The consequences of path dependency on funding for infill development in Victoria, Australia

Abstract

The increasing responsibility of the local government sector to provide and maintain a range of infrastructure is threatening its financial sustainability. The ‘development contributions’ system is one measure adopted by local government in Victoria, Australia to assist in the funding of infrastructure required as a result of new development. The development contributions system is intended to be used state-wide, but in practice the majority of development contributions have been collected in just seven Melbourne municipalities associated with greenfield development. In July 2012 the Victorian state government announced reforms to the system, which were eventually enacted in October 2016. These reforms are considered in this paper. Using two case studies of Hume City Council and Surf Coast Shire Council, this paper assesses the effectiveness of the new funding system for infill development in the Melbourne area. The findings suggest that the historic path dependency of the system has resulted in a missed opportunity as the new system remains fundamentally designed for greenfield development rather than highly important infill development.