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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
2016-03-09 Daily Xml
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Planning, Development and Infrastructure Bill

Committee Stage

In committee.

(Continued from 8 March 2016.)

Clause 156.

The Hon. K.J. MAHER: I move:

Amendment No 58 [Emp–4]—

Page 135, line 17—Delete paragraph (a)

A range of questions was being debated when we left off yesterday. I will answer very broadly some of the questions that were raised during that debate. In doing so, I will speak broadly and specifically about some of the questions.

Yesterday, quite a number of questions were raised about infrastructure schemes. I think some of these answers will aid with progressing the debate. However, based on the course of the debate and questions raised, I will firstly provide that overview as briefly as possible about how these schemes are intended to work, broadly rather than examining the minutiae about each of them in isolation.

Currently, we have the Development Act which has been in place for many decades. When it was set up, government was virtually wholly responsible for providing infrastructure. Since then, the world has moved on. The Planning, Development and Infrastructure Bill is designed to enable government to plan strategically and ensure that development and infrastructure decisions are not made in isolation. When the government considers rezoning broadacre land—it makes the planning decision—we do not want to agree to that until such time as we can ensure the infrastructure can be funded and it is appropriate to the development proposed.

These provisions formalise that arrangement which occurs now informally by negotiation of individual agreements. In terms of the schemes themselves, the basic or general infrastructure schemes and any associated funding arrangements may be initiated by the minister at his own initiative or on the request of another person, such as a developer or developers, but only after seeking advice of the commission.

The specific purposes for which the general scheme may be initiated are set out in the bill and the minister does this by preparing in consultation with the landowners, prospective developers and effective councils, a draft outline. The outline includes details of the nature, intended scope and proposed timing of delivery of the infrastructure and any other related development, the location, the body that will carry out the work and, if a funding arrangement includes a proposal for a collection of contributions, the contribution area proposed.

In setting out a scheme, the minister must facilitate the provision of infrastructure that is fit for purpose, designed to be built to an appropriate standard—that is, as we discussed yesterday, not gold plated—and be capable of timely delivery. The minister must also consider proposals to collect contribution from landowners by taking into account whether it is reasonable to use other sources of funding, the impact of any scheme on affected councils, the extent of benefits to contributors, any arrangements already in place within the designated growth area, and consulting affected councils and any landowners impacted.

Only then may the minister publish the draft outline of a scheme with any advice furnished by the committee. At this point, the minister will ask the chief executive of DPTI to appoint a scheme coordinator who will prepare, scope and cost the scheme in accordance with any relevant design standards. Among the functions, the scheme coordinator will also develop a work plan, consult in accordance with the community engagement charter and, if applicable, advance the funding arrangements.

The coordinator can be a person from either the private or public sector, a committee or a precinct authority and may only be appointed or removed by the chief executive if the state planning commission concurs. The coordinator is bound by an enforceable code of conduct and guided by the principles set out in part 13. An important role of the scheme coordinator, included at the suggestion of industry, is to advise the minister on enforcement of any charges and on contribution levels. They must also keep the chief executive of DPTI informed of additional or alternative funding sources which should be used to keep charges and contributions as low as possible.

If the minister decides to proceed with the scheme, the report provided by the scheme coordinator must be published in the Gazette and on the planning portal. Any commercial, in-confidence or other information protected pursuant to section 53 will be redacted prior to publication.

In terms of funding arrangements, funding for a basic infrastructure scheme consists of a charge on the land within a contribution area. The scheme may provide for an adjustment or indexation and arrangements for periodic review as determined by ESCOSA or another prescribed body or person. The funding arrangements for both infrastructure schemes may consist of publicly or privately sourced funding, including Treasurer's guarantees, exemptions from specified state taxes or levies, imposition of a charge in the basic infrastructure schemes, or the collection of contributions from a contribution area for the general scheme.

A scheme for rebates or the adjustment of contributions, including according to a determination of ESCOSA or the like, and a scheme for in-kind contributions may also be included. To come into effect, any funding arrangement or variation must be approved by the Governor by notice in the Gazette and published on the portal.

In the case of general infrastructure schemes, the Gazette notice can only be published if the minister has made a recommendation to the government after a report from the state planning commission and sets out the results of consultations with infrastructure providers, prospective developers, the LGA, relevant councils and non-specified persons or bodies as have been received by the minister and states that the commission is satisfied that the funding arrangements are fair, equitable and consistent with the principles set out in clauses 156(5) and 158(2) and has considered the impacts and the desired effects of contribution charges.

Most importantly, the funding arrangement must also have been approved by 100 cent of private (that is, non-government) landowners within the contribution area. The minister's report on the funding arrangement must be furnished to the Environment, Resources and Development Committee and, subject to the committee's views, may be subject to disallowance by parliament via the usual mechanisms.

Specifically in relation to issues that were raised by the Leader of the Opposition, I am advised that there are no speaking notes available from minister Mullighan's speech to the UDIA in response to questions that he raised yesterday. However, I am advised that the minister's office has provided a summary of the contents. I am informed that minister Mullighan only touched on the concept set of value capture in its broader sense in terms of recognising that the provision of public transport does provide an uplift to values of nearby land and that governments broadly are looking at mechanisms to capture that uplift and help fund such infrastructure.

On reflection, it appears that minister Mullighan may have been talking generally about how councils work out rates based on the values of property. That is completely and entirely separate to the planning system and these proposed infrastructure schemes. This bill puts forward two possible approaches of various possibilities to value capture.

I would like to draw the attention of members to the fact that councils, if they wish, are already able to contribute by whatever means, including rates on land, towards any infrastructure in conjunction with private investors and state government if this meets the council's strategic goal for their local area. Clause 155(9) requires that, in proposing to impose a charge, the minister must consider any other schemes or funding arrangements already in place, including existing council rating arrangements.

In terms of some issues that were referred to in mining referrals, the Hon. Mark Parnell put questions as to how many mining applications are referred to the planning minister each year, or totally. I am advised that this affects around 10 to 15 applications each year, on average. Also, I am advised that schedule 20 of the current Development Act 2003 sets out geographical areas, for example the Flinders Ranges, for which referral is required.

As previously advised, there is no plan to depart from the existing approach in the implementation of this bill. I also note questions from the Leader of the Opposition in relation to mining and wish to clarify that there is a proposed review of these provisions in relation to mining, as opposed to heritage. Sorry, it is proposed to review the operation of heritage, as opposed to mining. I think I said mining and heritage. I think it should have been limited just to heritage and not mining. I think I had a comma in the wrong place. I want to make it clear on the record that future reviews apply to heritage and not mining. While the heritage provisions of the bill are anticipated to undergo a review separately, I am advised that there is no plan to review the provisions in the mining bill at present.

Finally, I wish to emphasise that the government has gained the support of the UDIA and the PCA for these infrastructure scheme provisions. These two peak bodies represent land developers who are used to negotiating infrastructure agreements as part of the normal development process and support the use of basic infrastructure schemes to remove, in their words, the historic gridlock associated with reaching such agreements.

The Leader of the Opposition raised the views of the HIA. While both the HIA and the MBA have critical roles in the delivery of housing, such organisations have not been traditionally focused on the division of land and have not traditionally been as intensively involved in the negotiation of infrastructure agreements. It is not envisaged that the schemes in part 13 will apply to small-scale infill developments or minor subdivision.

In most circumstances an organisation such as the HIA would be able to continue to negotiate individual agreements if they so desired. The intent of these schemes is to provide additional, transparent mechanisms for broadacre and major infill developers such as UDIA and PCA members and state and local governments to negotiate, particularly where a large number of landowners are involved. In reality, all the basic scheme does is to formalise current practices and provide greater certainty, transparency and equity.

In relation to the amendment itself and the discussion on that, clause 156(6)(b) enables landowners who are not within a designated growth area associated with a basic scheme to be subject to a contribution charge for the cost of infrastructure that would normally be the subject of a basic infrastructure scheme where they would derive a benefit from it and it is the subject of a general infrastructure scheme. A contribution area is defined in clause 156(4)(f) under a scheme initiated by the minister, which would specify the contribution area for a general infrastructure scheme.

Who determines the contribution area was, I think, raised: the minister, on the advice of the commission under section 156(3)(a), as has been amended. How is it used? Clause 156(6)(b) will allow landowners within a general infrastructure contribution area to be liable for basic infrastructure which would normally be funded through a basic infrastructure scheme but, in this case, is being funded through a general scheme. Subclause (6)(b) enables people in a contribution area to contribute towards the cost of basic infrastructure even if they are not in a designated growth area.

It has been useful in this debate to demonstrate, by way of example, the operation of these things. So let us say that an area within Onkaparinga council is being rezoned and new infrastructure is being provided to enable broadacre development. Adjoining landowners across the main road from the development are also keen to take advantage of the new infrastructure and the uplift likely to occur, but there is no easy mechanism for that under the current system. If you need to provide a new road to uplift a rezoned area, the nearby areas could also voluntarily agree to contribute if, in their view, they would also benefit from the new road by better access and all the things that a new road brings.

Alternatively, if there is potential for a new development to address stormwater drains in an existing neighbouring area that is not in a designated growth area, the landowners in the existing area may volunteer to be in the contribution area and contribute to a scheme in the new development that would address existing landowners' concerns. A contribution would likely be far cheaper than paying to raise the floor level of a house, in this example, and would likely present a better deal for the landowners concerned.

Without clause 156(6)(b), the developers of a new suburb would bear all the costs of infrastructure, but neighbouring beneficiaries could not choose to do so. This allows for the cost of infrastructure to be fairly spread across all those who benefit, as made clear in clause 156(6). It is worth noting that any such funding arrangement that proposes the imposition of a charge or contribution will, as with general infrastructure schemes, be subject to the requirement for 100 per cent agreement as well as parliamentary scrutiny and potential disallowance.

The Hon. D.W. RIDGWAY: I will start with that response. The minister talked there about landowners outside the area who would get a benefit and were subject to a general scheme. He said they could voluntarily make a contribution. I do not know what sort of fairy tale he is living in, but I cannot imagine that anyone is going to say, 'We've got a new freeway interchange and I don't have to pay for it, but I will offer a contribution.' In a general scheme don't we have to have 100 per cent agreement? On one hand you say that if they like they can make a contribution but that we also need 100 per cent agreement. That does not make sense to me.

The Hon. K.J. MAHER: In the example about stormwater, if you are not in that area but you are concerned about flooding, rather than raising the level of your house, or the floor level, you might get 100 per cent agreement from neighbouring landowners so that pipes can be bigger so that you can tap into that scheme, for example. It is voluntary and you are absolutely right: as part of the general scheme it would require 100 per cent agreement.

The Hon. D.W. RIDGWAY: Surely, if there was a new subdivision that was going to cause my property to be inundated because there was to be flooding, it would be the responsibility of government to make sure that I do not get put under water.

The Hon. K.J. MAHER: I am not referring to the consequence of the new development, but there are areas more prone to flooding than other areas in the state, so it would be something that was pre-existing that you want to mitigate against, and what you put up with regardless of the development that is happening across the road or away from you.

The Hon. D.W. RIDGWAY: My understanding of it is that the way it is worded a landowner derives a benefit, so you are saying that they would make a voluntary contribution, but they would only get a benefit if the pipe, in this example you give, is big enough to make sure that their property is not inundated. They are not going to be consulted on the infrastructure because they are outside of the scheme.

The Hon. K.J. MAHER: The minister can consult any body or person that they wish to consult. It might be that they could consult with others further afield to seek their views and, if there was 100 per cent agreement, contributions could be made.

The Hon. D.W. RIDGWAY: But what portion? I cannot understand this concept of 'on the one hand it is voluntary, on the other hand we need 100 per cent agreement'. Obviously, you would have to agree on a contribution value. I have had parliamentary counsel give me an explanation as well (not that I did not have faith in the minister's explanation), but the explanation was that often people start a new settlement, pay the majority of the infrastructure costs and people who move into the area later piggyback off the back of that investment.

They gave me a scenario: three farms alongside each other identified for subdivision and are made a designated growth area. Under subdivision A2, those farmers contribute to the initial development of a road. Some years later the development expands into a township, and a bunch of general infrastructure is built, with new subdivision 3 contribution area. That expansion is not part of the original designated growth area, but it may be appropriate for new developers to contribute to the basic infrastructure under that initial scheme, that is, they do not live in the original designated area but are part of an associated scheme.

I still cannot work out when you say that they have to pay. You are saying that on one hand it can be voluntary. I do not know what world you are living in, but I do not know anybody who will make a contribution to some infrastructure if they do not have to, because it will not be 50¢ but will be tens of thousands of dollars. I just do not understand your concept of voluntary.

The Hon. K.J. MAHER: I take the point that, if you have very large numbers, the more people involved the more difficult it will be to come to an agreement. Let us say that on one side of the road there is a basic scheme, with stormwater going in, and on the other side of the road there is one landowner who potentially could benefit greatly if they were part of that scheme. That one landowner agrees, so there is 100 per cent agreement to make a voluntary contribution to allow them to be part of that scheme. That is one example of where this could work.

It is true that the more people it could affect the more difficult it will be to get that 100 per cent agreement that all the people will voluntarily contribute. Certainly, in the case of one landowner who wishes to take advantage of the basic infrastructure going in across the road, it would be 100 per cent agreement with that one landowner who would seek to derive the benefit by voluntarily becoming part of that scheme.

The Hon. M.C. PARNELL: I appreciate that we are ranging very widely over these infrastructure schemes. I think this means that when we get to individual clauses there may be fewer questions because we have covered most of them now, certainly in my case. I want to explore further what the minister just said in relation to the difficulty of getting 100 per cent of people to agree.

If we fast-forward to the government's amendment No. 85 which effectively is the one that replaces what was going to be a 75 per cent rule, I think the original bill talked about a prescribed percentage that was going to be put in the regs and the talk was around 75 per cent. That is now going to be replaced with a provision that says that all of the persons who own land within the relevant contribution area have to agree, so this is a 100 per cent rule we are talking about.

I accept what the minister is saying, that the larger the pool of people the more difficult it is going to be to get agreement, but something that struck me yesterday—and it is not an issue I have raised with the minister's advisers or anyone because I have only just thought about it—is that most of us have mortgages on our properties. Part of the deal with a mortgage is that you agree with your bank, you sign a sort of contract that says, 'I won't further encumber this land.' That is part of the deal because the bank wants to make sure that it is first in line and it does not want any other encumbrances.

From the answers the minister was giving us yesterday, there will be the possibility for a certificate of title to reflect that some sort of money might be owed in the future, perhaps when a person lodges a subdivision application or something, so it seems to me that there is possibly a risk that a person will be breaching their contract with their bank if they agree to an infrastructure scheme, because they are effectively agreeing to a further charge on their land.

It may be that there is a protection built in here somewhere that I have not seen, but I would not mind the minister's response about whether that is another potential difficulty where, even if only a small number of people have to agree, if they all have mortgages they might feel that they are legally obliged not to agree.

The Hon. K.J. MAHER: I thank the Hon. Mark Parnell for the question that he just asked. We are dealing with general charges, not basic charges, in this clause, but I assume it is a question applying to basic charges particularly. I think the answer to that is in new clause 163D—Enforcement of charge, which we are coming to, and particularly clause 163D(6)(b). This subclause relates to enforcement of charges and money required by a minister in relation to the sale of land under this clause where there is a charge, firstly, in paying the costs of the sale of the land but, secondly, in discharging any liabilities secured by instrument registered before the charge was created. So, yes, the act does contemplate the exact scenario I think the honourable member is referring to.

The Hon. D.W. RIDGWAY: When we recommenced this morning, the minister made statements around, I think, the HIA and the MBA in relation to individual agreements where a developer has a subdivision or where there are two developers. My understanding was that small subdivisions do not actually have to enter into any scheme: they might just be able to agree in the same fashion as agreements are reached now. Is it accurate that they are not compelled to enter into a scheme?

The Hon. K.J. MAHER: For the record, my advice is, yes, that is accurate. In the examples you gave, those small subdivisions are not compelled to have a scheme.

The Hon. D.W. RIDGWAY: I want the minister to explain this again, because he and his adviser have had time to think about it. Yesterday, the minister indicated that, for the basic infrastructure scheme, there could be two scenarios—an up-front charge per hectare, and I will pick a figure of $10,000 per hectare, or an annual payment for an allotment for a period of time paid, I assume, by either the person who holds the allotment or the home owner.

Can the minister reiterate that those two options are still on the table? Certainly the information we were given as an opposition was that the only option that was being considered by the UDIA and their experts was the up-front per hectare charge, yet yesterday you said there are the two possibilities. I just want to make sure we are clear on exactly what is being proposed.

The Hon. K.J. MAHER: I am advised that, for the basic scheme, a once-off charge is calculated but, with the scheme coordinator in consultation with the landowners, that once-off charge can be paid over a period of time as per any agreement that that consultation comes up with. You are right that it is a once-off charge, but the payment of that once-off charge can be made over a period of time, if that is the desired outcome from the landowners in consultation with the scheme coordinator.

The Hon. D.W. RIDGWAY: Can the minister guarantee that, in a subdivision, a new home owner will not ever be required to pay an annual charge for the infrastructure for the basic scheme?

The Hon. K.J. MAHER: As I said, it would depend on the terms of the scheme. It is a once-off charge, but the scheme coordinator, in consultation with the landowners, can decide if that will be paid off over a period of time.

To add to that, for any such purchaser of a house where the scheme has been set up—so there was that once-off charge—but it has been in consultation with the landowners and the scheme coordinator has determined that that once-off charge can be paid over a period of time, it would be registered against the property so that anyone looking to buy a property would not just buy a property and then be surprised that there are payments to go on that land. It would be registered against the property on the certificate of title.

The Hon. D.W. RIDGWAY: It is interesting because we had an extensive meeting with the UDIA, and their interpretation was that it would be a per hectare charge paid for by the developer. Basically, it would discount the value paid to the farmer and there would not be any charge on an annual basis for any home owner. The key of the whole bill is to try to make sure housing affordability is not impacted on, and in other states we have had developer levies and house blocks have gone up $40,000, $50,000 or $60,000 an allotment extra to pay for infrastructure.

I am concerned that we voted on some amendments last night—the Hon. Mark Parnell, the Hon. Kelly Vincent, the Hon. Tammy Franks and the Hon. John Darley—and yet we have no clarity about what we actually voted on. I want to make it 100 per cent clear that no young couple buying a house will be saddled with an annual payment for infrastructure when we have been told by the UDIA that it was going to come off the landowner's value and not be charged to young families trying to get a start in this state.

The Hon. K.J. MAHER: I do not think that is accurate at all. I think it was very clear yesterday, and that is why you are raising it now in relation to comments made yesterday that it could be paid off over time. I think it is a falsehood to suggest that people were not aware of that when we were voting yesterday. You were aware of it because you have brought it up in relation to the comments yesterday, so I do not think it is at all a fair comment to suggest that others voting on this bill were not aware that that could be paid off over time. That is a misrepresentation of what was said yesterday and the basis on what other people voted on. In terms of a new person buying into a piece of property, it is the case that they will not buy a property without knowing that there is that sort of charge against it. They will know.

The Hon. M.C. PARNELL: The information you have before you buy property comes from a number of sources; one is that you have searched the title and, if there is anything that is on the title, you will find that. But also there is an obligation on real estate agents to give you the Form 1 (it used to be called the vendor's statement), which actually lists things like whether your house is subject to being compulsorily acquired for a freeway expansion or whether it is a contaminated site. There is a whole list of things.

I would have expected that one of the consequential amendments that would probably flow from the passage of this might be amendments to the land and business conveyancing regulations—the Hon. John Darley would know. There may well need to be a specific inclusion of an extra item of information that has to be disclosed to potential purchasers. I would be surprised if it is not already caught under one of the existing obligations to disclose. I do not think there is a doubt that anyone could buy property and not know that these charges were potentially payable.

The Hon. D.W. RIDGWAY: I will just respond to the Hon. Mark Parnell. I am fully aware that landowners will always know what charges they will be expecting to pay. The point I am making is that all the information that was given to the opposition in the last few weeks of negotiation with industry and government was that there would be no ongoing charges on new home owners and that the cost of the infrastructure would be borne by discounting the price for the farmer so he or she got less and the developer would make that contribution.

What I am seeing here now is that if I am a smart developer and this legislation goes through I will get a scheme up and then I will say, 'Actually, I only want to pay it over time, maybe 40 years,' and then a young mum and dad who want to try to get on are going to have to pay for the infrastructure for the next 40 years out of their pocket, when we were told it would be done in a lump sum at the beginning. I think we need some real clarity around that from our point of view because otherwise, with the negotiations we have had from industry, either the government has been pulling the wool over industry's eyes or industry has been pulling it over our eyes.

The Hon. K.J. MAHER: I will not reiterate. I understand your point. People will not go into this with their eyes closed.

The Hon. D.W. Ridgway: It's not about not knowing; it's who pays.

The Hon. K.J. MAHER: People already pay for this effectively in house and land packages. It is much more transparent if it is registered on a government certificate of title. I would expect that in a lot, probably most, cases the developer may choose to pay for it up-front and factor it into the sale price of land. Of course, they will have to sell for a discount if there is a charge on there.

I think in a lot of cases it is unlikely that it will be asked for to be passed on. A developer will want to have the best possible chance of selling for as much as they can. They may choose to negotiate with the scheme coordinator for it to be paid off over time, but this will be known to the market before anyone buys at any stage.

The Hon. D.W. RIDGWAY: I will not prolong it because clearly either I do not understand or the minister does not understand. I think I will go back to industry, and I will have that briefing again and get some clear guidance from them as to whether they think it is an up-front, one-off charge per hectare to the farmer, or whether it is something they can drip feed out to Mr and Mrs Citizen who are trying to buy a house. When we recommit the bill, probably in the next sitting week, or whenever it is, I will explore that in much more detail.

Amendment carried.

The Hon. K.J. MAHER: I move:

Amendment No 59 [Emp–4]—

Page 135, after line 27—Insert:

(8a) In addition, the Minister must, as soon as is reasonably practicable after acting under this section on the advice of the Commission, publish the advice on the SA planning portal subject to any qualifications or redactions that apply under section 53 or under a practice direction published by the Commission for the purposes of this provision.

The effect of this amendment is that the minister may only initiate an infrastructure scheme on the advice of the commission. This amendment is consistent with good governance by ensuring that any advice provided to the minister by the commission will be shared transparently with the public and open to scrutiny by way of the planning website. The advice published on the portal will only exclude matters which are confidential, private, commercially valuable or sensitive and relate to safety or security or are prescribed by regulations.

Amendment carried.

The Hon. K.J. MAHER: I move:

Amendment No 60 [Emp–4]—

Page 135, after line 29—Insert:

Subdivision 1A—Scheme coordinator

Amendment carried; clause as amended passed.

Clause 157.

The Hon. K.J. MAHER: I move:

Amendment No 61 [Emp–4]—

Page 135, line 31—Delete 'section 156' and insert 'section 155B or 156'

This is a consequential amendment.

Amendment carried.

The Hon. K.J. MAHER: I move:

Amendment No 62 [Emp–4]—

Page 135, line 32—Delete 'a person' and substitute 'a suitably qualified person'

This amendment has resulted from discussions with industry. It requires that a suitably qualified person be appointed as the scheme coordinator, given the specialist skills which the appointee must possess, the high level at which they will be expected to function and the important outcomes they will be responsible for delivering. This amendment also reflects the importance of this role to the government and to industry.

Amendment carried.

The Hon. K.J. MAHER: I move:

Amendment No 63 [Emp–4]—

Page 136, after line 4—Insert:

(5) The Chief Executive must, in exercising a power under this section, act with the concurrence of the Commission.

This amendment has been drafted in response to suggestions which arose from consultations on the bill. This clause will ensure that the chief executive has the benefit of the commission's advice before appointing or replacing a scheme coordinator. If the scheme coordinator is a committee or its composition reflects the nature and complexity of the project, then it could comprise, for example, representatives of council, developers, technical experts, government officials, such as traffic engineers or civil engineers.

Amendment carried; clause as amended passed.

Clause 158.

The Hon. K.J. MAHER: I move:

Amendment No 64 [Emp–4]—

Page 136, after line 15—Insert:

(1a) In addition to the other provisions of this Division, in developing a funding arrangement that includes a proposal for the imposition of a charge made under Subdivision 2A, the scheme coordinator should seek to act consistently with the following principles:

(a) the charge should be limited to recovering the reasonable capital costs of the basic infrastructure based only on infrastructure that is not excessive and that is not produced or delivered at a cost or price that is unreasonable in the circumstances;

(b) the charge should not have an excessively adverse impact on—

(i) the development of a designated growth area; or

(ii) housing or living affordability within a designated growth area; or

(iii) employment, investment or economic viability associated with a designated growth area; and

(c) the charge should be based on a scheme under which a payment or payments under the charge become payable (or commence to become payable) on a specified event or events; and

(d) funding under the scheme should recognise the need to provide value for money in connection with funding arrangements including, as appropriate, through contestable provision of basic infrastructure; and

(e) rebates for charges should be available in appropriate circumstances; and

(f) exemptions from the imposition of a charge should be considered depending on the circumstances of the case.

(1b) In connection with subsection (1a)(c), an event or events that trigger the requirement to make, or to begin to make, a payment under a charge should be related to when development is undertaken being (for example)—

(a) the depositing of a plan for the division of land under Part 19AB of the Real Property Act 1886; or

(b) undertaking of approved development.

(1c) In addition to subsection (1a)(f), exemptions from the imposition of a charge under Subdivision 2A will apply in any circumstances prescribed by the regulations.

The Hon. D.W. RIDGWAY: I have some questions in relation to clause 158(2)(b) but, more importantly, paragraph (c). I note that paragraph (b) talks about:

…the contributions should not have an excessive impact on—

(i) housing or living affordability within a contribution area; or

(ii) the economic viability of a contribution area;

Just to refresh me (and I may be looking for something that is not there), if you have a farm that you want to subdivide, you have the approval to subdivide but you have to agree on a scheme to make that all happen, I assume. You have to agree on a scheme for the subdivision ever to be able to happen. I am thinking of subclause (2)(b)(ii), the economic viability of the contribution or the housing affordability. Could you get subdivision approval but then find that the scheme is so expensive that nothing can ever happen or it is not viable to go ahead with it?

The Hon. K.J. MAHER: My advice is that under the current system those individual agreements that the industry refers to as 'gridlock' need to be negotiated before the rezoning happens in any event. This makes it a much easier and more transparent way to do it, with a scheme coordinator.

The Hon. D.W. RIDGWAY: I just have a couple of quick questions on paragraph (c). It provides:

(c) funding under the scheme—

(i) may, as appropriate—

(A) seek to attribute costs over the lifetime of the relevant infrastructure (or over some other appropriate period);

Does that mean we are now looking at funding not only the construction of some infrastructure but the maintenance of that bit of infrastructure over its lifetime, whether it is a road, a stormwater drain or a pipeline? I am not sure that that was ever the intent of what the opposition explained. It was for the provision of infrastructure, not necessarily the maintenance over the lifetime of that bit of infrastructure.

The Hon. K.J. MAHER: I am advised that theoretically that would be possible, but theoretically it is also possible under the current scheme of the individual agreements that the industry describes as 'gridlock'. Individual agreements that currently operate before this passes could take into account the costs of maintenance over the life of whatever the infrastructure is. That could happen now. Theoretically it is possible; however, it would be tempered by a clause 158(1a)(b)(ii) that the charge should not have an excessively adverse impact on housing or living affordability within a designated growth area. So, theoretically it could be possible but that does not change the current practice where theoretically it could be possible under the gridlock individual agreements.

The Hon. D.W. RIDGWAY: It is interesting that we are seeking to attribute costs over the lifetime of the relevant infrastructure. We are talking about lifetime, whereas my understanding of the agreements that are in place now, whether they are Swiss cheese or complicated to negotiate, is that you agree on the infrastructure—it is $50 million, 10 developers pay $5 million each, end of story, the infrastructure is built. There is no ongoing 'It's $50 million to build it but, by the way, we need $500,000 a year for the next 100 years to maintain the roads and street lights for the interchange.'

I am concerned that this clause will allow the government to again—and I come back to the first home owners—buy a property that has a charge over it for the provision of infrastructure and say, 'And by the way, you can pay for the maintenance of it forever and a day because it says "over the lifetime".' What is the lifetime of a road? I am just concerned. You say that it is theoretically possible but I am nervous about governments, because if it is theoretically possible then it will probably happen.

The Hon. K.J. MAHER: As I think the honourable member acknowledges, it is possible now to have those costs over a scheme. I repeat that the thing that must be taken into consideration is the housing affordability and also that in clause 158(2)(a) the contributions should be limited to recovering the reasonable capital costs of the scheme, based only on infrastructure that is not excessive and not produced or delivered at a cost price that is unreasonable in the circumstances.

It should also be pointed out, again, that anyone going into the scheme, and particularly people subsequently buying, are not going in blind. The scheme provides for a charge against the certificate of title—and we have talked about this before with the Hon. Mark Parnell—and people will know what they are going into; they not going in blind.

The Hon. D.W. RIDGWAY: The costs over the lifetime of the relevant infrastructure—I will keep pursuing this—the cost to maintain a road today (let us say it is a road), is significantly different to what the cost will be in 50 years' time, when the road needs maintenance. So how is that charge likely to be charged to Mr and Mrs Citizen in the subdivision? What is determined to be 'the lifetime'? I was just chatting with my colleague the Hon. Mark Parnell: if the government has a scheme to maintain the infrastructure, then those people will never get a new road, they will always get the old one being maintained because then it can be continually charged back to the landowners.

It strikes at the issue of this housing affordability that some of the industry people have been really concerned about. This appears to provide a mechanism to levy home owners (because that is where it will eventually be), yet again, over a long period of time. I also assume it will have some level of indexation because it is about costs over the lifetime of the relevant infrastructure. I am just not sure how you can say that this is not going to impact on housing affordability.

The Hon. K.J. MAHER: I think this will be particularly helpful: clause 158(2), the one we are talking about, is in relation to a general scheme, and a general scheme requires 100 per cent agreement. So it is if everyone agrees to that, if there is 100 per cent agreement of those involved. If someone thinks it is completely unreasonable to have that one-off, up-front charge that can be paid off over a number of years, they will not agree to it if they think it is completely unreasonable. Clause 158(2) refers to the general scheme.

The Hon. D.W. RIDGWAY: That is interesting. Let us use a tramline down a road as an example. This clause will allow the government to recover the costs of maintenance, I assume, over the lifetime of a tramline—50, 100, 200 years.

The Hon. K.J. MAHER: If every single person, that is, 100 per cent of people, agree to doing that, and make the rational economic decision that this will provide sufficient uplift in the price of their home to justify doing that, then, yes, that is possible.

The Hon. D.W. RIDGWAY: Subclause (2)(a) states:

(a) the contributions should be limited to recovering the reasonable capital costs of the scheme based only on infrastructure that is not excessive and that is not produced or delivered at a cost or price that is unreasonable in the circumstances;

Earlier in subclause (2) you say that it should be limited to just covering the reasonable capital costs, and then you are saying that you can seek to contribute costs over the lifetime of the relevant infrastructure. Are you looking to apportion the capital costs over the lifetime of the infrastructure? Is that what you are meaning by this, or are you saying, 'We are going to seek the capital cost and also we're going to have a charge over the lifetime of the infrastructure'?

The Hon. K.J. MAHER: I think it will be reasonable costs over the lifetime of that infrastructure, if and only if 100 per cent of the people affected agree to it.

The Hon. M.C. PARNELL: To explore this a little bit further, if worst comes to worst and all of a sudden people seem to be lumbered with unreasonable, unfair charges (I guess this is what the Hon. David Ridgway is concerned about), can I just clarify that the two avenues for redress seem to me that, first, you have ESCOSA built in here—presumably you could go and talk to ESCOSA and say, 'Look, this is outrageous, we're paying too much' and, secondly, the other avenue for redress, which I am not so fond of for reasons that I will not elaborate on again, is parliamentary scrutiny—the parliament I think can chuck out one of these schemes as well. Am I correct that they are the two avenues of redress: going to ESCOSA or going to parliament at the start and getting parliament to try to agree that the scheme is unfair?

The Hon. K.J. MAHER: I can confirm that that is correct. The scheme contemplated under this clause, first, can have ESCOSA look at it, but then is subject to the provisions of parliament, as we have discussed before. So, yes, the honourable member and former planning lawyer is absolutely correct.

The Hon. D.W. RIDGWAY: One final question on this: subclause (2)(c) states:

(c) funding under the scheme—

(i) may, as appropriate—

(B) be based on contributions that become payable on a specified event or events;

Could the minister give an example of what is a specified event? Is it an earthquake or a flood? What exactly is he talking about there?

The Hon. K.J. MAHER: Specified events are laid out in clause 158(3) and examples are provided, for example, the division of land, a rezoning or approval or undertaking of a development—they are defined in the act as specified events.

Amendment carried.

Progress reported; committee to sit again.

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