Frequently asked questions

The NSW Government accepted all 29 recommendations of the Productivity Commissioner to deliver a system that is fair, transparent, consistent and certain.

The key elements of the package are:

• amending the local government rate peg to reflect population growth
• ensuring section 7.11 contributions are cost reflective and 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
• improving rigor in the application of planning agreements
• introducing a broad-based regional contribution in Greater Sydney, the Central Coast, Lower 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 bill is the next step in delivering the package of reforms recommended by the Productivity Commission.

The bill:

• Creates a regional infrastructure contributions system to collect levies on development in Greater Sydney, Central Coast, Hunter and the Illawarra Shoalhaven while preserving existing special infrastructure contribution arrangements.
• Requires owners who benefit from their land being rezoned for development to contribute towards the provision of land for local infrastructure when their land is either sold or developed.
• Provides greater transparency and accessibility for Planning Agreements.
• Provides incentives for councils to fund infrastructure upfront, allowing councils to borrow and pool their funds.

The adoption of the 29 Productivity Commissioner recommendations will create a clearer, more transparent, consistent and simpler system for state and local infrastructure contributions.

Councils will transition to the new system progressively. A new online digital tool to allow digitisation of auditing and reporting will be a staged approach. The first councils to pilot the digital tool will help ensure the centralised and digitised system is fit-for-purpose, tailored and minimises administrative burden.

That’s right, we’ve said councils will be no worse off because of these reforms. Separately, IPART has independently shown that no councils will be worse off because of the rate peg reform.

That’s right, we’ve said councils will be no worse off because of these reforms. Separately, IPART has independently shown that no councils will be worse off because of the rate peg reform.

Modelling and research has been completed to ensure the policy package has the settings right.

We have engaged with councils at an individual level to ensure we understand any elements of unique financial structures.

We are modelling a pathway for councils to borrow, and fund debt.

We will continue to work closely with local government on the transitional arrangements.

Councils existing contributions plans, in the current system, will continue to apply until transitioned into the new system.

Local government will have time to transition, we intend for councils to review these existing contributions plans by 1 July 2024. There will be flexibility, a council may apply for an extension to the 1 July 2024 deadline. We will continue to work closely with local government on the transitional arrangements.

The new infrastructure contributions system including the online tool is scheduled to start on 1 July 2022.

You can find out more about 7.12 changes in the local contributions Draft Environmental Planning and Assessment Amendment (Infrastructure Contributions) Regulation 2021 and Explanatory Paper.

The IPART review is not part of the infrastructure contributions reform exhibition but will be exhibited by IPART. Visit the IPART website.

IPART has completed the review of the rate peg to allow adjustment for population growth. See their final report.

You can find out more about the transition from Special Infrastructure Contribution to Regional Infrastructure Contributions on the state infrastructure contributions web page or the Regional Infrastructure Contribution Discussion Paper.

You can find out more about changes to the essential works list in the Independent Pricing and Regulatory Tribunal (IPART) review. The IPART review is not part of the infrastructure contributions reform planning exhibition. A second exhibition is proposed in early 2022, to complete the public consultation of these and the remaining reforms.

You can find out more about the governance of the Regional Infrastructure Contribution in the Regional Infrastructure Contribution Discussion Paper.

Metropolitan infill councils will benefit from an increase in section 7.12 levies, from 1% of the cost of construction to the equivalent of 3% for residential development. Section 7.12 levies are a simple and efficient contribution mechanism and the higher rate will appeal to metropolitan infill councils.

They are an easy to use mechanism that will fund the infrastructure required to support housing supply, economic growth, and great places.

Metropolitan greenfield councils will benefit through changes to the local government rate peg. The reformed rate peg will allow councils rate revenue to grow as their population grows.

New release areas, sometimes called ‘greenfield development’, have a high demand for new infrastructure such as roads, water drainage, and open space. There is often very little or no existing infrastructure in the area.

Infrastructure contributions can only help fund the upfront capital costs of building new infrastructure, not the ongoing maintenance costs. The reform to the rate peg will improve councils balance sheets, allowing them to deliver and maintain the infrastructure and services required to support housing supply, economic growth, and great places.

Regional towns and cities experiencing population growth will benefit from changes to the rate peg. The reformed rate peg will allow councils rate revenue to grow as their population grows.

Regional towns will benefit from an increase in section 7.12 levies, from 1% of the cost of construction to the equivalent of 3% for residential development. Making this simple and efficient contribution mechanism more useful and appealing to councils.

The digital contributions planning tools will also make the contribution system easier to use with integrated online templates, tools and guidance. This will mean, for high growth areas where more intensive development is occurring, councils will more easily be able to develop a section 7.11 plan to fund the high levels of infrastructure needed.

Additionally, councils and communities in the Illawarra-Shoalhaven and Lower Hunter regions will benefit from improved investment in their regions following the introduction of regional infrastructure contributions.

Large rural councils will benefit from an increase in section 7.12 levies, from 1% of the cost of construction to the equivalent of 3% for residential development. Making this simple and efficient contribution mechanism more useful and appealing.

As large rural councils shift to section 7.12 plans, they should be able to collect more funds from new development allowing them to provide infrastructure more easily for their communities.

These plans, when compared to section 7.11, are easier to prepare and use, saving councils on administration costs and time. They are an easy to use mechanism that will fund the infrastructure required to support housing supply, economic growth, and great places.

The new simpler to use digital system will also give regional councils greater capacity and better assist in the preparation and management of contributions plans.

Small rural councils will see similar benefits moving to simpler section 7.12 levies, but as they generally see less development, the biggest benefit will be from the digital infrastructure contributions planning tools. The reformed contributions system will be digital and online, with integrated guidance and learning capabilities.

Some small rural councils have very limited resources for planning services, which generally does not extend to expertise in contributions planning.

The new simpler to use digital system will give regional councils greater capacity and better assist in the preparation and management of contributions plans.

There will be support available to transition to the new system. Improving the certainty and transparency of the process will save councils time and money.

The changes will enable a clearer, more transparent and simpler system for state and local infrastructure contributions.

The changes will give developers greater certainty and clarity on the application of the infrastructure charge, how it is calculated, and enable more accurate pricing of investment decisions.

No. Developers have always had to contribute to the cost of infrastructure. The Regional Infrastructure Contribution will replace the Special Infrastructure Contribution with a fairer and more certain approach – so that everyone who benefits from development chips in for the added cost caused by pressure on transport, public spaces, and essential facilities such a schools.

Industry operating in metropolitan infill areas will benefit from greater certainty, consistency, and efficiency in the infrastructure contributions system.

The reforms will support investment through improvements in administrative processes, reduction in timeframes and a more coordinated and cost reflective delivery of infrastructure.

Value capture mechanisms are being clamped down on with less need for planning agreements because we have a better system.

The introduction of the regional infrastructure contributions will mean greater certainty that regional infrastructure will be delivered to support development in a given region.

The benchmarking of costs in local contribution plans and focusing on costs linked to development will also strengthen the process and reduce inefficiency.

Developers delivering housing in greenfield housing developments will benefit from improved infrastructure delivery.

Greenfield areas have limited or no infrastructure and therefore require intensive infrastructure delivery from councils and State Government, including open space, local roads, footpaths, stormwater drainage and traffic management. Without this infrastructure, development cannot proceed.

This means the development industry directly benefits from public investment in infrastructure.

Overall, the development industry contributes a small proportion of the cost of infrastructure, the remainder of costs is borne by the broader community through other revenue sources such as council rates and State revenue.

The reformed contributions system will also ensure that infrastructure is considered early in the land use planning process, ensuring it can be designed in an efficient and cost-effective manner.

Industry will know how much needs to be paid and what public infrastructure will be delivered to enable their development, and this will support investment decisions.

The introduction of the regional infrastructure contribution will mean greater certainty and regional infrastructure will be delivered to support development in a given region.

Costs will also be more evenly shared between landowners who benefit from having their land rezoned, developers and local government.

You can find out more about land value acquisition in the Land Value Contribution: Explanatory Paper.

You can find out more in the Practice Note: Contributions plans and planning proposals document.

You can find out more about transport project and strategic biodiversity charges on the state infrastructure contributions webpage or the Regional Infrastructure Contribution Discussion Paper.

You can find out more about the transition from Special Infrastructure Contributions to Regional Infrastructure Contributions on the state infrastructure contributions web page or the Regional Infrastructure Contribution Discussion Paper.

You can find out more about the governance of the Regional Infrastructure Contribution in the Regional Infrastructure Contribution Discussion Paper.

We are not exhibiting any policy changes on local works-in-kind.

The community will benefit through improved infrastructure provision and better places. The reformed contributions system will ensure the right infrastructure is delivered at the right time and in the right place to support our growing communities.

Increased transparency in the system will help to keep the community informed about what infrastructure will be delivered, and when it will be delivered.

These improvements will help to increase community confidence in the planning and infrastructure delivery systems.

Infrastructure contributions reform changes are targeted towards councils and developers, direct financial impacts on the community will be marginal.

There are two changes which may affect some property owners in the community:

• To create a fairer system, if you are renovating or doing a knock down rebuild in one of the RIC regions you will need to contribute towards local infrastructure.
• For landowners who are rezoning their land – they will need to contribute towards the cost of land for local infrastructure when their land is either sold or developed.

IPART has completed the review of the rate peg to allow adjustment for population growth. See their final report.