Legal Insights

Melbourne’s new Infrastructure Contributions System: what property developers need to know

Terry Montebello

• 29 September 2026 • 7 min read

Recent changes could expose residential and commercial developments across metropolitan Melbourne to new infrastructure levies. Developers should understand where the charges may apply, and why the timing of permit applications could materially affect project costs.

What has changed?

The recent 7 August 2026 amendments made to the Ministerial Direction for Infrastructure Contribution Plans has introduced the ability for “infrastructure levies” for residential and non-residential development to be imposed potentially across the board in metropolitan Melbourne, including in areas that were not previously thought targeted for infrastructure levies. It comes at a time when there are considerable challenges associated with constructing new residential developments.

How the new levy framework works

The framework provides a mechanism for infrastructure levies to be introduced through the planning system and imposed when land is developed or subdivided with potentially significant cost implications for residential and commercial development. Unlike some other regulatory processes, it does not require an impact statement or a separate assessment of the broader economic effects on land development.

What will the levies fund?

Infrastructure contribution plans have traditionally been used to fund specific infrastructure. The recent changes to the Ministerial Direction broaden the framework, allowing levies to fund categories of infrastructure without having to identify specific projects.

The categories of works that may be funded through local, State and Suburban Rail Loop (SRL) levies are broad, spanning major transport infrastructure and local community amenities. For areas other than SRL East Precincts, the infrastructure dollars raised distributed for Local and State works 66.66% / 33.33%. They categories of works include, for example, roads, rail stations, footpaths, street tree planting and bridges, as well as drainage works, schools, health and emergency services facilities, parks, sporting facilities, and public realm improvements demonstrated in the table below.

In SRL East Precincts, the former Suburban Rail Loop Authority (SRLA) (since absorbed into another government unit) gets the lion’s share of the levy followed by councils and then the State. The split is 61% SRLA, 29% councils and 13% State works.

Notably, in each development setting, it’s not only the works that can be the subject of the standard levy, but also the financing and administration costs associated with government borrowings to deliver those works and administration costs to implement the plans.

Works, services or facilities provided by or on behalf of a Minister or public authority (state precinct component)
Standard levy allowable item
- Roads, including the construction of bicycle and foot paths, and traffic management and control devices
- Public transport infrastructure, including fixed rail infrastructure, railway stations, bus stops and tram stops
- Bridges, including underpasses, overpasses or similar
- Pedestrian or cyclist bridges, crossings and accessways
- Intersections
- Drainage and integrated water management works
- Schools and kindergartens
- Higher education facilities
- Health facilities
- Emergency services
- Justice and police services
- Public realm improvements and street tree planting
- Parks, including playgrounds, shelters, toilets, landscaping, earthworks, pathways, fencing and seating
Works, services or facilities provided by or on behalf of a municipal council (local precinct component)
Standard levy allowable item
- Roads including the construction of bicycle and foot paths and minor traffic management control devices
- Intersections and minor traffic management control devices
- Footpaths and public realm upgrades
- Active transport infrastructure such as cycle paths and walking trails
- Drainage and integrated water management works
- Sports and recreation facilities
- Community facilities, including libraries, early childhood education, maternal and child health facilities and community centres
- Street tree planting
- Parks, including playgrounds, shelters, toilets, landscaping, earthworks, pathways, fencing and seating
Works, services or facilities provided by or on behalf of a Minister or public authority (SRL Infrastructure component)
Standard levy allowable item
- Underground stations at Cheltenham, Clayton, Monash, Glen Waverley, Burwood and Box Hill as part of the Suburban Rail Loop program and associated station infrastructure including:
  - roads and intersections that support access to SRL East stations
  - footpaths, shared paths and public realm
  - active transport infrastructure such as cycle paths and walking trails
  - utilities relocation, substations and network upgrades
  - drainage and integrated water management works
  - street tree planting and associated landscaping
Financing costs associated with the early delivery of works, services or facilities for other allowable items
Standard levy allowable item
The early delivery of the works, services or facilities must be essential to the orderly development of the Infrastructure Contributions Plan (ICP) plan area.
The financing costs must be:
- Incurred by the development agency responsible for providing the item; and
- Associated with the early delivery of an allowable item.

Where will the levies apply?

The metropolitan area has been divided into three areas namely:

Greenfields
State Led infill Precincts; and
SRL East Planning Area.

There are no substantive changes to the contributions framework for Greenfields. They will continue to be regulated by the older Development Contribution Plans and the more modern Infrastructure Contribution Plans that have now become fairly standard. Those plans impose standard and sometimes supplementary levies for the delivery of specific infrastructure items within and adjacent to a precinct structure plan area. The methodology is generally well accepted, although the inclusion of a broader range of higher order State road projects can place upward pressure on levy rates. The Creamery Road Development Contributions Plan is an example of that.

State-Led Infill Precincts: rates and coverage

Prior to the August edition of the Ministerial Direction, the only other development setting was the first 10 Activity Centres forming part of the Activity Centre Program. A strong signal was sent that these areas will be levied $11,350 from early 2027. It was anticipated that this levy would be extended to the other 50 centres forming part of the Activity Centre Program.

However, in a different tack, rather than identifying the other 50 centres in the Ministerial Direction, the Minister’s Direction has only identified the six SRL East Planning Areas (which includes the 1600 metre radius area from each station box) as a development setting in respect of which new levies are to be initially applied (and then increased substantially from 2032), and then a second “catch all” category known as “State-Led Infill Precincts.”

The State-Led Infill Precincts comprises (at this stage) all of metropolitan Melbourne inside the Urban Growth Boundary which is not included within the Greenfield or SRL East Planning Area development settings. That’s a big area.

Within those areas, subject to the preparation of an Infrastructure Contributions Plan, a levy of currently $11,350 per net additional dwelling can be applied. For commercial and industrial development, the rate is levied on a per square metre basis. The following table sets out the State- Led Infill Precincts 2026 rates which are to be indexed annually.

Class of development	Demand unit	Threshold	Standard levy rate	Local precinct component	State precinct component
Residential development	Each additional dwelling or residential lot	1 dwelling or residential lot	$11,350	$7,567	$3,783
Commercial development	1 additional square meter of leasable floor area	100 square metres of leasable floor area	$114	$76	$38
Industrial development	1 additional square metre of leasable floor area	200 square metres of leasable floor area	$57	$38	$19

SRL East: staged rates and precinct area

For the SRL East Planning Area, the table of levies is more complex due to a staged implementation of the levies and the differentiation between the structure plan area and the walkable catchment around it known as the outer ring area.

Structure Plan Area Residential development

Type of land: Structure Plan Area
Class of development: Residential development
Demand unit: Each additional dwelling or residential lot
Threshold: 1 dwelling or residential lot

Stage	Standard levy rate	Local precinct component	State precinct component	SRL Infrastructure Component
Stage 1: 01/01/2027 to 30/06/2032	$11,350	$7,567	$3,783	$0
Stage 2: 01/07/2032 to 30/06/2035	$29,263	$7,567	$3,783	$17,913
Stage 3: 01/07/2035 to 31/12/2062	$29,263	$7,567	$3,783	$17,913

Structure Plan Area Commercial development

Type of land: Structure Plan Area
Class of development: Commercial development
Demand unit: 1 additional square metre of leaseable floor area
Threshold: 100 square metres of leaseable floor area

Stage	Standard levy rate	Local precinct component	State precinct component	SRL Infrastructure Component
Stage 1: 01/01/2027 to 30/06/2032	$114	$76	$38	$0
Stage 2: 01/07/2032 to 30/06/2035	$293	$76	$38	$179
Stage 3: 01/07/2035 to 31/12/2062	$293	$76	$38	$179

Structure Plan Area Industrial development

Type of land: Structure Plan Area
Class of development: Industrial development
Demand unit: 1 additional square metre of leaseable floor area
Threshold: 200 square metres of leaseable floor area

Stage	Standard levy rate	Local precinct component	State precinct component	SRL Infrastructure Component
Stage 1: 01/01/2027 to 30/06/2032	$57	$38	$19	$0
Stage 2: 01/07/2032 to 30/06/2035	$146	$38	$19	$90
Stage 3: 01/07/2035 to 31/12/2062	$146	$38	$19	$90

Outer Ring Area Residential development

Type of land: Area around the Structure Plan Area
Class of development: Residential development
Demand unit: Each additional dwelling or residential lot
Threshold: 1 dwelling or residential lot

Stage	Standard levy rate	Local precinct component	State precinct component	SRL Infrastructure Component
Stage 1: 01/01/2027 to 30/06/2032	$0	$0	$0	$0
Stage 2: 01/07/2032 to 30/06/2035	$11,350	$7,567	$3,783	$0
Stage 3: 01/07/2035 to 31/12/2062	$29,263	$7,567	$3,783	$17,913

Outer Ring Area Commercial development

Type of land: Area around the Structure Plan Area
Class of development: Commercial development
Demand unit: 1 additional square metre of leaseable floor area
Threshold: 100 square metres of leaseable floor area

Stage	Standard levy rate	Local precinct component	State precinct component	SRL Infrastructure Component
Stage 1: 01/01/2027 to 30/06/2032	$0	$0	$0	$0
Stage 2: 01/07/2032 to 30/06/2035	$114	$76	$38	$0
Stage 3: 01/07/2035 to 31/12/2062	$293	$76	$38	$197

Outer Ring Area Industrial development

Type of land: Area around the Structure Plan Area
Class of development: Industrial development
Demand unit: 1 additional square metre of leaseable floor area
Threshold: 200 square metres of leaseable floor area

Stage	Standard levy rate	Local precinct component	State precinct component	SRL Infrastructure Component
Stage 1: 01/01/2027 to 30/06/2032	$0	$0	$0	$0
Stage 2: 01/07/2032 to 30/06/2035	$57	$38	$19	$0
Stage 3: 01/07/2035 to 31/12/2062	$146	$38	$19	$90

Managing exposure to the new levies

A key thing to note is that the levies do not apply to the development proposed in any permit application lodged prior to the approval date of any new Infrastructure Contributions Plan. Developers should therefore factor the timing of any prospective plan into their project and approvals strategy, including where possible, lodging your permit application before the Minister prepares infrastructure contributions plan for your area. This is particularly important for larger developments that are proceeding in staged permits, as the application of the levy may differ between stages depending on when each application is lodged.

The task of preparing the new contribution plans will be retained by the Minister for Planning. Councils will not be permitted to prepare these plans. The Minister has indicated that a new set of Infrastructure Contribution Guidelines will be published and it can be assumed that that will explain the content of new Infrastructure Contribution Plans. But it is not clear if the Guidelines will precede the new contribution plans or whether new contribution plans will be prepared on a fairly standardised basis and approved with only the required 30 days’ notice (under the new section 20(4) of the Planning and Environment Act 1987). Absent the finalisation of the prescriptions for planning scheme amendments, it’s not appropriate to speculate about what will be in or out of the various planning amendment pathways. Importantly, while there are no prescriptions (as is the case at the moment) significant planning reform and levies can be introduced very quickly and with limited consultation.

Existing DCP levies

Many councils have existing development contribution plans in place. Where that is the case, the cost of existing levies will be absorbed into the new levies so that the overall levy payable does not exceed the new levy of $11,350 per dwelling or the equivalent per sq metre area for non-residential development.

Key takeaways for developers

Permit timing matters. Applications lodged before a new Infrastructure Contributions Plan is approved may fall outside the new levy framework, making early consideration of the approvals pathway particularly important. Please reach out to Terry Montebello if you’d like to discuss further.

Terry Montebello

Terry is a Law Institute of Victoria accredited expert in the areas of environment land and planning law and local government law.

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