Posted on May 24, 2023 by Lindsay Taylor 31

Bill for Housing & Productivity Development Contributions Scheme Introduced into NSW Parliament

The Environmental Planning and Assessment Amendment (Housing and Productivity Contributions) Bill 2023 was introduced into the NSW Legislative Assembly on 23 May 2023. The Bill is now awaiting debate following the Minister’s second reading speech.

The Bill is for an Act to amend the Environmental Planning and Assessment Act 1979 (EPA Act) to provide for housing
and productivity contributions and related purposes.

The amending Act commences on a day or days to be appointed by proclamation (see section 2).

Departmental media release

The Department of Planning and Environment said in a media release on 23 May 2023 that ‘[t]he Bill will replace the existing Special Infrastructure Contribution system with a new broad-based charge, called the Housing and Productivity Contribution‘ and that it ‘will create a consistent and reliable revenue stream to pay for state infrastructure that supports housing and productivity in high growth regions‘.

The new Housing and Productivity Contribution (HPC) will be collected in Greater Sydney, the Lower Hunter, the Central Coast and the Illawarra and Shoalhaven. The Department’s media release says that the purpose of the HPC is ‘to make sure people are living in well-connected communities with access to roads, parks, schools and hospitals‘.

The Department’s media release describes the HPC as ‘a fair and consistent charge [that] will be applied to all developers in the region to help pay for the infrastructure needed to support growing communities‘.

Minister’s Second Reading Speech

In introducing the Bill in Parliament, the Minister for Planning and Public Spaces said:

‘If we are to have any chance of rising to the housing challenge, then we will have to do much better than we have done in the past. The bill will not solve all aspects of the housing crisis, but it is one of the few proposals to come before this Chamber that will genuinely address supply. It will support supply by dealing with a key bottleneck in infrastructure. This measure stems from the NSW Productivity Commission’s 2020 review of the infrastructure contributions system and will replace a complex system of contribution charges with a simple and modest charge levied across a broader base. It will support the provision of the roads, railways, parks, schools, and hospitals that we need to function and often take for granted. It will create a new system for funding and planning for infrastructure, replacing the ad hoc, piecemeal, stop/start system of the past.

…

Modelling by Planning and Treasury indicates that this new system will have a negligible impact on the feasibility of development projects and represents a tiny fraction of the land value uplift arising from the right to build additional dwellings. The existing infrastructure contributions system is not fully enabling us to support the development needed for optimally liveable communities. This bill will begin the transition towards a better system of State infrastructure contributions from 1 October 2023 that will generate a consistent, reliable, dedicated and fair revenue stream so we can achieve just that.‘

Productivity Commission Report

The Productivity Commission Report referred to by the Minister is the Productivity Commission’s Review of Infrastructure Contributions in New South Wales Final Report, dated November 2020.

Recommendation 5.1 on page 10 of the report states:

‘Special infrastructure contributions have been applied inconsistently and unpredictably, adding to investor uncertainty. Moreover, they have raised only limited revenue and have generally been unsuccessful in influencing broader State agency capital investment priorities. Stakeholders agree the ad hoc and ‘stop-start’ approach creates uncertainty for industry and communities and discourages development.

Greater cost recovery through broad-based state contributions will better leverage the State’s capital program towards growth enabling infrastructure in an emerging environment of fiscal pressures and reduced asset recycling opportunities. A broad-based state contribution is proposed for the regions of Greater Sydney, Central Coast, Hunter, and Illawarra-Shoalhaven. Feasibility analysis suggests a relatively low charge of $12,000 per dwelling in Greater Sydney and $10,000 per dwelling in other areas, combined with a cost reflective water charge, will have limited feasibility impacts. Moreover, increased certainty and timelier, more coordinated infrastructure delivery will enable more growth and development, rather than less.’

Replacement of SICs

Subdivisions 4 and 5 of Division 7.1 of the EPA Act currently provide for special infrastructure contributions (‘SICs’) and related matters. The Bill substitutes Subdivisions 4 and 5 to establish the new HPC scheme.

The Bill contains savings and transitional provisions for the continuation of SICs determined and required in respect of development under the EPA Act before the introduction of the new HPC scheme (see substituted Schedule 4 of the EPA Act).

Provision of regional infrastructure

The object of the scheme is to facilitate the provision of regional infrastructure that supports and promotes housing and economic activity in a region by enabling a HPC to be required (see proposed section 7.24(1)).

‘Regional infrastructure‘ means public amenities or public services, including infrastructure that enhances public open space or the public domain, affordable housing, transport infrastructure, regional or State roads, and measures to conserve or enhance the natural environment (see proposed section 7.22 of the EPA Act).

HPCs imposed on development in a region must be used to provide regional infrastructure that benefits the region (see proposed section 7.24 of the EPA Act).

Regional infrastructure funded by HPCs may be provided on one or more different ways, being:

• by providing the regional infrastructure,
• by recouping the cost of providing the regional infrastructure,
• by funding recurrent expenditure relating to providing the regional infrastructure,
• by the Minister, the Planning Ministerial Corporation or the Planning Secretary carrying out research or investigation, preparing a report or study or an instrument, or doing another matter or thing in connection with the administration of the HPC scheme. (See proposed section 7.24(2) of the EPA Act).

Regional infrastructure may be provided by making a payment to a council for the council to provide the regional infrastructure (see proposed section 7.24(3) of the EPA Act).

Ministerial planning order

HPCs will be authorised through a Ministerial planning order (see proposed section 7.24(4) of the EPA Act), which will require the Treasurer’s concurrence (see proposed section 7.27(1) of the EPA Act).

A Ministerial planning order requiring a HPC must specify:

• the level and nature of the HPC,
• the classes of development to which the HPC will apply,
• the region, or part of the region, to which the HPC applies,
• the way in which the HPC must be determined,
• the time at which the HPC is required,
• whether the HPC includes a component imposed on development on land identified in the Ministerial planning order as an area that benefits, or will benefit, from the provision of specified transport infrastructure (transport project component),
• whether the HPC includes a component imposed on development on biodiversity certified land as a contribution towards a measure to conserve or enhance the natural environment (strategic biodiversity component), and
• whether the HPC is required when a complying development certificate is issued for development. (See proposed section 7.26(1) of the EPA Act)

A Ministerial order may specify conditions that must be imposed by a consent authority or certifier as a condition of development consent, including the terms of the conditions (see proposed section 7.26(2)(b) of the EPA Act).

Requirement for HPC as a condition of development consent

If a Ministerial planning order requires a HPC in relation to development, a consent authority responsible for determining a development application or a registered certifier responsible for determining an application for a complying development certificate under the EPA Act must impose a condition on a development consent or a complying development certificate, respectively, for the development to require the contribution (see proposed section 7.27(1) of the EPA Act).

A HPC may be required in addition to a condition imposed under sections 7.11 or 7.12 of the EPA Act requiring a local infrastructure contribution in respect of development (see proposed section 7.28(4) of the EPA Act).

No appeal against HPC

A person cannot appeal to the Land and Environment Court in relation to a condition on a development consent or a complying development certificate requiring a HPC (see proposed section 7.30 of the EPA Act).

Nexus between development and regional infrastructure funded by HPC

No connection is required between the development on which a HPC is imposed and the regional infrastructure provided from the contribution, except that:

• a transport project component of the HPC may be imposed on development on land only for transport infrastructure that benefits the area in which the land is located, and
• a strategic biodiversity component of the contribution may be imposed on development on land only for measures to conserve or enhance the natural environment that were required for biodiversity certification of the land. (See proposed section 7.29 of the EPA Act).

Housing and Productivity Fund

The Bill contains provisions for the establishment and operation of a Housing and Productivity Fund (see proposed section 7.31A and proposed Subdivision 5 of Division 7.1 of the EPA Act).

The first print of the Bill can be found here.

UPDATE: The Bill passed both Houses of Parliament on 28 June 2023. See our later article here.

For further information about the new HPC scheme, please contact Dr Lindsay Taylor at lindsay.taylor@lindsaytaylorlawyers.com.au or on +61417997880.