On the 9th of May, the Deputy Premier announced the proposed introduction of a ‘fair value schedule of infrastructure charges’. The Deputy Premier stated that Councils who choose to use the fair value schedule could make application to have key works identified as Priority Development Infrastructure that could potentially attract co-funding by the State. It was further stated that Councils who choose not to adopt the fair value schedule of charges would not be considered for co-funding.
Details of the fair value schedule of charges and proposed co-investment have been slow to emerge since that time. Public announcements have been as follows:
- On 3 June 2014 the Treasurer announced that the Government’s Strong Choices Investment Program would include an allocation of $500 million for a Local Government Co-Investment Fund (LGCIF). However, the proposed funding is subject to the Government being granted a mandate to sell or lease Government assets at the next election. The Government has also stated that it will seek a return for the investment so that the LGCIF can be rolled over multiple times in future years, providing an ongoing source of investment.
- The Department of State Development Infrastructure and Planning (DSDIP) website states that the Priority Development Infrastructure Co-Investment Program (PDICIP) will facilitate State investment in catalyst infrastructure that unlocks significant development and economic growth within local communities. Further information about this program is promised, but is yet to be made available.
- Presentations made by DSDIP to the Planning Institute and local governments have confirmed that funds made available under the PDICIP are not grants.
It would appear that the PDICIP will operate in the interim until such time as the LGCIF is established.
Although no details are available concerning the funding of the PDICIP or how it might operate, it is our understanding that the PDICIP will operate on very similar principles to the LGCIF and that the PDICIP will seek a return for the investment so that the LGCIF can provide an ongoing source of investment into the future. Given the government’s confirmation that funds made available under the PDICIP will not be grants, it is likely that the PDICIP and subsequent LGCIF will offer either interest free or low interest loans for the construction of priority development infrastructure.
If this is the case, local governments must weigh up the advantages of a loan under the PDICIP versus the loss of revenue arising from implementation of the fair value schedule of charges. In undertaking this analysis, local governments will also need to consider the possible impacts of recent changes to the Royalties for the Regions program. The guidelines for round four of the Royalties for the Regions program state that priority will be given to projects that, inter alia, are submitted by local governments that have set their infrastructure charges at or below the level of the Queensland Government’s fair value schedule of charges.
With financial sustainability being a key focus for all levels of government, it is important that decisions are made with a full understanding of their financial implications. Using our proprietary financial model, PIE Solutions can quickly ascertain these financial impacts, whether it be the Priority Development Infrastructure Co-Investment Program, fair value schedule of charges, or the proposed adoption of a new schedule of works for a LGIP.