Queensland Government announces changes to infrastructure charges

THE Queensland Government has announced wide ranging changes to local government infrastructure charges on new developments in Queensland, proposed to come into effect from July 1 this year.

Queensland Premier Anna Bligh said the reforms are based on proposals by the independent Infrastructure Charges Taskforce and will give certainty to the building industry.

"These changes will provide simplicity, certainty and transparency for all involved," Ms Bligh said.

A key element of the reforms is setting maximum charges for trunk infrastructure, which includes water, sewerage, storm water, roads and parks.

These standard maximum residential charges will be set at $28,000 for a dwelling that has three or more bedrooms and $20,000 for one and two-bedroom dwellings.

Standard maximum charges for non-residential development will range between $50 and $200 per square metre of gross floor area depending on the development type. A stormwater charge per square metre will also apply.

The government said that under the current system, infrastructure charges for dwellings have been reported to have been as high as $50,000 for residential development and $524 per square metre for non-residential development.

Other changes announced include:

  • Annual increases in local government infrastructure charges will be limited to infrastructure CPI;
  • A moratorium on the collection of local function charges for the use of state roads, saving the development industry up to $30 to $40 million a year; and
  • Deferred payments meaning developers can pay charges at settlement rather than at the beginning of the planning process.

Deputy Premier and Attorney-General, Minister for Local Government and Special Minister of State, Paul Lucas, said the Government was not introducing a blanket cap.

"Rather we are introducing maximum standard charges and we are retaining the ability for councils to charge less than the maximums if they wish," he said.

Mr Lucas said the reforms would provide local governments with flexibility to choose whether they adopt the maximum charges or charge lesser amounts.

"This will give them the ability to choose lower infrastructure charges as a way of stimulating construction and competing for development."

Mr Lucas said the government's cap on infrastructure charges was a necessary action.

"The State Government was forced to step in because developers and local councils couldn't agree," Mr Lucas said.

"The State Government was responding to concerns from the development industry and councils when it convened the infrastructure charges taskforce following the Queensland Growth Management Summit in March 2010."

"The taskforce – which included representatives from both the property industry and local government - produced a report recommending that infrastructure charges be capped at a level between $20,000 and $30,000 in order to strike the right balance between councils and developers and keeping our building industry moving," Mr Lucas said.

The Infrastructure Charges Taskforce released its final report last month, outlining proposed reforms to simplify and streamline infrastructure charges for new developments to help address housing affordability and improve business confidence.

The Property Council of Australia said the caps on infrastructure charges would lock out investment from Queensland for the next three years.

Queensland Executive Director of the Property Council of Australia, Kathy Mac Dermott, said the State Government has sent a "clear and chilling message" to national and international investors and developers that Queensland is uncompetitive and closed for business.

However, the Local Government Association of Queensland said the cap on infrastructure charges would likely force councils to increase their debt to unsustainable levels and place further pressure on rates bills.

Local Government Association of Queensland acting chief executive Greg Hoffman said the government's changes to infrastructure charges could add an average $60 to the average rates bill in southeast Queensland.

Mr Hoffman said councils had always argued that setting a cap below $30,000 for residential development would pose enormous difficulties for them.

"This decision will push total council debt in Queensland past the $10 billion mark, an increase of 500 percent in 6 years," he said.

"At this point councils are at their borrowing limiting and will not be able to borrow to build infrastructure and development will be stifled."

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