Infrastructure contributions: review of impact of infrastructure taxes and charges on the NSW economy

Housing Housing development Low income housing New South Wales
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The New South Wales (NSW) Government has announced a number of reforms as part of its housing affordability package, A Fair Go for First Homebuyers, these include reforms to infrastructure charges including:

  • The Local Infrastructure Grant Scheme will cease at the end of 2020. It was originally designed to fund the shortfall between capped developer contributions and local infrastructure requirements.
  • The cap on developer contributions will be lifted, likely to result in a greater cost of local infrastructure being passed on to new home owners.
  • There are also plans to expand the Special Infrastructure Contributions (SIC) scheme, covering state and regional infrastructure, to cover new growth areas across Greater Sydney.
  • The Greater Sydney Commission (GSC) recommending a broad inclusionary policy which mandates a portion of affordable housing for very low to low income earners in certain areas.

The Urban Development Institute of Australia in NSW (UDIA NSW) has engaged PricewaterhouseCoopers (Consulting) Australia Ltd (PwC) to assess these proposed reforms in the context of the current housing market in NSW, and provide commentary on the potential impacts on development costs, the forward supply and affordability of new housing.

In order to do this, in this report we explore:

  • the state of the housing market and the issue of housing undersupply in NSW
  • the cost of housing production and the impact that development cost increases are likely to have on housing delivery
  • developer contributions and issues with the current charging approach.

The report also looks at the importance of the residential construction industry to the NSW economy, and assesses the potential impacts to the economy and jobs if forward supply was lower than expected.

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