Council Infrastructure Funding Performance Monitor for the Sydney Megaregion FY20

22 Apr 2021

UDIA NSW research reveals that Councils are sitting on $3bn in infrastructure contributions that if spent efficiently, could improve housing affordability, create thousands of jobs and improve the quality of life for hundreds of thousands of people in NSW.

The timely and efficient delivery of enabling and social infrastructure is a significant concern for many UDIA NSW’s members, and this guides our research, policy and advocacy. The UDIA NSW Council Infrastructure Funding Performance Monitor FY20 reviewed Annual Financial Reports from Local Government Areas across the Sydney Megaregion to determine the levels of income and expenditure derived from development contributions.

Key findings:

$3bn from section 7.11 and 7.12 plans or from planning agreements was held by Councils across the Sydney Megaregion (Illawarra to the Hunter), at the end of FY20 – up 6.2% from FY19 and a huge 50% jump from the $2bn held four years ago.
While the money for infrastructure held by Councils has increased year-on-year infrastructure delivery has not kept up, with many councils spending significantly less than they obtain from developer contributions.
Communities urgently need the infrastructure to support development including open spaces, roads and community centres such as libraries.
Of the $3bn, $670m is currently held for enabling infrastructure such as roads and sewers, which if spent, would help deliver more homes and improve housing affordability.
Councils’ performance varies significantly, and we acknowledge that delayed expenditure may be for reasons beyond a Council’s control. However, UDIA NSW suggests that poorly performing Councils could benefit by learning from best practice.
The NSW Government should implement the reforms recommended by the Productivity Commissioner as soon as possible, to make it easier for Councils to borrow to forward fund infrastructure delivery.

“Unlocking new housing supply is a key to meeting demand and managing affordability over time. More needs to be done by the State Government to work with Councils to deliver greater productivity and build a stronger housing supply pipeline in NSW.” said Steve Mann, CEO UDIA NSW.

“The challenge and also importantly, the opportunity to deliver more infrastructure housing and jobs is to get more of these funds moving. Activating even $1bn of growth infrastructure funds would create in the order of 25,000 homes and support around 30,000 jobs per annum. The economic stimulus of this policy into the NSW economy would be between $9bn and $16bn.”said Steve Mann.

The report was conducted primarily to examine the relationship between rising contributions and the ability for Councils to deliver infrastructure on the ground. The report is broken down by GSC regions.

Councils showing high asset holdings can be waiting on additional funding to “unlock” the money and fully deliver projects.

Councils with high asset holdings are often those with high levels of development and/or have expensive infrastructure to deliver.

Infrastructure contributions are the fees property developers are required to pay and are one of the main tools available to councils to help fund local infrastructure to support growth.

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