The Government is moving to give councils new powers to adjust Development Contributions (DCs) retrospectively for eligible fast-track developments – a targeted change with important implications for developers, councils and infrastructure planning.
Fast-track developments have come under increasing pressure from councils for proceeding ahead of planned infrastructure investment and funding programmes, creating infrastructure costs that were not anticipated when councils last set their DC policy. In some cases, this can mean millions of dollars in additional infrastructure expenditure, with the costs ultimately falling to future developers and ratepayers to fund.
The changes are intended as an interim measure while the Government transitions from Development Contributions to the new Development Levies regime, which is expected to be operational from 2029.
What is changing?
Under the proposed changes, councils will be able to amend their DC policies where necessary to recover the growth-related infrastructure costs associated with an eligible Fast-track development. The changes will also allow for DCs to be recovered by one council where infrastructure impacts extend into another council’s area, with the relevant share transferred to the affected council.
There are some important limits:
- The changes will not apply to Fast-track developments that have already been approved, or where a substantive application has already been lodged – when the legislation takes effect.
- For a Fast-track applicant whose project has not yet been approved – and where a substantive application has not already been lodged when the legislation takes effect, your DC liability will likely change.
- For fast-track developments that are captured, any amendment to the DC policy must be made within six months of Fast-track approval, and the amended policy must then be published as soon as practicable.
- The Government says existing safeguards within the DC regime will continue to apply, including requirements around the reasonableness of growth costs.
The change is specifically targeted at Fast-track developments…. But there may be some spill-over implications for other developers…
While the Government intends that councils use the new power to make project-specific amendments to recover the infrastructure costs attributable to the relevant Fast-track development, the arrival of a significant new development will inevitably have implications for a council’s wider infrastructure investment priorities, funding requirements and sequencing.
This means developers in Fast-track catchments should be alert to the potential for higher DCs when a council next undertakes its broader DC policy review, even where they are not themselves a Fast-track applicant. If you are progressing a conventional development outside the Fast-track system, your DC liability will continue to be determined under the relevant council’s existing rules. While the precise arrangements differ between councils, DC policies will typically be locked in based on the policy applying when the relevant application is lodged.
What does Property Council think?
Property Council supports the principle that growth should contribute fairly to the infrastructure costs it creates. We also recognise the particular challenge Fast-track creates for councils where development can occur outside the sequencing anticipated through their existing infrastructure plans.
Property Council has met with officials to raise concerns about what the changes mean for certainty across the sector – both for Fast-track applicants and for developers progressing through the conventional consenting system.
We have also sought clarity on the potential implications for the wider DC system. Our understanding is that the intended approach is for councils to make targeted amendments to their DC policies to address the infrastructure costs arising from the specific Fast-track development, rather than using the new power as an opportunity to undertake a wholesale review of their DC settings.
A targeted amendment should mean that the additional DC costs are scoped to the infrastructure impacts of the relevant Fast-track project. However, the development itself may still change the council’s overall infrastructure priorities and sequencing. There is a risk that councils could seek to use the opportunity to make broader changes to their DC policies. Any wider policy change would need to follow the applicable statutory process, including public consultation.
We have emphasised to officials the importance of clear communication with councils about the intended scope of the new powers. A broad, unanticipated reopening of DC policies would undermine the certainty developers rely on when making investment decisions.
What happens next?
The changes are being progressed through an Amendment Paper to the Local Government (System Improvements) Amendment Bill, which the Government expects to pass in mid-September. There will be no public consultation or select committee process.
These measures are explicitly intended as a transitional measure ahead of the Government’s proposed Development Levies system, which is expected to replace DCs from 2029.
Property Council will continue engaging with officials as the legislation progresses, with a focus on ensuring the new settings recover legitimate growth costs without creating unnecessary uncertainty for the wider development pipeline.
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Author | Bella Leddy
As a Senior Advocacy Advisor, Bella leads the development of policy and advocacy initiatives that reflect the real-world experience of our members.
With a Bachelor of Laws and Politics from Otago University and previous experience as a policy intern at the Department of Internal Affairs, Bella brings both a sharp analytical mind and a genuine passion for public policy. She’s particularly energised by engaging with members to ensure our advocacy is grounded in industry insight and practical solutions.
Extroverted, thoughtful and service-focused, Bella thrives in roles that connect people and ideas. Outside the office, she channels her energy into teaching group fitness classes – including yoga, pilates and spin – and is always up for a good political yarn.
