Melbourne Flood Issue Drags On as City Defers Site Buy

Fixing serious flood risks in Melbourne’s Macaulay Precinct seem certain to be delayed again after the city voted not to buy a key site.

The City of Melbourne’s Future Melbourne Committee resolved to hold off on acquiring the site that runs along Moonee Ponds Creek in the Macaulay Urban Renewal Area, and is referred to as drainage land in council documents. 

Acquiring the land is necessary to carry out flood mitigation work and to provide open space promised as part of residential projects in the precinct. 

But the process has been delayed and frustrated since June of 2022.

The acquisition process is set out in a proposed Macaulay Development Contributions Plan (DCP) and an interim DCP. 

Both also set out how much developers building projects in the precinct will need to pay in contributions with the proposed DCP setting out lower rates. 

The interim DCP, in place since 2017, collects $21,559 a home (as per figures for 2024-2025) but the proposed permanent DCP lists a $12,929 development infrastructure levy and a $1450 community infrastructure levy per new home (per 2024-25 figures).

Costs for developers would drop by $7180 a new home in the Macaulay Precinct once the proposed permanent DCP is approved. 

That proposed DCP was endorsed by the City of Melbourne in June of 2022 when it was sent to the Victorian Department of Transport and Planning. 

It was then delayed and not authorised for exhibition for two years until mid-2024 when it was exhibited between August 1 and September 6, 2024.

The delay has since created two key issues. 

First, it meant that during the two-year delay developers paid contributions, finished projects and residents moved in and now face potential flood risks and lack promised open space.

The second is that the initial funding mechanism proposed to allow the City of Melbourne to acquire the land from VicTrack was the Urban Renewal Cost Recovery Scheme (URCRS), which was shut down in July 2022. 

“That was going to be the mechanism that was going to fund major drainage and flood infrastructure works in these urban renewal areas,” deputy lord mayor Roshena Campbell said.

“And with the abandonment of that scheme that has necessitated an alternate funding mechanism for these projects.”

This has left Melbourne Water, the City of Melbourne and state planning trying to work out a new funding mechanism and process and drainage infrastructure requirements for both the Macaulay and Arden Precincts.

The current situation

In July of 2024 the City of Melbourne’s Future Melbourne Committee asked planning officers to look into options for acquiring the land, including prior to the approval of Amendment C417 and report back in March 2025. 

▲ Part of the Moonee Ponds Creek in the City of Moreland Council area showing a previous planning decision to create a concrete channel for the creek.

Planning officers advised the committee that $17.46 million has been collected in contributions in the interim and that there is a further $10 million previously allocated for a future North Melbourne Community Hub in the precinct. 

Their recommendations to the Future Melbourne Committee were to not allocate the funding towards the acquisition of the land until a suitable funding mechanism was found and the outcome of the Amendment C417 was known. 

Part of the concern was that if the proposed DCP was approved with a lower contribution rate, the collected funds would be needed to pay back the difference in contribution rates to the developers. 

The land was valued at $20.97 million and officers also noted that the contributions collected did not cover this sum. 

Contributions can be collected until July 31, 2026 under the interim DCP.

Planning officers also informed the councillors that until further study was completed on flood risks, it would be unclear what the extent of the flooding risk was, what infrastructure might be needed and how much it would cost. 

They also noted that they expected the Amendment C417 to go through a panel hearing between September and November 2025 with it being approved by the end of the year.

The alternate motion

An alternate motion was put forward instead to allow planning officers time to keep looking for options to acquire the land. 

It also asked officers to return with more information on all collected and projected contributions in Kensington since 2012 and the extent of flooding and potential risks as well as possible infrastructure needed on the site. 

“We need further information to make sure that when we make this decision, we are making it at the right time,” Campbell said.

▲ City of Melbourne deputy lord mayor Roshena Campbell said the alternate motion would allow the council to act to push for a faster resolution than wait.

The motion will also ask that the Lord Mayor Nicholas Reece and the City of Melbourne chief executive write to the DTP and Melbourne Water expressing the urgency of the situation and asking to fast-track the discussions. 

City of Melbourne management were also asked as part of the motion to write to VicTrack about the possibility of undertaking a lease arrangement for the land instead. 

The motion was unanimously carried with planning officers due to report back to the council as soon as possible.