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Where and how should we grow?Final Report

Municipal Association of Victoria

January 2012

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This report has been prepared for:

Municipal Association of Victoria

This report has been prepared by:

SGS Economics and Planning Pty LtdACN 007 437 729

Level 5 171 Latrobe StreetMELBOURNE VIC 3000

P: + 61 3 8616 0331F: + 61 3 8616 0332

E: [email protected]: www.sgsep.com.au

Offices in Brisbane, Canberra, Hobart, Melbourne and Sydney

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Table of Contents

ContentsSNAPSHOT................................................................................................................................................................................................EXECUTIVE SUMMARY..............................................................................................................................................................................

Introduction................................................................................................................................................................................1

Context for Research...........................................................................................................................................................1

The Approach.......................................................................................................................................................................2

Settlement Patterns.............................................................................................................................................................2

Literature Review........................................................................................................................................................................2Case studies................................................................................................................................................................................3Key findings.................................................................................................................................................................................3

Upfront costs.......................................................................................................................................................................3

Ongoing costs......................................................................................................................................................................4

Triple-bottom line costs.......................................................................................................................................................4

Information gaps..................................................................................................................................................................5

Conclusion..................................................................................................................................................................................5PROJECT BRIEF..........................................................................................................................................................................................

Rationale.....................................................................................................................................................................................6Overall Approach........................................................................................................................................................................6

1. INTRODUCTION.....................................................................................................................................................................................1.1 Project Background...............................................................................................................................................................71.2 Approach..............................................................................................................................................................................71.3 Report Structure...................................................................................................................................................................8

2. CONTEXT FOR RESEARCH......................................................................................................................................................................2.1 Introduction..........................................................................................................................................................................92.2 The ‘ Gap’ and Settlement Patterns......................................................................................................................................9

2.2.1 Relevant State Planning Policy..................................................................................................................................10

2.2.2 Ongoing Maintenance and Operation.......................................................................................................................11

2.3 Settlement Patterns............................................................................................................................................................113. LITERATURE REVIEW...........................................................................................................................................................................

3.1 Introduction........................................................................................................................................................................123.2 Fiscal costs faced by Local Government..............................................................................................................................12

3.2.1 Summary of Typical Costs.........................................................................................................................................12

3.2.2 Drivers of Fiscal Costs................................................................................................................................................15

3.2.3 Funding Mechanisms................................................................................................................................................17

3.3 Triple bottom Line Costs and Benefits................................................................................................................................18

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3.3.1 Introduction..............................................................................................................................................................18

3.3.2 Social Costs and Benefits...........................................................................................................................................19

3.3.3 Environmental Costs and Benefits............................................................................................................................20

3.3.4 Economic Costs and Benefits....................................................................................................................................20

3.4 Summary.............................................................................................................................................................................204. CASE STUDIES......................................................................................................................................................................................

4.1 Introduction and Approach.................................................................................................................................................214.2 Shire of Golden Plains.........................................................................................................................................................21

4.2.1 Relevant Settlement Policy.......................................................................................................................................22

4.2.2 Bannockburn.............................................................................................................................................................23

4.2.3 Ross Creek.................................................................................................................................................................25

4.3 Shire of Strathbogie............................................................................................................................................................26


4.3.2 Avenel.......................................................................................................................................................................27

4.3.3 Kirwans Bridge..........................................................................................................................................................28

4.4 City of Greater Shepparton.................................................................................................................................................30


4.4.2 Shepparton North.....................................................................................................................................................31

4.4.3 Mooroopna West......................................................................................................................................................32

4.5 Key Findings........................................................................................................................................................................34

4.5.1 Responsibility for Costs.............................................................................................................................................34

4.5.2 Cost Data...................................................................................................................................................................37

4.5.3 Information Gaps......................................................................................................................................................40

5. CONCLUSION.......................................................................................................................................................................................5.1 Key Findings........................................................................................................................................................................41

5.1.1 What Drives the Costs and Benefits of Different Settlement Patterns?....................................................................41

5.1.2 Triple Bottom Line Costs and Benefits......................................................................................................................43

5.1.3 Market-led vs. Policy-led Development....................................................................................................................45

5.2 Research Gaps.....................................................................................................................................................................46REFERENCES............................................................................................................................................................................................APPENDIX A: RELEVANT PLANNING SCHEME MATERIAL........................................................................................................................

City of Greater Shepparton.......................................................................................................................................................48

Municipal Strategic Statement...........................................................................................................................................48

Greater Shepparton 2030..................................................................................................................................................50

Golden Plains Shire...................................................................................................................................................................51

Municipal Strategic Statement and Local Policy................................................................................................................51

Residential Land Supply Review (2009)..............................................................................................................................52

Strathbogie Shire......................................................................................................................................................................53

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Municipal strategic statement and local policy..................................................................................................................53

APPENDIX B: DETAILED INFORMATION COLLECTED FROM COUNCILS...................................................................................................Key findings for Golden Plains..................................................................................................................................................55Key findings for Strathbogie......................................................................................................................................................57Key findings for Shepparton.....................................................................................................................................................60

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Where and How Should We Grow? / Short and Long Term Impacts of Settlement PatternsFINAL REPORT

SNAPSHOTHow settlements grow and where urban development occurs affects infrastructure provision andservice delivery costs for councils. Different settlement patterns have different infrastructurerequirements. In lower density locations such as rural Victoria, large land holdings and limitedinfrastructure networks mean that servicing development costs may vary significantly in differentcouncil areas.

Typically, capital, maintenance and upfront costs of infrastructure and service provision are born bycouncil. Many councils face a widening infrastructure and service gap. Understanding the impactsof different settlement patterns is necessary to improve this situation.

The Municipal Association of Victoria (MAV) commissioned SGS Economics and Planning (SGS) tounderstand the impacts of different settlement patterns from a ‘triple bottom line’ perspective anda ‘local government fiscal’ perspective over the short, medium and longer term. The study includeda review of current literature and three case studies that aimed to collect costs experienced bycouncils for residential development in the Golden Plains Shire, City of Greater Shepparton andShire of Strathbogie.

The literature review identified a lack of Australian research on the costs and benefits of differentsettlement patterns to rural local government and the wider community. Generally, researchfocuses on metropolitan development patterns, examining how accessibility and isolation ofdevelopment may lead to social, environmental or economic costs and benefits, rather thanrelating specific development patterns to these factors.

Interviews with councils highlighted several gaps in data on current and anticipated fiscal costs.Costs relating to specific development, and for maintenance and operational costs, are generallynot directly applicable for other local government areas. While councils agreed different settlementpatterns present different costs, limited data has been collected.

The report concludes that infill development is less costly when close to existing infrastructure andservices with sufficient capacity. Triple bottom line benefits of infill were also superior, includingimproved social interaction and access to existing services, reduced reliance on privatetransportation and longer term land savings.

Greenfield development can present lower upfront capital costs to council, due to developmentcontributions plans or Section 173 Agreements. It was noted that these tools were less easy toapply to other settlement types. However, the report finds that upfront costs are often lower thanthe operating and renewal cost of assets, with construction accounting for approximately 20 percent of an asset’s lifetime cost. Further to this, council charges to recoup costs do not accuratelyreflect actual cost.

It is recommended to address the information gap that future studies involve data collection over alonger time frame to provide a better analysis of costs. It was also concluded that local planningpolicy needs to be strong in supporting lower cost development utilising existing infrastructurewhich delivers better triple bottom line benefits.

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EXECUTIVE SUMMARY

Introduction

Different residential settlement patterns can have different infrastructure requirements, particularlyin lower density locations such as regional and rural Victoria. In these locations, large land holdingsand limited infrastructure networks mean that servicing development in one location may besignificantly more costly to local government than another location.

The Municipal Association of Victoria (MAV) has identified that the widening infrastructure andservicing gap faced by regional and rural councils might be exacerbated if settlement patterns arenot appropriately linked with fiscal outcomes.

SGS Economics and Planning (SGS) was commissioned by MAV to undertake a study thatidentified, described and sought to understand the impacts of different settlement patterns from a‘triple bottom line’ perspective and a ‘local government fiscal’ perspective over the short, mediumand longer term.

Context for Research

Local government is responsible for a large range of services, including environmental, health,emergency management, infrastructure, planning and building and social and community services.

In servicing new residential developments, local councils have moved away from funding newinfrastructure primarily through rate revenue to a ‘user pays’ model which intends to shift costs tothe private sector (end user). However, private-sector contributions from developers do not alwayscover the entire cost of new infrastructure, nor are they always collected across all developmenttypes. Further to this, the cost of maintaining and operating infrastructure is nearly always theonus of local government. As such, councils have been facing a growing shortfall between the costof required infrastructure and the funds available to pay for these facilities.

The ‘gap’ between the cost of providing, maintaining and operating infrastructure and services andavailable funding is the key issue driving this research. MAV has identified a potential link betweenthe gap that councils face and different settlement patterns, based on local government feedbackat various forums and seminars.

New residential development and residents usually utilise existing infrastructure and services whereaccessible capacity exists. However, some new development requires an expansion of existinginfrastructure and services or delivery of new assets, which in turn attracts additional ongoingmaintenance and operational costs. The level of access and capacity can vary by settlementpattern.

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The Approach

The study approach was based on two key tasks:

a) A concise literature review examining existing research on the fiscal and broader costs andbenefits of settlement patterns; and

b) Three case studies that examined actual costs experienced or anticipated by local governmentfor residential development. These case studies were based on locations in the Golden PlainsShire, City of Greater Shepparton and Shire of Strathbogie in Victoria.

Settlement Patterns

As identified in the project brief, settlement patterns can typically take one of four forms:

1. Consolidated - where infill opportunities are recognised and maximised;2. Dispersed – where development is vaguely centralised, but significant development in non-

serviced areas exists;3. Ribbon development - where development extends along coastal frontages or transport

links;4. Greenfield – new development in areas with little existing infrastructure. Development tends

to be predominantly suburban and reliant on existing town centres and/or activity centres forjobs and services

Source: Project Brief, p.2Literature Review

A literature review was undertaken to identify existing research on the fiscal costs of developmentfaced by local government and, more broadly, the triple bottom line costs and benefits associatedwith different settlement patterns.

The literature review highlighted a lack of research into settlement patterns within an Australiancontext, and an absence of specific research looking at the fiscal costs local government may face.Generally, research on triple bottom line costs and benefits is focussed on metropolitandevelopment patterns, and examines how accessibility and isolation of development may lead tosocial, environmental or economic costs and benefits, rather than relating specific developmentpatterns to these factors.

Other evidence shows that spatial and infrastructure planning can also play a fundamental role inoptimising infrastructure provisioning. By channelling a portion of development into infilldevelopment locations, planning can help tap some of the excess capacity in infrastructurenetworks (e.g. water, energy, telecoms, etc.), avoiding or at least delaying the need for extendinginfrastructure networks into urban fringe areas.

Fiscal costs related to settlement patterns can be driven by the scales of new development, thedistance from existing settlement patterns, the level of existing development, and community

20110382Where and How Should We Grow? / Short and Long Term Impacts of Settlement Patterns

FINAL REPORT

demographics. While literature on costs faced by local government is sparse, even less research

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has been completed in the ongoing costs of maintaining and operating infrastructure and services.

Case studies

Following the literature review, consultation was undertaken with three case study municipalities inVictoria. Two locations representing different settlement patterns were chosen in each case studycouncil, with the aim of determining different costs faced by local government for differentsettlement types. In Greater Shepparton, the two locations chosen were a greenfield site inMooroopna West and infill in Shepparton North. For the Shire of Strathbogie the two locationschosen were an infill site in Avenel and ribbon development in Kirwans Bridge. The locationsselected for Golden Plains Shire were a greenfield development in Bannockburn and disperseddevelopment in Ross Creek.

Key findings

The broad finding of the consultation process, which supported the findings of the literature review,was that most of the fiscal costs to local government that are related to settlement patterns arenot known, or at the very least, not readily available.

Upfront costs

Fiscal costs to government can be categorised into hard and soft infrastructure costs. As supportedby the literature, consultation identified that some of the hard infrastructure items that localgovernment may provide are:

Provision of new local roads, roundabouts, pathways, bicycle lanes (may include landacquisition)Provision of new drainage infrastructure (may include land acquisition)Provision of street lighting, street furniture, signage, bus sheltersCreation of new public open space, landscaping, wetlands and parks.

Upfront soft infrastructure items that may be provided by local government include:

Provision of new libraries, recreational facilities, community facilities, neighbourhoodhouses, men’s shedsProvision of new council-run childcare facilities, kindergartens, aged care facilities,community care facilities, maternal child health, youth outreach centresCommunity transport (community bus)

Larger developments (greenfield subdivisions and substantial infill developments) are more likely tohave a developer pay for a proportion or the entire amount of upfront capital costs, including newlocal roads, drainage, street furniture and lighting. Such development, however, is likely to resultin additional traffic and increased pressure on the existing local road network and consequentlymay result in ongoing costs to local government, including road upgrades and road maintenance.

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Consultation identified that in the case of infill development it is difficult to put a developmentcontributions plan in place as it is more complex to determine what share of the infrastructurecosts should be allocated to new development. Consequently, local government may incur largerupfront costs for this settlement type.

Ongoing costs

Ongoing costs are associated with operating and maintenance costs. The key difference betweenongoing and capital costs is that usually, local government pays for all ongoing cost items. Forexample, while a developer may pay for new local roads and drainage for a new subdivision, localgovernment will typically pay the ongoing maintenance costs of these new assets.

Ongoing hard infrastructure costs faced by local government are:

Maintenance of sealed local roads and paths (resealing, rehabilitation, improvements)Maintenance of gravel roads (gravel re-sheeting, routine maintenance)Maintenance of drainsMaintenance of street lighting, street furniture, signage, bus sheltersWeeding, mowing, tree clearing of public open space, reserves, wetlands and parksRubbish collection (labour, truck hire).

Ongoing soft infrastructure costs faced by local government are:

Maintenance costs of social infrastructure facilities run by councilOperation costs (i.e. staff wages) for social infrastructure facilities.

As many upfront costs are covered by the developer, there are generally more ongoing costs tolocal government than upfront costs. There are different ongoing costs associated with differentsettlement types. For example, for infill and greenfield developments, ongoing costs to councilinclude maintenance of street furniture, lighting, parks, footpaths and bicycle paths. In more rurallocations associated with dispersed development, costs to local government are more likely to befor road and drain maintenance. In addition, ongoing soft infrastructure costs to local governmentvary by settlement type, and are influenced by settlement size and changing demographics,amongst other factors.

Triple-bottom line costs

Both consultation and the literature identified that different settlement patterns can impact socialexclusion, the cost of living and social equity, while environmental effects of different settlementpatterns may include risk to damaged environments, including pollution, greenhouse gasemissions, loss of biodiversity and reduced water quality and land for agricultural purposes, as wellas risk of higher impacts of climate change. The economic effects of settlement patterns arelargely linked to how productively they function and are linked to factors such as level ofproductivity and travel costs.

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Information gaps

Consultation identified that cost data was not readily collected by councils and that there is limitedevidence available on the actual cost of upfront infrastructure requirements. This may be areflection of the variance in cost for different developments in municipalities, and the wide range offactors that may influence costs (i.e. terrain, existing infrastructure provision and distance, densityof development and so forth).

In relation to capital, upfront costs, data (on a unit cost basis) was generally not available for theprovision of local roads and roundabouts, drainage, open space, reserves, parks, recreation, streetlighting, furniture, signage, foot paths, cycle paths, shared paths and community facilities.

More detailed data is available on the ongoing maintenance and operation costs faced by councils,given that local government is responsible. However, this data was typically found to be anecdotal,rather than formally stored.

Conclusion

As discussed, the costs to local government vary between settlement patterns and these costs varyin the short, medium and long term. For example, in the short term, greenfield development isusually the least costly due to developers paying for new, required assets. Dispersed developmentand ribbon development are also unlikely to lead to upfront costs as these are generally servicedby existing infrastructure and require the landowner to pay for required infrastructure.

In the medium to long term, operating and maintenance costs are incurred across all settlementtypes. Generally, higher density locations, such as greenfield and infill locations, will have higherongoing costs due to the increased number of dwellings (users), higher level of infrastructureusage and more urbanised nature. Of course this additional cost generally serves a greater userbase, and per capita cost implications are not clear.

In the long term, it is possible that new social infrastructure would need to be provided whenpopulation thresholds for certain facilities are reached. These population thresholds vary acrosslocations and are generally not publicly available. This would be the case for dispersed andgreenfield development locations where assets may not currently exists and residents rely onnearby services in other towns.

The study has also identified research gaps, specifically that there is limited available data on fiscalcosts to local government and that there is limited forecasting on future cost pressures. While allcouncils agreed that different settlement patterns would present different costs to council, therewas extremely limited analysis within local government on what, and how much these costs wouldbe. Estimates of maintenance and operation costs were provided by some councils. However, it isunlikely that these are similar in other areas as these costs can be subject to local conditions.

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0110382Where and How Should We Grow? / Short and Long Term Impacts of Settlement Patterns

FINAL REPORT

PROJECT BRIEF

Rationale

Based on the findings of the study and the research gaps identified, this section provides a projectbrief for further study.

The project clearly highlighted a lack of data collection on upfront and ongoing costs faced bycouncils, which hampered the ability of the project to make meaningful, quantitative conclusions onthe cost of different settlement patterns. The use of settlement patterns also complicated thecollection of data and information.

A localised study including a few rural councils could be undertaken which looks at the upfront andongoing cost of infrastructure and service provision on a hierarchical basis. Councils which wouldstand to gain immediate benefit from the study could be selected, for example, councilsconsidering substantial rezoning of a rural location.

These councils would gain understanding in the tradeoffs between facilitating development in:

Infill, contiguous fringe and non-contiguous fringe locales; andRegional centre, town, village or hamlet locals.

These definitions vary from the settlement patterns defined in this report. However, councilinfrastructure/ service expectations vary between rural towns depending on their place within thesettlement hierarchy (e.g. a town, village, hamlet). Also, different items of council infrastructureand service serve differing geographic catchments meaning that their physical location might bedispersed (e.g. maternal health and child care centres) or centralised (e.g. libraries). Both of theseconsiderations are likely to affect the per dwelling delivery costs of council infrastructure andservices.

Finally, the existing location of more ‘centralised’ infrastructure may or may not have some ‘excess’servicing capacity or may be able to be augmented more efficiently than building an additionalfacility elsewhere.

Overall Approach

Councils could be selected via an expression of interest process, with an emphasis on councilsanticipated to experience residential growth. Funding would need to be provided to these councilsto allow sufficient resourcing over a 12 month period.

The study would focus on a comparison of settlement in different locations in the municipality, witha emphasis on:

The different infrastructure and service requirements in these locationsThe potential cost of providing infrastructure and service requirements in line withanticipated housing growth

Rolling this study out over several councils will enable a detailed data source to emerge.

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1. INTRODUCTION

1.1 Project Background

Different residential settlement patterns can have different infrastructure requirements, particularlyin lower density locations such as regional and rural Victoria. In these locations, large land holdingsand limited infrastructure networks mean that servicing development in one location may besignificantly more costly to local government than another location.

The Municipal Association of Victoria (MAV) has identified that the widening infrastructure andservicing gap faced by regional and rural councils might be exacerbated if settlement patterns arenot appropriately linked with fiscal outcomes.

SGS Economics and Planning (SGS) was commissioned by MAV to undertake a study thatidentified, described and sought to understand the impacts of different settlement patterns from a‘triple bottom line’ perspective and a ‘local government fiscal’ perspective over the short, mediumand longer term.

1.2 Approach

The approach adopted for this study was based on two key tasks:

a) A concise literature review examining existing research on the fiscal and broader costs andbenefits of settlement patterns; and

b) A series of three case studies that examined actual costs experienced or anticipated by localgovernment for residential development. These case studies were based on locations in theGolden Plains Shire, City of Greater Shepparton and Shire of Strathbogie in Victoria.

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1.3 Report Structure

The remainder of the report is structured as follows:

2. Context for Research

3. Literature Review

4. Case Studies

5. Conclusions

References

Appendix A

Appendix B

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Provides background context to the research question, i.e. what isthe infrastructure and services gap? What are settlement patterns?

Reviews existing literature on the relationship between settlementpatterns and local government fiscal costs and broader costs andbenefits.

Describes each case study location before delving into the findingsfor the three studies undertaken in rural and regional Victoria.

Identifies the fiscal costs and triple bottom line impacts over theshort, medium and long term of settlement patterns and providesrecommendations for further research and policy.

Provides a list of references.

Documents relevant local planning policy.

Provides detailed information collected from local government.

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2. CONTEXT FOR RESEARCH

2.1 Introduction

In servicing new residential developments, local councils have moved away from funding newinfrastructure primarily through rate revenue to a ‘user pays’ model which intends to shift costs tothe private sector (end user). However, private-sector contributions from developers do not alwayscover the entire cost of new infrastructure, nor are they always collected across all developmenttypes. Further to this, the cost of maintaining and operating infrastructure is nearly always theonus of local government. As such councils have been facing a growing shortfall between the costof required infrastructure and the funds available to pay for these facilities.

This section provides the background context for the research undertaken through this study.

2.2 The ‘ Gap’ and Settlement Patterns

Local government is responsible for a large range of services, including environmental, health,emergency management, transport and infrastructure, planning and building and social andcommunity services.

To meet these service obligations, rates, fees, fines and charges are collected locally by councils.However, insufficient revenue is collected locally to deliver core services, and therefore councilsrely on specific purpose and general purpose grants to make up local funding shortfalls. In short,local government depends substantially on the Australian and Victorian governments to meet itsfunding needs and this reliance causes significant financial pressure.

The ‘gap’ between the cost of providing, maintaining and operating infrastructure and services andavailable funding is the key issue driving this research. MAV have identified a potential linkbetween the gap that councils face and different settlement patterns, based on local governmentfeedback at various forums and seminars.

New residential development and residents usually utilise existing infrastructure and services wherecapacity exists. However, some new development requires an expansion of existing infrastructureand services or delivery of new assets, which in turn attracts additional ongoing maintenance andoperational costs. Essentially, it is the access to and capacity within existing infrastructure andservices that drive the need for new assets and services, and therefore costs. The level of accessand capacity can vary by settlement pattern.

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2.2.1 Relevant State Planning Policy

State planning policy recognises the issue local government (and other tiers of government) canface in providing new residential development with required infrastructure and services. The linksbetween settlement patterns and triple bottom line sustainability are identified in the StatePlanning Policy Framework (SPPF), which sets out the following objectives that aim to reduce thenegative impacts and potential costs of new development:

To ensure a sufficient supply of land is available for residential, commercial, retail, industrial,recreational, institutional and other community uses (Clause 11.02-1);

Locating urban growth close to transport corridors and services and ensuring efficient

infrastructure provision for growth to achieve sustainable growth and protect primary

production and valued environmental areas (Clause 11.02-2);

Facilitating the orderly development of urban areas (Clause 11.02-3);

To co-ordinate provision of infrastructure and services with development in growth areas

(Clause 11.02-4);

To manage land use change and development in rural areas to promote agriculture and rural

production (Clause 11.05-3);

To develop regions and settlements which have a strong identity, are prosperous and are

environmentally sustainable (Clause 11.05-4);

Facilitating a more diverse housing supply (Clause 11, Clause 16);

To identify land suitable for rural living and rural residential development (Clause 16.02-1);

Encouraging higher density housing development on sites that are well located concerning

activity centres, employment corridors and public transport (Clause 16.01-2);

To assist the integration of community infrastructure, health and education facilities and to

provide fairer distribution of and access to social and cultural infrastructure (Clause 19);

To facilitate the timely provision of planned infrastructure to communities through the

preparation and implementation of development contributions plans (Clause 19.03-1); and

To plan for the provision of water supply, sewerage and drainage services that efficiently and

effectively meet State and community needs and protect the environment (Clause 19.03-2).

State policy is reflected in planning policy set out by local governments. Local planning policies,structure plans and land use and residential frameworks aim to co-ordinate future developmentwith existing or planned infrastructure development. However, unplanned, market-led residentialdevelopment can occur in locations which do not have access to available infrastructure networksor servicing, presenting financial risk to councils. This issue can be more prevalent in localgovernment areas that have experienced declining or stagnant population growth, wheredevelopment, regardless of its location, may be viewed as a positive thing for the community.

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2.2.2 Ongoing Maintenance and Operation

State policy highlights the need to reduce capital outlays through settlement planning. However,there is less emphasis on the maintenance and operational costs local government face in themedium and longer term as a result of residential development.

In their report National Financial Sustainability Study of Local Government, PWC (2006) identifiedthat councils may give priority to investment in new infrastructure without considering the level offunding required to sufficiently renew infrastructure as it ages. The Local Government NationalReport 2007-8, produced by the Productivity Commission, highlighted that the initial constructioncost of infrastructure accounts for approximately 20% of an asset’s lifetime costs, with operatingand renewal expenses comprising the bulk. PWC (2006) also identified that 87% of rural councilsrely on some level of grants to meet current expenditure levels.

2.3 Settlement Patterns

As identified in the project brief, settlement patterns can typically take one of four forms:

1. Consolidated - where infill opportunities are recognised and maximised;2. Dispersed – where development is vaguely centralised, but significant development in non-

serviced areas exists;3. Ribbon development - where development extends along coastal frontages or transport

links;4. Greenfield – new development in areas with little existing infrastructure. Development tends

to be predominantly suburban and reliant on existing town centres and/or activity centres forjobs and services

Source: Project Brief, p.2

The research attempts to tie the findings to the settlement patterns, and also examine whether‘market-led’ or ‘policy-led’ development has different fiscal impacts for local government.

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3. LITERATURE REVIEW

3.1 Introduction

A literature review was undertaken to identify existing research on the fiscal costs of developmentfaced by local government and, more broadly, the triple bottom line costs and benefits associatedwith different settlement patterns.

3.2 Fiscal costs faced by Local Government

Local government is responsible for the delivery of certain types of infrastructure and services.Broadly, infrastructure can be categorised into ‘hard’ infrastructure and ‘social’ infrastructure. Inaddition to delivering new assets, local government is faced with the cost of renewal and ongoingmaintenance and operation costs. This section details these costs further.

3.2.1 Summary of Typical Costs

In servicing new development, local government can face upfront costs. There is a gap in existingliterature on what these costs specifically are, with most research focusing on total infrastructurerequirements, rather than those provided by local government specifically. Table 1 is based on aseries of papers that were reviewed.

As shown, the upfront cost items are listed in terms of hard and social infrastructure that might berequired to service an expanding or new residential community. It is noted that the responsibilityfor provision can vary, depending on the developer and the level of planning undertaken inpreparation by council. For example, in greenfield developments, the developer may pay for muchof the upfront infrastructure requirements.

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Hard Infrastructure Responsibility for provision

Provision of new local roads, roundabouts,pathways, bicycle lanes (may include landacquisition)

Local Government or Private Developers

Provision of new drainage infrastructure (mayinclude land acquisition)


Provision of street lighting, street furniture,signage, bus shelters


Creation of new public open space, landscaping,wetlands and parks


Social Infrastructure Responsibility for provision

Provision of new libraries, recreational facilities,community facilities, neighbourhood houses,men’s sheds


Provision of new council-run childcare facilities,kindergartens, aged care facilities, community



Table 1: Upfront cost items faced by Local Government

Source: Trubka et al (2006); SGS Economics and Planning (2002); University of Canberra (2001).

While literature on costs faced by local government is sparse, even less research has beencompleted in the ongoing costs of maintaining and operating infrastructure and services.

Table 2 lists the typical ongoing costs faced by local government. The key difference betweenongoing and capital costs is that usually, local government pays for all ongoing cost items. Forexample, while a developer may pay for new local roads and drainage for a new subdivision, localgovernment will typically pay the ongoing maintenance costs of these new assets.

A 1996 thesis by R.A. Lovell examined the economic impacts of converting farmland into hobbyfarms in Strathsfieldsaye (City of Greater Bendigo). Lovell found that one of the largest costs borneby councils following development in rural locations is the maintenance of roads. The maintenancecost for gravel roads provided in most hobby farm locations is similar on a per property basis to thecost of maintaining urban residential streets. These costs escalate when they are particularly long,steep or have high traffic movements.

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Lovell (1996) notes that while current maintenance costs are high, future costs should be aconcern once vacant lots are eventually developed.

As mentioned earlier, this can lead to fiscal pressures for local government, particularly when thereis a gap between these costs and rate revenues.

Table 2: Ongoing cost items faced by Local Government

Source: Trubka et al (2006); SGS Economics and Planning (2002); University of Canberra (2001).

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Hard Infrastructure Responsibility for provision

Maintenance of sealed local roads and paths(resealing, rehabilitation, improvements)

Local government

Maintenance of gravel roads (gravel re-sheeting,routine maintenance)

Local government

Maintenance of drains Local government

Maintenance of street lighting, street furniture,signage, bus shelters

Local government

Maintenance (weeding, mowing, tree clearing)public open space, reserves, wetlands and parks

Local government

Rubbish collection (labour, truck hire) Local government

Social Infrastructure

Maintenance costs of social infrastructure Local government

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3.2.2 Drivers of Fiscal Costs

Some research which looks at the drivers of infrastructure requirements and costs has beencompleted by Roman Trubka of Curtin University in Western Australia, who has produced two keyreports. This research is focused on urban locations; however, the drivers of cost variation are notrestricted to metropolitan areas.

Future Perth - Costs of Urban Form (2001), prepared for the Western Australian PlanningCommission, considers past studies to determine how the location and pattern of settlement mayaffect development costs. The analysis considers a large range of previous studies conducted inAustralia, Canada and the United States. Following on from this initial study, Trubka prepared areport on Assessing the Costs of Alternative Development Paths in Australian Cities with PeterNewman and Darren Bilsborough in 2006.

The key finding from Trubka’s research is that non-contiguous development can attracthigher costs. Non-contiguous development is defined as development which takes place at adistance from existing development (i.e. ‘leapfrog’ development). Therefore it is less able to utiliseexisting infrastructure and services, requiring new investment. Non-contiguous development istypically of a dispersed, ad-hoc nature, however, greenfield subdivisions that are not located nearexisting development may also be thought of as non-contiguous.

The key characteristics of a new development which may lead to a variation in fiscal costs areoutlined as follows.

The scale and needs of new development

A key driver in the cost of providing new infrastructure is the size of a new development. A largerdevelopment area or site is more likely to have a formal developer contributions plan associatedwith it. If one has not been prepared, it is likely council will be able to negotiate the terms ofinfrastructure provision with the developer through a Section 173 agreement.

Typically greenfield subdivisions are the largest type of development and are the easiest to apply adeveloper contributions plan to. In greenfield developments, the capital outlay for new roads,footpaths, street furniture, drainage and other new assets is usually covered, in full or in part, bythe developer.

Ribbon-type, infill and dispersed development usually occurs on an incremental basis, relying onexisting infrastructure and services where possible. Incremental development is more difficult tocharge development contributions for, as smaller developers are often involved and it is difficult toestablish new infrastructure requirements or expansions in an established area.

Lovell (1996) identified that in Strathsfieldsaye, the upgrading and maintenance of infrastructureand provision of services (particularly of collector roads and garbage collection) greatly exceed therates they generate, leading to an equitable share of direct services without sufficient contribution.

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Distance from existing settlements

A number of municipal services are provided by local councils. These include rubbish collection,street cleaning and weeding/mowing of council-owned open space, drainage, recreation reserves.Development which occurs at a significant distance from existing settlements can lead to greatercosts for councils. For example, dispersed, isolated development will attract higher costs due to thedistance that needs to be covered for those services to be provided.

Local government will generally collect costs for waste management through Section 162 of theLocal Government Act. However, these charges do not usually vary for households throughout amunicipality, leading to a potential gap in charges collected and actual costs where distancescovered are significant.

Distance between settlements can also raise the cost of local government-provided emergencyservices. Under the Emergency Management Act 1986, councils have a number of emergencymanagement roles in their municipality. These include co-ordinating emergency responses andrecovery, appointing a Municipal Emergency Planning Committee and prepare a MunicipalEmergency Management Plan (Department of Justice 2011).

Trubka et al (2006) identifies that the capital costs of providing emergency services areconsiderably lower in locations that have existing capacity. For operating and maintenance costs,the recurrent annual cost per additional costs is higher in non-contiguous locations that requirenew capacity. However, these costs are linked to population levels and location-specific factorssuch as risk of fire, crime rates, and emergency rates. Generally, the cost of emergency responseis higher as a result of increased distances. This can also have implications for service levels.

Generally however, residential growth can increase the cost of service provision regardless ofdistance. This ‘cost of growth’ includes required additional open space and drainage reserves andthe maintenance of these assets. Additional housing will boost the quantum of assets that requiremaintenance and service provision by local government.

The level of existing development

The level of existing development in a location, and whether it is urbanised is a key driver of costs.Development in rural locations will often rely on different road and drainage systems. For example,many rural locations have gravel roads and open-cut drainage systems. These can attract different,sometimes higher ongoing maintenance costs than sealed roads and underground drainagesystems. Further to this, if a number of developments occur in a rural locations, this maynecessitate upgrading of infrastructure (sealing of roads, placing drainage systems underground),which would attract upfront investment by councils.

Community demographics

The cost of providing social services, such as education, health and community facilities is largelydriven by demographic characteristics rather than settlement patterns. For example, a higherpopulation of school-age children will increase demand for schools, while an ageing population

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might result in higher demand for health and medical services. The cost of providing these servicesis therefore tied to levels of demand. However, significant development in locations with limitedaccess to existing capacity may necessitate new investments in social infrastructure and services ata cost to council.

3.2.3 Funding Mechanisms

As alluded to, funding for new infrastructure is often the onus of local government. In locationswhere a developer pays for required new infrastructure, this is often the result of a formaldeveloper contributions plan or negotiations between the developer and local government leadingto a Section 173 agreement.

While this research paper does not focus on funding mechanisms, it is important to note some ofthe difficulties that may be present for local governments. A key issue is the ‘initiator penalty’whereby a developer constructing dwellings in a new greenfield location will pay for infrastructureso that a development might proceed. This means that future developers in the area may be ableto feed off existing infrastructure. On the other hand, it is also noted where development islocated on land prior to it being zoned for residential uses, the uplift in land value can meandeveloper contributions charges may be easier to absorb.

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3.3 Triple bottom Line Costs and Benefits

3.3.1 Introduction

The following section summarises the findings of a number of studies that looked at how differentsettlement patterns may influence social, economic and environmental costs and benefits for thewider population.

The Future Land Use and Transport Planning Project (2010) sought to inform the long term futurespatial vision for Auckland. It evaluated three alternative land use and transport scenarios todetermine which spatial form could best meet agreed regional outcomes. The study found thatcompact scenarios provide the most enhanced accessibility and utilise current infrastructure moreefficiently, thus reducing the need for additional infrastructure investment. Furthermore, compactscenarios concentrate development within the existing urban footprint, thereby avoiding impacts onhigh quality environments outside the metropolitan urban area. The study found that the expansivescenario resulted in greater housing choice and was viewed as the most feasible by marketcommentators, who saw the expansive scenario as ‘the closest to a business as usual approach;most familiar to both developers and the market’ (pp4-5).

These findings are supported by Geurs & van Wee (2006) who produced an ex-post evaluation ofDutch experience between 1970 and 2000, illustrating how different spatial forms can producedifferent economic, environmental and social outcomes. They commenced by hypothesising howthe Randstad would have developed without the restrictive spatial policies that have been appliedover the past 30 years.

In short the results show:

‘…without compact urban development policies, urban sprawl in the Netherlands is likely tohave been greater, car use would have been higher at the cost of alternative modes,emissions and noise levels in residential and natural environments, and the fragmentationof wildlife habitats would have been higher’ (p. 139).

Other evidence shows that spatial and infrastructure planning can also play a fundamental role inoptimising infrastructure provisioning. By channelling a portion of development into infilldevelopment locations, planning can help tap some of the excess capacity in infrastructurenetworks (e.g. water, energy, telecoms, etc.), avoiding or at least delaying the need for extendinginfrastructure networks into urban fringe areas.

The US Costs of Sprawl 2000 report finds similar results:

‘In terms of costs, sprawl development consumes land and various types of infrastructureto a level that compact development does not. Sprawl development also provides fewerpositive fiscal impacts (more costs and less revenue) than compact development provides’p.21.

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McDougall (2007) undertook a preliminary assessment of the implementation of Melbourne 2030,contrasting its more compact city outcomes versus those under a continuation of sprawlingsuburban development. McDougall’s cost benefit analysis highlighted that the marginal costsassociated with Melbourne 2030 were primarily infrastructure outlays, whereas the benefitsincluded improved resident accessibility to urban services and opportunities, with commensuratereductions in travel costs, and urban land take savings, infrastructure connection cost savings, andefficiencies in constructing dwellings for the city’s growing population. While caution is noted giventhe inherent data constraints, the benefits of Melbourne 2030 appear to significantly outweigh itscosts.

The findings from the literature are disaggregated by social, environmental and economic costs asfollows.

3.3.2 Social Costs and Benefits

Isolated development which is at a distance from existing infrastructure and services can impose anumber of social costs:

Increased risk of social exclusion and fragmentation, which can lead to increased crimerates, unemployment, decreased educational performance and is often characterised by poorquality housing and urban environments.

Increased cost of living can be an impact associated of lower density development.Increased distance from services, infrastructure and goods generally mean longer and morecostly travel times. McCaan (2003) found that transport expenditure was a households largestexpense after housing, and that in some locations the cost of transportation exceeds that ofhousing.

Compromised social equity, with isolated development leading to higher fiscal costs forcouncils, while rates and charges are generally collected on an equal basis from households ina municipality. This can place an unfair burden on the wider community.

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3.3.3 Environmental Costs and Benefits

Development in rural, agricultural or environmentally sensitive locations can face higher risks ofnegative environmental impacts:

Increased risk of damaged environments, including pollution, greenhouse gas emissions,loss of biodiversity, reduced water quality and agricultural land used for urban purposes.

Risk of higher impacts of climate change, including average temperature increases, achange in rain falls and wind patterns, higher frequency of extreme weather events, includingfloods, droughts and storms (Ministry of Environment, 2008).

3.3.4 Economic Costs and Benefits

The economic costs of settlement patterns are largely linked to how productively they function.Productivity of a location, town or region is related to accessibility and job density. These economiccosts are:

A lower level of productivity owing to an insufficiently large workforce or establishedindustry, and more importantly, increased distances (and therefore travel costs), making alocation less competitive;

Increased travel costs for all members of the community, particularly where services are ata great distance from settlements. This can lead to higher car usage, increasing the rate ofemissions, accidents and maintenance requirements for roads. It can also have socialimplications, where segments of the community may not have access to a car.

Moreover, economic costs include the fiscal cost implications associated with effectivelyservicing varying settlement patterns with hard and soft infrastructure services, as described inSection 3, i.e. for all levels of government, not just from local government’s perspective. They alsoinclude the costs of land consumption for settlement/urban purposes, which reduces theavailability of land for productive agricultural uses (or indeed environmental services). The loss ofagricultural land and the impact of fragmentation on production is also identified in Lovell (1996).Lovell also identifies that development in proximity to agricultural uses can lead to conflict due toexpectations about amenity levels.

3.4 Summary

The literature review highlights a lack of research into settlement patterns within an Australiancontext, and an absence of specific research looking at the fiscal costs local government may face.Generally, research on triple bottom line costs and benefits is focussed on metropolitandevelopment patterns, and examines how accessibility and isolation of development may lead tosocial, environmental or economic costs and benefits, rather than relating specific developmentpatterns to these factors.

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4. CASE STUDIES

4.1 Introduction and Approach

Following the literature review, consultation was undertaken with three case study municipalities inVictoria. The purpose of the consultation was to fill any research gaps, and undertake three moredetailed comparisons of settlement patterns from a local perspective. The aim of the consultationwas to identify at least one location that fitted within the settlement patterns of consolidated,dispersed, ribbon and greenfield, and to identify what settlements were more readily supported bypolicy.

These comparisons considered the fiscal (upfront and ongoing) costs local government has or maypotentially face with a development location, and also the broader triple bottom line impacts.

The following section documents these case study findings.

4.2 Shire of Golden Plains

The Shire of Golden Plains is situated between the regional cities of Geelong and Ballarat. TheResidential Land Supply Review (2009) identifies a number of challenges relating to settlement inGolden Plains Shire. This includes an oversupply of land zoned for urban development close to thebigger markets of Geelong and Ballarat. Other factors include servicing residential developmentthrough co-ordinated and adequate infrastructure provision, such as water, sewerage, roads,drainage and social infrastructure. A further issue for the Shire is ad hoc development in rurallocations, which can result in limited infrastructure and services, the fragmentation of agriculturaland farm land, and can negatively impact biodiversity. A further consideration is the impact ofsalinity on development and subdivision.

Two locations were chosen for comparison: a greenfield subdivision in Bannockburn, and RossCreek, a dispersed development location in the north-west of Golden Plains. These are shown inFigure 1.

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Figure 1: Ross Creek and Bannockburn, Golden Plains (S)

4.2.1 Relevant Settlement Policy

Settlement in Golden Plains is directed by a series of local policies, including:

21.04-122.0422.0522.0622.0722.09

Managing residential growthHouse lot excisionManagement of rural residential development – north west areaUrban growth boundariesLot sizes and medium density housingLow density residential development policy

The Municipal Strategic Statement (MSS) suggests that demand for future residential developmentin the Shire could be met within existing towns via urban consolidation and infill, with no newmajor land parcels required. Accordingly, town structure plans have been prepared for Batesford,Corindhap, Dereel, Haddon, Lethbridge, Linton, Meredith, Napoleons, Rokewood, Ross Creek,Scarsdale, Shelford and Teesdale, and provide guidance for preferred future development.

Local policy also recognises the need to ensure sequenced development in rural locations which isco-ordinated with the delivery of infrastructure. In relation to infrastructure, Clause 21.04-1identifies the following hierarchy for urban settlements:

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Bannockburn – residential, commercial and administrative needs for the south east portion ofthe Shire.Inverleigh, Linton, Meredith, Rokewood and Smythesdale – residential and commercial needs oftheir surrounding districts.Corindhap, Dereel, Haddon, Lethbridge, Scarsdale, Teesdale – local centres serving thecommunity and commercial needs of their immediate residents.

Water is supplied to all towns by Central Highlands Water or Barwon Water. Sewerage systems arelocated in Woodlands Estate and Bannockburn, while reticulated sewerage is planned forSmythesdale. When population thresholds are reached, Scarsdale and Linton can be sewered bythe Central Highlands Water Authority.

4.2.2 Bannockburn

The development context of Bannockburn

Bannockburn is located in the south-east of Golden Plains Shire, approximately 20 kilometres tothe north-west of Geelong. Consultation with Golden Plains Shire determined that the town ofBannockburn is a suitable location for the policy-led development scenario, demonstrating anexample of greenfield development which is in line with the Bannockburn Urban Design Framework(2005). It is noted that a revised urban design framework is expected to be adopted in late 2011.

There is a reasonable level of demand for new development in Bannockburn. Some infilldevelopment is occurring within the town, and subdivision is encouraged through the planningscheme. The southern part of the Shire, including Bannockburn, is serviced by Barwon Water.Owners of land in the Farming Zone to the west of Bruces Creek and south of Charlton Road, whichhas been highlighted for future residential use, have not yet applied for rezoning in the area,however, this may be a possibility in the future.

There is demand for smaller lots and smaller dwelling types in the township to cater for an ageingpopulation where there is more opportunity to downsize. Dependent person dwellings are an optionon larger lots outside of the township, however, there is a risk that such dwellings may not be usedfor their defined purpose due to the limits placed on subdivision in these areas.

Bannockburn is the only sewered settlement in the Shire, although the area to the north of the railline is not sewered. This area is zoned accordingly (Low Density Residential Zone).

Upfront fiscal costs of development in Bannockburn

Greenfield development in Bannockburn has presented several costs to council. While thedeveloper is paying for the capital outlay associated with new local roads, drainage, street furnitureand lighting within the subdivision, the development is likely to place increasing pressure onsurrounding infrastructure. For example, additional traffic and pressure on roads is likely,particularly for the Kelly Road/Shelford-Bannockburn Road/Clyde Road intersection that crosses therail line.

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A higher developer contribution is applied in Bannockburn compared to other locations in the Shire($2,765 per lot compared to $500 per lot).

Ongoing costs

Council is likely to face a number of ongoing costs associated with the greenfield development inBannockburn. These include footpaths and bicycle paths, street lighting, roads and drains. Ongoingcosts related to social infrastructure include operating (staff wages etc), upgrade and maintenancecosts of aged care facilities, including meals and wheels and cleaning services, child and maternalhealth facilities, community hub and library and costs associated with the medical centre andmobile health service.

Other services that require an ongoing funding commitment by Council include the federally fundedsports stadium, and costs associated with schools, such as lollypop ladies. The current primaryschool in Bannockburn is at capacity and the Department of Education has purchased land for anew school, however, it is unknown what years this will provide for. Council also bears ongoingcosts for maintaining public open space.

In addition, Council planning staff costs need to be considered, for example time taken inmanaging zone changes.

Council suggested that the high levels of recent growth experienced within the Shire has initiatedprivate sector interest and that it is likely that additional services, such as child care and medicalservices, may be provided by the private sector in the future. Furthermore, Council identified thatmany services required by residents of Bannockburn were provided by the nearby City of GreaterGeelong.


In addition to the economic costs of settlement to Council, consultation identified social andenvironmental costs that included development threatening biodiversity and natural systems forexample, through the clearing of trees for ad hoc development. Furthermore, the car dependentnature of the area means that residents are more vulnerable to petrol price increases.

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4.2.3 Ross Creek

The development context of Ross Creek

Ross Creek is located in the north-west of Golden Plains Shire. It is covered by the Rural LivingZone to the north of Lacys Road and the Farming Zone to the south. Due to its close proximity toBallarat, Ross Creek has become a highly desired location for rural lifestyle living.

Ross Creek was selected as an example of dispersed development, which is predominantly market-led. Consultation with Council identified that the precedent in ad hoc development approvalsthroughout Ross Creek had already been set and was therefore likely to continue. However, it isworth noting that as the Crown land allotments that comprise the area cannot be subdivided, thereis not likely to be a significant increase in capacity in Ross Creek.

Ross Creek is unsewered and there is therefore a requirement for all lots to treat wastewater.

Up-front fiscal costs of development in Ross Creek

There is limited infrastructure in Ross Creek. Typically, new development will rely on septic tanksand open-cut drains which are at the cost to the resident or developer. More development in RossCreek may however require gravel roads to be sealed, should traffic counts exceed 75 vehicles perday. Further to this, community facilities may need to be provided nearby to cater for a growingpopulation.

Ongoing costs

Increased development in Ross Creek may require more regular maintenance of roads. Thisincludes grading of gravel roads, maintaining sealed roads and additional roadside slashing. Thereis a possibility that road upgrades in Ross Creek will be needed to cater for an increasedpopulation, which will also increase ongoing costs.

In terms of social infrastructure, ongoing costs include aged care services such as communitytransportation and meals on wheels services. Garbage collection is also a service provided byCouncil and is funded by a rate of $187 per year per dwelling, however this is a flat rate chargeregardless of location.

Council identified that services such as health services, community services and education facilitiesrequired by residents of Ross Creek are provided by the nearby City of Ballarat. This reduces theneed for new, large-scale community facilities in the immediate area.


Social isolation is a risk for dispersed, ad-hoc development, leading to pressures for communityservice provision. Environmental costs include tree clearing for development purposes and thepotential for development to impact biodiversity and natural features around Ross Creek.

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4.3 Shire of Strathbogie

Strathbogie Shire is located in the Strathbogie Plateau and is halfway between Melbourne andAlbury. The municipality is 3,302 square kilometres in area and includes the towns Euroa,Nagambie, Avenel and Violet Town. Smaller townships are located throughout the municipality andare primarily used for rural living purposes. The Shire has an aging population, the third fastestaging population in the state. Strathbogie has a low household income ratio compared with theRegional Victorian average.

The two comparison locations chosen in Strathbogie were Kirwans Bridge (Ribbon) and Avenel(Greenfield). These are shown in Figure 2.

Figure 2: Kirwans Bridge and Avenel, Strathbogie (S)


Settlement in Strathbogie is primarily directed by Clause 21.03-1 of the planning scheme.

The MSS acknowledges that undesirable, ad hoc development is occurring throughout the Shireand specifically encourages residential development within Euroa, Nagambie, Avenel and VioletTown to utilise existing infrastructure and to protect agricultural land. The MSS notes that theadequate and efficient provision of infrastructure is important in delivering affordable housing,

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generating economic growth and sustainability for the Shire. Rural living is acceptable inappropriate locations within Strathbogie.

Settlement objectives for Strathbogie Shire include the co-ordination of development andinfrastructure provision, provision of housing diversity, ensuring the future sustainability offarming, minimising unsewered urban development, restructuring old and inappropriate townshipsand groups of crown allotments, and to protect agricultural land from urban encroachment.

The key settlement issues and challenges identified in the MSS include creating diversity of housingand lot sizes, protecting agricultural land and the environment, and the management and deliveryof infrastructure. Issues surrounding development within smaller towns in the Shire include theabsence of water, sewerage, drainage and road infrastructure, the location of development withinhigh fire risk areas without a reticulated water supply, and rural and low density residentialdemand.

Due to the high demand for rural lifestyle purposes within the Shire, a challenge for Strathbogie isto limit ad hoc development, which could have negative impacts on the rural landscape,agricultural activity and biodiversity.

4.3.2 Avenel

The development context of Avenel

A 54 lot subdivision in Avenel was chosen as a case study for greenfield development inStrathbogie. The development is located in the town of Avenel, behind the main street, whichcontains existing (social and hard) infrastructure within walking distance. Growth in Avenel hasattracted private investment, with a number of private health services moving to the area. Avenelis also a potential commuting town, located 15 minutes from Seymour which has V/Line trainaccess to Melbourne.

Up-front fiscal costs of development in Avenel

Where possible, Council will aim to have most upfront costs including road networks, drainage,paths and street lighting, paid for by the developer. As such, there are not many upfront costs toCouncil. The developer is also paying for the sealing of Belmont Street and another intersection.Outside of the development, increased traffic as a result of the development may require theupgrade of an intersection between a local and VicRoads road, particularly given trucks (B-Doublesetc) use the road. It is unclear when and if this upgrade will occur, however, if it goes ahead theremay be some cost to Council.

In terms of other costs, an increased population may require Council to provide additionalplayground equipment and/or a community hall upgrade. This hall currently houses infant welfareservices.

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Ongoing costs

Ongoing costs to Council as a result of greenfield development in Avenel will include landscapingand mowing of an 18 metre wide reserve. Current road reserves in other locations in Avenel have a30 metre frontage. Council will also cover the cost for maintaining the wetlands associated with thesubdivision development. Further maintenance costs to Council will include street cleaning,sweeping, garbage collection, gardening, stormwater drain clearing costs, street furniture and busshelters, line markings and street lights. Increased traffic associated with development mayincrease the maintenance requirements of the local roads and increase the requirement formaintaining kerb and channels.

In terms of social infrastructure, development is likely to put pressure on existing services, such aschildcare and maternal and child health, particularly if younger families locate to the area. Ongoingcosts associated with this could include the upgrade of existing facilities or provision of newfacilities.


It is possible that the Avenel development will increase housing affordability through increaseddwelling supply and mix. Smaller than average lots are being developed (700 to 800 squaremetres) and this may attract a more diverse community to the area, such as younger families.Council have identified that existing aged care service levels may not be able to cope withincreased demand.

In contrast to many greenfield subdivisions, Avenel is within walking distance from an existingtown centre. This provides social benefits by allowing accessibility for segments of the communitywho do not have access to a car. It can also lead to reduced car use more broadly, which hasenvironmental benefits. At the same time, it is important that the natural environment of Avenel isretained as it is a key feature of the area.

Other considerations include that there are no public hospitals within the Shire and that residentstherefore rely on health services in neighbouring municipalities, such as the City of GreaterShepparton. The only secondary school in the Shire is in Euroa, however, transport to the schoolfrom other towns in the Shire is presently full. An increased population within Avenel will increasepressure on these services.

4.3.3 Kirwans Bridge

The development context of Kirwans Bridge

Kirwans Bridge is located north-west of Nagambie, west of the Goulburn Valley Highway and alongthe Goulburn Weir. Development in Kirwans Bridge has escalated in recent years, due to thelifestyle opportunities offered by the proximity to water features. This increase in demand has ledto increased housing costs in the area and pressure on existing infrastructure. Most lots in the areahave a dwelling on them, but there is room for some additional dwellings.

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Up front fiscal costs of development in Kirwans Bridge

The major cost to Council associated with development and increased traffic at Kirwans Bridge isthe need for a redeveloped bridge, which has been costed at approximately four million dollars(over 314 metres long). The existing bridge is heritage listed and is over 100 years old. Inaddition, as there is no existing underground drainage in Kirwans Bridge; increased developmentmay require underground drainage infrastructure, provided at cost to Council. Open drains arelocated in the north and south. There may also be further costs relating to the water sensitivity ofthe area, being located along the Goulbourn Weir.

On going costs

Ongoing costs to Council associated with development at Kirwans Bridge include maintenance costsfor landscaping, street cleaning and roads. Road capacity is an issue in the area, and increaseddevelopment and consequent traffic flows as a result of development will likely require roadupgrades.

A major capital expense to Council will be the introduction of gross pollutant traps to the outfall ofall existing open drainage systems.


Households in Kirwans Bridge are heavily dependent on cars, which has environmental costs andthe lack of a transport alternative can have implications for social equity. The car dependence ofthe area is linked to the hilly terrain of the area, and the lack of existing public transport services.

Residents of Kirwans Bridge are reliant on retail in Nagambie, and public hospitals in surroundingmunicipalities as there are none in Strathbogie. The only secondary school in the Shire is in Euroa,however, transport to the school from other towns in the Shire is presently full. More broadly,much development throughout the Shire will rely on neighbouring municipalities for major services.

Kirwans Bridge is not sewered and is reliant on septic tanks, which need to be closely monitored toensure that there are no implications on the local environment and water quality, given theproximity of the Goulburn Weir.

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4.4 City of Greater Shepparton

The City of Greater Shepparton is in the North Goulburn region of Victoria, approximately 180kilometres north of Melbourne. Shepparton is the largest urban centre in the City of GreaterShepparton, serving as a central business district, and a commercial, administrative and industrialbase for the wider region. Smaller centres within the City include Congupna, Dookie, KatandraWest, Merrigum, Murchison, Tallygaroopna, Tatura, Toolamba and Undera.

The two locations chosen for the case study are Mooroopna West (Greenfield) and SheppartonNorth (Infill), as shown in Figure 3.

Figure 3: Mooroopna West and Shepparton North, Shepparton (C)


Greater Shepparton’s planning scheme promotes urban consolidation and higher density residentialdevelopment in Shepparton and other key activity centres in order to limit urban expansion andprotect agricultural land.

Strategies to achieve this include encouraging urban consolidation in existing residential areas withinfrastructure and services, and increased densities in identified locations, such as near publictransport, within major redevelopment sites and near activity centres.

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The MSS states that development in rural residential locations is to be limited and thatdevelopment must not compromise urban consolidation, rural amenity or agricultural function. Toensure these objectives are met, subdivision of rural land is to be prevented and agricultural landwill be protected from urban encroachment, except for in designated growth areas. Ruralresidential development will only be approved if it is supported by a supply and demand analysis.

In rural locations, residential development that is not related to farming is discouraged. Farmingand agricultural uses are to be protected by preventing development on small lots and setting theminimum dwelling lot size to two hectares. In addition, dwellings are discouraged on land that isnot suitable for on-site disposal of septic tank effluent. The MSS acknowledges that non-agricultural development in rural areas can impact on irrigation and drainage infrastructure andthat these must be addressed as part of any new development (Clause 21.01).

Clause 21.07-2 covers urban and rural infrastructure services. Only Shepparton, Mooroopna,Tatura, Murchison and Merrigum have reticulated sewerage services managed by Goulburn ValleyWater and there are no proposals to provide this service to any other community within the next10 years. Shepparton, Mooroopna, Tatura and Merrigum all have natural gas reticulation supplyand there are no plans for natural gas extension to other townships in the municipality. This isparticularly important as the MSS identifies that a key challenge will be urban encroachment onagricultural land, flooding and drainage issues, and salinity.

The policy recognises that there is a need to ensure that new development provides physical andCommunity infrastructure through development contributions plans or pre-developmentagreements as part of development plans.

4.4.2 Shepparton North

The development context of Shepparton North

Greater Shepparton’s planning scheme is supportive of urban consolidation and infill development.An infill site in the Shepparton North was identified as a case study example. It is bounded byVerney Road, Southdown Street, Ford Road and Hawkins Street.

Upfront fiscal costs of development in Shepparton North

While infrastructure and service provision may already exist for infill development locations,Council is still likely to incur costs. Consultation highlighted that it is difficult to put a DCP in placefor existing areas as it is more complex to determine what share of the infrastructure costs shouldbe allocated to the new development. Often the land is already zoned for the purpose andtherefore can only impose development costs as permit conditions which must directly relate to thedevelopment. Current legislation does not allow for the imposition of ‘headworks’ type charges. Asa result, the cost to Council for infill development will be higher. Costs to Council include theupgrade and renewal of drainage infrastructure to accommodate increased capacity, road upgrades(kerb and channel), and possible land acquisition costs for provision of a 2.5 metre sharedfootpath.

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Ongoing costs

Ongoing costs for infill development are broadly the same as those for greenfield development, forexample, Council must fund maintenance of roads, shared paths and drainage infrastructure. Asexisting services may already be in place, increased densities and population as a result of infilldevelopment may require the additional provision for drainage capacity, of public open space, aswell as the expansion, consolidation or upgrade of some community services and/or facilities, suchas the primary school, kindergarten and maternal health. In addition, increased traffic volumes asa result of a growing population within infill areas will require significantly more spending byCouncil on road maintenance, road upgrades and towards traffic management. Verney Road wasidentified by Council as a location with increased traffic flows and requiring significant works toaccommodate increased traffic movements and responding to road safety concerns. Although thisadditional traffic is in some way linked to the infill development, is not possible to impose some ofthis cost onto the developments which are leading to the increased volumes.


The impacts of infill development on social and environmental factors identified include that thereis a higher degree of walkability in infill locations as a result of existing path networks. However, itis also acknowledged that there are some locations where pedestrian linkages do not exist. Inaddition, smaller dwellings are catered for via infill development, providing diversity of dwellingtypes and choices, including for an ageing population.

4.4.3 Mooroopna West

The development context of Mooroopna West

Mooroopna West is a greenfield subdivision (1600 lots in total) located in a growth corridor ofGreater Shepparton. The overall Structure Plan area is bounded by the western side of the Echuca-Mooroopna Road, Cornish Road to the North, Goulbourn Valley Highway reservation to the westand Midland Highway to the south.

Mooroopna West is relatively flat and prone to flooding. This issue, coupled with residential growthpressures in Greater Shepparton, has led to significant preparatory work by council, includingpreparation of Developer Contributions Plans and Structure Plans.

Upfront fiscal costs of development in Mooroopna West

As a result of development in Mooroopna West, upfront capital costs to Council broadly fall underfour categories, including costs for the preparation of plans, implementation costs, hardinfrastructure costs and soft infrastructure costs. Costs to Council associated with plan preparationinclude the preparation of the Mooroopna West Growth Corridor Development Contributions Plan(2009) and the Mooroopna West Structure Plan (2009). In order to efficiently co-ordinate jointinfrastructure and to accurately account for all costs, these plans require a great deal of detail.

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Further to this, implementation costs to Council have included costs associated with VCAT,compensation hearings, legal advice, panel hearings and expert witnesses.

While most hard infrastructure costs in Mooroopna West are to be paid for by the developer, hardinfrastructure costs to Council include surveying, some upsizing of pipes and land acquisition costsfor drainage.

There have not been great costs to Council as yet regarding soft infrastructure, however, as thepopulation of Mooroopna West increases by another 4000 residents, it is likely that Council willhave to provide additional recreation facilities. Council will incur the cost for some add-ons to thecommunity centre and may have to provide further community services, such as a community hall,which cannot be covered by a DCP. A children’s service centre can however be covered by a DCP.

The Mooroopna West Growth Corridor Development Contributions Plan (2009) outlines the costs ofdevelopment for the projects that involve developer funding. Where the developer does not fund100% of a project, Council may be required to contribute to some, or all, of the external costs. Theexternal costs for the Mooroopna West Growth Corridor are outlined in Table 14.

Ongoing costs

Although most infrastructure capital costs are paid for by the developer, the ongoing maintenanceof this infrastructure lies with Council. These include for roads, lighting, footpaths, roundabouts,playgrounds, drainage and treatment, embellishment, maintenance and planting of wetlands.Maintenance of the extensive areas required for flood mitigation will also be borne by the Council,often requiring the provision of additional staff and equipment.


A number of social and environmental costs were identified for development in Mooroopna West.These included that the dispersed development can lead to social isolation, particularly amongthose with mobility issues. Furthermore, the bus network will not service the Mooroopna West areauntil a certain population threshold is reached, therefore making residents car dependent, at leastin the short term.

Development in Mooroopna West is occurring on grazing land. While there can be tensions betweennew residents living next to farming land without an understanding or tolerance for farmingactivities, the isolated nature of the site bounded by the Shepparton by-pass will ameliorate theseissues in this case.

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InfrastructureItem

Greenfield Dispersed Ribbon

New local roads,required upgrades,intersections androundabouts withinthe developmentsite

Developer paysproportion orentire cost

Not often requiredunless traffic reachesa certain threshold.Council will pay.

Not often requiredunless traffic reachesa certain threshold.Council will pay.

Larger sites willusually be paid for bydeveloper. Smallersites may not neednew roadinfrastructure.

Required roadupgrades,intersections androundaboutsaround thedevelopment site

Council usuallypays entire cost

As above As above As above.

New/upgradeddrainage


Developer/residentpays for upgrades onsite

Developer/residentpays for upgrades onsite

Council usually pays

New footpaths,cycle paths andshared paths


If required, councilpays.


Council pays

Street signage,furniture and

Developer paysproportion or



Council pays


4.5 Key Findings

This section documents the key findings by settlement pattern type, based on consultation heldwith councils. Responsibility for upfront and ongoing costs is first detailed, followed by collectedcost data. Data gaps are also examined.

4.5.1 Responsibility for Costs

Responsibility for upfront, capital costs can fall on a developer/resident/landowner or council. Asshown in Table 3, larger developments (greenfield subdivisions and substantial infill developments)are more likely to have a developer pay for a proportion or the entire amount of upfront capitalcosts.

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Table 3: Responsibility for upfront capital costs

36

InfrastructureItem


Open space,recreation,reserves,playgrounds

Developer pays aproportion viaopen space levy orDCP

Council pays, openspace levy may apply



Communityfacilities, libraries,youth centres

Council usuallypays cost

Residents usually relyon existing facilities.Council pay for newrequired facilities.

Residents usually relyon existing facilities.Council pay for newrequired facilities


Maternal and childhealth facilities,child care facilities,aged care facilities

Council usuallypays cost




Council planningcosts (surveying,

Council pays. Council pays if this isrequired.

Council pays if this isrequired.

Council pays if this isrequired.


Table 6 presents the responsibility for ongoing costs associated with maintaining and operatinginfrastructure. As shown, local government is typically responsible for all ongoing costs, however,may receive funding from other tiers of government when available.

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InfrastructureItem


Road maintenance(potholes, linemarking, gravel re-sheeting)

Local governmentwith potentialState/Fed. Fundingfor major upgrades



Drainagemaintenance

Local government. Local government. Local government.

Maintenance ofopen space,playgrounds,reserves

Local government.Potential fordeveloper to paycosts within site forfirst 12-24 months.

Local government. Local government.

Garbage collectionand clearing ofillegally dumpedrubbish.

Local government. Local government. Local government.

Operation of Local government. Local government. Local government.


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Table 4: Responsibility for ongoing costs

38

Item Greenfield Dispersed Ribbon

Required roadupgrades,intersections androundaboutsaround thedevelopment site

Sealing ofgravel roads,$200 permetre

Intersectionupgrades$100k to$200k councilproportion

unknown unknown

Street signage,furniture andlighting

unknown unknown unknown


4.5.2 Cost Data

Consultation identified that cost data was not readily collected by councils. As shown in Table 5,there is limited evidence available on the actual cost of upfront infrastructure requirements. Thismay be a reflection of the variance in cost for different developments in municipalities, and thewide range of factors that may influence costs (i.e. terrain, existing infrastructure provision anddistance, density of development and so forth).

Table 5: Upfront capital costs

More detailed data is available on the ongoing maintenance and operation costs faced by councils,given that local government is responsible. Table 6 lists the cost data collected by councils. A keyfinding from these costs is that the cost of maintaining gravel roads is higher than maintainingsealed roads – an important consideration in dispersed or ribbon-type development.

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Item Greenfield Dispersed Ribbon Infill

Maintenance ofroads

Sealed roadsRepair of potholes

Line marking ofroads

Replacement of

broken kerb

Maintenance of

gravel roads(machine, labour,

materials, potholes)

Sweeping loosestones at

intersections

Approx $30

per potholerepair

$148 (per lotfor 54 lotsubdivision)

$250 perintersection

$200 per

metre $1,200 per week

$375 per

intersection

unknown unknown

Garbagecollection

~$180-$300per dwelling

~$180-$300 perdwelling



Oval maintenance $10,000 p.a.per oval

$10,000 p.a. peroval

Presumably asper greenfield/dispersed

Presumably asper greenfield/dispersed

DrainageMaintenance

Clearing

~$270 per lot(in 54 lotsubdivision)

~$55 per lot(in 54 lotsubdivision)

$5,000 p.a. inRoss Creek

unknown unknown


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Table 6: Ongoing maintenance and operation costs

40

Item Greenfield Dispersed Ribbon

Erosion tidy up ~$25-30 perlot

Presumably asper greenfield


Replacement ofsigns andfingerboards

$100 perfingerboard



Clearing ofillegally dumpedrubbish

$300 p.a. (in54 lotsubdivision)

unknown unknown

Street lights(electricity cost)

$30 per streetlight



Replacement ofstreet trees

$80 per tree Presumably asper greenfield


Mowing ofcouncil land

$3,900 per Ha

Full timemower$45,000 to$48,000 p.a.


$3,000 (treetrimming only)


Watering ofreserve

~$370 per dayfor labour andute (approx 10days perannum)



Operation ofcouncil-run

unknown unknown unknown


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4.5.3 Information Gaps

As shown, there are significant data gaps on costs. In relation to capital, upfront costs, data (on aunit cost basis) was generally not available for the provision of:

Local roads and roundabouts;Drainage;Open space, reserves, parks, recreation;Street lighting, furniture, signage;Foot paths, cycle paths and shared paths; andCommunity facilities.

Typically, the costs of roads, paths and drainage differ according to local attributes, such as thetype of road or drain, the terrain, soil type, and so forth. It was identified that new communityfacilities would be required at the completion of some developments; however, detailed coststudies were not yet prepared.

In relation to maintenance and operation costs, there is a larger body of data on this available fromlocal government. This is presumably due to the ongoing responsibility of councils in providingthese services and their capability to estimate potential costs.

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5. CONCLUSION

5.1 Key Findings

5.1.1 What Drives the Costs and Benefits of Different Settlement Patterns?

Comparison of infill, greenfield, ribbon and dispersed settlement patterns has highlighted that eachpatterns has varying costs to local government.

Consolidation (infill) development

Broadly, infill development is less costly as it is located near existing infrastructure and services,and local government is therefore not required to contribute capital costs, assuming additionalcapacity requirements do not trigger an upgrade or extension of existing infrastructure andservices. Should additional or upgraded infrastructure be required however, then costs may besignificant for local government.

As it is difficult to determine usage proportions in existing urban areas, it is harder to obtainfunding from developer contributions for development in infill locations. Therefore, the upfront costto local council for infill development is often higher as it must cover the costs for upgradingexisting infrastructure, such as drainage, to accommodate increased population and densities.

In terms of social infrastructure, the costs to local government are also reduced, as services suchas maternal and child health, already exist. However, councils may incur costs for extending orupgrading community facilities, as a result of an increased local population and usage.

Greenfield development

The upfront costs to local government for greenfield development are generally quite low if adeveloper contributions plan is in place, which ensures that most upfront costs are picked up bythe developer. Therefore, greenfield development involves less upfront costs and financial risk tocouncils. Typical upfront costs covered by the developer under a development contributions planinclude local roads, footpaths, street lighting and furniture and landscaping. If any external use isassociated with a development, council may have to contribute to costs, such as for a local road orfootpath.

Local government incurs higher operating and maintenance costs for greenfield developmentcompared to ad-hoc development due to the greater stock of infrastructure that must be kept.Ongoing costs to local government include maintaining drainage and open space, footpaths, streetlights, cleaning drains and garbage collection. Consultation identified that developers often installunconventional street lighting within a development that is more expensive for Council to maintainthan traditional council fittings.

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43


Greenfield developments often lack sufficient social infrastructure, meaning that residents willtravel to nearby established town centres for services. This can place pressure on existingsurrounding services and can also contribute to increased traffic congestion and heighten othernegative impacts associated with car use.

Dispersed development

Dispersed development does not present many upfront costs to council. Despite a lack ofsubstantial infrastructure (such as sealed roads, underground drainage or sewerage), newresidents generally accept this and it is reflected through the lower price of land in these locations.Costs may be incurred by local government where dispersed development reaches a threshold tonecessitate infrastructure upgrades, such as sealing of gravel roads.

Some of the major costs associated with dispersed development include ongoing maintenancecosts for unsealed roads, which are higher than the costs associated with sealed roads. Roadupgrades were also recognised as a significant cost to council.

Social isolation and car dependence were issues also identified with dispersed development, as wellas a lack of housing diversity. Consultation identified the importance of regional services toresidents in dispersed locations. Another issue identified with a dispersed settlement pattern wasthe fragmentation of rural land, which is a more significant issue in locations with productiveagricultural land, as it can prevent that land from being used for agricultural purposes.

Ribbon development

Ribbon development usually occurs next to/alongside existing residential areas, meaning there arefew, if any capital costs to council arising from incremental development. The case studyhighlighted the need for a major piece of infrastructure to be upgraded due to increased traffic inan area, however, as with infill development, ribbon development can utilise existing infrastructureand so there are less upfront costs to council, compared to greenfield development. Possible futurecosts to council, as is the case with Kirwans Bridge, could include underground drainageinfrastructure provision.

As well as local servicing costs such as street sweeping and garbage collection, ongoing costsidentified with ribbon development include road maintenance costs, as well as traffic managementand road upgrade costs associated with increased traffic.

Short, medium and long-term costs

The case studies highlight that different development types result in different costs to localgovernment in the short, medium and long term. In the short term, greenfield development isusually the least costly due to developers paying for new, required assets, however there may beplanning and surveying costs incurred by council. Dispersed development and ribbon developmentare also unlikely to lead to upfront costs, as these generally require the landowner to pay forrequired infrastructure. On the other hand, infill development can incur upfront costs to council,particularly as it is more difficult to apply a DCP in these locations.

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Typical costs Typical benefits

Consolidated (infill) Amenity may becompromised whendevelopment is not well-planned.

Construction nuisance(noise, pollution) more likelyin infill locations in short-term.

Closer proximity to existingservices

Increased walkingopportunities

Increased opportunities forsocial interaction

Ribbon-type development Can heighten social isolationin low density locations.

May be in close proximity toexisting services dependingon location.

Dispersed development A high level of socialisolation

Limited access to communityand social services

May presentlifestyle/amenity benefits forresidents


In the medium to long term, operating and maintenance costs are incurred across all settlementtypes. Generally, higher density locations such as greenfield and infill locations will have higherongoing costs, due to the increased number of dwellings (users), higher level of infrastructureusage and more urbanised nature. Of course this additional cost generally serves a greater userbase, and per capita cost implications are not clear.

In the long term, it is possible that new social infrastructure would need to be provided whenpopulation thresholds for certain facilities are reached. These population thresholds vary acrosslocations and are generally not publicly available. This would be the case for dispersed andgreenfield development locations where assets may not currently exists and residents rely onnearby services in other towns.

5.1.2 Triple Bottom Line Costs and Benefits

Through the literature review and consultation, broader triple bottom line costs and benefits wereidentified for different settlement patterns. The following series of tables documents these bysocial, environmental and economic costs and benefits.

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Table 7: Social costs and benefits by settlement pattern

45


Consolidated (infill) May increase carcongestion/traffic in somelocations.

Higher potential for less caruse, reducing emission insome locations.

Land savings, with a reducedarea of land beingdeveloped.

Ribbon-type development Higher levels of car use,increased emissions.

May avoid development ofsome areas by concentratingit along a transport route.

Dispersed development Septic tanks (where used)can compromise waterquality if not managed

Higher levels of car use,increased emissions.

If effectively planned for, lowdensity rural living canensure retention of valuedlandscapes

Greenfield development The loss of rural, agriculturalor environmentally

Can be subject to morerigorous environmental


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Table 8: Environmental costs and benefits by settlement pattern

46


Consolidated (infill) May have higher levels oftraffic congestion, emissionsfrom vehicles and so forthdue to increasedpopulation/housing density.

Can increase productivity viahigher pool of workers in atown/city.

Can maximise efficient useof existing infrastructure andservices.

Land savings, with a reducedarea of land beingdeveloped.

Ribbon-type development Likely to be car dependent. If located along a road, canincrease accessibility (bycar).

Closer proximity to existinginfrastructure

Dispersed development May contribute to lowerlevels of social capital.

Reduced accessibility toservices and jobs mayimpact productivity of aregion.

May reinvigorate an areawhere population growth isstagnant or in decline


Table 9: Economic costs and benefits by settlement pattern

5.1.3 Market-led vs. Policy-led Development

Broadly, all development can be said to be market-led and policy-supported, as a developer willinitiate it and the planning scheme will permit it. However, most planning schemes emphasise theneed to utilise existing infrastructure to maximise efficiencies, and this is primarily achievedthrough infill development but also ribbon development where it can tap into nearby networks.

The case studies and literature have shown that utilising existing infrastructure will reduce upfrontcosts to councils, and will lead to a number of broader economic, social and environmental benefitsfor the community.

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However, it is also noted that there can be increased difficulty with local government obtainingdeveloper contributions for infill development. Further to this, ongoing maintenance and operationcosts will still apply.

5.2 Research Gaps

The literature review identified a lack of Australian research on how settlement costs may presentdifferent fiscal and triple bottom line costs and benefits to local government, and the widercommunity, particularly from a rural and regional perspective.

Consultation with councils identified several data gaps, highlighting the need for future studies.

Limited available data on fiscal costs. Councils are not always able to readily access fiscalcost data associated with specific developments. Local factors which can significantly influencecosts must be considered, and the potential costs of new assets usually are subject to detailedstudies. Therefore, examples of these costs are not generally applicable for other localgovernment areas.

Limited forecasting on future cost pressures. While all councils agreed that differentsettlement patterns would present different costs to council, there was extremely limitedanalysis within local government on what, and how much these costs would be. Estimates ofmaintenance and operation costs were provided by some councils. However, it is unlikely thatthese are similar in other areas as these costs can be subject to local conditions.

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REFERENCES

Department of Justice (2011) ‘Local Government and Emergency Management’ website accessed 3November 2011, via:http://www.justice.vic.gov.au/wps/wcm/connect/justlib/DOJ+Internet/Home/Safety+and+Emergency+Management/Emergencies/Planning+for+Emergencies/JUSTICE+-+Local+Government+and+Emergency+Management

Geurs, K.T. and van Wee, B. (2006) Ex-post Evaluation of Thirty Years of Compact UrbanDevelopment in the Netherlands, Urban Studies, Vol. 43, No. 1 139-160.

Lovell, R.A., (1996) The conversion of farmland to hobby farming: Regional environmental andeconomic costs. Thesis for the degree of Master of Arts (Town Planning), Victoria University ofTechnology.

McCaan, B. and Ewing, R. (2003) Measuring the Health Effects of Sprawl: A National Analysis ofPhysical Activity, Obesity and Chronic Disease, Smartgrowth America

McDougall, A (2007) A Preliminary Cost Benefit Assessment of Melbourne 2030, Australian Planner,Vol. 44, No. 2.

SGS Economics and Planning (2002) Guidelines for a Local Government Infrastructure FinancingManual. Final Report prepared for National Office of Local Government & the Local GovernmentMinisters’ Conference

Social Exclusion Unit – Social Exclusion and Cabinet Office (2001) ‘What is Social Exclusion’http://www.cabinet-office.gov.uk/seu/index/march_%202000_%20leaflet.htm.

TRB and NRC (2002) Costs of Sprawl -2000, TCRP Report 74.

Trubka, R. (2001) Future Perth – Costs of Urban Form. Working Paper 2. Prepared for the WesternAustralian Planning Commission.

Trubka, R., Newman, P., and Bilsborough, D. (2006) Assessing the Costs of AlternativeDevelopment Paths in Australian Cities. Report commissioned by Parsons Brinckerhoff Australia.

University of Canberra (2001) Managing Urban Systems- An Introduction, course notes preparedby Spiller Gibbins Swan Pty Ltd.

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APPENDIX A: RELEVANT PLANNING SCHEME MATERIAL

City of Greater Shepparton

Municipal Strategic Statement

Within the municipality, it is predicted that the towns of Shepparton and Mooroopna willaccommodate most population growth to 2030 (approximately 19,733 people or 13,154 dwellingsby 2031). By 2030, it is estimated that most residents of Greater Shepparton (approximately66,039 people, or 82 per cent of the population) will live in Shepparton and Maroopna, while theremainder of the population will be located in Tatura, Murchison, Merrigum, Dookie, Congupna,Katandra West, Tallygaroopna, Toolamba and Undera (Clause 21.04).

In terms of settlement, the MSS promotes urban consolidation and higher density residentialdevelopment in Shepparton and other key activity centres. The MSS states that settlementboundaries on urban development are needed to limit urban expansion and to protect agriculturalland. Council has identified four growth corridors around Shepparton and Mooroopna whereresidential densities will be maximised.

Based on the population projections above, the MSS suggests there is 151 hectares of landavailable in Shepparton and Mooroopna. Assuming a take up rate of 400 dwellings per annum, thisrepresents a 3.5 year supply based on the dwelling mix:

medium density dwellings (400 square metres per lot) – five per cent of dwelling stockconventional dwellings (800 square metres per lot) – 70 per cent of dwelling stocklow density dwellings (2000 square metres per lot) – 25 per cent of dwelling stock

To accommodate an additional 13,154 dwellings on an estimated required 1057 hectares (includingthe above 151 hectares) in Shepparton and Mooroopna by 2031, and the changing demographic inthe municipality, the following dwelling mix has been compiled:

medium density dwellings - 20 per cent of dwelling stockconventional dwellings – 60 per cent of dwelling stocklow density dwellings – 20 per cent of dwelling stock

Clause 21.04 outlines objectives for urban consolidation and growth, rural residential and ruralareas. Objectives for urban consolidation and growth include to provide urban growth to 2030 inspecified growth areas and to provide a diversity of housing types and densities to meet the needsof the community. An additional objective is the efficient release of land so that it is co-ordinatedwith infrastructure provision and services and in appropriate locations. Medium densitydevelopment is encouraged in identified locations, while township expansion may occur toaccommodate growing populations so long as it does not affect agricultural land or the growth ofurban centres.

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Strategies to achieve these objectives include encouraging urban consolidation in existingresidential areas with infrastructure and services, and increased densities in identified locations,such as near public transport, within major redevelopment sites and near activity centres.Apartment and shop top housing is encouraged within the Shepparton CBD, while smaller lotprovision is encouraged in urban locations to provide housing diversity for the changingdemographic. Multi dwelling developments are discouraged in locations covered by a FloodwayOverlay. To contain urban growth, the MSS suggests introducing a settlement boundary. In termsof townships, strategies aim to ensure that development is determined by infrastructure provisionand a supply and demand analysis and that developers fund the extension of water and sewerageservices in these locations.

The MSS recognises that residential growth near the current airfield may be constrained, howeverif relocation of the aerodrome occurs, then residential/commercial uses are suitable for the site.

The MSS states that development in rural residential locations is to be limited and thatdevelopment must not compromise urban consolidation, rural amenity or agricultural function. Toensure these objectives are met, subdivision of rural land is to be prevented and agricultural landwill be protected from urban encroachment, except for in designated growth areas. Ruralresidential development will only be approved if it is supported by a supply and demand analysis.The urban/rural interface is to be protected and the green belt between Shepparton andMooroopna protected.

In rural locations, residential development that is not related to farming is discouraged. Farmingand agricultural uses are to be protected by preventing development on small lots and setting theminimum dwelling lot size to two hectares. In addition, dwellings are discouraged on land that isnot suitable for on-site disposal of septic tank effluent. The MSS acknowledges that non-agricultural development in rural areas can impact on irrigation and drainage infrastructure andthat these must be addressed as part of any new development (Clause 21.01).

Clause 21.07-2 covers urban and rural infrastructure services. Shepparton, Mooroopna, Tatura,Murchison and Merrigum all have reticulated sewerage services managed by Goulburn Valley Waterand there are no proposals to provide this service to any other community within the next 10years. Shepparton, Mooroopna, Tatura and Merrigum all have natural gas reticulation supply andthere are no plans for natural gas extension to other townships in the municipality. Goulburn ValleyWater is responsible for the supply and distribution of irrigation water for rural use.

The policy recognises that there is a need to ensure that new development provides physical andcommunity infrastructure through development contributions plans or pre-developmentagreements as part of development plans.

Relevant objectives relating to infrastructure include that a high quality water supply is providedfor urban and rural use, that irrigation infrastructure is protected from urban development, thattelecommunications facilities should be available to all locations throughout the municipality, andthat the rural drainage network should not be used to facilitate urban expansion.

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To achieve these objectives, relevant strategies include to ensure that new developments haveconnections to reticulated services or can have on-site disposal with no adverse impacts onwaterways, and that buffer distances are established around existing waste water facilities.Strategies also include to ensure that DCPs or pre-development agreements for infrastructure andcommunity services provision are prepared for all growth areas.

Challenges associated with the future growth and development of the Shire include urbanencroachment on agricultural land, flooding and drainage issues, and salinity.

Greater Shepparton 2030

Greater Shepparton 2030 is a strategy developed by the City of Greater Shepparton and theDepartment of Sustainability and Environment as a blueprint for building sustainable economicactivity and maximising the quality of life in the municipality over the next 30 years. It wasdeveloped as an update to the City of Greater Shepparton Strategy Plan 1996 which formed thebasis for the current Municipal Strategic Statement. The study looked at five key areas of:settlement and housing; community life; environment; economic development; and infrastructure.The settlement and housing section covers urban growth, housing and sustainable design.

The strategy highlights that the key considerations for urban growth are a growing and agingpopulation, water availability and management and dependence on the agricultural sector. Thestrategy references the Shepparton North and South Growth Corridors as locations for futureresidential development. A supply and demand analysis of residential land in Shepparton andMooroopna indicates that there will be a shortfall of land either zoned or identified for residentialdevelopment by 2015. The identified objectives for urban growth include to provide a sufficientsupply of land for urban growth to 2030, to release land efficiently in terms of infrastructure andservices provision, to contain urban growth within specified areas, and to ensure access toemployment and activity centres.

The strategy identifies the role and function of the different urban settlements within the Shire,including the CBD of Central Shepparton, the cities of Shepparton, Mooroopna and Kialla, themedium towns of Tatura and Murchison, and smaller towns, such as Dookie and Congupna. Thestrategy outlines the hierarchy of centres and the functions they serve within the Shire. The futurerole of each settlement type is specified. For example, in Shepparton, Mooroopna and Kialla,growth will occur through consolidation and within specified boundaries. In Tatura and Murchison,growth potential will be matched by demand, and in the short to medium term growth can beaccommodated within town boundaries. In the smaller towns there is limited growth potential dueto limited infrastructure, such as sewerage, and the need to protect surrounding agricultural land.

The housing section of the strategy also deals with residential growth and expansion and considersfactors including an aging population, providing for smaller households and housing diversity,housing affordability, and supply and demand for residential land to 2030.

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Golden Plains Shire

Municipal Strategic Statement and Local Policy

Local policies relating to the settlement of Golden Plains Shire include:21.04-122.0422.0522.0622.0722.09

Managing residential growthHouse lot excisionManagement of rural residential development – north west areaUrban growth boundariesLot sizes and medium density housingLow density residential development policy

The MSS acknowledges that demand for future residential development within Golden Plains Shirecan be met within existing towns within the municipality, including through urban consolidation andinfill (Clause 21.04-1). The MSS recognises that development within the Shire needs to beconsidered in a regional context, specifically the settlements of Ballarat and Geelong.

Town structure plans have been developed for Batesford, Corindhap, Dereel, Haddon, Lethbridge,Linton, Meredith, Napoleons, Rokewood, Ross Creek, Scarsdale, Shelford and Teesdale, andprovide guidance for preferred future development. The structure plans indicate locations for futureresidential development and residential capacity. Future expansion and low density residentialdevelopment will occur in Bannockburn, Batesford, Haddon, Inverleigh, Meredith and Teesdale, andtownship consolidation is promoted in Dereel, Lethbridge, Linton, Napoleons, Rokewood, RossCreek, Scarsdale, Shelford and Smythesdale (Clause 21.03).

Specifically, Bannockburn is the largest urban centre in the Shire and demand for residentialgrowth in the town is expected to continue. Likewise, the population of Smythesdale is predicted tosteadily increase and the town has been nominated as the northern growth centre for the Shire.There is also high demand for growth in Inverleigh, however, within the historical township growthis limited due to potential flooding and limited land sizes for effluent disposal.

Clause 22.04 addresses house lot excision in farming and rural activity zones. It aims to preventisolated residential development that does not have access to infrastructure and services, inaddition to the protection of agricultural land.

Clause 22.05 relates to the management of rural residential development in the north-west of theShire. This area contains townships as well as rural residential, rural living and rural areas and ischaracterised by larger lots. The policy aims to ensure that development occurs in a sequence andis co-ordinated with infrastructure provision. Land adjacent to this area is part of the City ofBallarat and will be the location of rural residential use in the future. The policy recognises that thiswill strengthen the rural residential nature of the area.

Clause 22.06 relates to urban growth boundaries. The policy aims to accommodate growth inexisting towns to maximise the use of existing infrastructure and services and to limit urbanencroachment on agricultural and rural land.

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Clause 22.07 deals with lot sizes and medium density housing. It acknowledges that with anincreasing population there are changing housing needs and to accommodate these, a wider rangeof housing types and lot sizes should be provided. This includes medium density developmentadjacent to community services and facilities, and near commercial centres.

Clause 22.09 relates to low density residential zoned land which is generally found at the fringe ofurban residential zoning throughout the Shire. This policy aims to limit subdivision below onehectare in low density areas, keeping in mind that any additional development in these locationswill put pressure on existing infrastructure, including roads, drainage and effluent disposal.

In terms of infrastructure, Clause 21.04-1 identifies the following hierarchy for urban settlements:

Bannockburn – residential, commercial and administrative needs for the south east portion ofthe ShireInverleigh, Linton, Meredith, Rokewood and Smythesdale – residential and commercial needs oftheir surrounding districtsCorindhap, Dereel, Haddon, Lethbridge, Scarsdale, Teesdale – local centres serving thecommunity and commercial needs of their immediate residents.

Water is supplied to all towns by Central Highlands Water or Barwon Water. Sewerage systems arelocated in Woodlands Estate and Bannockburn, while reticulated sewerage is planned forSmythesdale. When population thresholds are reached, Scarsdale and Linton can be sewered bythe Central Highlands Water Authority.

Residential Land Supply Review (2009)

The Residential Land Supply Review was undertaken to help assist Council in prioritising locationsfor structure plan review, and specifically to determine the locations where additional residentialland is required. The review involved assessing the structure plans and urban design frameworksfor townships within the Shire to determine their potential to accommodate future growth.

Bannockburn in the south of the Shire and Smythesdale in the north of the Shire, are predicted toaccommodate the most growth. Both locations have capacity for urban consolidation within thetownship as well as in surrounding low density residential areas. The north west of the municipalityis characterised by a Rural Living Zone.

The review makes suggestions for the rezoning of land in certain locations, such as from TownshipZone to Low Density Residential Zone to protect areas of environmental significance and to addressissues of limited infrastructure. Other challenges to growth that are identified in the review includethe protection of township and rural interfaces, establishing clear settlement boundaries andnatural environmental features that limit development. Proximity to other urban locations, such asGeelong, and to the Geelong Ring Road are also highlighted in the review as having an impact onthe future growth of the Shire.

There are a number of issues and challenges related to settlement in Golden Plains Shire that areidentified in the local planning framework. These include an oversupply of land zoned for urban

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development close to the bigger markets of Geelong and Ballarat. Other factors include servicingresidential development through co-ordinated and adequate infrastructure provision, such aswater, sewerage, roads, drainage and social infrastructure. A further issue for the Shire is ad hocdevelopment in rural locations, which can result in limited infrastructure and services, thefragmentation of agricultural and farm land, and can negatively impact biodiversity. A furtherconsideration is the impact of salinity on development and subdivision.

Strathbogie Shire

Municipal strategic statement and local policy

The Strathbogie Shire Municipal Strategic Statement (MSS) includes a number of objectives andstrategies relating to settlement (Clause 21.03-1). The MSS acknowledges that undesirable, ad hocdevelopment is occurring throughout the Shire and specifically encourages residential developmentwithin Euroa, Nagambie, Avenel and Violet Town to utilise existing infrastructure and to protectagricultural land. The MSS notes that the adequate and efficient provision of infrastructure isimportant in delivering affordable housing, generating economic growth and sustainability for theShire. Rural living is acceptable in appropriate locations within Strathbogie.

Settlement objectives for Strathbogie Shire include the co-ordination of development andinfrastructure provision, provision of housing diversity, ensuring the future sustainability offarming, minimising unsewered urban development, restructuring old and inappropriate townshipsand groups of crown allotments, and to protect agricultural land from urban encroachment.

Strategies for settlement include to encourage urban consolidation of residential development inexisting urban centres, encourage development with a diversity of lot sizes, develop in locationsaway from areas affected by flooding and drainage, investigate the provision of rural living and lowdensity residential opportunities, and provide a diverse range of residential infill developments,including medium density housing opportunities and retirement housing opportunities (Clause21.03-3).

Clause 22.01 relates to housing and house lot excisions in rural zones. It aims to protectagricultural land by limiting new development on high quality agricultural land and discouragingdevelopment of housing for non-rural purposes. It encourages consolidation of farm lots.

Structure plans for Euroa, Nagambie, Avenel, Violet Town are incorporated in the Strathbogie MSS.

The key settlement issues and challenges identified in the MSS include creating diversity of housingand lot sizes, protecting agricultural land and the environment, and the management and deliveryof infrastructure. Issues surrounding development within smaller towns in the Shire include theabsence of water, sewerage, drainage and road infrastructure, the location of development withinhigh fire risk areas without a reticulated water supply, and rural and low density residentialdemand.

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Due to the high demand for rural lifestyle purposes within the Shire, a challenge for Strathbogie isto limit ad hoc development, which could have negative impacts on the rural landscape,agricultural activity and biodiversity.

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Infrastructure type Greenfield: Bannockburn Dispersed: Ross Creek

Hard infrastructureProvision of new local roads,required upgrades,intersections, roundabouts,etc.

Paid for by the developer Nil. All lots have frontage to anexisting road.

Provision of new open space,recreation and reserves

Paid for by the developer Nil.

Provision of new drainage Paid for by the developer(underground drainage)

Residents/developer pays.

Provision of new footpaths,cycle paths, shared paths.


Provision of new streetfurniture, lighting, signage.


Soft infrastructureProvision of a new library,community centre, recreationfacility, youth centre

If required, paid for by councilwith funding assistance fromState Govt.

Nil. Residents rely on servicesin Ballarat and nearby towns.


APPENDIX B: DETAILED INFORMATION COLLECTED FROM COUNCILSKey findings for Golden Plains

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Table 10: Upfront cost items faced by Golden Plains Shire

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Table 11: Ongoing cost items faced by Golden Plains Shire

1 As per the Golden Plains Shire 2011/12 budget20110382

58

Infrastructure type Greenfield: Bannockburn Dispersed: Ross Creek

Hard infrastructureLine markings on roads $5,000 to $8,000 per year for

54 lot subdivision$800 to $1,000 per year forLacys Road

Maintenance of gravel roads n.a. $1,200 per week (machine,labour, materials) fixingpotholes etc

Street sweeping $12,000 to $15,000 per yearMowing (maintenance of main street

and side streets)

$45,000 to $48,000 per year(for full time mower who alsodoes some tree clearing and adhoc work)

$3,000 per year (tree trimmingonly)

Drainage $12,000 to $15,000 per year $5,000 per yearFootpaths $5,000 per year (maintenance) No footpaths provided.Vandalism (e.g. graffiti) $2,000 to $3,000 per year Graffiti not significant.Sealing of roads $200 per metre from gravel to

sealed road$200 per metre from gravel tosealed road

Cleaning storm water pits $5,000 to $8,000 per yearGarbage collection 1$187 for each rateable land $187 for each rateable land

(2011/12 budget)Oval maintenance $10,000 per year per oval (two $10,000 (one oval)

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Infrastructure type Avenel Kirwans Bridge

Hard infrastructureIntersection upgrades Unknown UnknownBridge upgrade (314 metres) n.a. $4,000,000 or $12,739 per

metreNew local roads Developer pays UnknownLine markings on new roads Developer pays UnknownStreet lights Developer pays UnknownWetlands/rain garden Developer pays UnknownGross pollutant traps n.a. $645,000Drainage Developer paysSoft infrastructureAdditional playgroundequipment (at fulldevelopment)

Unknown Unknown

Community hall upgrade (atfull development)

Unknown Unknown


Key findings for Strathbogie

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Table 12: Upfront cost items faced by Strathbogie Shire

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Table 13: Ongoing cost items faced by Strathbogie Shire

2 As per the Strathbogie Shire 2011/12 budget20110382

61


Repair of pot holes $2,400 per annum (20 potholes, 4x per annum)

Unknown

Additional child and maternalhealth service provision

Unknown Unknown

Clearing four bins weekly atparks

$312 per annum Unknown

Street cleaning/sweeping UnknownGarbage collection $298 per rateable property per

2annum$298 per rateable property perannum

Sweeping of loose stones atintersections (eightintersections)

$1,500 per annum

Gardening UnknownMowing, edging and poisoningof one hectare of open space

$3,900 per annum (mowingonce per fortnight)

Unknown

Street sweeping 1,440 per annum (streetsswept monthly)

Unknown

Drain cleaning $3,000 per annum (drainscleared yearly)

Unknown

Line marking touch up (sixintersections)

$1,500 per annum Unknown

Erosion tidy up after heavy rainuntil nature strips fullyestablished (53 nature strips xthree times per year)


Replace broken or hit kerb(approx five metres long)


Replace damaged concretefootpath (from root lifting andconstruction activity) approx20 metres.


Replacement of three street $240 per annum Unknown

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reticulated water for reserveWatering of reserve (10 daysfor one person and ute)



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Infrastructure type Shepparton North Mooroopna West

Hard infrastructureProvision of new/upgradeddrainage

Developer pays Developer pays

Footpath provision (new pathsand to fill gaps)

???Includes land acquisition costfor 2.5 metre shared path

Developer pays

Road upgrades (e.g. kerb andchannel)

Unknown

Bus stop provision Unknown UnknownProvision of street furniture,lighting.

Developer pays

Temporary pump for wetlands Not applicable. $30,000 to $40,000MacIsaac Road intersectiontreatment

Not applicable. 3

196,864Midland Highway intersectiontreatment

Not applicable. 4296,217

Link Road and culverts Not applicable. 5258,993

Floodway crossing on North-South collector road


Bicycle and pedestrianpathway


Roundabouts Not applicable. UnknownPassive recreation in wetlands Not applicable. UnknownSoft infrastructureOpen space provision Not applicable. UnknownExpand or consolidate existing Unknown Unknown

Data obtained from Mooroopna West Development Contributions Plan. Cost to local Council


Key findings for Shepparton

Table 14: Upfront cost items faced by Greater Shepparton

3 is assumed to be the remaining proportion not covered by the developer.4

5

6

7

As aboveAs aboveAs aboveAs above

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64


Hard infrastructureDrainage maintenance Unknown UnknownFootpath/shared pathmaintenance

Unknown Unknown

Road maintenance Unknown UnknownBus stop maintenance Unknown UnknownTraffic management (increasedtraffic from infill development)

Unknown Unknown

Soft infrastructure


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Table 15: Ongoing cost items faced by Greater Shepparton

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Structure Plan (2009)Implementation costs includinglegal costs, VCAT, panelhearings, expert witnesses

Not applicable. Unknown

Error in DCP calculations Not applicable. UnknownUpsizing of drainage pipes Unknown UnknownLand acquisition (detention Unknown Unknown

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