Frankston Special Economic Priority Area (SEPA)

A Special Economic Priority Area (SEPA), often referred to as Special Economic Zone (SEZ), is a targeted, geographically defined zone where governments work together to stimulate economic activity through time-limited incentives, coordinated investment, and streamlined development support.

In Frankston City, a proposed SEPA could unlock development in Frankston’s city centre and the area between the Monash University Peninsula Campus, Peninsula University Hospital, Chisholm Institute Frankston Campus and the Kananook Industrial Precinct. 

The proposed SEPA could:

• Focused on linking University, Hospital and Tafe with Frankston’s city centre and the Kananook Industrial Precinct
• Designed to accelerate housing, jobs and private investment
• Supported by Victorian and Australian Government policy mechanisms

The proposed Frankston SEPA could work to deliver:

• Time-bound incentives encourage earlier and larger-scale development of housing, workplaces, retail, entertainment and wellness spaces
• Coordinated public and private investment
• Economic activity increases, particularly within the Frankston Metropolitan Activity Centre (FMAC), benefiting businesses and the local and regional community
• Government recoups investment through long-term growth in tax revenue.

Frankston City is uniquely positioned to deliver a successful SEPA and ready to lead it as a pilot for Victoria.

Frankston City boasts strong foundations, including a major university, tertiary education, public hospital and an endorsed Metropolitan Activity Centre structure plan. However, development has been slower than expected due to market and structural barriers.

Challenges include:

• Rising housing demand and affordability pressures
• Underutilised land and vacant commercial space
• Lower education attainment compared with the Victorian average
• Pockets of unemployment and slower job growth
• Fragmented connections between key institutions and precincts

Together, these factors have constrained investment and limited economic opportunity, despite significant public infrastructure.

The proposed SEPA could cover a strategic corridor linking Frankston City’s key economic anchors:

• Frankston Metropolitan Activity Centre (FMAC)
• Monash University Peninsula Campus
• Chisholm Institute Frankston Campus
• Peninsula University Hospital
• Frankston Foreshore
• Kananook Industrial Precinct

Photo caption: Proposed conceptual SEPA area map. 

SEPA is not a single policy – it is a package of targeted incentives and investments designed to unlock development.

Potential inclusions could feature:

• Targeted and time-limited land tax concessions the during construction phase of development projects
• Stamp duty surcharge concessions for investors in affordable housing
• Payroll tax reduction to the regional rate to reflect Frankston City’s location at the edge of metropolitan Melbourne
• Reinvestment of a percentage of the taxes collected into local infrastructure, precinct improvements and events
• Access to State and Australian Government grant funding for catalyst projects
• Funding to support local research, innovation and industry growth.

Strong backing from key stakeholders

Early stakeholder engagement shows strong interest from major local institutions and industry:

• Monash University supports a proposal to reinvest payroll tax locally to improve connections and precinct outcomes
• Local developers have identified SEPA incentives as a potential trigger for new projects
• Committee for Frankston and Mornington Peninsula has indicated broad support for the concept

This early backing highlights the proposed SEPA’s potential to deliver real, investable outcomes.

Quotes from Monash University and Josh Sinclair to come. 

The proposed Frankston SEPA is designed to deliver net-positive outcomes for the community, industry and government. Based on current modelling, benefits of a proposed Frankston SEPA could include: 

Independent economic modelling by Econosis. Most benefits expected within the first 6-8 years. Central benefit-cost ratio is based on a 7% discount rate.

These potential outcomes could support both local priorities and Victorian Government objectives, including housing supply and economic growth. 

Proposed could include: 

1. Residential and Mixed-Use Development

• Land Tax Holiday: The model proposes up to a 3-year land tax holiday to accelerate housing in Frankston City.
• Stamp Duty Concessions: The model proposes concessions for buyers investing in affordable housing in Frankston City.
• Fast-Tracked Approvals: Major mixed-use residential and commercial projects can already benefit from the recently introduced guaranteed 16-week Priority Fast-track Pathway, subject to meeting eligibility criteria.  

2. An interconnected community

The Proposed Frankston SEPA seeks to establish a well-connected community between Frankston's city centre, the health and education precinct and Kananook Industrial Precinct, creating a thriving knowledge and wellbeing precinct for business, education and visitation.  

• Target Precincts: Strategic investments could be funnelled along the corridor connecting Frankston’s city centre with Monash University Peninsula Campus, Chisholm Institute Frankston Campus and the Peninsula University Hospital. 
• Opportunity Sectors: High demand is emerging for purpose-built student accommodation, allied health facilities, and research-focused commercial spaces.

3. Commercial and Industrial Expansion

• Payroll Tax Concessions: Proposed incentive-based interventions in the pipeline aim to reduce operating costs and increase returns.
• Growth Estimates: Independent business cases model that a proposed Frankston SEPA could generate upwards of $4 for every $1 invested, resulting in approximately $63,000 square metres of new commercial and industrial development.

4. Retail and Hospitality

• Urban Activation: As major residential projects roll out (e.g., Horizon Frankston and The Harbour), significant opportunities exist in activating Frankston’s CBD streetscape, particularly in ground-floor retail, hospitality, and service precincts.

Without intervention:

• Investment may continue to lag
• Housing supply constraints will worsen
• Economic opportunity for residents may remain limited
• Competing regions may attract funding and development instead

For Government

• Support a pilot Frankston SEPA to deliver housing, jobs and economic growth in a strategically important metropolitan centre.
• To arrange a discussion about the proposed Frankston SEPA, email us(OFT, 39KB).

For Industry

• Explore opportunities to invest, expand and partner in a high-growth precinct within Frankston City - see Develop | Imagine Frankston

For the Community

• Help shape Frankston City’s future through consultation and engagement - see Engage Frankston!