The Planning and Environment Amendment (Growth Areas Infrastructure Contribution) Act 2011 received assent on 29 June 2011, with operation commencing on 30 June 2011. The changes are intended to reduce developer holding costs and place downward pressure on housing affordability. They also aim to enable some infrastructure in growth areas to be brought forward.

The Growth Areas Infrastructure Contribution (GAIC) is a scheme under the Planning and Environment Act 1987 that applies to land brought into the urban growth boundary in 2005-2006 and 2010 that is zoned for urban development. The amending Act:

  • establishes a new scheme whereby a developer can discharge all or part of its GAIC liability by entering 'Work-in-Kind Agreements' (WIK Agreements) with the Minister
  • allows for deferral of the entire GAIC payment until the end of the subdivision process
  • makes consequential and miscellaneous amendments to the GAIC scheme and related Acts.

Under the previous arrangements, GAIC payments were generally required up-front, at the point of transfer when a person bought land or when a person made a significant acquisition in a 'land rich landholder' company. There were special provisions that allowed for staged payments or deferral of up to 70% of the GAIC until the end of the subdivision process.

A WIK Agreement now allows a party required to make a GAIC payment to discharge its liability through building infrastructure on behalf of government rather than making a payment to Treasury. Such a party may enter a WIK Agreement with the Minister in relation to proposed works in a growth area. The Minister may approve it after consulting any other Minister who has an interest in the proposal. If the value of the work-in-kind proposal exceeds $2 million, the Minister must also obtain the approval of the Treasurer. However, in a statement to the Australian Financial Review on 28 June 2011, Victorian Planning Minister Matthew Guy said that all WIK Agreements would be signed off by the Department of Treasury and Finance. The burden of a WIK Agreement must be registered on the title of the land subject to the WIK Agreement and runs with the land.

The GAIC payment amount in the 2010/2011 financial year ranged from $80,000-$95,000 per hectare. The land or works to be provided under a WIK Agreement must be either land acquisition or capital works for state-funded public transport infrastructure in a growth area (ie that could be funded from the Growth Areas Public Transport Fund under s 201VA), or land or works in a growth area that could be funded from the Building New Communities Fund under s 201VB, ie:

  • transport infrastructure that is not public transport infrastructure
  • community infrastructure, including health, education and major recreation facilities
  • environmental infrastructure, including regional open space, trails and creek protection
  • economic infrastructure, including access to information technology and infrastructure supporting the development of commerce and industry
  • the acquisition of land necessary to establish or maintain the infrastructure above.

The Act requires that the Department and Growth Areas Authority state the total value and 'the details' of WIK Agreements performed or partly performed in their annual reports. Mr Guy told the Australian Financial Review that it would be Coalition policy to publicly disclose the value of each project in the GAA's annual report.

The Act does not require that WIK Agreements provide works proposed in precinct structure plans. Mr Guy dismissed concerns expressed by councils that they would receive infrastructure that they did not request, stating 'it will be a piece of state infrastructure, and state cabinet will decide whether it goes ahead or not'.

With its breadth of experience in large and small developments in Victoria, DLA Piper can help you to:

  • draft WIK Agreements
  • apply for deferral of GAIC payments.

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