Developer contributions represent 8-11% of total development costs and directly impact project feasibility. In Sydney’s growth areas, contributions can reach $85,000 per dwelling—enough to compress development margins by 4 percentage points and reduce residual land values by 36%. Understanding how infrastructure levies work across Australia’s fragmented state-by-state frameworks may mean the difference between a viable project and an abandoned site. This guide provides professional developers with the technical knowledge, current rates, and strategic insights needed to navigate contribution requirements, negotiate effectively, and factor these substantial costs into development feasibility from day one. Recent reforms in NSW (Housing and Productivity Contribution from October 2023) and Victoria’s announced statewide overhaul (reporting March 2025) are reshaping the landscape. Developers who understand these mechanisms gain competitive advantage through better site selection, accurate feasibility modeling, and strategic use of works-in-kind arrangements that can reduce cash outlays by 10-20%.
What the fragmented state systems mean for developers
Australia operates eight distinct developer contribution frameworks—one for each state and territory—with minimal coordination. The terminology alone creates confusion: NSW calls them “Section 7.11 contributions” (formerly Section 94), Victoria uses “Development Contributions Plans” and “Infrastructure Contributions Plans”, Queensland refers to “infrastructure charges”, and Western Australia employs “Development Contribution Plans” under entirely different legislation. This fragmentation extends beyond semantics to fundamental differences in calculation methodology, payment timing, and scope of funded infrastructure.
The financial impact varies dramatically by jurisdiction. A typical greenfield residential development in Sydney may face combined contributions of $58,000 per dwelling across local (Section 7.11), levy (Section 7.12), and state (Housing and Productivity Contribution) layers. The same development in Melbourne might incur $52,000 per dwelling through Development Contributions Plans and Growth Areas Infrastructure Contribution. Brisbane’s capped system typically results in $32,000 per dwelling, while Adelaide’s contributions average just $6,000 per dwelling—nearly a tenfold difference for comparable projects.
Recent reforms are creating both opportunities and risks. NSW implemented its Housing and Productivity Contribution scheme in October 2023, initially offering a 50% discount that stepped down to 25% in July 2024. Victoria announced a comprehensive overhaul in October 2024, with an industry working group reporting in March 2025 and Activity Centre pilot contributions commencing January 2027. Queensland continues refining its Priority Development Area charging policies, while Western Australia focuses on improving coordination and transparency of its Development Contribution Plan system.
For developers operating across multiple states, this creates strategic site selection considerations. The same project economics that work in Brisbane may prove unviable in Sydney due to contribution differentials. Developers increasingly factor contribution exposure into land acquisition decisions, recognising that every additional $10,000 per dwelling in contributions reduces residual land value dollar-for-dollar and compresses internal rates of return by approximately 2.5 percentage points over a 24-month project.
NSW: Section 7.11 and Section 7.12 contributions explained
New South Wales operates a dual contribution system alongside state-level charges, creating three potential layers that developers must navigate carefully. Understanding the nuances between each mechanism is essential for accurate feasibility modelling in one of Australia’s most expensive contribution jurisdictions.
Section 7.11 contributions: The nexus-based approach
Section 7.11 contributions (renamed from Section 94 in March 2018 during legislative renumbering) require councils to demonstrate a clear relationship between new development and infrastructure demand. This “nexus and apportionment” principle means contributions must be reasonably required by, and attributed to, the development. Councils prepare detailed Contributions Plans identifying specific infrastructure projects, costs, and the methodology for apportioning costs across future development.
The system operates with regulatory caps to prevent excessive charging. The Independent Pricing and Regulatory Tribunal (IPART) must review any plan proposing contributions exceeding $20,000 per dwelling or lot in infill areas, or $30,000 in greenfield areas. However, councils can seek—and often receive—Ministerial approval for higher rates following IPART review. Major growth area councils like Blacktown, The Hills, and Liverpool frequently operate above these thresholds.
Calculation methodology varies by council but typically follows a formula: contribution equals the net increase in population (residents, workers, or visitors) multiplied by the per-capita infrastructure cost. The City of Sydney, for example, uses occupancy rates of 1.3 residents per one-bedroom dwelling, 1.67 for two-bedroom, and 2.5 for three-bedroom dwellings. After applying per-resident infrastructure costs and the $20,000 cap, indexed rates as of December 2024 range from $15,458 to $20,000 per dwelling depending on precinct and bedroom count.
Infrastructure funded through Section 7.11 spans five categories: roads and traffic facilities, drainage and stormwater management, open space and recreational facilities, community facilities including childcare centres and libraries, and plan preparation and administration costs (capped at 1.5% of capital costs). Contributions are indexed quarterly using the Consumer Price Index for Sydney, meaning charges increase even between development approval and construction certificate issuance.
Payment timing typically occurs prior to construction certificate issuance, though large subdivisions may negotiate staged payments. Works-in-kind arrangements allow developers to construct infrastructure directly instead of paying cash, potentially delivering cost savings of 10-20% through competitive procurement compared to council delivery. These arrangements require formal agreements with financial security (typically bank guarantees) and defects liability periods of 12-24 months.
Section 7.12 levies: The simpler percentage model
Section 7.12 levies (formerly Section 94A) operate on an entirely different principle. Introduced in 2005 as a simpler alternative, these levies charge a fixed percentage of proposed development cost without requiring demonstrated nexus between specific development and infrastructure. The standard rate sits at 1% of development cost, though several councils have received approval for enhanced rates: Liverpool and Wollongong up to 4%, while Parramatta, Newcastle, Burwood, and Willoughby can charge up to 3%.
Development cost determination follows strict methodology. For developments valued between $250,000 and $3 million, a cost summary report is required. Projects exceeding $3 million require a quantity surveyor’s detailed report. The calculation must include site works, building construction costs, external works, and professional fees, but explicitly excludes land acquisition costs, financing expenses, marketing costs, and GST.
Section 7.12 levies apply differently than Section 7.11 contributions. Where a contribution was already paid at subdivision stage under Section 7.11, a Section 7.12 levy generally cannot be charged on subsequent development—unless the new development generates demand beyond what was anticipated at subdivision. This prevents double-charging but requires careful analysis of what infrastructure demand was already captured.
Critical limitation: works-in-kind arrangements are not available for Section 7.12 levies. The legislation does not provide for “material public benefit” offsets under Section 7.12. Developers seeking to deliver infrastructure directly must instead negotiate Voluntary Planning Agreements prior to development consent, structuring the agreement to provide an alternative to both contribution types where the planning authority is a party to the agreement.
Housing and Productivity Contribution: The state layer
The Housing and Productivity Contribution (HPC) commenced on 1 October 2023, replacing the previous Special Infrastructure Contributions system. This state-level charge applies across Greater Sydney, Illawarra-Shoalhaven, Lower Hunter, and Central Coast regions (excluding Western Sydney Growth Areas and Western Sydney Aerotropolis, which transition by 1 July 2026).
HPC base rates for Greater Sydney as of current discount period (July 2024 to June 2025, with 25% discount applied):
- Residential subdivision: $9,000 per new dwelling lot (full rate $12,000)
- Medium/high-density residential: $7,500 per new dwelling (full rate $10,000)
- Commercial development: $22.50 per square metre of gross floor area (full rate $30)
- Industrial development: $11.25 per square metre (full rate $15)
Regional areas (Central Coast, Illawarra-Shoalhaven, Lower Hunter) apply different base rates, with residential subdivision charged at $8,000 per dwelling lot ($6,000 discounted) and medium/high-density at $6,000 per dwelling ($4,500 discounted).
Additional components layer onto the base HPC. The Cumberland Plain Conservation Plan Strategic Biodiversity Component, introduced from 1 July 2024, adds $10,000 per dwelling (currently $5,000 with 50% discount until 30 June 2025) for developments in designated areas. The Pyrmont Peninsula Sydney Metro Transport Project Component adds $15,000 per dwelling and $200 per square metre for commercial development in that specific location.
The HPC system includes quarterly indexation using the Producer Price Index for Road and Bridge Construction in NSW, published by the Australian Bureau of Statistics. All payments are processed through the NSW Planning Portal, with the system automatically calculating indexed amounts at the time of payment. This creates payment timing considerations—delaying payment from construction certificate to occupation certificate could add 2-4% in indexation costs.
July 2024 amendments addressed a critical double-charging issue. Previously, medium-density residential development paid HPC at construction and again at strata subdivision. The current framework charges both medium and high-density development at construction certificate stage only, eliminating this duplication and providing greater cost certainty.
Victoria: Development Contributions Plans and Infrastructure Contributions Plans
Victoria’s contribution system has evolved into a complex patchwork of 133 separate schemes across 43 of 79 councils, creating what the state government acknowledged in October 2024 as an “inequitable, complex, and uncertain” framework. The Victorian Auditor-General’s 2020 report found the system was “not delivering infrastructure needed by growing communities”, with tools managed in isolation lacking overarching strategy. Understanding the current fragmented system—and upcoming reforms—is essential for developers operating in Australia’s second-largest market.
Development Contributions Plans: The established area model
Development Contributions Plans (DCPs) apply primarily to established urban areas and operate under Part 3B of the Planning and Environment Act 1987. These plans incorporate into local planning schemes through Clause 45.06 (Development Contributions Plan Overlay) and establish a two-tiered levy structure designed to prevent excessive community infrastructure charges.
The Development Infrastructure Levy (DIL) remains uncapped and can fund roads, transport infrastructure, public transport improvements, basic public open space, drainage, maternal and child health centres, childcare centres, and kindergartens. This covers essential infrastructure reasonably required by development, with costs apportioned based on detailed demand analysis.
The Community Infrastructure Levy (CIL) is capped at $1,190 per dwelling (2019-20 base rate), indexed annually on July 1 using the ABS Producer Price Index for Non-Residential Building Construction. This cap prevents councils from imposing excessive charges for community facilities including libraries, community halls, neighbourhood houses, senior citizens’ centres, aquatic centres, sporting facilities, and public toilets. As of 2025-26, indexation has increased this cap to approximately $1,530 per dwelling in some municipalities.
DCPs in established areas typically impose lower charges than growth area schemes. Municipal-wide DCPs like Merri-bek (formerly Moreland), Yarra, and Whitehorse generally charge $500 to $5,000 per dwelling depending on precinct location. Urban renewal DCPs such as Fishermans Bend may reach $17,000 per dwelling, reflecting the intensive infrastructure required to transform former industrial areas into mixed-use communities.
Payment timing varies by infrastructure type and council policy. The Development Infrastructure Levy is typically payable at planning permit issue or plan endorsement, while the Community Infrastructure Levy must be paid before building permit issuance. For subdivisions, contributions become payable not more than 21 days prior to Statement of Compliance issuance. Multi-stage developments can negotiate staged payment arrangements aligned with development phasing.
Infrastructure Contributions Plans: The growth area framework
Infrastructure Contributions Plans (ICPs) replaced DCPs in greenfield growth areas from 2015 onwards, incorporating under Clause 45.11 (Infrastructure Contributions Overlay) of local planning schemes. The intention was to standardise and cap escalating contribution costs through a “standard levy” model. However, analysis by the Urban Development Institute of Australia Victoria shows transport levies continued increasing despite the standard levy framework.
Standard ICP levy rates for 2025-26:
- Residential development: $115,453 per net developable hectare (community and recreation) + $150,295 per net developable hectare (transport) = $265,748 per hectare base levy
- Commercial/industrial development: $150,295 per net developable hectare (transport only)
At typical residential densities of 17 dwellings per hectare, the standard levy equates to approximately $15,632 per dwelling. However, six of nine ICPs analysed included “supplementary levies” for infrastructure not covered by the standard rates, with average supplementary transport levies of $47,137 per hectare. When including land contributions (averaging $275,065 per hectare) and supplementary levies, total ICP obligations reach approximately $540,000 per hectare or $52,000 per lot.
This represents 16% of the median greenfield lot price ($330,000 in outer Melbourne growth areas), creating material affordability impacts. The UDIA Victoria research shows transport levies increased from $86,463 per hectare in early DCPs to $171,816 per hectare in ICPs—a 99% increase in real terms—despite the standard levy system intended to contain cost growth.
The per-hectare calculation methodology differs fundamentally from NSW’s per-dwelling approach. This creates density neutrality—developers adding more dwellings per hectare spread the fixed per-hectare cost across more units, reducing the per-dwelling contribution. This theoretically incentivises higher-density development, though market demand and planning controls often constrain density choices more than contribution structures.
Growth Areas Infrastructure Contribution: The state charge
The Growth Areas Infrastructure Contribution (GAIC) operates as a state-level levy collected by the State Revenue Office from seven growth area councils: Casey, Cardinia, Hume, Melton, Mitchell, Whittlesea, and Wyndham. Introduced in 2010, GAIC charges between $99,230 and $117,870 per gross hectare (averaging $108,550), or approximately $6,385 per lot at typical densities.
Revenue is split 50/50 between the Growth Areas Public Transport Fund and the Building New Communities Fund. The most recent funding round (announced December 2024) allocated $150 million toward transport infrastructure including bus services, railway stations and interchanges, major intersections, roads connecting growth areas, and cycling and walking paths. As of June 2025, total GAIC collections have reached $1.49 billion.
GAIC works-in-kind arrangements provide an alternative to cash payment. Developers can enter formal agreements with the Minister for Planning (administered by the Victorian Planning Authority) to provide land or construct state infrastructure instead of paying the levy. Two model agreements exist: one for land and works combined, another for land transfer only. Values over $2 million require Treasurer approval. This mechanism allows developers to deliver infrastructure directly, potentially capturing cost efficiencies while accelerating project timelines if the infrastructure sits on the critical path.
Upcoming Victorian reforms creating uncertainty
Victoria’s October 2024 reform announcement introduces two parallel tracks. The Activity Centre pilot commencing January 2027 will impose contributions in 10 locations: Broadmeadows, Camberwell, Chadstone, Epping, Frankston, Moorabbin, Niddrie, North Essendon, Preston, and Ringwood. The aim is delivering 60,000 additional homes by 2051 in areas with existing transport, jobs, and services. Contribution rates will be announced following industry consultation, creating uncertainty for developers with sites or options in these locations.
The statewide system redesign involves an industry working group (Property Council of Australia, UDIA, Housing Industry Association, Master Builders Victoria, and Assemble) reporting in March 2025. This represents the most significant potential overhaul of Victoria’s contribution system since the Planning and Environment Act 1987 was introduced. The reform aims to replace the current “patchwork” of 133 schemes with a unified statewide system, addressing fundamental concerns about equity, complexity, and infrastructure delivery.
Developers should monitor reform announcements carefully and consider transition risks. Previous major changes created grandfather provisions, transition periods, and retrospective application issues. Projects currently in planning should assess whether to accelerate development applications before new contribution frameworks commence, or wait if proposed reforms may deliver more favourable outcomes.
Queensland: Infrastructure charges and Local Government Infrastructure Plans
Queensland’s infrastructure charges framework operates under the Planning Act 2016 and Planning Regulation 2017, with Schedule 16 of the Regulation prescribing maximum amounts that councils cannot exceed. This creates a fundamentally different dynamic than uncapped systems—Queensland’s caps provide greater upfront certainty, though Priority Development Areas can significantly exceed standard maximums through bespoke charging policies.
The capped framework providing cost certainty
Maximum prescribed charges (indexed annually using the Producer Price Index for Road and Bridge Construction in Queensland):
- Dwelling with two or fewer bedrooms: $22,200
- Dwelling with three or more bedrooms: $31,080
These state maximums represent the ceiling for charges outside Priority Development Areas. Councils set their own adopted charges through Infrastructure Charges Resolutions, which must not exceed the prescribed amounts. Many councils adopt rates at or near the maximum, though some regional councils apply lower rates or charge differentially by location within their local government area.
Brisbane City Council’s Resolution (No. 14) 2025 applies charges for transport infrastructure, stormwater infrastructure, and parks and community facilities. Water and sewerage infrastructure is charged separately by Queensland Urban Utilities, which services Brisbane along with Ipswich, Lockyer Valley, Scenic Rim, and Somerset council areas. Brisbane has introduced incentive programs including 100% waivers for community housing providers, and staged discount programs (50% reduction for eligible developments approved September 2023 to June 2025, stepping to 25% thereafter). Build-to-rent developments can access deferral arrangements up to five years.
Gold Coast City Council historically fluctuated its rates following the Global Financial Crisis, initially slashing housing infrastructure charges by 50% from $28,000 to $14,000, before gradually returning to the state maximum. The Council of the City of Gold Coast Charges Resolution (No. 1) of 2023 aligns with Planning Act requirements and includes special charges such as the Maroochydore City Centre Automated Waste Collection System. As Gold Coast acts as its own water distributor-retailer, it sets water and sewerage charges independently from other state water entities.
Sunshine Coast Regional Council’s Resolution (No. 9) 2022 covers transport, stormwater, parks, and community facilities, with water and sewerage set by Unitywater (serving Moreton Bay, Sunshine Coast, and Noosa). Charges align with Schedule 16 maximum prescribed amounts following indexation of previously adopted lower rates.
Local Government Infrastructure Plans: The planning foundation
Local Government Infrastructure Plans (LGIPs)—which replaced the previous Priority Infrastructure Plans terminology—are integral components of local planning schemes that identify local shared infrastructure needed to support planned urban development. Councils must have an LGIP in place to levy infrastructure charges, creating a fundamental linkage between land use planning and infrastructure funding.
LGIPs must identify Priority Infrastructure Areas (PIAs) where trunk infrastructure exists or is planned. Development within PIAs pays standard infrastructure charges based on adopted rates. Development outside PIAs may face extra payment conditions if it generates more infrastructure demand than assumed in the LGIP, requires new trunk infrastructure earlier than identified, or imposes extra costs on council. This creates site selection considerations—developers should verify whether prospective sites sit within PIAs to avoid uncertain “pay-as-you-go” infrastructure obligations.
Five trunk infrastructure networks can be funded through infrastructure charges: water supply (set by distributor-retailers in South East Queensland), sewerage (set by distributor-retailers in South East Queensland), transport (set by councils), stormwater (set by councils), and public parks and land for community facilities (set by councils).
LGIPs undergo mandatory five-year reviews with four types of amendments outlined in the Minister’s Guidelines and Rules. State-approved panels of LGIP reviewers are available to councils requiring technical expertise. The review process includes stakeholder consultation, infrastructure needs assessment, demand projections based on planning scheme assumptions, and cost estimation aligned with construction indices.
Payment timing and indexation mechanics
Infrastructure charges become payable at different triggers depending on development type:
Material change of use: Payable when the change of use occurs or when a Compliance Certificate is issued under the Plumbing and Drainage Act 2002, whichever happens first.
Reconfiguring a lot (subdivision): Payable when council approves the plan of reconfiguration, before council endorses the plan of survey.
Building work: Payable when the final inspection certificate for building work is issued or when a certificate of occupancy is received under the Building Act 1975.
Critical cost consideration: automatic indexation applies from the date levied until payment date. When council issues an Infrastructure Charges Notice with development approval, it specifies the base amount owed. Between that notice date and actual payment date (which may be 12-24 months later for large projects), charges increase quarterly based on the Producer Price Index. This indexation cannot cause charges to exceed the Queensland Government’s prescribed caps, but can still add 2-4% annually to contribution costs.
Before payment, developers must request an infrastructure charges quote (valid for 28 days) that calculates the indexed amount payable. This quote system ensures transparency and allows developers to time payments strategically—paying earlier avoids further indexation, but impacts cash flow and financing costs.
Offsets and infrastructure agreements
Trunk infrastructure offsets allow developers to construct infrastructure identified in council’s LGIP instead of paying some or all charges. The offset value is calculated based on establishment cost (life cycle cost of infrastructure required to service future development) or market cost (current construction value). Councils specify maximum allowable indirect costs and project embellishments to prevent gold-plating.
Conversion of non-trunk to trunk infrastructure provides a mechanism where developer-provided infrastructure not originally in the LGIP can be credited against charges if it meets criteria and council agrees. This requires prescribed form submission and formal approval before construction commences.
Infrastructure agreements offer contractual flexibility between councils and developers, particularly useful for developments outside Priority Infrastructure Areas, where councils lack LGIPs, or for complex out-of-sequence developments. These agreements can establish custom obligations, vary timing of charge payments, arrange works-in-kind provision, and create staged payment schedules aligned with development phasing.
Priority Development Areas: The higher-charge exception
Priority Development Areas (PDAs) administered by Economic Development Queensland operate under the Economic Development Act 2012 with separate charging frameworks that can significantly exceed standard caps. The Infrastructure Funding Framework (IFF) updated annually establishes Development Charges and Offset Plans (DCOPs) for specific PDAs.
PDAs include urban renewal areas like Bowen Hills, Northshore Hamilton, and Fitzgibbon in Brisbane, and major greenfield developments such as Greater Flagstone, Yarrabilba, Ripley Valley, and Caloundra South. Charges in PDAs like Ripley Valley can reach $65,000 per lot—more than double the standard state cap—reflecting the scale and cost of infrastructure required to support large master-planned communities.
PDA charge types differ from standard infrastructure charges: municipal charge (typical trunk infrastructure), state charge (state community facilities), catalyst and public transport charge (sub-regional infrastructure), and value capture charge (only applies to land outside former urban footprint).
Developers in PDAs should engage early with Economic Development Queensland to understand specific DCOP provisions, negotiate infrastructure agreements where appropriate, and explore works-in-kind opportunities that may provide cost efficiencies and accelerate infrastructure delivery.
Western Australia and other jurisdictions compared
Western Australia: Developer Contribution Plans under SPP 3.6
Western Australia operates Development Contribution Plans (DCPs) under the Planning and Development Act 2005, Section 26, with policy guidance provided by State Planning Policy 3.6 - Infrastructure Contributions (revised April 2021). The framework allows multiple parties to contribute to infrastructure costs where land development requires major new infrastructure, with DCPs prepared by local governments in consultation with landowners and developers.
Typical contribution rates in Perth’s greenfield areas average approximately $15,000 per dwelling, significantly lower than eastern states. The framework includes caps: $2,500 per dwelling for local community infrastructure and $3,500 per dwelling where district or regional infrastructure is required. These caps provide cost certainty while preventing excessive charges for social infrastructure.
DCPs can only be used when development is imminent (likely within 5-10 years), ensuring contributions fund infrastructure that will actually be delivered within reasonable timeframes. The cost-sharing principles ensure fair and equitable distribution, allow parties making upfront contributions to recoup costs from future developers, and protect general ratepayers from paying for growth-related infrastructure.
The City of Wanneroo operates the most comprehensive DCP system in Perth, with multiple schemes including East Wanneroo Cells 1-9 (covering suburbs like Tapping, Ashby, Sinagra, Wanneroo, Hocking, Pearsall, Landsdale, Darch, and Madeley), Alkimos/Eglinton DCP, and Yanchep Two Rocks DCP. Annual independent auditor’s reports provide transparency on collections and expenditure, with cost estimates updated regularly to reflect construction cost movements.
Infrastructure funded through WA DCPs typically includes district roads and integrated arterial roads, parks and public open space, community facilities (halls, libraries), drainage and groundwater management systems, school sites (land only, not buildings), and sports and recreation facilities. Internal subdivision roads remain the developer’s responsibility, as do water, sewer, and electricity connections to individual lots.
Recent planning reforms (ongoing since 2019) include a centralised developer contribution coordination unit, improved transparency requirements, state-wide consistent guidelines, better integration with structure planning, and development of an online planning portal. State-led district structure planning processes have commenced in East Wanneroo (completed 2022), with Wanju, Waterloo, Glen Iris, Albany North, and Emu Point in progress.
South Australia: Basic and General Infrastructure Schemes
South Australia’s framework under the Planning, Development and Infrastructure Act 2016 provides three contribution mechanisms with a notably light-touch approach compared to other mainland states. Average contributions of approximately $6,000 per dwelling make South Australia one of Australia’s lowest-cost development jurisdictions from an infrastructure contribution perspective.
Basic Infrastructure Schemes impose one-off charges on land in designated growth areas, covering essential community infrastructure in rezoned areas including basic subdivision infrastructure (access roads, hydraulic connections) and open space dedication under Section 50A. These schemes provide simple, predictable charging with minimal administrative burden.
General Infrastructure Schemes address broader social infrastructure for significant development or urban renewal, with contributions paid over time rather than upfront. These require State Planning Commission consultation and Planning Minister approval, which notably requires 100% landowner support. This consensus requirement prevents councils from imposing schemes over significant landowner objections but can create coordination challenges in areas with fragmented ownership. Infrastructure can include roads, public transport, schools, and health facilities.
Land Management & Infrastructure Agreements provide negotiated solutions with individual landowners for project-specific arrangements covering significant infrastructure works to make land suitable for development. This flexible mechanism suits complex sites with contamination, flooding, or other constraints requiring bespoke solutions.
South Australia’s Planning and Development Fund is funded by monetary payments in lieu of open space (for subdivisions of 20 or fewer allotments) and supports the Open Space Grant Program providing councils with funding for park improvements and acquisitions. This cross-subsidisation mechanism helps smaller councils that might otherwise struggle to deliver adequate open space from their own contribution collections.
Tasmania: Minimal system creating development opportunities
Tasmania operates the lowest infrastructure charge regime in Australia, with average charges of approximately $5,000 per lot. The framework under the Land Use Planning and Approvals Act 1993 (Part 5) relies on negotiated agreements between developers and planning authorities (councils) rather than standardised contribution plans.
Developer charges fall into two categories: “works internal” encompassing internal infrastructure built at developer cost then gifted to the authority, and “works external” covering stand-alone assets like pump stations installed at developer cost. This simple structure reduces administrative complexity but provides less certainty than scheduled contribution plans.
Limited public reporting requirements mean minimal aggregated data exists on contributions collected and spent. Industry consultations have raised concerns about certainty and transparency, with developers reporting difficulty obtaining definitive contribution requirements prior to lodging development applications. Infrastructure providers (TasWater for water and sewerage, Aurora for electricity) charge 100% cost recovery upfront, creating significant utility connection costs separate from general infrastructure contributions.
The state’s Density Incentive Grant Scheme offers $10,000 per dwelling grants to encourage medium and high-density housing (up to 50 dwellings per developer), partially offsetting low infrastructure charges to incentivise infill development in Greater Hobart. This reflects policy focus on urban consolidation rather than greenfield expansion, creating opportunities for townhouse and apartment developers who can access both low infrastructure charges and density incentive grants.
Australian Capital Territory: The land value capture alternative
The Australian Capital Territory operates a fundamentally different model under the Planning Act 2023 (commenced late 2023). ACT does not levy traditional developer contributions as used in other jurisdictions. Instead, the Territory charges approximately 75% of market price for new property rights granted through rezoning under its leasehold land system.
When the Territory releases Crown leases or varies existing leases to permit higher-value uses, the government captures most of the land value uplift created by the planning decision. This “betterment levy” or “lease variation charge” provides Territory-wide infrastructure funding through general revenue rather than development-specific contributions. Developers may be required to provide infrastructure as a condition of Crown Lease release, with infrastructure costs offset against the amount paid to government for the lease.
This approach avoids the nexus and apportionment challenges that plague contribution plans in other states—there is no need to demonstrate that specific development requires specific infrastructure when the funding mechanism captures general land value uplift. However, it potentially places greater burden on development compared to traditional contributions, as 75% of rezoning uplift exceeds the typical 8-11% of development costs represented by infrastructure contributions elsewhere.
Territory Plan policies and zone requirements set development standards, with the National Capital Design Review Panel reviewing significant developments. The focus on urban intensification near transport and services aligns with planning objectives but creates higher infrastructure demands in established areas than greenfield development, which the land value capture model may address more effectively than traditional contribution systems.
Northern Territory: Narrow scope stormwater focus
The Northern Territory operates the narrowest-scope contribution system in Australia under the Planning Act 1999 and Planning Regulations 2005. The Northern Territory Planning Scheme 2020 (covering the whole Territory except Jabiru) includes limited contribution plan provisions primarily addressing stormwater drainage and car parking.
Contribution plans are expressed as dollar amounts per square metre and vary by location. Darwin CBD is categorised into Policy Areas A, B, and C with different rates. As of 2024-25, stormwater contribution rates include Policy Area A at $9.43 per square metre, Policy Area B at $5.76 per square metre, and Policy Area C at $3.67 per square metre. Car parking contributions apply in CBD and municipal areas.
The Land Development Strategy indicates that district-level infrastructure costs are “generally recovered through uplift in value and sale of Crown land or through infrastructure contributions”. Government land sales fund major infrastructure, with developer contributions representing a minor component of infrastructure funding compared to other jurisdictions. This reflects the Territory’s smaller development market, different governance model (state-level planning rather than local government control), and greater reliance on government infrastructure investment.
Very limited public reporting makes it difficult to assess total contribution collections or infrastructure delivery funded by contributions. The centralised planning system through the Development Consent Authority and NT Planning Commission creates different accountability mechanisms than the council-based systems operating in most other states. Developers report that essential infrastructure like roads, water, and sewer are provided as basic requirements with minimal additional levies, creating a low-cost environment for development from a contribution perspective.
Navigating Voluntary Planning Agreements strategically
Voluntary Planning Agreements (VPAs)—called Planning Agreements in NSW and similar mechanisms in other states—provide negotiated alternatives or additions to standard contribution frameworks. These legal agreements between developers and planning authorities offer flexibility to structure development contributions around project-specific circumstances, though they require sophisticated negotiation and introduce transaction costs that only make sense for larger or more complex developments.
When VPAs make strategic sense
VPAs prove most valuable in five scenarios: rezoning applications where the planning proposal creates substantial value uplift that the planning authority seeks to capture; development applications requiring bespoke arrangements where standard contribution plans don’t adequately address infrastructure impacts; major or complex developments where upfront contribution costs would destroy feasibility but staged payments or works-in-kind might work; projects delivering benefits beyond standard contributions such as affordable housing, public art, environmental conservation, or regional infrastructure; and situations where timing flexibility matters more than the absolute dollar amount.
The key difference between VPAs and standard contributions lies in flexibility versus predictability. Standard contributions follow formulaic calculations with fixed rates and limited negotiation scope, apply automatically when contribution plans exist, and use rigid payment timing at construction certificate or subdivision stage. VPAs allow tailored contributions negotiated between parties, enable broader public purposes beyond infrastructure identified in contribution plans, and permit flexible staging aligned with project cash flows. However, they introduce negotiation costs, require public exhibition creating potential community objection, and take 3-6 months to execute even in straightforward cases.
Structuring effective VPA proposals
Successful VPA negotiations begin with understanding the planning authority’s infrastructure priorities, budgetary constraints, and political context. Developers should review the council’s strategic plans, Delivery Program, and Infrastructure Funding Statements to identify infrastructure gaps where the council is struggling to secure funding. Offering to deliver high-priority infrastructure through works-in-kind arrangements creates more negotiating leverage than offering cash.
Effective VPA structures often bundle complementary benefits: land dedication for a park or community facility site, limited monetary contribution toward fit-out or associated works, commitment to deliver specific infrastructure items to specified standards and timing, and provision of public benefits like affordable housing units, community space within commercial buildings, or public domain improvements. This bundling allows both parties to achieve outcomes that pure monetary contributions cannot deliver.
The negotiation process typically follows defined stages: developer makes a written offer before or during the development application process; preliminary negotiations with council officers assess feasibility; draft VPA prepared with explanatory note in plain English; public exhibition for minimum 28 days allowing community submissions; council consideration and approval at council meeting; and execution by all parties with registration on title if applicable. The public exhibition creates risk of community opposition potentially derailing negotiations, making it essential to ensure the VPA delivers genuine public benefit that can withstand scrutiny.
Critical timing and exclusivity considerations
The voluntary nature must be genuine. Courts and tribunals scrutinise whether VPAs were truly voluntary or effectively compelled as a condition of consent. If a planning authority signals that development consent depends on entering a VPA, the “voluntary” characterisation becomes questionable. Developers who feel coerced should seek legal advice, as compelled contributions may be challengeable.
VPAs can exclude standard contributions if properly structured and if the planning authority is a party to the agreement. In NSW, a VPA may provide that Section 7.11 contributions do not apply where the VPA addresses the same infrastructure needs and the council is a party to the agreement. However, Section 7.12 levies typically cannot be excluded through VPAs as they are imposed by operation of law rather than at council discretion. This limitation means developers in high-levy areas like Wollongong City Centre (3% levy) cannot use VPAs to avoid substantial percentage-based charges.
Registration on title makes VPAs binding on future landowners if the development site is sold before completion. This protects councils from developers selling sites after obtaining valuable consent but before delivering promised infrastructure. For developers, registration creates an encumbrance that may affect site value if sold, but also provides certainty that fulfilling VPA obligations will extinguish the requirement.
Practical strategies to reduce contribution exposure
Developer contributions are negotiable and manageable through strategic approaches, despite often being presented as fixed obligations. Developers who understand the levers available to reduce, defer, or avoid contributions gain competitive advantage through improved project feasibility and better land pricing decisions.
Works-in-kind: Delivering infrastructure directly
Works-in-kind (WIK) arrangements allow developers to construct infrastructure directly instead of paying monetary contributions. This approach typically delivers three key benefits: cost savings of 10-20% through competitive procurement compared to council delivery; faster infrastructure delivery by controlling timing and removing the risk that councils won’t deliver infrastructure when needed; and potential credit surpluses where the independently-valued infrastructure exceeds the contribution owed, generating refunds or credits toward future contributions.
The process begins with identifying infrastructure items from the council’s works schedule within their contribution plan. Roads, drainage, parks embellishments, and community facility sites typically offer good WIK opportunities as the developer already needs to interface with this infrastructure. Engaging a quantity surveyor to value the proposed works establishes the credit amount that will offset contributions. For feasibility modelling, platforms like Feasly enable modeling both scenarios—cash contribution versus direct delivery with estimated construction cost—to determine which provides better project economics.
Successful WIK arrangements require meeting council standards and specifications. Developers must design infrastructure to council engineering standards, obtain necessary approvals and permits, construct to specified quality standards with council inspection rights, provide as-constructed documentation, and maintain assets through a defects liability period (typically 12-24 months) before final handover. Financial security through bank guarantees protects councils if developers fail to complete agreed works.
The main risk in WIK arrangements is scope creep. UDIA member feedback consistently reports that scope requirements during construction exceed what was costed in contribution plans. Site preparation costs, temporary works, drainage requirements, and authority-mandated design changes can add 15-30% to anticipated costs. To mitigate this, negotiate scope clearly in advance, obtain independent valuations before and after scope changes, ensure WIK agreements specify council’s obligation to compensate for scope increases, and build 20% contingency into WIK cost estimates.
Timing strategies leveraging discount periods
Strategic timing of development applications and contribution payments can deliver substantial savings during reform transition periods. NSW’s Housing and Productivity Contribution discount schedule offers a clear example: developments approved in July 2024 to June 2025 receive 25% discount on base HPC rates, saving $3,000 per dwelling on the $12,000 Greater Sydney rate. From July 2025 onwards, full rates apply. A 100-dwelling project lodging approval in June 2025 rather than July 2025 saves $300,000 in HPC alone.
Brisbane’s incentive scheme provides 50% reduction for eligible developments approved between September 2023 and June 2025, stepping to 25% reduction thereafter. Developments near the June 2025 threshold should assess whether accelerating development applications to capture the higher discount is feasible, considering the trade-off between discount savings and the costs of rushing design and approval processes.
Indexation timing also matters. Contributions are typically indexed at two points: when development consent is issued (establishing the base contribution) and between that time and actual payment (applying quarterly indexation). In high-inflation environments with construction indices increasing 6-7% annually, a development approved in January 2024 but not paying contributions until construction certificate in July 2025 (18 months later) faces approximately 9-10% indexation cost. Where timing is flexible, paying contributions earlier avoids indexation but requires financing those payments through the project period.
Challenge strategies when contributions are excessive
Developer contributions can be challenged through informal and formal mechanisms when they are unreasonable, lack proper nexus, exceed fair cost apportionment, or result from procedural errors. The cost-benefit calculation is critical—legal challenges typically cost $50,000-$200,000+ for court proceedings, justifiable only where potential reduction significantly exceeds legal costs plus delay costs and relationship impacts.
Informal challenge approaches should always be attempted first. Request formal review by writing to council with detailed reasons, quantity surveyor evidence, and precedent examples supporting lower contributions. Escalate through council hierarchy from team leader to manager to director to CEO if initial responses are unsatisfactory. Engage local councillors to raise concerns at council meetings and brief them on project benefits and contribution issues. Many councils will negotiate rather than face the cost and uncertainty of legal challenges.
Formal challenge mechanisms vary by state. In NSW, developers can apply for modification under Section 4.55 of the Environmental Planning and Assessment Act to amend or remove contribution conditions from development consent, which costs less than full court proceedings. Land and Environment Court appeals on the merits (Class 1) allow rehearing of development applications where the court can modify contribution conditions. Judicial review (Class 4) challenges the legality of decisions but cannot introduce new evidence or review merits.
Building a challenge case requires assembling expert evidence including independent quantity surveyor reports valuing infrastructure and contribution fairness, expert planning evidence on nexus and apportionment principles, traffic or engineering studies if transport contributions are challenged, comparable development precedents showing lower contribution rates, analysis of council’s contribution plan methodology and infrastructure delivery timeframes, financial impact analysis demonstrating feasibility effects, and public benefit analysis for developments providing infrastructure serving broader areas.
Due diligence protecting feasibility before land purchase
The most effective contribution management occurs before land acquisition by factoring contribution exposure into purchase price negotiations. Every dollar of additional contributions reduces residual land value dollar-for-dollar when development economics are constant. Discovering $40,000 per dwelling in contributions after paying $300,000 per lot destroys feasibility that might have worked at $260,000 per lot.
Comprehensive due diligence follows a staged process. Desktop research identifies the local government area, verifies zoning and contribution overlays, downloads all applicable contribution plans (Section 7.11, Section 7.12, Housing and Productivity Contribution, biodiversity contributions), and calculates indicative contributions at current indexed rates across all layers. Tools like Feasly can model this analysis efficiently by incorporating contribution assumptions directly into feasibility calculations, running sensitivity scenarios showing feasibility at different contribution levels.
Council consultation provides written confirmation of exact contribution calculations, clarifies whether upcoming amendments will affect rates, identifies any discount programs or incentive schemes, explores works-in-kind opportunities, and establishes whether the site is within Priority Infrastructure Areas or equivalent. Pre-lodgement meetings with contributions officers should occur before exchanging contracts on land purchases, not afterwards.
Technical due diligence includes obtaining Section 10.7 Planning Certificates (NSW) or equivalents showing deferred or unpaid contributions attached to land, title searches identifying registered VPAs or contribution liens, infrastructure capacity checks with water, sewer, electricity, and road network providers that may trigger augmentation charges, and environmental assessments identifying biodiversity offset requirements that function similarly to contributions.
The financial modelling stage stress-tests feasibility against contribution variations: base case at confirmed current rates plus anticipated indexation; low case at minimum possible contributions if discounts or reductions apply; and high case at maximum potential contributions if supplementary levies, state charges, and utility contributions all apply at upper bounds. If high-case contributions make the project unviable, the land price must reflect this risk, or the site should be rejected.
How contributions reshape development feasibility calculations
Developer contributions represent 8-11% of total development costs in major Australian markets, creating material impact on residual land value calculations and internal rates of return that developers must model accurately to avoid feasibility surprises. Understanding how contributions flow through feasibility analysis enables better decision-making on land acquisition pricing, development density choices, and project structuring.
The residual land value mechanism
Residual land value methodology works backward from expected sale revenues to determine how much can be paid for land after all costs and required profit. The formula is:
Residual Land Value = Gross Development Value - Total Development Costs - Developer Profit
Where Total Development Costs includes land acquisition costs, construction and site works, professional fees, finance charges, marketing and sales costs, government charges, and developer contributions. Developer contributions typically appear as a distinct line item within government charges, sitting alongside stamp duty, development application fees, building permit fees, and utility connection charges.
When developer contributions increase, they reduce residual land value dollar-for-dollar if all other variables remain constant. A 100-dwelling project with $60 million gross development value, $42 million in development costs, and $8.4 million target profit (20% of costs) yields $9.6 million residual land value or $96,000 per lot. If contributions increase from $50,000 to $85,000 per dwelling (+$35,000), total development costs rise to $45.5 million, reducing residual land value to $6.1 million or $61,000 per lot—a 36% reduction.
This creates an inverse pricing relationship between contributions and affordable land prices. Areas with high contributions require correspondingly lower land acquisition costs to maintain viable development economics. Developers overpaying for land because they underestimated contributions face margin compression or project abandonment when full costs become clear during detailed feasibility analysis.
Sensitivity analysis showing threshold impacts
Contribution variations create measurable impacts on project returns that developers should model explicitly. Using a 24-month greenfield project as an example, internal rate of return (IRR) sensitivity shows:
- +$10,000 per dwelling contribution increase: -2.5 percentage point IRR impact, -$1.0 million NPV
- +$20,000 per dwelling: -5.0 percentage point IRR impact, -$2.0 million NPV
- +$35,000 per dwelling: -8.8 percentage point IRR impact, -$3.5 million NPV
- +$50,000 per dwelling: -12.5 percentage point IRR impact, -$5.0 million NPV
For a development targeting 18% IRR with base case projecting 19.5%, tolerance for contribution increases is approximately $15,000 per dwelling before IRR drops below the target threshold. Beyond $70,000 per dwelling in total contributions, the project approaches break-even (12% IRR) where most developers would abandon the project.
Margin compression occurs simultaneously. The same contribution increase that reduces IRR by 5 percentage points also compresses development margin from 14% to 10.2% of total development costs. When margins drop below 12-15%, developers struggle to secure financing as banks view the project as higher risk with insufficient buffer for cost overruns or market softening.
Feasibility platforms should enable scenario modelling showing these sensitivities. A three-scenario analysis examining low contributions (regional rates), base contributions (typical rates), and high contributions (growth area rates including state charges) provides decision-makers with clear visibility of feasibility range rather than false precision from single-point estimates.
Cash flow timing creating financing impacts
Contribution payment timing affects project cash flow and financing requirements, particularly where contributions are payable early in the development cycle prior to revenue generation. Construction certificate payment timing—standard in NSW and increasingly common in other states—means contributions are paid 12-18 months before lot settlements in subdivision projects or 6-12 months before apartment settlements in multi-residential developments.
The financing cost of early contribution payment is substantial. A $50,000 contribution per dwelling paid at construction certificate rather than settlement costs approximately $6,000 in additional interest over an 18-month period at 8% financing rates. For a 100-dwelling project, this timing differential costs $600,000 in additional financing charges that must be factored into feasibility analysis.
NSW’s July 2024 HPC amendments deferred payment timing for medium and high-density residential development from strata subdivision to construction certificate stage. While this appears to accelerate payment, it actually provided clarity by eliminating double-charging where developments were paying twice—once at construction certificate and again at subdivision. The clarification improved feasibility certainty even though payment timing for new projects moved earlier for medium-density developments previously paying at subdivision only.
Works-in-kind arrangements can actually improve cash flow where the infrastructure sits on the project’s critical path. If the development needs the road or drainage infrastructure to commence construction, delivering it directly as works-in-kind allows construction to proceed immediately rather than waiting for council to design, tender, and deliver the infrastructure through its budget cycles. The time saved may exceed any cost savings, turning works-in-kind into a schedule acceleration tool rather than purely a cost reduction mechanism.
Real-world examples demonstrating feasibility impact
Western Sydney growth centres provide clear examples of contribution impacts on land values. Between 2011 and 2021, combined state and local contributions increased from approximately $32,000 to $85,000 per dwelling lot in some growth areas. Landowners who purchased sites expecting $280,000 per lot residual values suddenly found that increased contributions compressed achievable land values to $225,000 per lot—a $55,000 reduction. Developers who had already acquired land at $280,000 faced unviable projects unless they could negotiate contribution reductions, pursue works-in-kind savings, or accept lower profit margins.
Melbourne’s growth corridor transition from DCPs to ICPs created similar impacts. Transport levies increasing from $86,000 per hectare to $172,000 per hectare represented a $16,100 per dwelling cost increase for projects at 20 dwellings per hectare density. Developers responded by increasing density where planning controls permitted, spreading the per-hectare levy across more dwellings to reduce per-dwelling contributions. This demonstrates how contribution structure influences development outcomes—per-hectare levies incentivise density, while per-dwelling levies create density neutrality.
Queensland’s contrast between capped non-PDA sites ($30,000 per dwelling) and uncapped PDA sites (potentially $65,000 per dwelling) creates $35,000 per dwelling residual land value differentials. Unless PDA sites offer superior locations, faster approvals, or higher sale prices justifying the premium, developers rationally avoid them. This creates the ironic outcome where Priority Development Areas intended to accelerate housing supply actually discourage development relative to standard-cap locations.
Developer contributions are complex, variable, and material to project feasibility—but manageable through strategic planning, rigorous due diligence, and understanding the negotiation and challenge mechanisms available across jurisdictions. Developers who factor contributions accurately into land acquisition decisions, model sensitivity to contribution variations, explore works-in-kind opportunities, time developments to capture discount periods, and challenge unreasonable charges position themselves for superior risk-adjusted returns. As NSW, Victoria, and other states continue reforming contribution frameworks through 2025-2026, monitoring policy changes and understanding their commercial implications will separate sophisticated developers from those caught by surprise when new regimes commence.
For professional developers, contribution management should be integrated into feasibility analysis from the earliest stages—not treated as an afterthought discovered during development application preparation. Tools that enable comprehensive feasibility modelling with contribution sensitivity analysis help development teams make better investment decisions by exposing how contribution variations affect project returns before committing to land purchases or project structures that later prove unviable.