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Under Victorian planning rules, many new developments need to treat stormwater to prevent pollution. These rules include meeting the current best practice performance objectives for stormwater quality in the Urban Stormwater - Best Practice Environmental Management Guidelines (Victorian Stormwater Committee, 1999). Victorian councils have responsibilities to enforce these requirements.

Councils can set up stormwater quality offset schemes to help developers fully meet their stormwater quality requirements. However, using offsets does not remove other obligations for stormwater management under the:

Stormwater offsets guidance

Guidance has been developed to guide councils on how to establish and operate stormwater quality offset schemes in their municipalities to manage stormwater quality impacts from urban development.

What are stormwater quality offsets?

Sometimes stormwater management requirements can be met on-site using rainwater tanks or rain gardens. But sometimes there isn’t enough space or there are other technical reasons why on-site options won’t work.

In these cases, a better environmental outcome may come by treating stormwater offsite. For example, by using a larger treatment asset within the same catchment, like a constructed wetland.

Instead of treating all their stormwater on-site, developments can pay a stormwater offset fee to council. Then council can use these funds to build larger stormwater treatment assets. This way, the stormwater impact from the new development can be treated offsite.

Contributing to off-site stormwater management schemes:

  • allows councils to better integrate stormwater management assets into open space planning
  • provides developers flexibility to better meet their stormwater management obligations
  • can have additional environmental benefits by:
    • being able to harvest more stormwater than smaller on-site assets such as tanks or raingardens.
    • supporting maintaining public open spaces where the asset is located nearby
    • reducing flood risk – see Edithvale scheme example
    • improving water security by reducing potable water demands.

See the guidance (listed above) for information on how to set up a council stormwater quality offset scheme.

Melbourne Water

Melbourne Water have an offset scheme for developments within the Port Phillip and Westernport catchments. This was created historically in the absence of local government schemes.

The Melbourne Water offset scheme varies from council offset schemes, including how they’re applied and the associated fees. See the guidance for more information on the Melbourne Water and council offset schemes.

Case study: Edithvale Recreation Reserve

Councils with mature offsets schemes have taken opportunities to build stormwater assets that reduce stormwater impacts.

In accordance with Kingston Council’s IWM strategy, offset funds were used to construct the Integrated Water Treatment System at the Edithvale Recreation Reserve, which uses a bio-retention system to remove rubbish and pollution.

Water is pumped to above ground tanks (pictured below), which can store up to 1.8 million litres of water. The water is used for sports ground irrigation, street tree watering and flushing of toilets at the nearby Children’s Centre.

Edithvale Recreation Reserve Source: Kingston City Council

Where are stormwater quality offset schemes suitable?

Stormwater quality offsets are voluntary. Where possible, stormwater quality offsets should be based on the stormwater management response hierarchy of, in the first instance, avoiding harm by mitigating impacts on-site.

If on-site treatment is not practically feasible and offsetting could achieve an equal or better environmental outcome, then offsetting some or all of the impacts would be appropriate.

It is important to ensure that on-site compliance with stormwater performance objectives is not undermined, where on-site compliance is appropriate.

Offset schemes are best suited to councils that have:

  • land available for the construction of offset-funded stormwater assets
  • a portfolio of water sensitive urban design (WSUD) investments or a Council integrated water management (IWM) plan or similar document that can be used to plan investments using stormwater quality offset funds
  • adequate resources for the scheme's initiation and ongoing management.

The suitability of a development contribute to the offset scheme is determined on a case-by case basis.

Councils have the discretion to apply full or partial offsets, or refuse an application based on local circumstances in accordance with a council’s own local scheme.

This may include, but is not limited to, developments:

  • where on-site treatment is practically feasible i.e. there is ample land on-site for WSUD assets, and/or there are no other constraints
  • where offsets will not achieve an equal or better environmental outcome
  • located within an area of high environmental priority (e.g. Healthy Waterways Strategy Stormwater Priority Area) and are not deemed appropriate
  • located within a Melbourne Water greenfield Development Services Scheme (DSS) area.

Approved applications will include relevant planning permit conditions. Refer to the Stormwater Quality Offset Scheme Guidance for model permit conditions.

How is a stormwater quality offset calculated?

Stormwater quality offset fees are collected by a council to construct stormwater assets and works in strategically beneficial locations that ‘offset’ the stormwater quality impacts from developments.

Stormwater quality offset fees:

  • should be calculated on a $/m2 of untreated impervious area basis.
  • should be calculated to incorporate the full recovery of lifecycle costs of any stormwater asset funded to deliver the equivalent environmental outcome (this includes asset design, asset renewals, and operations and maintenance costs).
  • should be subject to an annual review, with fees adjusted based on the findings of any such review.
  • must not be used for any other purpose than the provision of identified stormwater management projects.

Pricing offsets using lifecycle costs means that developers pay the full cost of the impact and councils and ratepayers do not carry any ongoing burden.

A calculator tool is available to councils to assist them with setting offset fee rates for their individual councils.

What do stormwater treatment assets look like?

On-site stormwater treatment infrastructure includes assets such as:

  • rainwater tanks
  • rain gardens
  • permeable pavements
  • landscaping treatments.

Off-site stormwater treatment infrastructure includes assets such as:

  • precinct or regional scale wetlands
  • bio-filters
  • stormwater harvesting projects that can be used to treat and reuse stormwater runoff.

Stormwater management systems must be designed and managed in accordance with the requirements of the relevant drainage authority.

In metropolitan Melbourne, this is either Melbourne Water for catchments larger than 60 ha or the local council where a catchment is 60 ha or less. In regional areas, the local council is generally the relevant drainage authority.

Page last updated: 15/05/25