Infrastructure funding briefing
NSW’s billion-dollar infrastructure funding leak
NSW’s local infrastructure contribution thresholds have remained frozen for 16 years—while the State’s Housing and Productivity Contribution is indexed 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 index values for 2026, with 2010 set at 100. The land-cost index is an InfraGrowth estimate; the building and roads indices are based on published construction cost series.
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.
Based on typical apartment development costs, 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.
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See the evidence, methods and reform options
The full briefing examines the history and operation of the thresholds, the supporting modelling, 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
Have another council example?
This research is intended to put the issue on the public record, improve transparency and encourage informed discussion about practical reform. Comments, corrections and additional council examples are welcome.
Important qualifications
The statewide figures are indicative, activity-based estimates of the contribution revenue capacity potentially suppressed by the thresholds. 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.
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