Providing the right infrastructure at the right time is key to the continued growth of homes and jobs throughout NSW. This includes the timely allocation of funds.
Infrastructure funding can come from a variety of sources:
Of these funding sources it is the development contributions system that the Department is most actively involved in.
The Department it is responsible for the day-to-day operation of the Special Infrastructure Contributions (SIC) system including the preparation of the necessary plans and determinations as well as the collection and distribution of contributions.
Special infrastructure contributions (SIC) help fund the regional infrastructure that supports different communities across the state. They partially fund state or regional roads and land required for social infrastructure such as schools, health care and emergency services. They may also fund some of the cost of planning and the cost of offsetting biodiversity impacts. SICs are imposed through a Ministerial Determination.
There are three SICs in place in NSW:
|Class of development||Contribution rate|
|Development on residential land that is within a Western Sydney growth centre precinct subject to a precinct plan (as referred to in clause 5(1)(a) of the Determination)
||$205,258* per hectare of net developable area
|Development on residential land within Balmoral Road Area, Elderslie Area or Spring Farm Area (as referred to in clause 5(1)(b) of the Determination)
||$162,889* per hectare of net developable area|
|Development on industrial land that is within a Western Sydney growth centre precinct subject to a precinct plan (as referred to in clause 5(1)(c) of the Determination)||$88,984* per hectare of net developable area|
|Development in any land that is within a Western Sydney growth centre precinct not subject to a precinct plan (as referred to in clause 5(1)(d) of the Determination)||$205,258* per hectare of net developable area|
The Department will prepare draft SICs as they are required. There are currently three draft SICs under preparation:
The infrastructure needed to support new homes and communities is identified when land is rezoned, or sometimes earlier.
At this point, contributions plans are prepared and allow the State and Local Government to levy a contribution towards the infrastructure needed.
The amount of the contribution that needs to be paid is a condition of approval for a development.
Payment occurs when the land is finally subdivided or certificates issued to start construction.
|Special infrastructure contributions (SIC)||Local Infrastructure contributions (s94 & S94A)
Roads (state and regional)
Planning and delivery of new urban areas
Development contributions help cover the cost of delivering infrastructure needed to support new communities and homes.
They are about making sure that developers and businesses are paying their fair share towards the infrastructure needed to support new homes.
The development contributions system operates under the Environmental Planning and Assessment Act, 1979.
This system covers contributions for both state/regional (Special Infrastructure Contributions or SIC) and local infrastructure (Section 94 contributions and Section 94A contributions), as well as the ability to negotiate planning agreements directly with individual developers for the provision of infrastructure.
The local contributions system is administered by local councils as they are best placed to understand the needs of their communities. There are two types of local contributions:
The main aim of a contributions plan is to spread the cost of providing infrastructure across everyone that benefits from it.
More detail on the process to be followed and the issues to be considered are provided in the Regulations and Practice Notes.
Section 94 contributions for residential development are currently capped at $20,000 per dwelling and $30,000 in greenfield areas. There are also a limited number of areas where the cap does not apply as development was well underway when the cap was introduced. There is no cap for non-residential development.
Section 94A levies are currently capped in the following way, with a small number of exceptions:
|Proposed development cost||Maximum percentage of development cost for the levy|
|Up to $100,000||Nil|
|$100,001 to $200,000||0.5%|
|More than $200,000||1.0%|
A local contributions plan will need to be submitted to the Independent Pricing and Regulatory Tribunal (IPART) for review in the following circumstances:
Information on what needs to be done when a review is required, including Practice Notes can be found on IPART’s contributions plan webpage
The Department’s role in the local contributions system is one of oversight and guidance. This is provided through Regulations, Ministerial Directions and Practice Notes.
The Minister has the power to direct councils regarding the type of development that can be required to pay a contribution (or not) and the amount of contribution to be levied.
The current Ministerial Directions are:
There are currently two sets of practice notes in place to help councils, applicants and the community understand the NSW development contributions system:
These practice notes are designed to be read in conjunction with the Act, Regulations and Ministerial Directions.
There are also a set of guidelines that relate to the Local Infrastructure Growth Scheme.
From time to time the Department will issue circulars providing additional information on a variety of policy issues. The information provided in these circulars is reflected in the information on our website.
If you would like to look at a particular circular please visit the circular library.
Planning agreements are commercial agreements entered into by a developer and the Minister for Planning, other Ministers or council. They can cover a variety of issues but most commonly address at least one of the following:
They can require either the physical provision of the above or a monetary contribution towards their provision.
The majority of planning agreements entered into by the Department relate to satisfactory arrangement clauses in a Local Environmental Plan. These clauses require ‘satisfactory arrangements’ to be made for the provision of state and regional infrastructure before the land can be developed for urban purposes.
At a glance…
If you think your development might need a planning agreement to contribute towards state infrastructure, talk to us as soon as possible.
These agreements are legal documents and you will be required to meet the cost of their preparation. Contact our Information Centre.
Where a SIC is in place a developer may want to construct infrastructure instead of paying a cash contribution. If they want to do this they will need to enter into a Works-In-Kind (WIK) agreement. A WIK agreement is a legal agreement between the development and the Department or State Agency that will identify the works to be provided, timing for provision and the costs to be offset against any contributions required.
The Local Infrastructure Growth Scheme (LIGS) funds the gap between the maximum contribution that councils can charge developers and what it actually costs councils to deliver the infrastructure.
It helps deliver essential local infrastructure in housing growth areas, including:
The LIGS helps councils to deliver local infrastructure at the same time as new homes are built. It also helps keep house prices down as the developer does not need to pay the full cost of infrastructure.
The scheme also helps boost housing supply by easing the pinch points which slow new home development.
To be eligible for funding, a council must have a development contributions plan reviewed and approved by the Independent Pricing and Regulatory Tribunal (IPART).
This review must conclude that council cannot fund essential infrastructure if the cap on contributions is applied.
More information on the review process is available on the IPART website.
Page last updated: 13/02/2017