Community infrastructure plays a crucial role in enhancing the quality of life and supporting economic growth in local communities. However, funding community infrastructure in Australia can pose significant challenges, and one potential solution is the implementation of Section 94 levies as a mechanism for generating funding. Section 94 levies and public funds are important mechanisms for funding community infrastructure, the challenges of insufficient funding, the impact on economic growth and development, and potential solutions and best practices.
What are Section 94 levies/ contributions?
Section 94 contributions (levies) are a funding mechanism utilised in Australia to support infrastructure upgrades and community amenities that are required due to new developments that increase the density and number of community members living within an area. Their purpose is to ensure that developers contribute their fair share towards the costs associated with the increased demand for local infrastructure and services resulting from their developments. Once a development application is approved, local councils may require developers to pay a levy based on a percentage of the estimated cost of the development. These contributions are then utilised by the council to fund essential infrastructure projects such as roads, water supply, sewage, parks, community facilities, and other necessary services to support the growing community.
Section 94 Levies and sustainable development
Section 94 levies play a critical role in promoting sustainable development, as they help to mitigate the impacts of new developments and ensure that the burden of funding necessary infrastructure is shared among developers and the broader community. However, it is important to note that Section 94 levies are not without potential drawbacks or criticisms, such as concerns about affordability for developers and potential impacts on housing affordability for end-users. Nevertheless, when implemented effectively, Section 94 levies can contribute to the creation of more liveable and sustainable communities by ensuring that development occurs in a responsible and balanced manner, addressing the needs of both current and future residents. Overall, Section 94 levies serve as a crucial funding mechanism that supports the sustainable growth and development of local communities in Australia.
However, organising Section 94 contributions can be challenging for developers, and can lead to delays in progress if they aren’t reported properly. It is important to liaise with an expert such as a quantity surveyor during the development process to ensure the swift and accurate documentation of required Section 94 contributions, so the developer isn’t overburdened and the project isn’t stuck or delayed.
The problems of underfunded infrastructure in communities:
Insufficient funding for community infrastructure is a pressing issue that can have significant negative consequences for residents. When essential community infrastructure projects are delayed or cancelled due to a lack of funding, it can result in a range of challenges that impact the quality of life in the area. For example, congestion may increase as transportation networks become inadequate to meet the needs of a growing population. Inadequate access to services such as healthcare, education, and recreational facilities can further diminish the liveability of a community, affecting the well-being of its residents.
Financial stress:
Furthermore, reliance on external financings, such as loans or bonds, can exacerbate the problem of insufficient funding for community infrastructure. Local governments and taxpayers may incur long-term debt, leading to higher interest rates and borrowing costs that further strain limited resources for community infrastructure development. This can create a burden on local budgets, diverting funds from other essential services and programs, and potentially leading to financial challenges for the community in the long run.
Community inequality:
Another consequence of inadequate funding for community infrastructure is the disparities it can create among different communities. Not all communities have the same access to funding for infrastructure development, and this can result in inequality in terms of the quality and availability of essential services and amenities. Some communities may receive inadequate or substandard infrastructure compared to others, leading to disparities in the level of services and opportunities available to residents. This can exacerbate existing inequalities and perpetuate disparities among communities, leading to an uneven distribution of resources and opportunities.
For example, in a growing urban area, insufficient funding for community infrastructure may result in delays or cancellations of projects such as roads, public transportation, parks, and schools. This can lead to increased traffic congestion, longer commutes, overcrowded schools, and limited access to recreational areas, affecting the quality of life for residents. Similarly, in regional or rural areas, lack of funding for infrastructure such as water and sanitation systems, healthcare facilities, and educational institutions can result in limited access to basic services and hinder economic development.
Long-term consequences and challenges:
The impact of insufficient funding for community infrastructure goes beyond the immediate challenges of delays or cancellations of projects. It can have long-term repercussions on the economic growth and development of local areas. Adequate community infrastructure is crucial for attracting businesses, creating jobs, and stimulating economic growth. Without proper funding, communities may struggle to attract new businesses or retain existing ones, resulting in a limited economic base and reduced opportunities for residents.
For instance, businesses may be deterred from establishing or expanding operations in an area with inadequate infrastructure, such as poor transportation networks, unreliable utilities, or inadequate public facilities. This can result in missed opportunities for economic growth and development, as businesses may choose to invest in areas with better infrastructure and resources. Additionally, a lack of proper funding for community infrastructure can limit the economic opportunities available to residents, such as access to employment, education, and healthcare services. This can perpetuate economic disparities and hinder social mobility, leading to long-term negative impacts on the well-being and prosperity of communities.
How Section 94 contributions can help
To address the challenges of insufficient funding for community infrastructure, it is crucial to implement effective solutions and best practices, including the proper implementation and utilisation of Section 94 levies. Local governments play a key role in this process, and Section 94 levies, which require developers to contribute their fair share towards community infrastructure, can be an effective mechanism to generate funding. Whilst Section 94 contributions and levies are not the only budget solution for public infrastructure funds, they are a helpful additional tool and can be a good way to offset the immediately increased burden on public infrastructure by new developments, resulting in less damaging long-term financial budgetary stresses for the community.
Quantity Surveyors and Section 94 Reports
While Section 94 contributions have benefits to the community, there is no point in letting them lead to withheld development due to tedious or incorrectly detailed Section 94 reports. Speak to an expert today to ensure correct and appropriate Section 94 contributions occur for any new projects in a timely manner. At Section 94, our team of highly qualified quantity surveyors can help organise all the required and recommended quantity surveyor reports for your development.
With over a decade of industry experience, our qualified building quantity surveyors are AIQS certified with a fast turnaround time and clear communication. Give us a call today at 0413 953 869 or email us at info@section94.com.au to discuss our quality budget services for residential and commercial builds.