Reverend the Hon. Dr GORDON MOYES: The purpose of the Environmental Planning and Assessment Amendment (Development Contributions) Bill is to amend the Environmental Planning and Assessment Act 1979. These amendments extend the means by which planning authorities may obtain development contributions to be applied for the provision of public amenities, public services and other public purposes. We commend the bill to the House. When a developer has plans to develop an area likely to need the provision of public services, the current law allows for the consent authority to require the developer to contribute to the creation and/or maintenance of those services in some form. Development contributions are payable in New South Wales where there is an existing development contributions plan. A condition of development consent is the payment of the contributions required. Section 94 is the main provision for the Environmental Planning and Assessment Act governing developmental contributions for public purposes.

Those of us who have been responsible for large-scale developments have got to know section 94 quite well. It has been under review for some time now. That review was prompted by the difficulties faced by the development industry and local councils. One difficulty that has arisen is the inflexibility of this legislative provision. For example, in greenfields areas, areas that are undeveloped and generally unpolluted, the traditional contributions plan under section 94, being the dedication of land free of cost, is workable. However, as pointed out in the second reading speech on the bill in the Legislative Assembly, when development occurs in established inner areas, where there is little opportunity to acquire open space, the traditional plan is unworkable. In such situations it is easy to see that the application of a flat percentage levy is the best option.

That immediately brings to mind a large-scale development in Pitt and Castlereagh streets, known as the Wesley Centre, that I negotiated in the mid-1980s. It ultimately cost $320 million; development costs and levies on the site were extremely high. At the time I secured approval for a car park but we had to pay an additional levy of $250,000 to Sydney city council to help it build car parking spaces on the outskirts of the city. When the development reached the building stage Sydney city council rejected the car park that we had negotiated and I appealed against the council’s objection. At about the same time the members of Sydney city council were sacked and replaced by three administrators. I appealed to the administrators and, after an enormous search, eventually found the earlier agreement. The administrators discovered that the $250,000 levy that we had paid for the car park had already been spent. The new administration eventually allowed the construction of some 400 underground car parking spaces in the Wesley Centre, which is what had been agreed in the first place. However, since then I always remembered to keep copies of the relevant documents when we paid such levies.

It is worth pointing out at this stage that a review committee on section 94 was established in order to evaluate the existing system and make recommendations about whether changes should be made. The committee reported to the Minister for Planning in January 2000, and the Minister took the recommendations into account in his report on the issue. Following the formation of the Department of Infrastructure, Planning and Natural Resources in 2003, the Minister for Infrastructure and Planning, and Minister for Natural Resources established a task force to consider closely the way in which the current contribution system operates. It also considered alternative mechanisms through which planning authorities may obtain developmental contributions.

I believe the main merit of the bill is that it offers flexibility in the way in which development contributions may be made and allocated. An inflexible system usually results in less than optimal outcomes. Providing different alternatives for parties in meeting the costs of public services that are situated in areas of development appears to be a commendable initiative. Providing flexibility in allocating those funds is also important. Significantly, the public services concerned do not include public amenities or public services comprising water supply or sewerage works. In practice, the bill will give planning authorities a couple of approaches, and it will be up to the consent authority to determine which approach best suits its particular needs.

First, planning authorities will be able to levy a flat percentage of the development cost to fund public services. As I explained in my earlier illustration, I paid on behalf of Wesley Centre a flat tax or flat percentage of development costs to fund car parking spaces in another area. Such a levy will be provided as part of a contributions plan. The second reading speech suggests that a maximum 1 per cent fixed development consent levy is proposed for the regulations but this is still to be determined conclusively. A great deal of care will need to be taken because the total costs of large developments vary. In my lifetime I have been responsible for the development of a number of very large retirement villages, for example, whose costs exceeded $100 million each. We found that our original costings and the costings of those we employed—quantity surveyors and others—increased considerably over time. So a 1 per cent flat development consent levy would obviously need to increase with every rise in value.

Thus in cases where a council opts for a 1 per cent flat levy, it will replace the usual section 94 payment. One concern that should be borne in mind is that a 1 per cent levy may not bring in as much funding as the present system. The planning authority concerned should consider that. Interestingly, the Sydney Morning Herald on 9 December 2004 reported that the president of the Local Government Association said that councils were reasonably happy with the changes but she doubted whether many councils would accept the flat levy in preference to the present manner of negotiating a development levy.

Secondly, a voluntary agreement may be entered into between the planning authority, the State Government and developers when a negotiated amount is paid to fund infrastructure needs that may arise. For example, a developer may undertake to dedicate land free of cost, pay a monetary contribution or provide any other material public benefit via a negotiated agreement with the consent authority. There will be a clear statutory framework for this entire process. As the agreement is voluntary, it is important for developers to note that they cannot appeal to the Land and Environment Court against the failure of the planning authority to enter into a planning agreement or against the terms of a planning agreement. According to the second reading speech:

… this approach is consistent with the current law that developers cannot appeal to the court in relation to matters concerning development applications about which they agree or acquiesced.

Thus legal counsel becomes of the utmost importance when entering into such agreements. The saying caveat emptor, or buyer beware, becomes all the more relevant to the developer in this scenario. Another significant change is that councils will be able to levy or spend funds on developments in neighbouring council areas. This is a good initiative for which I commend the Minister. It is envisaged that funds will be allocated on a needs basis and, hopefully, this approach will bridge the gap between those areas that have and those that have not. Present restrictive practices limit the areas in which money can be spent on improvements. According to today’s edition of the Sydney Morning Herald, one council will now be free to use $100 million that was previously locked up in a bank. The bill seeks to liberate an estimated $800 million in developer levy funding, which the council has not yet spent on infrastructure. It is also commendable that if infrastructure lacks maintenance, funds from the public purse ought to be made available to remedy deficiencies on a priority basis. The Christian Democratic Party has great pleasure in commending the bill to the House.

Friday, 6th May, 2005, 2:48 pm | Articles