Infrastructure funding briefing
NSW’s billion-dollar infrastructure funding leak
A NSW policy has frozen council infrastructure contribution thresholds for 16 years—while the State indexes its own contribution every three months.
Why it matters
The infrastructure need does not disappear when the contribution is capped
The $20,000 and $30,000 thresholds applying to many council section 7.11 contributions plans have not been indexed since September 2010.
Over the same period, the cost of land, roads, parks, community facilities and other local infrastructure has increased substantially.
Where a calculated contribution exceeds the applicable threshold, the developer pays less than the amount reasonably attributed to development. The council must fund the difference from rates, grants or other constrained revenue; reduce or defer the infrastructure; or accept a lower level of provision.
This funding pressure is no longer limited to greenfield development on Sydney’s fringe. As established suburbs accommodate more infill and higher-density housing, councils must expand and upgrade infrastructure in locations where land and construction costs are often higher.
Indicative 2026 values. The land-cost series is an InfraGrowth estimate. The building and road series use published construction cost indices.
Not a general alternative
Higher-rate section 7.12 levies do not close the gap
Under the Department’s section 7.12 Practice Note, a council may seek the Minister’s approval for a higher-rate levy of up to 3 per cent, supported by a costed infrastructure program and reasonable apportionment of costs to development.
However, the criteria generally limit higher-rate levies to identified growth areas or precincts. The section 7.11 threshold problem may extend across an entire local government area, including established areas outside designated growth precincts.
Even a 3 per cent levy may generate only around $18,000 to $22,000 per apartment—barely above the $20,000 section 7.11 threshold, if at all, and well below many uncapped contribution rates.
Download the briefing
See the evidence, methods and reform options
The full briefing examines the history and operation of the thresholds, their financial consequences and practical options for reform.
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.
A constructive discussion
Comments and additional council examples are welcome
This research is intended to put the issue on the public record, improve transparency and encourage informed discussion about practical reform.
Important qualifications
The statewide figures are indicative activity-based estimates of potential contribution capacity suppressed. They are not audited estimates of cash income foregone by councils.
Actual outcomes depend on plan coverage, development activity, dwelling mix, contribution rates, credits, exemptions, planning agreements and payment timing. The housing allocation is a screening estimate pending detailed plan-area mapping.
Your details will be used to provide the briefing and may be used to contact you about this research. They will not be sold or provided to third parties.
Download the briefing
Enter your details to access the full briefing.