NSW developer contribution changes raise infrastructure concerns
A proposed overhaul of developer contributions in NSW has prompted warnings from local councils that delaying infrastructure funding could leave growing communities without the roads, parks and essential services needed to support new housing.
Announced by the NSW Government as an election commitment, the proposed changes would allow developers to pay infrastructure contributions when construction is completed, rather than before building work begins.
GALLERY
Local Government NSW (LGNSW) says the move could delay investment in essential infrastructure and place additional financial pressure on councils, particularly in Western Sydney and regional NSW.
Developer contributions help fund the local infrastructure required as populations grow, including roads, footpaths, drainage, sporting fields, parks and community facilities. LGNSW argues that postponing payments would shift financing costs and collection risks from developers to councils and, ultimately, local ratepayers.
The organisation has also raised concerns about the potential redirection of billions of dollars in contributions already collected by councils. It says the proposal could undermine funding earmarked for infrastructure in areas already experiencing significant growth, with the prospect of legal challenges if existing contributions are taken.
Local Government NSW president and Inner West Mayor Darcy Byrne said councils and communities had not been consulted before the announcement.
“This policy will give a handout to developers while worsening the housing supply crisis and short-changing communities in the suburbs and the bush,” Byrne said.
The scale of the existing infrastructure challenge is evident across Sydney’s growth areas. Blacktown City Council reported $631 million in unfunded capital costs for community infrastructure in 2024, while holding $213 million in developer contributions at June 2025. In the St Marys precinct, Penrith City Council estimates $235 million in local infrastructure is needed to support forecast population and employment growth, including $108.5 million for roads and transport. Camden Council held $175 million in infrastructure contributions earmarked for development and population growth at June 2025.
LGNSW says previous contribution deferral arrangements, including those introduced during the COVID-19 pandemic, created difficulties for councils trying to recover unpaid payments, adding administrative costs and potential legal expenses.
Rather than delaying contributions, the organisation is calling on the Government to adopt its proposed $5 billion interest-free loan scheme. The proposal would allow councils to fund infrastructure ahead of development, with costs recovered as projects progress.
“Instead of helping councils deliver more homes, the Government wants to delay the contributions that pay for that infrastructure,” Byrne said.
The debate highlights a central challenge for NSW housing delivery: increasing supply requires more than planning approvals and construction capacity. New homes also need the infrastructure that makes neighbourhoods functional and liveable. For councils managing rapid population growth, the timing and security of infrastructure funding will be critical to whether new housing can be supported.
Images via Local Government NSW
The Grove has expanded beyond Abu Dhabi with a second café in Al Ain, bringing its nature-led hospitality ...
Brisbane-based developer Rogerscorp has filed plans for a 101-townhouse community at Hope Island, adding to a growing pipeline ...
A proposed overhaul of developer contributions in NSW has prompted warnings from local councils that delaying infrastructure funding ...