New framework for state infrastructure contributions

Our growing communities need improved transport connections, great public spaces, and essential facilities such as schools to create quality places to live, work and play. To complement local contributions, we are introducing a new Regional Infrastructure Contribution (RIC) Framework which will provide a more consistent and reliable funding base to accelerate the delivery of priority growth infrastructure.

Councils will continue to collect local contributions to deliver local infrastructure, as they have always done.

A RIC is a mechanism to collect contributions from development to help fund State and regional infrastructure such as hospitals, transport infrastructure, state or regional roads and measures to conserve or enhance the natural environment.

Supporting the RIC Framework is a new approach to the planning and delivery of infrastructure that better aligns funding decisions with growth. This will be achieved through stronger alignment with government investment planning and opportunities for developers to deliver priority growth infrastructure.

Further details on the RIC are outlined in the discussion paper, explanation of intended effects and supporting guidelines available on the NSW Planning Portal.

The RIC is a charge that will apply to new residential, commercial, retail and industrial development in the following high growth regions of NSW:

• Greater Sydney
• Central Coast
• Lower Hunter
• Illawarra Shoalhaven.

Everyone will benefit from a fairer, more certain and transparent system. The proposed RIC Framework will provide a more consistent and reliable funding base to accelerate the delivery of priority growth infrastructure. The base regional infrastructure contribution is forecast to levy, on average, $793 million per annum.

The framework will:

• create a simpler state contributions system where new development contributes to ensuring better and more productive places are created through infrastructure provision
• generate a more consistent and reliable funding base to accelerate the planning and delivery of priority growth infrastructure within the RIC regions
• reduce development feasibility risks by applying a predictable and modest contribution requirement to all development
• create a more efficient system of infrastructure planning and delivery to support the release of vital housing supply and employment lands, and to stimulate economic activity
• ensure a more strategic and integrated approach to land use and infrastructure planning to deliver great communities
• ensure that developers contribute towards the cost of the large taxpayer investments in major transport infrastructure that results in a significant uplift in their property values
• allow for a strategic approach to biodiversity conservation where careful planning is needed to avoid, minimise and offset biodiversity impacts.

The successful implementation of the RIC Framework for developers, agencies, councils, and the broader community requires careful consideration of factors such as market cycles, feasibility, funding commitments and existing obligations. It is important to ensure there is a smooth transition and that users are not charged twice where they have already met their state infrastructure contributions.

The RIC will not apply where there is a current Special Infrastructure Contributions (SIC) framework in place. However, when the RIC Framework comes into effect, it is proposed that all implemented Special Infrastructure Contributions (SICs) will be transitioned into the new system over time and no new SICs will be made after the RIC is implemented.

The timing of transition for each SIC is being considered. The key principles underlying the proposed transitional arrangements are to:

• minimise impact on existing infrastructure commitments
• manage the transfer of existing credits
• minimise impact on development feasibility and stakeholder expectations.

Existing arrangements such as SIC works-in-kind agreements and state planning agreements executed prior to 1 July 2022 will continue to operate as per the entitlements granted under the agreement.

The RIC SEPP is proposed to commence on 1 July 2022. To minimise the potential for adverse impacts on current development supply, and in light of ongoing impacts of the COVID-19 pandemic, we propose to phase-in the RIC to allow industry stakeholders, councils and consent authorities to adapt to the new charge.

A discount to the base contribution rate will be available for payments made in the first two years after the RIC is introduced. From the third year, no discount will be applied, and the full RIC will come into effect.

The exhibition package sets out the regional infrastructure contribution framework including where it applies, applicable development types, charge rates and how it will be spent. To view the exhibited documents on regional infrastructure contributions visit the NSW Planning Portal. The public exhibition has closed.