Environmental Planning And Assessment (Contributions Plans) Amendment Bill

About this Item
SpeakersWebster The Hon Robert
BusinessBill, First Reading, Second Reading


Bill introduced and read a first time.

Second Reading

The Hon. R. J. WEBSTER (Minister for Planning and Minister for Energy) [10.38]: I move:

That this bill be now read a second time.

The need to provide services and infrastructure in all areas where new development is occurring is well understood by this Government. The plight of residents of new release
Page 4840
areas, with no access to transport, isolated from social contact and with no services or facilities for the community is not part of this Government's vision for Sydney. For councils currently experiencing a high level of growth, such as those in western Sydney and the North Coast, the early provision of services in response to this growth is essential to avoid the physical and social problems associated with a lack of support facilities. A high growth in an area results in large numbers of newcomers who need their local council to provide the community facilities that bring them together and help develop social networks. They also need, of course, the usual services such as roads and drainage, as it is no good having a brand new house if access to it is over a potholed road.

Since the introduction of the Environmental Planning and Assessment Act in 1979, section 94 has assisted local councils in providing the services and amenities needed as a result of new developments. Under this section councils may require contributions from developers to help pay for these new services and amenities without placing a burden on existing communities. Section 94 is equally applicable in developed areas, particularly in regard to larger redevelopment sites. It is anticipated, for example, that in the Ultimo-Pyrmont area, to be known as City West, section 94 contributions will play an important role in the revitalisation of this old inner city area by providing funding for the services and amenities which will be needed for the workers and residents as a result of the new development.

Since section 94 has been available to councils many improvements have been made. In Sydney's west one finds new suburbs which have good community facilities and superior infrastructure. Often standards are higher than in the older areas which were built before section 94 was available. However, recent experiences of councils in other areas have not been satisfactory. These councils have been less than rigorous in their implementation of section 94 and have seen it as a source of general revenue to be spent where they choose. Contributions have been spent on facilities where the link between those facilities and the new development is not established and where interest has been creamed off and used for unrelated purposes.

An inquiry chaired by Commissioner Simpson investigated the many problems associated with section 94 and the criticisms levelled at councils' administration of it. Among these criticisms was the lack of justification for how contributions were arrived at, the inappropriate purposes for which they were being raised and the fact that many services or amenities were not available within a reasonable time. Special investigations under the Local Government Act have subsequently borne out some of these criticisms. Coffs Harbour City Council, for example, has been shown to have millions of dollars of unspent contributions invested and no firm plans about how or when they will be spent. Yet this area is notorious for water shortages and inadequate treatment of sewage. The need was there, the funds were collected but the council did nothing. Baulkham Hills shire is an example of another council found to have no clear expenditure plans and no satisfactory system for recording and monitoring section 94 contributions. My intention in introducing this draft bill is to eliminate such problems and to ensure that councils administer section 94 in a more consistent, professional and accountable way.

The amendments I propose will achieve these objectives and will address the concerns highlighted in the Simpson commission of inquiry. The bill amends section 94 to provide that, when granting consent to a development application made on or after a date to be proclaimed, a council may impose a section 94 condition only if it is of a kind allowed by, and in accordance with, a contributions plan approved by the council. These contributions plans will be drawn up by way of public participation and ratified by a full
Page 4841
council. In this way accountability will arise from councils' section 94 policies being explained and justified in a public document. Improved consistency will be achieved through the establishment of principles in the levying of contributions, also made clear in the contributions plans.

Greater certainty will be provided through the contributions plans. Developers will know in advance the level of contributions which will apply to any development and councils' intentions regarding expenditure. People buying into an area will know the level of section 94 contributions required and what services and facilities they can expect. These contributions plans will not reduce the autonomy of local councils. In fact, councils will be able to decide to make the number and type of plans to suit their area and focus on the specific local needs generated by new developments. These plans will be local plans drawn up through community involvement. Contributions plans can then be amended in response to the changing needs of an area and be the vehicle for the planned, efficient provision of services and amenities likely to be required as a result of, or to facilitate, new development.

Regarding the use of monetary contributions, the bill amends section 94(3) by removing the requirement that councils hold monetary contributions in trust. Councils are currently required to hold contributions in trust, but this has not served to produce either an efficient or equitable system. We ask why this is so. Although the words "in trust" appear to be very strong, they have not hindered many councils from holding money and treating the interest as general revenue. This is wrong in three ways: first, it defeats the purpose of section 94 to provide infrastructure early in a development; second, it leads to the erosion of the value of the funds through inflation; and, third, it is unfair to those who pay the contributions, who are in effect subsidising the general ratepayer. The removal of the reference to trust will allow councils to embrace the new Australian accounting standard No. 27, which recommends full accrual accounting and a streamlining of councils' financial arrangements. In this regard both my department and that of my colleague the Minister for Local Government and Minister for Cooperatives are working in close liaison.

Councils will be required to demonstrate in their financial statements full public accountability through disclosure of all receipts and expenditure of contributions. As a result of this amendment, contributions will be able to be used to provide services and facilities in a systematic way and councils will be able to establish priorities depending on local needs. Further, councils will be given a degree of flexibility in the way they apply contributions towards service provision and will have the opportunity to provide the required services and facilities according to an agreed works program in a phased and systematic way. Most important, the bill requires that any interest earned from the investment of any monetary contribution levied under section 94 be held by the consent authority and applied for the purpose for which it was levied within a reasonable time. Finally, in the light of the new requirements for contributions plans, it was considered necessary for the bill to define the powers of the Minister for Planning and the Director of Planning when imposing conditions under section 94.

I turn now to the provisions of the bill, which can be conveniently examined by reference to each clause. Schedule 1(1)(a) amends section 94(3) to provide that any monetary contribution received for the purpose of providing, extending or augmenting a particular public amenity or public service, together with any additional amount earned by its investment, is to be held by the consent authority and applied for that purpose within a reasonable time. On the application of contributions plans, schedule 1(1)(b) amends section 94 to provide that when granting consent to a development application
Page 4842
made on or after the day proclaimed in that regard a council may impose a section 94 condition only if it is of a kind allowed by, and in accordance with, a contributions plan approved by the council. A condition of a kind allowed by a contributions plan remains appealable as unreasonable.

In relation to section 94, conditions imposed by the Minister or director, schedule 1(2) inserts a new section 94AA. The proposed section states that the Minister for Planning or the Director of Planning may impose a section 94 condition when granting consent to the carrying out of development on land that is within a growth centre, defined as including a designated area under the Albury-Wodonga Development Act 1974, or on other land that is within a single local government area. In the case of land within a growth centre, such a condition will be able to require a contribution towards the provision of public amenities or public services for the whole of the growth centre, regardless of local government boundaries. When imposing a section 94 condition, in any case the Minister or director must have regard to, but is not bound by, any relevant contributions plan. Any money received as a consequence of any such condition must be transferred to the development corporation for the centre or the council of the area concerned and must be used within a reasonable time for the purpose for which it was levied.

I turn now to the making and effect of contributions plans. Schedule 1(2) also inserts proposed new sections 94AB and 94AC. Section 94AB provides for the making and approval of contributions plans. It requires that such a plan be consistent with any relevant ministerial directions made under section 94A. It leaves most of the subject-matter, together with the requirement for the drafting, exhibition and approval procedures, to be determined by regulations and provides a presumption that those procedures have been complied with. Section 94AC provides for judicial notice to be taken of a contributions plan and of the date it came into effect. It also prohibits a challenge to the validity of the procedures followed in making a contributions plan unless it is commenced in the Land and Environment Court within three months after the plan came into effect. The effect of anything duly done under a plan before it is amended or repealed is preserved. In conclusion, councils' powers to obtain developer contributions are extremely valuable. Indeed, without such powers councils would find it impossible to respond to the needs generated by new developments in their area. However, the key issue in the successful operation of section 94 must be the accountability, both public and financial, of local councils. The changes I propose will offer much greater accountability and will ensure that this important area of councils' powers is redefined to permit effective use in the future. I commend the bill to the House.

Debate adjourned on motion by the Hon. I. M. Macdonald.