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PLANNING AND ENVIRONMENT AMENDMENT (GROWTH AREAS INFRASTRUCTURE CONTRIBUTION) BILL 2011

Planning and Environment Amendment
    (Growth Areas Infrastructure
       Contributions) Bill 2011

                         Introduction Print


               EXPLANATORY MEMORANDUM


                                  General
Part 9B of the Planning and Environment Act 1987 establishes a system for
levying Growth Areas Infrastructure Contributions (GAIC) on land in
Melbourne's growth areas. This Part is read together with the Taxation
Administration Act 1997.
The Bill amends Part 9B of the Planning and Environment Act 1987 to
establish a system under which persons who must pay GAIC may be allowed
to meet GAIC liabilities by "in kind" contributions--provision of land or
carrying out works--instead of paying in cash. To this end, it allows the
Minister to enter into work-in-kind agreements. It also allows a person liable
to pay GAIC as a result of a dutiable transaction relating to land to defer the
whole of the required payment in specified cases.
The Bill also makes technical changes to correct minor errors and to improve
the operation of the GAIC system.
The Bill includes consequential minor changes to the Land Acquisition and
Compensation Act 1986 and the Sale of Land Act 1962.




571007                                 1      BILL LA INTRODUCTION 31/5/2010

 


 

Clause Notes Clause 1 sets out the purposes of the Bill--to amend the Planning and Environment Act 1987 (the Principal Act) and to make consequential amendments to the Land Acquisition and Compensation Act 1986 and Sale of Land Act 1962 to-- provide that a person liable to pay a GAIC may enter into an agreement to provide land or works to meet that liability; provide that a person liable to pay a GAIC will be able to defer the payment of the whole of the contribution rather than only 70% of it; and make other consequential and miscellaneous changes to the operation of the GAIC scheme. Clause 2 provides for the commencement of the Bill on the day after the day on which it receives the Royal Assent, except that clause 6, a provision to exclude certain small lots having an area of 0·41 hectare or less from the GAIC scheme, is to be taken to have come into operation on 1 July 2010, that being the day on which the whole GAIC scheme originally came into operation. It was always intended that small lots existing or authorised at the commencement of the GAIC scheme or created subsequently by an excluded subdivision would be excluded from the need to pay GAIC, and GAIC has not been collected in the case of events on these small lots, but the existing legislation leaves some gaps in the definition of the small lots exempt from GAIC. Retrospective commencement will ensure that owners and developers of these small lots will not be disadvantaged. Clause 3 specifies the Planning and Environment Act 1987 as the Principal Act for the Bill. Clause 4 amends section 201R of the Principal Act to define additional terms to be used in Part 9B of that Act as amended. Clause 5 substitutes for section 201RC(6) of the Principal Act 2 new subsections to clarify circumstances in which land may cease to be in a contribution area and thus cease to be subject to GAIC. Clause 6 substitutes for section 201SA(d)(ii) of the Principal Act new provisions to clarify the original intention that lots having an area of 0·41 hectare or less, existing before the introduction of the 2

 


 

GAIC scheme or created in accordance with a permit in force immediately before the introduction of the GAIC scheme, or by a subdivision which is an excluded subdivision for the purpose of the GAIC scheme, are not subject to GAIC. This clause is to operate retrospectively from 1 July 2010. Clause 7 amends a note at the end of section 201SF(5) of the Principal Act to clarify a cross-reference by referring to the specific provisions which are relevant. Clause 8 amends section 201SL(2) of the Principal Act to clarify it is subject to sections 201SMAA, 201SP and 201SS. This clause also inserts new section 201SL(5) of the Principal Act to provide to the effect that a person who has applied to the Minister for reduction or exemption from paying GAIC in exceptional circumstances (201TE of the Principal Act as substituted by clause 21) or under section 201TF, or who has applied to the Growth Areas Infrastructure Contribution Hardship Relief Board for relief from liability to pay GAIC (section 201TH or 201TI of the Principal Act), does not have to pay that GAIC (or any reduced GAIC) until the later of the date upon which the payment was originally due or 14 days after being notified of the decision on the application. Clause 9 inserts a new Subdivision 2A--Work-in-kind agreements--into Division 2 of Part 9B of the Principal Act. New section 201SLB establishes the basic power for the Minister to enter into a work-in-kind (WIK) agreement with a person for the provision by that person of land or works or a combination of land and works to meet the whole or part of that person's GAIC liability. An agreement may include other parties. The land or works to be contributed under the agreement must be situated in a growth area and be of a type which could be funded in accordance with section 201VA or 201VB of the Principal Act under the Growth Areas funds established by section 201V of the Principal Act. Before entering into an agreement, the Minister must consult with any other Minister who has an interest in the subject matter of the agreement and, if the value exceeds $2 million, obtain the approval of the Treasurer. New section 201SLC(1) sets out matters which must be provided for in a WIK agreement. This is not restrictive to the matters which may be provided for. New section 201SLC(2) provides that a WIK agreement may contain provisions setting out 3

 


 

circumstances in which the agreement is ended wholly or as to any part of the land affected by the agreement. New section 201SLD provides that an agreement may contain a term that restricts dealings with certain land. The land may be land that is to be transferred under the agreement, land (other than Crown land) on which works are to be carried out under the agreement or the land in respect of which the GAIC is imposed. This is necessary to give effect to the principle that the person who entered into an agreement is responsible for the specific delivery of the works and services provided for under the agreement, although the Minister may agree to responsibilities being transferred. Specified dealings are excluded by subsection (2). The following sections back up the principle. New section 201SLE requires that a copy of a WIK agreement must be given to the Commissioner of State Revenue and the Growth Areas Authority. New section 201SLF provides for amendments to be made to WIK agreements by the Minister. New section 201SLG provides that the Minister may end a WIK agreement with the agreement of all parties. New section 201SLH requires the Minister to apply to the Registrar of Titles to record a WIK agreement on any folios of the Register relating to any land affected by the WIK agreement. On receiving an application, the Registrar may make recordings in the Register. On the making of a recording the burden of any covenant in the agreement runs with the affected land and may be enforced by the Minister against any person deriving title from the person who entered into the agreement. The recording will ensure that any person considering purchasing affected land is aware of the WIK agreement and that they will be bound by it. Note that clause 29 amends section 32 of the Sale of Land Act 1962 to include reference to WIK agreements. On the ending or amending of an agreement the Minister must apply to the Registrar of Titles to remove the recording and if the agreement is amended record the amended agreement on folios of affected land. The Registrar of Titles may remove (in whole or in part) or make recordings as appropriate. 4

 


 

New section 201SLI provides statutory support for the principle that WIK agreements may restrict dealings with land subject to the limited exceptions set out. New section 201SLJ provides that entering into a WIK agreement does not discharge a GAIC liability in itself. The note to the section points out that it is not until the person performs their obligations under the agreement that this can be taken as a payment towards the GAIC owed. New section 201SLK provides that a person who has performed the requirements of a WIK agreement or any stage of an agreement or partly performed the agreement must notify the Growth Areas Authority of that performance. New section 201SLL requires the Growth Areas Authority to determine whether the agreement or stage has been performed by the due date, or if partially performed, the value of the land or works provided, and to notify the Commissioner of State Revenue of the determination. New section 201SLM provides that performance of a WIK agreement is taken to be payment of the stated amount of GAIC. A person is taken to have paid an amount of GAIC at the time the Commissioner of State Revenue receives a notice from the Growth Areas Authority of the performance of the WIK agreement or value of works partly performed. New section 201SLN sets out the consequences of a person's failing to perform the whole or a stage of a WIK agreement. If the GAIC contribution has been deferred or is the subject of a staged payment, the whole of the contribution becomes immediately payable as if it had never been deferred or the staged payment approval had never been given. The note explains how the tax default provisions of the Taxation Administration Act 1997 will work if there is non-performance of the agreement. Despite the tax default, a person remains liable under the WIK agreement to perform the obligations under the agreement. Clause 10 amends section 201SM of the Principal Act by substituting a new subsection (1) to the effect that a person who could currently defer up to 70% of a GAIC will be able to defer up to 100% of that GAIC. It also amends subsection (2) to clarify that deferred payment arrangements for subsequent transferees of GAIC land apply to the whole of the contribution and amends subsection (5) to correct an incorrect cross-reference. 5

 


 

Clause 11 amends section 201SMAA of the Principal Act which relates to the liability to pay deferred GAIC in the case of subsequent dutiable transactions of land subject to a GAIC and the timing of payments. Subsection (1) is amended to clarify that the section applies when a subsequent dutiable transaction takes place in relation to whole or part of the land. Subclause (2) substitutes section 201SMAA(6) of the Principal Act to cover situations where land is the subject of a subsequent dutiable transaction and is also the subject of an application to the Growth Areas Infrastructure Contribution Hardship Relief Board or the Minister for relief in special circumstances--in these circumstances the date for payment of GAIC is deferred pending determination of the application. In other cases, the payment is due within 3 months after the liability arises. These times for payment are subject to any deferred payment option or staged payment approvals; in these cases see section 201SP or 201SS (as the case requires) for the due date of payment of GAIC. The note to the new section 201SMAA(6) draws attention to the possibility that the Growth Areas Infrastructure Contribution Hardship Relief Board may allow additional time for payment of GAIC. Subclause (3) inserts a note to subsection (3) to make it clear that a reference to deferred GAIC includes the GAIC as indexed and any interest payable. Clause 12 amends section 201SMA of the Principal Act which relates to indexation and interest applying to deferred GAIC. Subclause (1) inserts additional cross-references to payments made under section 201SMAA(6) (as substituted in accordance with clause 11). Subclause (2) substitutes the interpretative provision of section 201SMA(8) so that a reference in Part 9B to an amount of GAIC owing includes the amount as indexed and any interest payable. This enables various references in Part 9B to the inclusion of interest to be deleted from Part 9B. Clause 13 amends section 201SO(1) of the Principal Act to refer to calculation of the "amount" of interest calculated rather than the "payment" of that interest. Clause 14 amends section 201SP of the Principal Act consequentially due to other changes made by the Bill to correct a cross-reference and substitute an example to better explain the section. 6

 


 

Subclause (1) amends section 201SP(1) and (2) to delete references to interest charged under Subdivision 3 relating to deferred GAIC. This is consequential on the change made by clause 12 to section 201SMA(8). Subclause (2) amends section 201SP(1)(a) to exclude a subdivision of land made solely to allow land to be transferred under a WIK agreement from triggering payment of deferred GAIC. Subclause (3) amends section 201SP(2) to insert a cross- reference to clarify that the timing requirements of section 201SP for paying deferred GAIC do not apply if there is approval for staged payment under Subdivision 4. Subclause (4) substitutes the example at the foot of section 201SP(2). Clause 15 amends section 201SPA of the Principal Act to remove a reference to interest charged under Subdivision 3 relating to deferred GAIC. This is consequential on the change made by clause 12. Clause 16 amends section 201SQ of the Principal Act to remove reference to deferred GAIC including interest payable under Subdivision 3. This is consequential on the change made by clause 12. Clause 17 repeals section 201SR(8) of the Principal Act which refers to a deferred GAIC including interest payable under Subdivision 3. This is consequential on the change made by clause 12. Clause 18 amends section 201SZF of the Principal Act, which sets out the matters to be included in a GAIC certificate. It inserts into section 201ZF(1)(b) a requirement that a certificate refer to a staged payment approval under Subdivision 4 and deletes reference to interest payable consequential on the change made by clause 12. It also inserts a provision to require a GAIC certificate to state whether a WIK agreement has been entered into if GAIC has been imposed. Clause 19 amends section 201SZG of the Principal Act, which provides for the Commissioner of State Revenue to give a notice to the Registrar of Titles notifying that a transfer or subdivision of land in the contribution area can be registered. Section 201SZG refers to section 201UG, which provides that the Registrar of Titles is not to accept a transfer of land subject to GAIC unless it is 7

 


 

accompanied by a notice issued by the Commissioner under section 201SZG or an application made by the Growth Areas Authority under section 201UC. Subclauses (1) and (2) amend subsections 201SZG(1)(d) and (e) to clarify the types of transfer or subdivision of land which require the Commissioner to issue a certificate of deferral (where appropriate) or a certificate of staged payment approval. Subclause (3) inserts a new note to section 201SZG(1)(e) explaining the ability of a subsequent owner who is liable to pay GAIC to apply to the Commissioner for the issue of a certificate staged payment approval. Subclause (4) inserts in section 201SZG(2) a qualification that the requirement for the Commissioner to give a notice allowing an instrument of transfer to be lodged or that requirements under the Subdivision Act 1988 have been met is subject to the new provision inserted by subclause (5). Subclause (5) inserts a new subsection (2A) in section 201SZG of the Principal Act to the effect that if there is a WIK agreement relating to the GAIC, the Commissioner must not give the notice under section 201SZG(2) unless the Minister has advised the Commissioner that the notice may be given. This is to enable the Minister to control transfers or subdivisions of land which may prejudice delivery of WIK agreements. The accompanying note explains the circumstances in which a transfer or subdivision of land affected by a WIK agreement will require the consent of the Minister before it can be registered. Clause 20 inserts into section 201SZJ of the Principal Act a new subsection (2), being an exception from the requirement that GAIC money be paid into or transferred to the Consolidated Fund, as land and works contributed under a WIK agreement can not be paid into the Consolidated Fund. Administrative arrangements will be implemented to account for the value of land or work taken to be GAIC paid under section 201SLM. Clause 21 substitutes a new section 201TE of the Principal Act, which provides for the Governor in Council to grant reduction of or exemption from GAIC in exceptional circumstances. The existing section 201TE provides a procedure which is unusual in that it requires an application to be made directly to the Governor in Council. The Governor in Council may on the 8

 


 

recommendation of the Minister grant a reduction of or exemption from liability. The substituted provision requires a person to apply to the Minister who may recommend that the Governor in Council grant a reduction or exemption. If the application is not granted the Minister must advise the applicant. Clause 22 inserts in section 201TG of the Principal Act a new subsection (2) to require the Minister to advise an applicant for reduction or exemption of GAIC in accordance with section 201TE of that application being refused. If the request is refused or there is otherwise still a GAIC debt, this will set the date by which the GAIC is to be paid or by which an election to defer GAIC payment may be made (see proposed new section 201SL(5) inserted by clause 8). Consequentially, the heading to the section is substituted to reflect the new requirement. Clause 23 inserts into section 201V of the Principal Act a provision to the effect that the requirement for 50% of GAIC money received into the Consolidated Fund to be allocated to each of the Growth Areas Public Transport Fund and the Building New Communities Fund does not apply to money taken to be paid to the Commissioner under section 201SLM. The clause also inserts a new section 201V(4) to appropriate money to the two Funds established under section 201V(1), rather than rely on the existing implied appropriation. Clause 24 amends section 201VB(1) of the Principal Act (application of the Building New Communities Fund) to clarify the intention that the matters to be funded are those located in growth areas. This makes the requirement consistent with the requirements of section 201VA for allocation of the Growth Areas Public Transport Fund. Clause 25 inserts into section 201VC of the Principal Act new reporting requirements for the Department and the Growth Areas Authority to include details including the value of work-in-kind agreements which have been performed in each growth area. It also inserts a new subsection (3) so that the requirement of section 201VC(1)(b) to report on the proportion of all GAIC money received relating to each growth area since the commencement day that has been paid out in relation to that area since that day does not apply to WIK contributions. 9

 


 

Clause 26 substitutes for section 218 of the Principal Act a new transitional provision, having two distinct parts. Existing section 218 of the Principal Act is no longer required because there is no longer any need for the Governor in Council to have the power to fix a lower amount of GAIC than would have applied under section 201SG for the 2010/2011 financial year. New section 218 provides that despite the amendments made to section 201SM(1) (by Clause 10), the extended ability to defer GAIC payments under that section as amended does not apply to a person whose liability arose before the commencement day. It also provides that an application made to the Governor in Council for reduction or exemption in exceptional circumstances before the commencement date and not finally determined before the commencement date of clause 21 is taken to be an application under section 201TE as substituted by clause 21. Clause 27 amends sections 201SPA, 201SY(b)(iii), 201TF(1)(a) and 201TM(1) of the Principal Act to make statute law revision amendments to correct cross references and terminology. The Note to section 201SPA includes a reference to a last date for payment of GAIC under section 201SL. Section 201SMAA(6) also sets a last date for payment in certain circumstances. The amendment inserts this additional cross- reference. The amendment to section 201SY(b)(iii) corrects punctuation to give a correct lead into the following 201SY(c). The amendment to section 201TF(1)(a) corrects a reference-- subsection (2) relates to timing, while subsection (3) is the substantive provision referred to. The amendment to section 201TM(1) is to insert the full name of the Growth Areas Infrastructure Contribution Hardship Board. Clause 28 amends section 5 of the Land Acquisition and Compensation Act 1986 to the effect that the requirement that land be reserved under a planning scheme before it is acquired does not apply to land being contributed under a WIK agreement. This is necessary due to the very wide definition of acquire under that Act. 10

 


 

Clause 29 amends section 32 of the Sale of Land Act 1962 to require the notice to purchasers of land to include information about any WIK agreement affecting the land. Clause 30 provides for the automatic repeal of this amending Act on the first anniversary of its commencement. The repeal of this Act does not affect the continuing operation of the amendments made by this Act (see section 15(1) of the Interpretation of Legislation Act 1984). 11

 


 

 


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