Chapter 8 of the Sustainable Planning Act 2009 (the Act) provides a suite of conditioning powers for infrastructure. These powers allow a local government to condition for:
- infrastructure to be supplied as non-trunk infrastructure; or
- infrastructure to be supplied as necessary trunk infrastructure; or
- the payment of an additional trunk infrastructure cost incurred by the local government in servicing the development.
Each type of infrastructure condition imposes different financial obligations on the local government and developer. The intent of these conditioning powers is to fairly balance the cost of providing infrastructure and ensure the financial viability of development and the financial sustainability of local government.
To further this outcome, infrastructure which is internal to premises, or services a small numbers of users is considered non-trunk infrastructure. This is wholly funded by the developer.
In relation to trunk infrastructure, a development which is consistent with the LGIP assumptions and is inside the area which has been prioritised for infrastructure provision (the PIA) is not to be financially disadvantaged if required to provide adequate trunk infrastructure as part of the development approval. In these circumstances, the infrastructure can only be conditioned as necessary trunk infrastructure and the developer must be fully reimbursed the cost of the infrastructure through an offset against infrastructure charges for the development. Where a balance remains, this must be refunded.
The conditioning powers also protect a local government from being forced to fund shared (trunk) infrastructure beyond its obligation to service 10-15 years of urban development in accordance with the assumptions stated in its LGIP. In this regard, if development is inconsistent with the planning assumptions of the LGIP or is wholly or partly outside the PIA, the developer may be required to pay for additional trunk infrastructure costs to service the development. A developer is only entitled to a refund of these additional trunk infrastructure costs in limited circumstances.
When deciding to impose a condition about infrastructure, a two-step decision making process must therefore be followed. These steps are:
- Does the infrastructure being conditioned for provide a trunk function?
- If yes, does the infrastructure result in an additional cost being incurred by the local government?
The proper determination of these questions will allow the appropriate condition to be imposed – thereby achieving the intent of the Act.
In 2014, the Act was amended to include new provisions that allow an applicant to apply to convert non-trunk infrastructure required by a condition of development approval to trunk infrastructure (the conversion provisions). The conversion provisions require a local government to decide a conversion application having regard to the criteria identified in its charges resolution. The criteria must also be consistent with parameters provided for under a guideline. These parameters have subsequently been provided in Statutory Guideline 03/14 (Local government infrastructure plans).
If, after considering these conversion criteria, the local government’s decision is to convert non-trunk infrastructure to trunk infrastructure, section 662 of the Act provides that:
- the non-trunk infrastructure condition no longer has effect; and
- the local government may amend the development approval by imposing a necessary infrastructure condition for trunk infrastructure.
Most notably, the conversion provisions do not allow a local government to consider whether the infrastructure will result in an additional cost being incurred, and if it does, to amend the development approval by imposing an additional trunk infrastructure cost payment condition. This means that if infrastructure is successfully converted to trunk infrastructure, it can only be conditioned as necessary trunk infrastructure which carries with it the obligation for the local government to provide an offset or refund for the value of the infrastructure.
This approach is inconsistent with the Act’s trunk infrastructure conditioning provisions discussed above.
The consequence of this omission is that a local government could be obligated to fund trunk infrastructure that imposes an additional cost to the local government. To prevent this scenario, many local governments have included in their charges resolution a conversion criteria that the infrastructure must be necessary to service development that is:
- consistent with the assumptions stated in the LGIP about the type, scale, location or timing of future development; and
- for premises completely inside the priority infrastructure area.
If the conversion provisions provided the opportunity to use the full suite of trunk infrastructure conditioning powers in Chapter 8 of the SPA, including those for additional trunk infrastructure costs, there would be no need for local governments to include the above criteria referring to the development’s consistency with the LGIP planning assumptions or the PIA. The only question to be rightly resolved by the conversion criteria would be whether the infrastructure performs a trunk function. This would alleviate concerns that the conversion criteria developed by local governments may be inconsistent with the conversion parameters provided in Statutory Guideline 03/14.
PIE Solutions believes that the conversion provisions of the SPA should be reconsidered as part of the current reform of the planning legislation. In the meantime, local governments can reduce potential impacts by using the two step decision making process outlined above when determining which type of condition about infrastructure to impose on development. By doing this, a local government will not unnecessarily expose itself to the risks associated with the conversion of non-trunk infrastructure to trunk infrastructure.