NSW’s infrastructure funding leak just got a lot bigger

Detailed summary

The Fifth Estate - Moving local contributions from construction certificate to occupation certificate sounds like a timing tweak. Made permanent, it leaves NSW councils about $850…

Moving local contributions from construction certificate to occupation certificate sounds like a timing tweak. Made permanent, it leaves NSW councils about $850 million short, and that gap never closes.

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On 6 November, the Minns Government committed, if re-elected, to permanently defer payment of local infrastructure contributions from the time that construction certificates are issued to the occupation certificate stage.

Councils and industry have spent the past week arguing over it. What’s been missing from the debate is the numbers.

In September I wrote in this column about NSW’s billion dollar infrastructure funding leak: s7.11 thresholds, introduced after the GFC to help developers and frozen since 2010, have suppressed an estimated $730 million in council funding capacity. The deferral opens a second, different hole.

It doesn’t change how much councils are owed. It permanently changes how much cash they hold to build the infrastructure new homes need.

And it isn’t just the Government. Shadow Planning Minister Chris Rath told an industry conference last month that a Coalition government would defer both local contributions and the Housing and Productivity Contribution to occupation certificate from July 2029. Whoever wins in March, the question is not whether councils face this gap, but who bridges it.

Residential subdivision is different. Contributions are usually paid before the subdivision certificate is issued, not the construction certificate. Complying development pays before work starts. Neither pathway is the target of the change.

The result reverses the usual pattern. Greenfield councils, where most growth comes through subdivision, are largely unaffected. Infill councils, where growth comes through apartments, carry most of the impact.

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