• New Melbourne Strategic Assessment Environment Legislation

    2019-10-17

    New Melbourne Strategic Assessment Environment Legislation

    On 16 October 2019, the Victorian Government introduced the Melbourne Strategic Assessment (Environment Mitigation Levy) Bill 2019 to parliament.

    The Bill provides for the implementation of agreements between the Victorian and Federal Governments, as set out in the Melbourne Strategic Assessment (MSA) Report in accordance with the Environment Protection and Biodiversity Conservation Act (EPBC Act). It is only relevant for land to which the MSA and Biodiversity Conservation Strategy (BCS) apply.

    The legislation comes into effect on 1 July 2020, allowing the property development industry, government and delivery partners, time to prepare their businesses and systems for the new regime.

    In addition to providing the legislative framework for the imposition of the environment mitigation levy (replacing the Habitat Compensation fee system), the Bill provides for the amendment of the Building Act 1993, the Commissioner for Environmental Sustainability Act 2003, the Mineral Resources (Sustainable Development) Act 1990, the Subdivision Act 1988, and the Victorian Civil and Administrative Tribunal Act 1998 to give effect for the provision of the Bill.

    UDIA Victoria's policy and advocacy work on this has achieved:
    - the retention of staged payment arrangements;
    - the retained ability to contribute land for fee reductions;
    - rights of review;
    - phased fee increases rather than all at once; and
    - ongoing systemic reviews, helping to ensure transparency and fairness.
     

    UDIA Exclusive Forum: MSA Industry Briefing from DELWP

     

    UDIA Victoria is pleased to announce that we have secured an exclusive industry briefing from Warrick McGrath, Director Regulatory Strategy and Design  Biodiversity Division at DELWP, who will discuss the must-know elements of the new Melbourne Strategic Assessment Bill for industry. 
    Date: Wednesday 27 November 
    Time: 8am registration for 8.30-10am
    Location: State Library Theatrette, 179 La Trobe St. Melbourne
    Registrations open soon: Please email your interest to Luke - luke@udiavic.com.au to be notified when bookings open. 


    Key points for industry 

    Environment mitigation levy

     

    - The environment mitigation levy replaces the Biodiversity Conservation Strategy (BCS) Habitat Compensation fee system.
    - The environment mitigation levy will be indexed annually to 2024-2025. Indexation is calculated according to a weighted balance of consumer price index and wage price index. The average adjustment in the five years to 2019 has been 1.7%.
    - The levy for FY 20/21 has been calculated based on an updated estimate of the cost of implementing the program, which has almost doubled since the introduction of the BCS.

    Levy amounts are set out below:

    Habitat area

    Fee per hectare of habitat area

    % increase from current fees

    Golden Sun Moth

    $10,005

    26%

    Growling Grass Frog

    $7,846

    4%

    Matted Flax-lily

    $11,351

    1%

    Any Native vegetation area

    $113,441

    19%

    Scattered tree location

    $15,768

    19%

    Southern Brown Bandicoot

    $4,138

    3%

    Spiny Rice-flower

    $8,522

    7%

     

    Imposition of levy

     

    - The levy is payable where where land is in the levy declaration area and a leviable event has occurred.
    - Payment is typically triggered at Statement of Compliance, must be paid prior to registration of titles, or prior to the issue of a building permit where no subdivision is proposed. A building surveyor cannot issue a permit, or plan of subdivision may not be registered, until the levy has been paid or staged payment agreed.
    - The published 'environment mitigation dataset' that determines where levies are payable is available at www.msa.vic.gov.au.
    - The Bill defines excluded building work and excluded events where the environment mitigation levy is not imposed/payable. These are generally activities minor in nature, or where the activity would not be subject to Commonwealth approvals under the current system. Land transfer agreements are exempt. The exclusions have also been brought into line with the GAIC excluded events such as boundary realignments and minor excisions.
    - Staged payments are permitted where an application has been sought and approved.
    - Where works or events are excluded, an applicant will be able to apply for a certificate of no liability to allow the issue of a building permit or lodgement of plans of subdivision.
    - Levy related certificates can be applied for to document the status of levy liabilities, payments and for staged payment approvals.
    - Where a habitat compensation payment has already been made, there is no further obligation, and agreements entered into prior to the commencement of the legislation will be recognised.
    - Land contributed for conservation purposes will reduce levy liabilities.
    - Levy assessments will be subject to a right of review at VCAT.


    Transparency, accountability, and reviews

     

    The Bill:
    - establishes the Melbourne Strategic Assessment Fund, and specifies the purposes for which the fund may be used;
    - requires the Minister to publicly report on the use of the funds;
    - clarifies the intention that the levy is targeting full cost recovery for MSA activities;
    - requires the Sustainability Commissioner to review the package every two years and undertake independent audits of the process and systems; and
    - requires the Minister to undertake 5-yearly reviews of the activities to achieve conservation outcomes, the associated levy amounts, and indexation measures, to be subject of detailed cost benefit analysis and a public exhibition process with submissions to be considered prior to approval.
     

    Q&A (Provided by DELWP) 

    How has the Bill been shaped by industry input?

    Industry representatives have been closely involved in the development of the program from the beginning and have helped shape its streamlined and simple approach. The Bill reflects the input from industry over this time and seeks to codify and strengthen implementation of the program and helps to ensure that the growth area housing supply is not delayed by uncertainty that existed under the previous site-by-site process. 

    The phased-in introduction of the levy rate increases resulted from industry consultation in 2017.

    The MSA’s staged payment process has been largely driven by industry users. The Bill maintains  and simplifies the staged payment framework. 

    The Bill secures the mechanism whereby proponents can transfer land they own that forms part of a conservation reserve to the crown and receive a levy reduction equivalent to the value of the land transferred.

    How will the cost base be reviewed?

    The Bill ensures that the levy rates are comprehensively reviewed every five years, to ensure that the program is recovering enough to meet its costs (not under or over) and that funds are being spent in the most efficient and effective way to meet the conservation outcomes required under the Commonwealth approvals.

    This review will commence three years into each five-year cycle, allowing two full years for a rigorous review and any subsequent adjustments to be implemented in the next cycle. The reviews will be open to public submissions, include publicly available draft and final reports, and will be tabled in Parliament, to ensure the greatest level of transparency.

    Industry input will be actively sought as part of the review process.

    Will the new legislation change the area that is subject to the levy?

    The Bill does not change the area subject to the current habitat compensation fee scheme.

    Does this replace the Biodiversity Conservation Strategy for Melbourne’s Growth Corridors (BCS)?

    The primary purpose of the BCS is to identify the 36 conservation areas within the UGB, and establish the relevant conservation objectives and planning controls. This aspect of the BCS is unchanged by the Bill.

    Will the levies still be based on the same time-stamped data from surveys in 2009 and 2010?

    Yes. A key part of the strategic assessment process is to ‘lock in’ a baseline against which future losses can be measured. For the Melbourne Strategic Assessment, this baseline is set in 2010.

    This approach means that the program’s conservation commitments can be determined in advance, and provides important stability and certainty to proponents.

    Why didn’t we do this six years ago?

    The Bill’s development has been informed by the evolution of the program as it has operated over the past six years and codifies the policy arrangements settled over that time. The Bill has benefited from the range of refinements made to the program over this time.

    What will be different for users of the system?

    DELWP understands that industry appreciates the simplicity of the MSA system and has worked to maintain this.

    The MSA Program provides online maps that identify obligations for each parcel in the growth areas. MSA obligations are also included as an encumbrance on title. This information can be found through a title search or a section 32 vendors statement under the Sale of Land Act.

    The Bill provides much greater clarity regarding who is liable, for which actions, and in relation to which land. There are formal objection and review processes if proponents wish to challenge a levy assessment.