Infrastructure funding briefing
NSW’s infrastructure funding leak just sprang another hole
Moving local contributions from Construction Certificate to Occupation Certificate sounds like a timing tweak. Made permanent, it leaves NSW councils around $850 million short, and that cash never comes back.
Why it matters
Councils are owed the same amount, but permanently hold less cash
Moving payment from CC to OC doesn’t change what developers pay. It changes when they pay. A temporary deferral catches up when it ends. A permanent one doesn’t, so councils stay that far behind for good.
Greenfield councils are largely unaffected, because subdivision pays before the subdivision certificate. Infill councils, where apartments pay at CC, carry most of the impact.
The evidence
The COVID deferral shows the pattern
City of Sydney’s contributions receipts fell from about $41 million in 2019–20 to $21 million in 2020–21 while payment was deferred to OC. They spiked to $74 million in 2022–23 when the deferral ended.
That catch-up only happened because the deferral was temporary.
NSW local infrastructure contributions
What does moving contributions from CC to OC cost your council?
Annual receipts with a permanent deferral
Deferral applies to new consents from the start of Year 1. Receipts return to normal, but the shaded amount is never received early again.
Range for this council type
| Scenario | Share at CC | Lag | Cash shortfall | Cost of funds a year |
|---|
How the estimate works
Cash shortfall = annual receipts × share paid at CC × CC-to-OC lag.
Each affected development still pays in full, but two to three years later. Under a temporary deferral, as during COVID, the dip is followed by a catch-up when payment timing reverts. Under a permanent change there is no catch-up, so the council stays that far behind for good.
Statewide, InfraGrowth estimates a shortfall of about $850 million (range $600 million to $1.2 billion), based on the financial statements of around 40 NSW councils.
Limits
- Indicative only. Defaults are typical values for each council type, not figures for any particular council.
- Assumes the change applies to new consents. If existing consents are brought in, the dip arrives sooner and deeper.
- Does not model growth in receipts, indexation, or the risk of payments being missed at OC.
- Not financial advice. A council-specific estimate needs your development pipeline and consent conditions.
Need a figure you can take to your executive?
InfraGrowth Planning prepares council-specific assessments by development pathway and transition scenario, using your consent and pipeline data.
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The fix
Keep the timing change without the cash hole
- A State bridging facility through TCorp: pay councils at CC and collect from developers at OC.
- Count contributions in the debt service cover ratio, or set a sunset on the change.
- Verify payment before any OC, including interim and phased OCs, with security allowed.
- Publish council-by-council impacts before commencement.
About the author
Jonathon Carle
Jonathon is the founder and director of InfraGrowth Planning. He has more than 25 years’ experience in infrastructure planning and funding across local government, the NSW Government and consulting.
jonathon@infragrowth.com.auRelated briefing
NSW’s billion-dollar infrastructure funding leak
The unindexed s7.11 thresholds have suppressed an estimated $730 million in contributions capacity since 2010. That is lost value; the CC-to-OC shortfall is a permanent timing gap, so the two are not added together.
Read the thresholds briefing →Important qualifications
This is a modelled estimate, not an audited loss. It is based on s7.11 and s7.12 cash receipts from the audited financial statements of about 40 councils (about 87% of statewide receipts), with the remainder estimated.
It assumes the change applies to new consents. Bringing in existing consents would bring the dip forward.
It should not be added to the $730 million threshold estimate: one is lost value, the other a permanent timing gap.
Method
How the estimate was built
01 Formula
Permanent cash shortfall = annual contributions receipts × share currently paid at CC × typical CC-to-OC lag (years)
Ongoing cost = shortfall × council cost of funds (5% assumed)
02 Data
- s7.11 and s7.12 cash receipts compiled from the audited financial statements of 40 NSW councils (latest two years averaged), covering about 87% of statewide receipts (about $666 million of an estimated $766 million a year).
- Remaining councils estimated by council type (about $100 million).
- Excludes s7.4 planning agreements and works in kind.
- Councils compiled by type: CBD 3, middle-ring infill 15, regional city 10, mixed growth 6, greenfield 4, rural 2.
03 Assumptions by council type
| Council type | Share paid at CC low / central / high | CC-to-OC lag (years) low / central / high |
|---|---|---|
| CBD or major centre | 85 / 90 / 95% | 2.5 / 2.75 / 3.5 |
| Middle-ring infill | 80 / 85 / 90% | 1.5 / 2.0 / 2.5 |
| Regional city | 40 / 50 / 60% | 1.5 / 1.7 / 2.0 |
| Mixed growth | 20 / 30 / 40% | 1.5 / 2.0 / 2.5 |
| Greenfield | 5 / 10 / 15% | 1.0 / 1.2 / 1.5 |
| Rural or regional town | 30 / 40 / 50% | 1.0 / 1.0 / 1.0 |
04 Results by council type (central case, $ million, rounded)
| Council type | Annual receipts | Cash shortfall |
|---|---|---|
| CBD or major centre | ≈ 85 | ≈ 207 |
| Middle-ring infill | ≈ 220 | ≈ 373 |
| Regional city | ≈ 135 | ≈ 116 |
| Mixed growth | ≈ 225 | ≈ 134 |
| Greenfield | ≈ 65 | ≈ 8 |
| Rural or regional town | ≈ 30 | ≈ 13 |
| NSW total | ≈ 766 | ≈ 850 range ≈ 600 to ≈ 1,190 |
Figures rounded; may not sum.
05 Note
Estimates are indicative and by council type. Individual council results depend on development mix, consent conditions and transition arrangements. Council-specific assessments are available on request.
Need a figure you can take to your executive?
InfraGrowth prepares council-specific assessments by development pathway and transition scenario, using your consent and pipeline data.