NSW infrastructure contributions system set for short and long-term reform

Infrastructure contributions in NSW is set to be overhauled, with a package of proposed reforms on public exhibition and a NSW Productivity Commission review to be completed by the end of the year.

Snapshot

• NSW Department of Planning, Industry and Environment (DPIE) is seeking public submissions on proposed changes to the infrastructure contributions system. Submissions are open until Friday 12 June 2020.
• The Minister for Planning and Public Spaces (Minister) has also asked the NSW Productivity Commission to review and report on the infrastructure contributions system by the end of 2020.

Reform package targets voluntary planning agreements, levies and special infrastructure contributions

DPIE has released a package of reforms to improve the NSW infrastructure contributions system. This comprises five components:

• a draft planning agreements (VPA) policy framework, comprising a draft practice note to assist parties to prepare VPAs under section 7.4 of the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act) and a draft direction requiring local councils to consider the practice note when negotiating or preparing VPAs;
• a discussion paper exploring the options for reforming the process by which contributions plans for contributions under section 7.11 of the EP&A Act are reviewed by the Independent Pricing and Regulatory Tribunal (IPART);
• a discussion paper proposing a set of criteria to help determine whether the maximum fixed-rate contribution levy under section 7.12 of the EP&A Act (up to 1% of the proposed cost of carrying out the development) should be increased in respect of particular land in specific local government areas;
• draft guidelines on special infrastructure contributions (SIC) aiming to give greater clarity about the objectives of the SIC framework, the key principles guiding the NSW Government for implementing and administering the SIC framework, the method for determining a new SIC, and the process for allocating SIC revenue to infrastructure investment; and
• a policy paper setting out the proposed amendments to the Environmental Planning and Assessment Regulation 2000 (NSW) and a public consultation draft instrument to amend the regulation.

DPIE is seeking feedback on these proposals from key stakeholders and the community. Submissions may be made online or post by Friday 12 June 2020.

NSW Productivity Commission to consider longer-term changes

The Minister has also asked the NSW Productivity Commission to recommend longer-term changes to the infrastructure contributions system. The terms of reference require the NSW Productivity Commission:

• to review the infrastructure contributions system to determine whether it achieves certainty and efficiency while delivering public infrastructure required to support development;
• to recommend reforms to deliver a principles-based system that delivers the infrastructure required to accompany growth; and
• to identify legislative and regulatory changes to implement those reforms.

Accordingly, we may see more substantive changes to the NSW infrastructure contributions system following the review.

The NSW Productivity Commission has been asked to consult with NSW Government agencies, external stakeholders and the community as appropriate. The NSW Productivity Commission will provide more information on timing and next steps in due course.

Next steps

If you would like to have your say on the NSW infrastructure contributions system, make sure to:

• make a submission to DPIE on the reform package by Friday 12 June 2020; and
• look out for updates on the NSW Productivity Commission infrastructure contributions review.

By Peter Briggs, Partner, Daniel Webster, Senior Associate and Tom Dougherty, Senior Associate.

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