Govt aims to build more housing by reforming development system
The Government has released the second stage of the Going for Housing Growth program, which includes changes to infrastructure funding and financing tools that are designed to ensure more housing gets built.
The Ministry of Housing and Urban Development (HUD) said “the most significant change being made” was replacing development contributions with a development levy system.
HUD said this switch would give councils more flexibility to charge developers for the overall cost of growth infrastructure across an urban area, so that “growth pays for growth”.
Councils will still be required to use identified infrastructure projects to calculate levies, according to HUD. However, councils will be able to adapt plans to respond to growth and use levy revenue to build the infrastructure needed to support housing and urban development.
“Development levies will be subject to regulatory oversight and councils will need to ensure they’re setting appropriate charges,” HUD said.
How the IFF Act will change
The Government will also make amendments that aim to improve the effectiveness of the Infrastructure Funding and Financing Act, particularly for developer-led projects. That includes broadening the scope of the act, as well as simplifying the levy development and approvals process.
Furthermore, the Government will make changes to allow councils to set targeted rates that apply when a rating unit (for example, a separate property) is created at the subdivision stage.
HUD said this would allow councils to set targeted rates that apply only to new developments, or use targeted rates and development levies together where projects benefit existing residents and provide for housing growth.
New system expected to start in mid-2026
“As a package these changes will provide councils, developers and other infrastructure providers with a flexible funding and financing toolkit to respond to growth pressures and deliver infrastructure to land zoned for housing development,” according to HUD.
“This is expected to reduce the current cross-subsidisation by ratepayers. Councils will continue to have discretion about which tools they use in certain circumstances, but regulatory oversight will ensure councils are setting appropriate charges in line with a ‘growth pays for growth’ approach.”
The legislation to implement these changes to infrastructure funding and financing tools is expected to be introduced in September 2025, with the aim of being enacted in mid-2026
The process will include opportunities for public feedback.