Insights

NSW Infrastructure Contributions Review paper: an opportunity for systematic reform

Posted August 11, 2020

Author(s):

Patrick Fensham

Types:

State government

SGS NSW Infrastructure Contributions Review Issues Paper image

The NSW Productivity Commissioner is undertaking a once in a generation review into the State’s infrastructure contributions system.

Following an unprecedented bushfire season and the challenges of the COVID-19 health pandemic, The NSW Productivity Commissioner released an Issues Paper on 8 July 2020 for public response.

The Paper aims to open the conversation into how infrastructure is currently funded in New South Wales with a focus on the role of infrastructure contributions and the key issues and challenges encountered in their application. The review is the Commissioner’s first step toward delivering a fairer and more efficient contributions system across the State.

The SGS team, led by Principal & Partner Patrick Fensham, responded to the NSW Productivity Commissioner’s request for public submissions.

Our paper addresses the Commissioner’s discussion questions and identifies 10 recommendations for reform. The 10 recommendations are based on the conceptual distinction we identify between user pays contributions, impact mitigation contributions, value sharing contributions and inclusionary requirement contributions.

SGS Infrastructure contribution plans diagram

SGS Economics & Planning

An effective system of infrastructure contributions, aligned with land use planning, is fundamental to achieving liveable, productive and sustainable settlements. The NSW Productivity Commissioner’s Review into infrastructure contributions is a timely intervention to renew a critical element of the planning and development architecture in NSW.

Getting the system right will improve the quality of strategic, infrastructure and asset planning at both state and local levels, reduce costs and uncertainty in the development process, and generate funds for infrastructure and services to support better quality urban and regional development.

SGS has led debates and policy development in infrastructure and funding policy for over 30 years, and contributed to many of Australia’s planning jurisdictions pioneering world-leading innovations in infrastructure funding. But gaps remain, in particular the lack of a systematic means to capture the uplift in land value that follows the granting of additional development rights - to provide funding for investment in infrastructure delivering community benefits - and the use of inclusionary requirements to provide affordable housing. SGS’s submission to the NSW Productivity Commissioner’s Review of the infrastructure contributions system in New South Wales addresses these and many other issues. We also suggest a comprehensive package of reform recommendations.
— SGS Principal & Partner Patrick Fensham