Second time lucky for GAIC: Upper House passes revised infrastructure levy

THE Victorian Parliament has passed through the Planning and Environment (Growth Areas Infrastructure Contribution) Bill 2009, with the Upper House passing the legislation on Tuesday 25 May. This will allow the collection of over $2 billion for the provision of infrastructure and services in Melbourne's growth areas and paves the way for an expansion to Melbourne's Urban Growth Boundary (UGB).

Planning Minister Justin Madden said it was essential to have a plan for funding community infrastructure before considering any extension to the UGB. "We have always said that it would be irresponsible to open up new land for development without first securing the revenue to pay for the necessary infrastructure over the life of the development," Mr Madden said.

"Now the GAIC is in place, there is a dedicated fund of approximately $1.2 billion for public transport services such as trains and buses. A further $1.2 billion will be set aside for community infrastructure such as child care facilities, sporting grounds and libraries. This clear way forward means we can now get on with the job of managing Melbourne's growth and protecting our enviable liveability," Mr Madden said.

The GAIC Bill was rejected by the Victorian Upper House in February, with the Opposition claiming that, while they supported the GAIC in principle, they were not prepared to support it without changes. These changes included the payment of the GAIC levy at the end of the planning process, not when land was purchased.

In March, the Victorian Government announced it has reached agreement with peak development industry bodies on a revised formula for funding infrastructure within growth areas, signing a Memorandum of Understanding with the Property Council of Australia and the Urban Development Institute of Australia spelling out the details of how the charge would be restructured to make it acceptable to the industry.

Whilst last month, the government announced that Dispute Resolution Committee of Parliament has negotiated a "bipartisan way forward for funding vital infrastructure in an expanded urban growth boundary."
Mr Madden said he was pleased the Opposition had supported the GAIC legislation after it was amended to reflect the Government's Memorandum of Understanding with the Property Council of Australia and the Urban Development Institute of Australia.

"This MoU underpinned negotiations between the Government and Opposition on the way forward for GAIC," Mr Madden said. "I am pleased to see the bipartisan agreement we have reached now enshrined in legislation."

The main points of the GAIC include:

  • The GAIC will apply to land brought into the UGB from 2005 and zoned for urban development. The proposed GAIC are $80,000 per hectare for land brought into the UGB in 2005 and 2006, and $95,000 per hectare for land brought into the UGB in or after 2009;
  • Developers will pay 30 per cent of the GAIC liability when they purchase land, with the remaining 70 per cent to be deferred and paid in stages as the land is subdivided;
  • The outstanding balance will be indexed at the Consumer Price Index up to the point that a Precinct Structure Plan is gazetted. Following this, any deferred amount deferred will accrue interest at the Treasury Corporation of Victoria 10 year bond rate;
  • Properties between 0.41 hectares and 5 hectares will now be exempt from GAIC on the sale of land unless it is being subdivided or developed; and
  • GAIC is not payable on lots of 10 hectares or less (up from 2.03ha) where there is a habitable dwelling until subdivision or development.

Mr Madden said that now the GAIC has passed, the Government would shortly re-introduce a planning scheme amendment to expand the UGB, making an additional 24,000 hectares available for housing. "This amendment would also put in place public acquisition overlays to establish the proposed 15,000ha grassland reserve, the Regional Rail Link and the Outer Metropolitan Ring / E6 Transport Corridor," Mr Madden said.

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