Developer Contributions reform coming in NSW

3 December 2020

Earlier this year, the NSW Government commissioned a review of the infrastructure contributions system in New South Wales with the objective of bringing about reform of the current complex arrangements between state and local governments.

The Review has made 29 recommendations to deliver an efficient system, that is easy to understand, is transparent and consistent in its application, and provides greater certainty to market participants.

Mr Stokes commissioned the review into the system to fix uncertainty of developer contributions, unlock new housing supply, deliver infrastructure and drive investment.

Minister for Planning and Public Spaces Rob Stokes said, “the development industry has been telling us for years that uncertainty surrounding infrastructure contributions was driving up house prices and slowing down progress”

The Government expects that changes to the infrastructure contributions system could unlock up to $12 billion of productivity benefits over the next 20 years.

“Those who complain about growth in Sydney often have the same gripe – too much housing, not enough infrastructure. This report recommends a complete shift in thinking, where land rezoning, infrastructure planning and funding is considered together at the start of the process”, said Mr Stokes.

“If the changes in this new report are implemented, these barriers will be removed and development will be coordinated with the right infrastructure.”

The Final Report was released on 3 December 2020. Priority recommended reforms include:

  • amending the local government rate peg to reflect population growth
  • cost reflective section 7.11 contributions based on efficient costs
  • requiring infrastructure contributions plans to be developed upfront prior to rezoning
  • retaining the simplicity of section 7.12 levies but with a higher maximum rate for residential development
  • introducing rigor in the application of section 7.4 planning agreements (State and local) 
  • broad-based regional contributions of between $8,000 and $12,000 per dwelling in Greater Sydney, the Central Coast, Hunter and Illawarra-Shoalhaven, in place of special infrastructure contributions
  • restoring water charges for Sydney Water and Hunter Water, which are currently set at zero
  • simplifying the system with digital tools, adopting benchmark costs and use of standardised templates.

The Treasurer said $14.8 million was allocated in the recent 2020-21 NSW Budget for the development of a contributions calculator, which would make it easier to determine project development costs at the start of the process.

The Government will now review the report’s recommendations and consult with industry to develop a formal Government response and roadmap for implementation by early 2021.