Posted on November 15, 2021 by Lindsay Taylor and Megan Hawley

New Regulations for Infrastructure Contributions Released for Public Consultation

On 28 October 2021, the NSW Government released several documents as part of the infrastructure contributions reform package for public consultation.

These documents include:

  • Environmental Planning and Assessment Amendment (Infrastructure Contributions) Regulation 2021 (‘Amendment Regulation‘).
  • Environmental Planning and Assessment (Local Infrastructure Contributions – Planning Proposals) Direction 2022 (‘Planning Proposals Direction‘).
  • Environmental Planning and Assessment (Housing, Infrastructure and Urban Development – Dual and shared use of open space and public facilities) Direction 2022 (‘Open Space Direction‘).

We have previously written about the Environmental Planning and Assessment (Infrastructure Contributions) Bill 2021 (‘Bill‘) introduced to the NSW Parliament in June 2021 to reform the infrastructure contributions system (see here). The Bill is currently before the legislative council.

In this post, we provide an overview of the above instruments. The consultation process closes on 10 December 2021.

Amendment Regulation

The Amendment Regulation proposes to make changes consequent on the commencement of the Bill, if it is passed into law. It is proposed to commence on 1 July 2022.

The Explanatory Note to the Amendment Regulation identifies 19 discrete reforms. One of those is to change the notice and exhibition requirements for planning agreements, which we will discuss in a separate blog post. We discuss the remainder below, focusing on local infrastructure conditions, local levy conditions, and the new land value contributions.

Local infrastructure contributions

Many of the key changes being introduced by the Amendment Regulation are in the new Division 1B of Part 4, which replaces the the whole of the existing Division in the current Environmental Planning and Assessment Regulation 2000. Many of these are said to respond to the recommendations in Chapter 4 of the NSW Productivity Commission’s Review of Infrastructure Contributions in New South Wales (‘PC Review‘), which we wrote about in detail when it was released in December 2020.

Clause 25J sets out the developments and land in relation to which local infrastructure conditions or local levy conditions must not be imposed. These include:

  • public housing;
  • seniors housing and affordable housing carried out by a social housing provider;
  • development carried out by or on behalf of the State for schools, health services facilities, emergency services facilities and public administration buildings; and
  • development on land within a Lease Area within the meaning of the State Environmental Policy (Three Ports) 2013.

The clause also prohibits local levy conditions from being imposed on development consents if:

  • contributions have been made under a local infrastructure condition for the subdivision of the land; and
  • the development, other than the subdivision, will not or is not likely to increase demand for public amenities or services.

Contributions plans will be allowed to further specify development or land in relation to which local infrastructure or levy conditions must not be imposed.

Subdivision 2 provides for the indexation of costs and contributions relating to local infrastructure conditions.

  • Clause 25K specifies that the cost of providing public amenities and services will now include the cost of interest on loans used to provide them.
  • Clause 25L requires a contributions plan to provide for the indexation of the cost of providing each public amenity or service identified in the plan for which a local infrastructure condition may be imposed. This includes the cost of acquiring land in a land value contributions area. The indexation formula is stated in sub-clause (4) and is based on the land value index. .
  • Clause 25M requires a contributions plan to provide for the indexation of contribution amounts and rates, including land value contributions, in relation to a contribution for which a local infrastructure condition may be imposed. Again the formula is contained in the Regulation, and is based on the land value index.

Subdivision 3 regulates the new land value contributions proposed by the Bill.

As expected the Amendment Regulation sets out how land value contributions are to be calculated based on valuations determined by the Valuer-General under the Valuation of Land Act 1916. The maximum land value contribution that can be required is 20% of the total area of land in a land value contributions area.

Subdivision 4 regulates the levies imposed under local levy conditions. Levies are to vary based on whether the development is for residential purposes (cl 25S), commercial and industrial purposes (cl 25T), or solar and wind electricity generation purposes (cl 25U). Both the calculations of the levy and the maximum amounts are stated in this subdivision.

The levy rates must not be more than the ‘adjusted‘ maximum rates which are prescribed in the Regulation and are essentially a cap on the levies that can be imposed. The levies are not based on construction cost.

The maximum rates depend not only on the type of development but where the development is being carried out. The greatest maximum levies may be imposed for developments in Greater Sydney—East, followed by Greater Sydney—Central. Greater Sydney—West and Regional NSW are different areas in the Amendment Regulation, but the maximum rates for these areas are currently identical. The definitions of each of these areas are in clause 25R.

An exception applies to solar and wind electricity generation and developments. For these, the calculation of the levy and the maximum amount are not differentiated by location within the State.

A new clause 271A will restrict the approval of development applications for residential accommodation, commercial premises, or industries on certain land identified in environmental planning instruments, if a contributions plan has not been approved. The restriction will apply for six months from the date the land is identified in the environmental planning instrument. The consent authority will be able to dispense with this requirement of the development is minor or the developer has entered into a planning agreement for the matters that may be the subject of a contributions plan.

Other changes

Further changes proposed by the Amendment Regulation are as follows:

  • Clause 27 will set out the mandatory particulars of a contributions plan, replacing the existing clause to align with the new infrastructure contributions system.
  • Clauses 28 and 31 will require draft contributions plans to be exhibited on the NSW Planning Portal, as well as decisions about the same.
  • Clause 32 will allow more types of amendments to be made to contributions plans without re-exhibition, including changes to the cost of public amenities and public services and local infrastructure contribution rates set out in the plan as a result of adjustments made in accordance with proposed Division 1B.
  • Clauses 33A and 33B will require contributions plans to be reviewed at least once every four years and existing contributions plans to be reviewed by 1 July 2024.
  • Clause 34 will be amended to require conditions imposed on complying development certificates to be included in councils’ contributions registers.
  • New clause 34A and 35B will require councils to keep an affordable housing contributions register and to include information about affordable housing contributions in their annual reports.
  • Clauses 136K and 136L will be replaced by a new clause 136K which requires a local infrastructure condition or local levy condition to be imposed on complying development certificates for developments for which such conditions may be imposed, despite any provision to the contrary in a council’s contributions plan. Contributions are to be paid before work commences.

Ministerial Directions

Planning Proposals Direction

The Planning Proposals Direction proposes to change when councils are required to consider and make or amend contributions plans in connection with planning proposals. The Direction responds to Recommendation 4.1 of the PC Review.

The Direction will apply ‘when a planning proposal authority prepares a planning proposal that will, in the opinion of the planning proposal authority, permit development to be carried out (whether with or without consent) that will, or is likely to, require the provision of, or increase the demand for, public amenities or public services in the relevant local government area.‘ (cl 4)

The key provision is clause 5, which will require the planning proposal authority to:

  • consider whether it is necessary to amend or create a contributions to support rezoning of land for development or other changes to planning controls that will allow intensification of development; and
  • if that is necessary, draft and exhibit the contributions plan at the same time as or as closely together with the planning proposals as is practicable.

A new or amended contributions plan will not be required for every planning proposal, but planning proposal authorities will be required to produce evidence to the Minister that they have considered the required matters.

Relevant considerations for the planning proposal authority include whether a planning agreement has been or will be entered into, whether other arrangements are in place to meet any need or increased demand for public amenities or services, and whether such an increase will be minor and met by existing amenities and services.

Supporting the Planning Proposals Direction is the Contribution Plans and Planning Proposals Practice Note. This practice note sets out a ‘benchmark procedure and process‘ for the concurrent preparation and exhibition of draft contributions plans and planning proposals. It also suggests that the Guide to Preparing Planning Proposals will be amended identify what more is needed if a draft contributions plan is prepared and progressed with a planning proposal.

Open Space Direction

The Open Space Direction will require planning proposals to demonstrate their consideration of the efficient use of land used for public open space and other purposes. It responds to Recommendation 6.7 of the PC Review.

The Direction will apply to a planning proposal authority when it prepares a planning proposal that will affect land within:

  1. an existing or proposed residential or business zone (including by altering the boundaries of such zones); and
  2. any other zone in which significant residential development is permitted or proposed to be permitted,

but not if the proposal will only proposes to rezone land for rural residential purposes. (cll 3 and 4)

The key provision is clause 5, which will require the planning proposal to:

demonstrate the efficient use of land used, or proposed to be used, for public open space, drainage purposes or public facilities. This includes considering measures to share use of publicly owned land and facilities to enable more than one public amenity or public service (whether local or State) to be provided on that land or in that facility.

The Ministerial Direction also provides five circumstances when a planning proposal can be inconsistent with the Open Space Directions (see cl 6). These include when the planning proposal is of minor significance, is otherwise justified, or when the inconsistency arises from a reservation, covenant, or restriction applying to the land.

Other documents on exhibition

Regional Infrastructure Contributions papers

There are six documents on exhibition in relation to the Regional Infrastructure Contributions regime:

  • RIC discussion paper.
  • RIC Explanation of Intended Effect.
  • RIC infrastructure delivery agreements (i.e., guidelines).
  • RIC Governance and Prioritisation guidelines.
  • RIC State Planning Agreement guidelines.
  • RIC feasibility analysis.

We will blog on the new RIC framework separately.

Practice Note Review

The NSW Government has released a policy paper indicating that the practice notes for infrastructure contributions will be reviewed. The paper exhibits nine ‘draft practice note modules‘ outlining legislative requirements, policy advice, best practice, procedures, worked examples, and templates and guides. We will discuss this policy paper specifically in relation to planning agreements in a separate blog post.

Land Value Contribution Exhibition Paper

Exhibited alongside the Amendment Regulation is an exhibition paper about the new land value contributions framework introduced by the Bill. The paper explains how land value contributions will work and provides two examples prepared by technical working groups to illustrate.

To see all of the documents on exhibition and to make a submission, please follow these links:

Each of these links also contains FAQ documents which further explain the documents on exhibition.

If you have any questions about this blog post, please leave a comment below or contact Dr Lindsay Taylor on 02 8235 9701 or Megan Hawley on 02 8235 9703.