space
amenity of the employment precinct. A contribution of 3% would provide a better urban design
outcome.
It is not clear why one third of the amount is charged for public land for retail and
commercial/industrial land.
Do you agree with the proposed residential standard levies in Regional Growth Areas?
As a starting point the Department needs to clarify whether the Mesh Tier 1 and Tier 2 is
equivalent to Urban Enterprises Regional Growth Areas and Other Regional (Small Towns) or
which categorisation is preferred. The Mesh report suggests that the standard levy in total could
reflect Metropolitan Growth Area rates; however, the Urban Enterprise report strongly suggests
that this should not occur.
The data for regional areas appears to be very limited, and strongly skewed as a result of the
Armstrong Creek influence. It is suggested that an alternative method of dealing with Armstrong
Creek be identified. To boost the data it is also suggested that the Precinct Structure Plans
currently being prepared by the MPA for Baw Baw, Latrobe, Bendigo and Greater Shepparton
be factored in. The Lake Narracan DCP, for example, is close to completion.
The lower amounts identified in DCPs for ‘Other Regional’ probably reflect the desire of rural
councils to charge developers at a low rate as an incentive for development. Low land values
generally result in a lower viability threshold compared to metropolitan Melbourne.
The community recreation cap is also a great concern for regional councils.
Do you agree with the proposed criteria for Regional Growth Areas and Small Towns?
It needs to be clarified whether the Mesh Tier 1 and Tier 2 is equivalent to Urban Enterprises
Regional Growth Areas and Other Regional (Small Towns) or which categorisation is preferred.
The growth area capacity threshold recommended by Mesh should be further tested against
some of the recent PSPs and DCPs prepared by the MPA in regional cities.
Do you agree with the proposed retail and commercial/industrial standard levies for
Regional Victoria?
The basis for the standard levies for retail and commercial/industrial is very limited which makes
it difficult to make assumptions. Again it would be useful to examine some of the more recent
DCPs being prepared by the MPA in regional cities to provide more meaningful data.
The equivalence ratio issue raised in the previous point is obviously an issue for regional areas
as well.
For public land contribution do you prefer a set monetary amount or a set contribution
percentage?
A set contribution percentage is an interesting option to explore as it deals with averaging
concerns about land value. The current approach averages higher values in the south east as
opposed to the north and west which will mean that the standard levy will deliver a lower rate to
the south east and a higher rate to the north and west. This results in a fairness question and
impacts on affordability.
However, the alternative option presents a percentage that is considered too low in the west
and there are some concerns about how it would be applied.
Councils also raise concerns about valuation of public land and the current recourse available
to landowners through the Land Acquisition and Compensation Act. It is considered that this
must be changed in order for a simpler methodology to be developed.
Do you agree with the proposed infrastructure contingencies for Growth Areas?
The same subgroups that applied in the discussion about the standard levies in Regional
Growth Areas should also apply for contingencies. It is appropriate for a Tier 1 ICP to have a
higher contingency, closer to Metropolitan Growth Areas.
For Metropolitan Growth Areas it is considered that a 20% contingency is essential.