Home Property Australia A case for more scrutiny of section 94 plans

A case for more scrutiny of section 94 plans

  • October 27, 2016

A case for more scrutiny of section 94 plans?

IPART recently released their assessment of Wollongong City Council’s development contributions plan for West Dapto, finding that costs could be reduced by at least 30% by removing projects that are not in the essential works list, did not demonstrate nexus, or where cost estimates should be updated. It is the first contributions plan the regulatory body has assessed outside the Sydney North West Growth Centre, and raises the question on whether there should be more scrutiny of the costs and projects included in section 94 plans.

IPART’s role in reviewing contribution plans only occurs where the total cost of a contribution plan exceeds the NSW Government cap of $30,000 per lot in greenfield areas, and $20,000 per lot in infill areas, whereby councils would apply to the NSW Government to fund the gap through the Local Infrastructure Growth Scheme.

The West Dapto major greenfield release area is projected to have around 56,0 residents in 19,0 dwellings and up to 8,0 workers by the time the entire area is developed in 2070. It is a new release area beset by fragmented land ownership and flood risks, which requires 66 bridges over creek lines, railway corridors and major roads. One particular road upgrade, the Princess Highway / Fowlers Road upgrade, is estimated to cost $93.5 million.

WCC estimated the total contributions plan would cost $1.23 billion, which translates to $68,734 per lot.

IPART found that most of the infrastructure proposed in the plan is reasonable in terms of need and cost, but has recommended to the Planning Minister that a number of projects be removed which either where not allowed under the essential works list requirement, did not demonstrate nexus with the development, or where costs were inflated, double counted or required updating. The IPART recommendations if adopted in full would save $291.9 million, and reduce contributions for residential lots by around 30%.

Given the quantum of savings identified by IPART, it begs the question of how many other section 94 plans across the state have gold-plated, inappropriate or over-priced infrastructure projects that are driving up development costs and ultimately contributing to our housing affordability crises.