By Nafsika Starvaggi

29 November 2016

The Victorian Minister for Planning has recently introduced a new infrastructure contributions plan (ICP) system to address the planning and delivery of essential infrastructure such as roads, parks, local sports grounds and community facilities such as kindergartens and child care facilities to new and growing communities.

The Victorian Government notes that the purpose of the new ICP system is to ensure:

  • A more consistent and transparent approach to the application of infrastructure levies through access to new standard levy rates;
  • Planning authorities, infrastructure providers and the development industry have more certainty about the levies payable and the type of infrastructure they will fund; and
  • A reduced risk of escalating infrastructure charges by specifying the rates of indexation for the levies.

Already, various developers and industry organisations have expressed concern that the new ICP system will increase development costs and negatively effect housing affordability.

Key Features of the New ICP System

The legislative framework for the new system is set out in the Planning and Environment Act 1987 (Vic) and the relevant Ministerial Direction. It is based on levies that are pre-set for defined ‘development settings’ to fund specified infrastructure, known as allowable items.

The infrastructure levy is made up of two (2) parts: a standard levy and, where appropriate and justified, a supplementary levy.

Standard Levy

The standard levy is a pre-set monetary rate that may be used to fund basic and essential local infrastructure. There are separate standard levy rates for different land uses in different development settings. For example, in metropolitan greenfield growth areas there are separate rates for residential, commercial and industrial development.

The standard levy rates will be indexed annually based on mechanisms in the Ministerial Direction.

Supplementary Levy

The supplementary levy is an additional levy that may be used when the standard levy cannot adequately fund the required infrastructure or where additional infrastructure is required to ‘unlock’ the growth potential of an area. The supplementary levy may also be used to fund state infrastructure in areas of growth where the Growth Areas Infrastructure Contributions (GAIC) levy does not apply. Specific criteria must be met to apply a supplementary levy.
The supplementary levy rate is based on the actual cost of the infrastructure projects being funded by the levy. Projects funded by a supplementary levy must be fully costed and the costs apportioned.

Imposition of Infrastructure Levies

An infrastructure levy may only be imposed through an approved ICP.
The levy is paid by the developer at the time specified in the planning permit or (if no planning permit is required) in the ICP. It is paid to the collecting agency, which is usually the council. A collecting agency may accept (but is not obliged to) works-in-kind in lieu of being paid the infrastructure levy.

Development Settings

Three (3) ‘development settings’ are identified:

  1. Metropolitan greenfield growth areas;
  2. Regional greenfield growth areas; and
  3. Strategic development areas.

From 27 October 2016 the ICP system only operates in metropolitan greenfield growth areas, being land on the fringe of metropolitan areas which are in, or planned to be in, the Urban Growth Zone.

The Victorian Government has foreshadowed that the two other development settings will come into operation at a later stage, at which time their exact definition will be set out in the Ministerial Direction.

Allowable Item

An allowable item is an item specified in the Ministerial Direction that may be funded by a standard levy, a supplementary levy or both of these levies.

Each development setting has its own specific list of allowable items.

An allowable item may take the form of a new infrastructure item, an upgrade or extension to an existing infrastructure item, or the replacement of an infrastructure item that has reached the end of its economic life.

Related Articles

View All
Property & Development / Developments / Real Estate Agents

Property Law Changes – Land tax adjustments, vacant residential tax & windfall gains tax

A prohibition on the ability of a Vendor to pass on land tax liability assessment against a property The current...
Read More
Commercial Contracts & Agreements / Leasing & Lease Disputes / Property & Development

Exercising Options

If a lease is a retail lease, the provisions of the Retail Leases Act (Vic) (2003) will govern the exercise of option...
Read More
Construction / Owners Corporations / Planning

Occupancy permits – the ticking clock in defective building work

Where multiple occupancy permits are issued in relation to a building permit, which permit is the operative permit for...
Read More
Commercial Law / Property & Development / Developments

2023-2024 State Budget Recap

Acquisitions of Commercial and Industrial Properties From 1 July 2024, Land transfer duty (stamp duty) on commercial...
Read More
Adverse Possession / Commercial Law / Family Law

2024 Best Lawyers list out now

Tisher Liner FC Law are proud to announce that this year three of our Principals have been selected by their peers for...
Read More
Property & Development / Planning

The 1, 2, 3 of Property Law Reminders for NY2023

In so reflecting, reflecting on one’s property matters (current or proposed for the future) is also a worthwhile...
Read More
Planning / Property & Development / Construction

Section 9AC of the Sale of Land Act – What does ‘materially affect’ mean?

Throughout the registration period, a Plan of Subdivision may undergo many amendments from the proposed Plan which was...
Read More
Property & Development / Leasing & Lease Disputes / Real Estate Agents

CTRS protections has ended. What do you do now when a tenant defaults?

What can landlords do if a tenant breaches the lease If a tenant is in breach of a lease, the landlord may charge...
Read More
Property & Development

Early deposits. Your FAQ’s answered

This blog explores what is required in order for a Vendor to obtain their deposit prior to settlement and what a...
Read More
Property & Development / Real Estate Agents

Stamp Duty is now payable on late settlement and default penalty interest

The dutiable value of a property is the value in which stamp duty is determined to be due and payable at settlement by...
Read More
Property & Development / Commercial Contracts & Agreements

Market rent reviews under the Retail Leases Act 2003: Applying to the VSBC for the appointment of a Specialist Retail Valuer under the Act

In Part 1 of our blog series, we explored market rent reviews generally This is Part 2 of our 2 part blog series, in...
Read More
Property & Development

Market rent reviews under the Retail Leases Act 2003

The Retail Leases Act 2003 (Vic) (the “Act”) sets out certain rights and obligations in relation to rent reviews...
Read More