Victorian Premier Jacinta Allan says a review of the state's infrastructure contribution plan will ensure communities that build more homes receive funding for key services such as schools and parks.
With his government's third housing policy announcement in as many days, Allan on Tuesday flagged a renewed infrastructure contribution pilot program across the state.
The trial will not be implemented until January 1, 2027, after the next Victorian election in November 2026.
Speaking to reporters, Allan said the proposed plan would link infrastructure funding to the construction of new homes.
“Communities that build more housing should also have the opportunity to receive the funding they need for the things that make those communities great. “Wonderful schools, good transport links, roads, trails and open spaces make those communities great places to live,” he said.
“It’s fair to take that approach.”
Allan said the principle should “apply everywhere” and required everyone to make a financial contribution, including developers.
It will initially be limited to Melbourne's first 10 designated “activity centres” (which the government has earmarked to accelerate high-density developments) in Broadmeadows, Camberwell, Chadstone, Epping, Frankston, Moorabbin, Niddrie, North Essendon, Preston and Ringwood .
The Prime Minister said current contribution arrangements for developers were “complex, inequitable and unfair” and an “administrative nightmare” that could slow down housebuilding.
“There are something like 43 of the 79 local government councils across the state that collect these contributions from developers,” he told reporters on Tuesday in Wollert, in Melbourne's outer north.
“But they collect them in many different ways… they can be different from one block of land to another.”
Allan said the lack of a uniform approach at the state level meant that areas where more housing was being built did not have “the opportunity to share in this funding”.
He said the development industry recognized the infrastructure contribution landscape needed reform, with a working group due to report to the government in March 2025.
Planning Minister Sonya Kilkenny said the aim was to create a scheme that would eventually be used across the state.
“What we want to see is a simplified system,” he said.
“Something that is fit for purpose and works for all communities and for all local government areas across the state.”
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Opposition spokesman for home ownership and housing affordability, Evan Mulholland, said the government's announcement was a “housing tax” that would increase the cost of housing.
“We have seen examples of growing areas not getting the infrastructure they deserve because hundreds of millions of dollars have been held up in Treasury coffers at Spring Road instead of being delivered to communities before residents move in,” he said.
“Labour has completely failed to deliver new areas of growth. Now Jacinta Allan's idea is to take that model and spread it throughout the state.”
Under the current system, developers make a one-off payment for essential state infrastructure in most of Melbourne's greenfield suburbs under the Growth Area Infrastructure Contribution.
Other plans are mainly used to finance local government infrastructure.
The Growth Areas Infrastructure Contribution is estimated to pay for only 15% of the infrastructure and state services needed in growth areas.
Infrastructure Victoria has long called on the state government to establish a consistent and efficient infrastructure contribution system.
A 2023 report from the independent advisory body highlighted that seven councils housing Melbourne's greenfield suburbs accounted for 50% of Victoria's population growth over the past decade.
The trend runs counter to the Victorian Housing Statement's aim for 70% of new homes to be built in established areas.
The reform of infrastructure contributions follows the introduction of a controversial plan to take over the planning of some of Melbourne's most affluent suburbs to increase density and a 12-month expansion of stamp duty concessions.
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