The MSA Act and a new Biodiversity Conservation Regime. How Does it Work?
On 1 July 2020, the Melbourne Strategic Assessment (Environment Mitigation Levy) Act 2020 (MSA Act) came into force.
First proposed by the state government in 2019, the MSA Act:
- regulates in more detail the existing biodiversity conservation regime in Victoria’s growth corridors;
- is modelled on, and similar to, the regime for GAIC;
- is intended, according to government, to provide landowners with more flexibility in dealing their biodiversity conservation obligations, and codifies previous informal policy and process; and
- ensures landowner compliance with the scheme by placing a notice on titles of affected land.
Read on for some of the main headlines from the MSA Act:
1. How to determine whether my land is affected?
If your land is subject to the requirements of the MSA Act there will be a notice registered on the certificate of title to your land which refers to Section 45 Melbourne Strategic Assessment (Environmental Mitigation Levy) 2020 (MSA Land).
2. The Levy
The MSA Act imposes a vegetation/habitat compensation levy on MSA Land. The levy builds on the previous habitat compensation obligations fee system which was in place as part of Victoria’s Biodiversity Conservation Strategy.
2.1 Amount of the Levy
The amount of the levy is determined by reference to:
a) The type of vegetation on the land and the applicable rate (Levy Rate). The the levy amounts for the 2020 to 2021 financial year have increased and are as follows:
|Vegetation Type||Levy rate (per hectare)|
|Native Vegetation patch||$113,441.00|
|Scattered Tree (per tree)||$15,768.00|
|Growling Grass Frog|
|Golden Sun Moth$|
|Southern Brown Bandicoot||$4,138.00|
b) The amount of vegetation on the land (Vegetation Area). The Vegetation Areas associated with MSA Land were set in 2010 as part of the biodiversity conservation scheme timestamping process and will remain constant for the life of the MSA Act.
2.2 Changes to the Levy
One of the main changes to the levy under the MSA Act is that the Levy Rate will be subject to yearly indexation. The MSA Act provides for:
a} Indexation of the Levy Rate by reference to a composite index rate of 1/3 of the Consumer Price Index and 2/3 Wage Price Index.
b) Additionally, for the first 5 years of the operation of the MSA Act there is an ‘enhanced rate’ of indexation which will increase the payment by reference to an ‘area factor’ (for further details see Schedule 2 and Section 22(1) and 22(2) of the MSA Act or contact the Maddocks team to discuss).
3. How will the MSA Act effect my ability to deal with my land?
Provided a ‘levy event’ has not been triggered on your land the MSA Act will not affect your ability to deal with your land and the title to your property.
The notice and the associated levy will remain dormant until the property is dealt with in the manner which will trigger the liability. Once the trigger event has occurred, the MSA Levy must be paid in the manner contemplated below.
|Levy event||Period of time within which levy must be paid|
|Statement of compliance for a plan of subdivision.||3 months after the date the statement of compliance is issued under the Subdivision Act 1988. Payment must be made before the plan of subdivision can be lodged with the Registrar of Titles.|
|Application for building permit for 'building work' on freehold land.||Within 14 days of receipt of a building permit application, provided the building works are not excluded under section 5 of the MSA Act. Your building surveyor is required to notify DELWP of the levy event and DELWP will then issue a levy assessment notice for the amount payable by the landowner.
The due date for payment will be specified in the assessment notice, which we expect may be 3 to 6 months consistent with other timeframes.
|Application for a building permit for 'building work' on Crown land.||A similar regime to building works on freehold land, with some additional exclusions of certain types of building work (including telco facilities).|
|The certification of plan of subdivision under section 35 of the Subdivision Act 1988 (where the statement of compliance is not required).||3 months after the date the plan of subdivision is certified under the Subdivision Act 1988. This is a notable difference to GAIC triggers where registration of such plans would not trigger liability.|
|Construction of utility infrastructure on Crown land.||6 months after the date on which the utility infrastructure work is completed. This includes water, sewerage, drainage, gas, electricity or telco facilities.|
|Road Construction on Crown land.||6 months after the date on which the construction is completed.|
|Approval of a work plan or variation of a work plan under the Mineral Resources (Sustainable Development Act 1990).||In the case of the relevant owner, 3 months after the date on which the approval is given. In the case of the approval holder, 6 months after the date on which the approval is given.
Payment must be made for the work authority to be granted.
Whilst the liability to pay the MSA Act levy does not occur until a levy event has occurred, if you are buying or selling MSA Land the impact of the liability should be considered and if appropriate factored into your transaction.
4. Plan of Subdivision trigger process and transitional considerations
We have set out below a more detailed summary of the process for the plan of subdivision levy event as in in our view this will be the most common levy event for MSA Land:
a) A levy assessment notice will be issued by DELWP to the landowner where a statement of compliance is issued for a plan of subdivision relating to MSA Land.
b) Once the levy liability has been paid, DELWP will issue MSA Levy release certificates to the landowner. The release certificates are required to allow lodgement of the plan of subdivision to progress with Land Use Victoria and remove the MSA Act notice from the residential titles created.
DEWLP was not able to give us a definitive answer as to the turn around time for the issue of a certificate of release or partial release, once payment is received. Similar to the SRO’s G2 and G3 notices for GAIC, this will be dependent upon workload. DEWLP is ‘hopeful’ that the release can be turned around within a week of payment.
As landowners had been addressing native biodiversity conservation payments prior to 1 July 2020 there are steps landowners can take now to avoid unintended delays associated with the MSA Act:
|Removal of notices on subdivided lots||The MSA Act notice is intended to be registered on developable parcels of land and not on the residential lots created by their subdivision. Many residential lots have been burdened with the MSA Act charge, as this may have been in error. Further investigation is required and this should be actioned as soon as possible.|
|Early release of the MSA Act notices||Early releases can be obtained for developable parcels where the MSA Levy was paid prior to 1 July 2020, this would assist in obtaining the required releases to lodge plans of subdivision prior to receipt of a statement of compliance.|
|Staged Payment Approvals (SPA)||Developers who are subdividing parcels in stages have the option of staging the MSA Levy under a SPA. SPA existing prior to 1 July 2020 will continue (but can be varied). Additionally, new SPA's can be obtained by making application to DELWP.|
So, there you have it. The MSA Act in a nutshell. It remains to be seen if the issuing of certificates of release or partial release will be similar timing to the current slow and inefficient process for GAIC G2 and G3 release certificates form the SRO. We sincerely hope not.
Do you have any questions on the MSA Act application or processes, or need help in navigating the new regime?
Get in touch with the Development team.
Watch out for drop bears! What does the Koala Protection SEPP actually do?
Summary on what the SEPP (Koala Habitat Protection) 2019 actually does
Consequences for Project Finance due to COVID-19 Staffing Reductions on Construction Sites
By Michael Zheng & Josh Montebello
Mandatory staffing reductions on construction sites and the consequential impacts for developers and project finance.