Principles of section 7.12 contributions
Local infrastructure contributions practice notes
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Section 7.12 levies are one of the mechanisms available to councils to collect contributions towards funding infrastructure.
This module explains the principles that underpin the use of section 7.12 levies.
Legislative requirements
Section 7.12 levies are a simple and administratively efficient way of collecting monetary contributions from development. They are charged under section 7.12 of the Environmental Planning and Assessment Act 1979 (EP&A Act).
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Council can charge a section 7.12 levy as a condition of consent if it is authorised by a contributions plan. |
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Contributions can be collected under a section 7.12 plan to provide local infrastructure or recoup the cost of infrastructure already provided. |
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The infrastructure must be provided in a reasonable time |
7.3 (1) EP&A Act |
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A section 7.12 plan must demonstrate the relationship between the expected types of development in the area to which the plan applies, and the demand for additional local infrastructure. |
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However, condition imposed under section 7.12 does not require a direct link between the development and the local infrastructure the contribution will be spent on. |
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A condition under section 7.12 cannot be appealed if it is made in accordance with an approved plan. |
Policy positions
Local infrastructure contributions must be reasonable
Infrastructure contributions must be reasonable. For section 7.12 plans, this means that contributions should be collected in accordance with an approved contributions plan, and that the infrastructure identified in the contributions plan should be provided in a reasonable time.
The maximum levy amount for section 7.12 plans is set by the Regulations. As such, section 7.12 plans are not required to demonstrate the reasonableness of the levy amount.
Section 7.12 plans should demonstrate a general relationship between development and the demand for infrastructure
Section 7.12 levies can be charged even if there is no direct nexus between the development being levied and the infrastructure being funded.
However, a section 7.12 plan must contain information on the relationship between expected types of development and the demand for infrastructure. This means there should be some relationship between the types of development on which the levy is imposed and the infrastructure being funded by the levy.
Showing this relationship can be as simple as providing information on potential development that could occur over a period of time within the catchment of the plan. This can include the projected future volume of residents, workers, visitors, new gross floor area or net developable area. This can then be linked to a general need for upgraded or new infrastructure items in the area.
It does not need to show a direct connection between an individual development and a specific amount or type of infrastructure to address it.
Advice on determining demand for infrastructure is provided in the section 7.11 contributions practice note. While section 7.12 plans do not need demonstrate nexus, this guidance can help councils to identify the infrastructure needed in an area and demonstrate the general relationship.
Councils are accountable for the contributions they charge
Councils must also be accountable for the infrastructure contributions they collect and how these funds are managed and spent. This includes:
- following the legislative requirements relating to contributions
- being transparent about how the contributions were derived and the decision making processes involved
- delivering the infrastructure in a reasonable time and ensuring the facilities meet the needs of the development
- accurately reporting on how funds are collected, managed and spent and being open to public scrutiny.