Some of you might have noticed the Planning Bulletin (93/2013) heralding in the new 2013 Planning and Development Fee structure. There hasn’t been an increase for two years during which CPI has gone up 6.25%.
I have spent an evening working out what the increases actually mean in terms of increases for development applications and subdivision clearances. These are the results for a range of developments and subdivision clearances which indicate that the scheduled increases are well below 6.25%.
DEVELOPMENT APPLICATIONS REGULATED FEES
|Value of Devt.||2011/12 Fees||2013/14 Fees||2011-2013 fee increase|
SUBDIVISION CLEARANCES REGULATED FEES
|Lots||2011/12 Fees||2013/14 Fees||2011-2013 Fee increase|
The opening statement in the Planning Bulletin that the fees “have been increased by 6.25 per cent, being the sum of the Consumer Price Index (CPI) rate for two years as advised by WA Treasury”, does not tally with the calculations shown in the tables. My enquiries to the Department has elicited the comment that the failure to achieve the 6.25% was the result of rounding down and that rounding up would have resulted in the figure exceeding 6.25% which was the figure approved by the Minister. No series of calculations such as those above have seemingly been done by the Department to demonstrate the veracity of the fee increase!
As the figures above clearly show, the failure to come close to 6.25% has nothing to do with rounding. It is clear that while the Minister has agreed to a 6.25% increase this has not been given effect and it should be rectified.
In contrast, increased WAPC subdivision fees were recently announced (also effective from 1st July 2013). Here the increase has been 90%. The justification for this very large increase is that “the WAPC operates on a cost recovery basis for their services and they, in conjunction with the Department of Planning, have recently implemented a more rigorous costing model which demonstrated that specific services had not been fully cost recovered in previous years. This necessitated a significant adjustment in fees in order to rectify the under-recovery.”
It is presumed that the increased fees will pay for improved DoP statutory services. However, at this stage it is difficult to find out whether the fees will be hypothecated, so to speak, and thereby go to pay for the cost of providing the service, or whether the additional fees will by a revenue raising exercise to cross-subsidise cost overruns elsewhere in the Department or worse – a revenue stream for State Treasury! While I wouldn’t for a moment suggest anything as beyond the pale as fees from subdivision applications being used to prop up general state revenue, without any evidence to the contrary it remains a possibility. At this point outsiders have no way of knowing where the almost doubled fees are going. It is hoped that scrutiny of the forthcoming state budget will put the matter to rest.
Out of interest, I have compared the approved subdivision fees with local government fee increases for the past decade or so. The table compares the payable fees for a typical $0.5million development and a 25 lot subdivision from 2000 to the present. It is clear that there has been a significant continual increase in subdivision fees (2000-2013 up 1043%) but a very minor increase in fees to local government (2000-2013 increase of 40.5%). The differences do appear extreme, dare I say outrageous, and would welcome any feedback to explain or refute the obvious conclusions.
COMPARISON OF COST INCREASES FOR SUBDIVISION AND DEVELOPMENT APPLICATIONS
If you plot the growth in strata fees prior to their forced delegation to local government in 2009 and then compare that with what has happened since, you will find that the fee payable for a 25 lot strata grew from $455 in 2002 to $1,767.50 in 2009 (increasing by 307% over six years). Then stratas were delegated to local government and now the fee is $1,851 (a 4.7% increase over four years). 50% a year increase prior to delegation then 1% pa thereafter!
Planning fees are accepted as a means of ensuring that those benefiting from a development pay for the application processing, rather than the costs falling on the general ratepayer or taxpayer. It may be excessive to aim for full cost recovery, as the Department now claims for itself, but some measure of cost recovery is reasonable. Local governments should have the opportunity to decide whether to recoup most of their costs or subsidise to a greater or lesser extent depending on the extent to which they seek to encourage development. In any event it should be a local government’s choice and not left to the whims of the State which history has shown is not motivated to provide the paperwork to enable gazettals to occur on time and is reluctant to even accept that there is a case for CPI increases.
Certainly if there is a new model that the Department has discovered for estimating the real cost of processing subdivision applications, it is pretty likely that the model could be extended to local government for their planning applications. Consultants for WALGA have undertaken a fairly comprehensive study into the true costs of processing applications leading to the conclusion that the present system is overly complicated, fees do not come close to reflecting the true cost of service and a full review is warranted. In the interim annual CPI fee increases need to be permitted. Unfortunately the CPI increase has simply not occurred and it does not appear that Departmental Officers even know that this is the case.
The recent history of the relative planning fee increases authorised for State compared with local government looks on the face of it to be discriminatory. Moreover, where functions are cost-shifted from the state, as in the case of stratas, they are not accompanied with any ability to fund in line with CPI cost increases. As yet there is no “planning fees scandal” because no one has pursued the matter. But the ingredients are certainly there.