Posted on June 19, 2014 by Frances Tse
A reduction in funding for the Local Infrastructure Growth Scheme
The NSW State Budget for 2014-2015 released on 17 June 2014 indicates that $60 million has been allocated for the Local Infrastructure Growth Scheme (‘LIGS‘), down from $99 million in 2013-2014. Given the purpose for which the LIGS was established, it seems that the future of funding for local infrastructure under LIGS is uncertain.
The LIGS forms part of the Housing Acceleration Fund established to support housing supply across NSW.
The LIGS supports local council delivery of essential local infrastructure in their areas (such as roads, stormwater and public open space) by meeting the shortfall between the cap on the amount of development contributions that local councils can obtain from developers under s94 of the Environmental Planning and Assessment Act 1979 (EPA Act) and the amount of the development contributions that could have obtained if the cap was not in place.
To be eligible for funding, a council must first have the relevant development contributions plan reviewed and approved by the Independent Pricing and Regulatory Tribunal.
A fact sheet on the LIGS published on the Department of Planning and Environment’s website states that:
‘This scheme is a transitional funding arrangement put in place by the NSW Government until the new planning system commences in 2014. Developer contributions are identified as a key area for reform in the Government’s new planning system White Paper because the current system impedes new housing supply…These reforms are expected to do away with the need for a funding cap and Government gap funding.‘
Given the delay in the introduction of the new planning system, it is not clear why a lesser amount has been allocated to the LIGS this year. Without any obvious indication by the NSW Government of the continuation of the LIGS past 2014-2015, and a tight budgetary environment more generally, it cannot be assumed that the continuation of LIGS funding, or sufficient funding, is certain.
One method that local councils can use to seek to ensure timely delivery of local infrastructure beyond the LIGS, is to enter into voluntary planning agreements under s93F of the EPA Act. VPAs are not subject to the contributions cap and can provide for monetary contributions, land dedications, works and other material public benefits.