State government sets out roadmap for NSW infrastructure contributions system reform

The decision by the NSW Government to accept all 29 recommendations in the NSW Productivity Commissioner’s November 2020 report (Report) on the efficacy of the infrastructure contributions system is a watershed moment for the state’s planning system.  

Following an initial set of reforms to the infrastructure contributions system announced only weeks ago, the NSW Government issued its formal response to the Report on the efficacy of the system. 

Treasurer Dominic Perrottet (Treasurer) and Minister for Planning and Public Spaces Rob Stokes (Minister) have announced that the acceptance of the Report’s recommendations would lead to a suite of legislative, policy and operational reforms of infrastructure charges in NSW over the next 18 months.

The recommendations and response

The NSW Productivity Commissioner made 29 different recommendations to Government in his Report, including:

• varying the local government ‘rate peg’ system to allow Councils’ general income to increase with population growth;
  
  
• ensuring infrastructure contributions plans for rezoned land are certain and set during the rezoning process;
  
  
• permanently adopting the temporary COVID-19 measure of deferring the payment of local contributions to the Occupation Certificate stage;
  
  
• requiring contributions plans to conform to standard templates and reflect benchmarked costs for common contribution items; and
  
  
• creating a digital contributions tool through the NSW Planning Portal, integrated with spatial mapping and development application tools.

The Treasurer and Minister’s media release stresses that the reform package will deliver productivity benefits in the billions of dollars and, crucially, improve certainty for the whole community. The release sets out the Government’s view that there is a pressing need to ensure clear policy guidance and to simplify the system generally.

While the Government’s response indicates that it has accepted all 29 recommendations, the manner in which the reforms will be implemented is subject to further work. The Government has noted that consultation groups will shortly be established by the Department of Planning, Industry and Environment to guide the implementation of reforms, drawing on participants from local government, industry and the community.

Timeline for reforms

The rollout of this larger package of reform has been broken down into four distinct stages intended to take place progressively over the next 18 months, with scope for ongoing implementation of the changes by individual councils beyond that. 

The Infrastructure Contributions Reform Roadmap (Roadmap) outlines the four stages of reform and the timeline for implementation:

Next steps

While the announcement of the Roadmap and the release of the NSW Government’s response to the Report provides a clear indication of how the NSW infrastructure contributions system is set to change, it remains to be seen precisely how these legislative, policy and operational reforms will be achieved. 

We anticipate that the bulk of the reforms will be subject to public exhibition and feedback on draft legislation, regulatory instruments and policy documents, and expect to see further back-end upgrades to implement the recommendations related to the Planning Portal announced and rolled out progressively.

Many participants in the system, from developers to community residents to planning and utilities authorities, have long called for greater transparency and certainty. 

Now, with an agreed agenda and Roadmap, signs are positive that the NSW Government is set to deliver on this long held request.

However, the timely implementation of the proposed reforms in full, particularly by local councils, will be material to the effectiveness of the reform agenda and, at this stage, it is unclear how long this process is expected to take.