Media Archive / UDIA report reveals obstacles to Councils funding critical social and enabling infrastructure

UDIA report reveals obstacles to Councils funding critical social and enabling infrastructure

As part of our evidence-based research to inform our advocacy, UDIA NSW has delivered the latest Council Infrastructure Funding Performance Monitor 2021-22, showing that Councils in the Sydney Megaregion held $3.2 billion of developer contributions, increasing 7% from the previous year and 46% over the last 6 years.

The data collected from the Annual Financial Statements for 2021/22 from 42 of the 43 Councils of the Megaregion, revealed that Councils are still facing significant challenges in the delivery of critical infrastructure, including, roads and footpaths, parks and community facilities in a timely fashion.

“Councils do a lot of heavy lifting when it comes to delivering infrastructure for local communities and in recent years, many resource and capacity-based challenges have needed to be navigated. That said, Councils across the Sydney Megaregion have a fundamental role in providing the critical enabling infrastructure for the future development of housing for the people of NSW. Getting infrastructure right is a significant step towards creating a sustainable development ready pipeline of housing in NSW,” said Steve Mann, CEO, UDIA NSW.

The graph below shows that over the period 20/21 financial year, expenditure from Councils has fluctuated, but FY22 was clearly the poorest performance to date.

Figure 1: Local Development Contributions in the Six Cities Megaregion, FY17-22

Source: NSW Local Council Financial Statements; UDIA NSW

“NSW is the State with the highest developer contributions in Australia – the majority of which is paid for in the price of new homes – and the lowest council rates in Australia. The next government in NSW needs to deliver on the Infrastructure Contributions reforms put forward by the NSW Productivity Commission in 2021, forecast to deliver $12 billion of productivity gains, with a lower broader based and more productive system,” added Steve Mann.

UDIA has consistently championed Infrastructure Contributions reform as the key to driving productivity reforms. Despite this strong advocacy, action on reform continues to stall.

UDIA warns that without a contributions mechanism that efficiently enables Councils to reinvest in community and city building, the housing pipeline in NSW will hit an even deeper trough than its current level. Record low approvals across the state are testament to this current deep decline.

Outlined in our research, UDIA proposes three clear solutions that could free up the funding currently held by Councils:

  1. Initiate a self-replenishing enabling infrastructure fund that will enable Local Councils to bring forward infrastructure delivery without the need to use debt.
  2. The NSW Government to commit $450m to the Housing Acceleration Fund to deliver growth infrastructure over the next 3 years and unlock future supply.
  3. Utilise Empowered UDP Committees across the Sydney Megaregion to encourage evidence-based prioritisation in the delivery of development ready land.

UDIA NSW also acknowledges the recent decision from the Minister for Local Government, Wendy Tuckerman, to expand the low-cost loans program that supports infrastructure and community facilities delivery to include all NSW Councils.

“The decision by Minister Tuckerman is an encouraging and positive step towards investing in the infrastructure that communities will need for the future and should be part of broader initiatives that help bring forward the delivery of infrastructure across our state” Mr Mann said.

The full report can be found at this link.


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