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Infrastructure aligns with forecast growth - growth infrastructure compact

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Objective 2

A Metropolis of Three Cities identifies areas that are forecast to experience significant residential and employment growth. These areas will require new and/or enhanced local and regional infrastructure to support growth.

Many of these areas have existing infrastructure challenges. To better understand, plan for and address these challenges as well as new ones, this Plan introduces a new approach, being piloted by the Greater Sydney Commission, known as a growth infrastructure compact (refer to Figure 7).

A growth infrastructure compact aims to:

  • model the growth potential of an area and explore scenarios for its long-term future
  • encourage openness about the range of infrastructure and services needed to grow an area, the costs involved and how this could feasibly be funded
  • stage growth by being selective about where, when and what to invest in to deliver successful areas
  • make the roll-out of new areas more certain, cost effective and easier to understand for investors, developers and the local community.

In this way, growth infrastructure compacts assess the nature, level and timing of the infrastructure investment required for an area, by considering its forecast housing and employment growth, and analysing growth scenarios. A growth infrastructure compact is based on a series of questions such as:

  • To what extent can investment in existing infrastructure be maximised?
  • To what extent does this infrastructure need to be enhanced, extended, embellished or replaced?
  • What new infrastructure is required to support various growth scenarios? 
  • How would this work with agency programs and priorities?

The growth infrastructure compact approach differs from existing approaches. It would enable a broader level of collaboration and a place-based business case, using a triple-bottom-line methodology to determine the necessary level of investment to support an appropriate growth scenario. Input from all infrastructure agencies would be critical to the process.

This approach would lead to an infrastructure delivery plan that is co-designed and co-delivered by State and local governments together with industry.

Figure 7: Growth infrastructure compact

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Align growth with infrastructure

A growth infrastructure compact would model the best outcome by location and compare this across Greater Sydney. This would provide a tool to determine the most effective and appropriate locations for growth, taking into consideration a wide range of variables within a local context. Taken together, growth infrastructure compact locations could have the potential to form a set of priority locations that inform city-wide planning.

This innovative approach is being piloted in the Greater Parramatta and the Olympic Peninsula (GPOP) area (refer to Objective 5). The outcomes of the pilot will potentially inform government on how the growth infrastructure compact could provide an important benchmark for understanding the relative costs and benefits of new development. These benchmarks would provide regional and district planning activities with a greater understanding of potential infrastructure priorities and planning decisions. In delivering on the growth infrastructure compact initiative, existing Planned Precincts and Growth Areas will be unaffected.

Across Greater Sydney significant areas have already been committed to growth and change. At the same time the NSW Government is allocating unprecedented levels of investment in transport, education and health (refer to Figure 8). This is alongside investment in arts and cultural facilities across the region.

However, there is room to better align growth with infrastructure by identifying place-based infrastructure priorities. This would take into account the capacity of existing infrastructure and existing infrastructure commitments and programs such as Special Infrastructure Contributions, affordable housing initiatives, social housing programs and augmentation of utilities.

The growth infrastructure compact could also provide greater context for coordination with infrastructure delivered by local governments. In time, and as appropriate, this approach could be expanded to include local infrastructure requirements.

Fund and finance infrastructure

Resources are finite so infrastructure investments need to be prioritised to deliver maximum benefits to the community. Even with the potential to improve decision-making through growth infrastructure compacts, multiple sources of funding are required to cover the cost of new infrastructure across Greater Sydney.

Many sources of funds are in place already, including funding from consolidated revenue and asset recycling, user charges, contributions from local developments, voluntary planning agreements, council rates and private investment. The NSW Government is investigating Special Infrastructure Contributions in Planned Precincts to fund critical infrastructure.

Many funding sources are provided via contributions from development. Development needs to support the funding of infrastructure at an appropriate level, but should not be unreasonably burdened to the extent that projects become unviable. Part of the solution could rely on growth infrastructure compacts identifying the most costeffective locations for growth, based on existing and future infrastructure capacity. Another part of this solution relates to industry and governments being certain of cumulative development costs. There is a need for guidance to address the cumulative impacts of development contributions on development feasibility and delivery across Greater Sydney.

Established cost-recovery mechanisms for infrastructure can operate alongside other major project value-sharing mechanisms. Value sharing involves identifying and raising funds additional to those from business-as-usual development activities. Value-sharing assessments should be undertaken as part of the business case development process. While value sharing may provide a useful contribution to project funding, it will not form a major part of the funding equation in most cases. It is important to recognise that value sharing and other cost recovery mechanisms contribute to only a part of the funding required for infrastructure delivery. The majority is still funded by the NSW Government.

Figure 8: Existing infrastructure investment in Greater Sydney

Figure 8: Map showing existing infrastructure investment in Greater Sydney including various modes of transport such as Sydney Metro, Light Rail, B-Line Northern Beaches and NorthConnex/WestConnex.

Source: New South Wales State Budget 2017 to 2018.

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Several infrastructure funding mechanisms are sourced from State and local governments. While the Government is presently investing at unprecedented levels in Greater Sydney's infrastructure, many councils are limited in their ability to invest in infrastructure and its maintenance, within the current settings for council rates and development contributions for local infrastructure. Accordingly, there is a need to continue to work within fiscal limits and manage community expectations for infrastructure while achieving objectives to create great places and support growing communities (refer to Chapter 4).

There is also a need to consider broader multijurisdictional impacts. One approach could be to expand the scope of infrastructure that is subject to development contributions, however, this expense could create a greater burden on the development sector and ultimately hinder development, which is not in the interest of Greater Sydney. Planning for infrastructure therefore needs to:

  • balance requirements to fund infrastructure without burdening private development unreasonably, by better understanding the cumulative impacts of development contributions in different markets across Greater Sydney
  • explore and, where appropriate, trial opportunities to share value created by the planning process and infrastructure investment (such as rail) to assist the funding of infrastructure
  • increase collaboration with the private sector to finance infrastructure
  • better leverage capacity and the efficiency of existing infrastructure
  • investigate the potential of further user charging to support infrastructure delivery
  • explore and implement new delivery models to improve services to the community.

Closely aligning land use and infrastructure planning at the earliest stages enables infrastructure to be delivered efficiently by relevant government and private sector processes to meet the needs of Greater Sydney's growing population.

Sequence infrastructure with growth

No matter what the provisions for funding and financing infrastructure, it is not possible to cover the cost of new or improved infrastructure across the entire region simultaneously. This can create challenges for State and local governments to meet the demands of growth at the same time as maintaining ageing infrastructure.

Effectively aligning infrastructure with growth requires a methodical and sequenced approach to development. It requires a whole-of-government approach and a place-based understanding of sequencing of infrastructure delivery. This enables planning to support infrastructure alignment with areas of growth and transformation before additional areas are rezoned and ready for development. This new approach supports the appropriate growth and infrastructure being provided at the right time. At a district or regional level it could provide valuable context for decision-making.

The Greater Sydney Commission's governance frameworks - including the Infrastructure Delivery Committee (comprising key State agencies including Health, Education, Transport, Treasury and Planning) - enable planning that will best align growth with the provision of infrastructure. Using insights from growth infrastructure compact assessments, the Commission via its Infrastructure Delivery Committee provides advice to the NSW Government on the sequencing of development.

Strategy 2.1

Align forecast growth with infrastructure.

Strategy 2.2

Sequence infrastructure provision across Greater Sydney using a place-based approach.