Development contributions in NSW need an overhaul

Concerns about development contributions raised by Newcastle City Councillors highlight the need for an overhaul of the developer contribution system in NSW, says the Urban Taskforce.

“If councillors are confused by how development contributions are calculated in their local area, just imagine how confused the development industry is,” says Urban Taskforce CEO, Chris Johnson following recent concerns raised in Newcastle regarding inconsistent levying of development contributions by the state government. “The NSW infrastructure contributions system has become confused with a variety of levies applied to developments by the state government and by councils, such as Section 94 contributions, special infrastructure contribution plans and voluntary planning agreements’.

“Victoria has recently undertaken a review of development contributions for infrastructure to give a clearer system for all parties and the Urban Taskforce calls on the NSW government to undertake a similar review.”

“There are three components of the new Victorian contributions system – an infrastructure levy; a pre-set list of ‘allowable’’ infrastructure items that may be funded through the levy; and an infrastructure contributions plan that details the levy payable and the infrastructure items being funded.”

“If both councils and developers are confused in NSW then the system needs to be improved.”

“The review should look at how to spread the need to fund infrastructure across a large number of beneficiaries rather than tax single developments. High contribution costs may well please local councils but will only add to the cost of a project. For apartment buildings this means additional costs will need to be added to each apartment therefore impacting upon housing affordability.”

“The NSW White Paper ‘A New Planning System for NSW’ produced as part of the Department of Planning’s 2012 planning reforms, confirmed that ‘there is support for a broad based contribution model’.”

“A comprehensive review of development contributions will also need to look at the growing trend for councils to request Voluntary Planning Agreements (VPAs) that raise funds for council projects as a trade off for extra floor space.”

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