Developers coming to Melbourne from Sydney often look for the Victorian version of a Section 7.11 or 7.12 contribution and find there is no single equivalent. Victoria uses a mix of mechanisms instead. Some are set by councils, some by the state, and some depend entirely on where the land sits. A greenfield subdivision in Wyndham, a townhouse project in Ringwood and an apartment building in Preston can face very different charges, collected by different authorities at different points in the project. The rules are also changing. A new standard levy for activity centres starts on 1 January 2027, and it will apply to many established suburbs that have not paid a broad infrastructure charge before. This article explains how development contributions work in Victoria, how they differ from the NSW system, and where they belong in a development feasibility.
How development contributions work in Victoria
Victoria collects contributions through several separate mechanisms under the Planning and Environment Act 1987 and the Subdivision Act 1988. A single project may be subject to more than one of them, so the first step is always to check the planning scheme overlays and the land’s location.
Development Contributions Plans
A Development Contributions Plan (DCP) is the longest standing mechanism and the one most councils use. It is incorporated into the planning scheme through the Development Contributions Plan Overlay at clause 45.06, and it applies only to land within that overlay. A DCP can impose two kinds of levy.
The development infrastructure levy funds items such as roads, drainage, public transport works, basic open space improvements, kindergartens and maternal and child health centres. It is not capped. Each DCP calculates it from the estimated cost of the listed projects, apportioned according to each development’s expected share of use. The community infrastructure levy funds facilities such as libraries, community halls, aquatic centres and sporting facilities. It is capped per dwelling. The cap was set at $1,190 per dwelling in 2019 to 2020 and is indexed each 1 July.
Because every DCP is prepared separately, rates vary widely between councils and even between precincts in the same municipality. The Victorian Government has noted there are 133 separate developer contribution plans across the state.
Infrastructure Contributions Plans
An Infrastructure Contributions Plan (ICP) applies through the Infrastructure Contributions Overlay at clause 45.11. Rather than costing each project from scratch, it uses a standard levy set by the Minister, plus a supplementary levy where an area has unusual infrastructure needs. ICPs can also require land for public purposes such as roads, parks and community facilities.
Until now, ICPs have mainly applied to growth area land zoned for urban use in Casey, Cardinia, Hume, Melton, Mitchell, Whittlesea and Wyndham. In those areas the standard levy is charged per net developable hectare. The most recent rates published by the Department of Transport and Planning are $256,650 per hectare for residential development and $147,562 per hectare for commercial and industrial development, both for 2024 to 2025 and indexed each 1 July.
The new activity centre levy from 2027
The biggest change is the extension of the ICP system to established suburbs. The Victorian Government will apply a single standard Infrastructure Contributions Plan to 58 train and tram zone activity centres. The 2026 to 2027 rate is $11,350 per net additional dwelling, $114 per square metre of new commercial floor space and $57 per square metre of new industrial floor space, above set thresholds. Councils keep two thirds of the residential levy and pass one third to the state.
It applies to planning permits issued from 1 January 2027 in the 10 pilot activity centres, including Broadmeadows, Camberwell, Chadstone, Epping, Frankston, Moorabbin, Niddrie, North Essendon, Preston and Ringwood. The remaining 48 centres follow from 1 July 2027. Where a council DCP already applies, the council share is reduced by the existing DCP rate, so the two are not simply added together.
Growth Areas Infrastructure Contribution
The Growth Areas Infrastructure Contribution (GAIC) is a separate, state level charge collected by the State Revenue Office. It applies once to growth area land in the same seven municipalities and funds state infrastructure such as transport, health and education. For 2026 to 2027 it is $122,260 per hectare for Type A land and $145,220 per hectare for Types B1, B2 and C land. It is usually triggered by a statement of compliance, a building permit application above a cost threshold, or certain land transactions.
Public open space contributions
Under the Subdivision Act, councils can require up to 5 per cent of the land, or 5 per cent of its site value, for public open space when land is subdivided. Many councils set their own rate in the schedule to clause 53.01, and some precinct plans require more. This applies across Victoria and catches many apartment and townhouse projects at the subdivision stage.
Voluntary agreements
Councils and developers can also agree infrastructure contributions through a section 173 agreement, usually negotiated as part of a planning permit. These often deal with works in kind or site specific upgrades, and they bind the land.
How Victoria differs from Sections 7.11 and 7.12 in NSW
In NSW, local contributions come in two familiar forms. A Section 7.11 contribution is calculated from a council’s works program and charged per dwelling, lot or square metre, based on the demand the development creates. A Section 7.12 levy is a flat percentage of the cost of development, which is why NSW applications so often need a quantity surveyor’s cost report. On top of these sits the state level Housing and Productivity Contribution in Greater Sydney and several regional areas.
Victoria has nothing equivalent to the Section 7.12 percentage levy. DCP and ICP charges are worked out per dwelling, per hectare or per square metre, so the cost of the building itself does not set the contribution. The estimated cost of development still matters, though, for different reasons. It sets the planning permit application fee, and in metropolitan Melbourne it determines the Metropolitan Planning Levy. That levy is $1.30 for every $1,000 of estimated cost on projects above $1,344,000 in 2026 to 2027, and it must be paid before the permit application is lodged.
The other major difference is coverage. Almost every NSW council has a contributions plan that applies across its area. In Victoria, a DCP or ICP only applies where the overlay has been placed on the land, so two sites a few streets apart can carry very different obligations. Many established areas have had no broad infrastructure charge at all, which is exactly what the 2027 activity centre levy is designed to change.
| Feature | NSW | Victoria |
| Main local mechanisms | Section 7.11 contributions and Section 7.12 levies | Development Contributions Plans and Infrastructure Contributions Plans |
| How local charges are calculated | Per dwelling, lot or area (7.11), or a percentage of development cost (7.12) | Per dwelling, per hectare or per square metre, set in each plan or by standard levy |
| Where they apply | Generally across each council area under its contributions plan | Only on land within a DCP or ICP overlay |
| State level charge | Housing and Productivity Contribution in Greater Sydney and nominated regions | GAIC in growth areas, plus a state share of the activity centre levy from 2027 |
| Role of the cost estimate | Directly sets the Section 7.12 levy | Sets permit fees and the Metropolitan Planning Levy, not DCP or ICP charges |
| Open space | Usually within 7.11 plans | Separate contribution under the Subdivision Act and clause 53.01 |
Source: Victorian Department of Transport and Planning, State Revenue Office Victoria, NSW Department of Planning, Housing and Infrastructure. Rates and coverage change regularly and should be confirmed for each site.
When contributions are paid and how they are indexed
Timing matters as much as the amount, because it decides which part of the cash flow carries the cost and whether it is funded by equity or debt.
DCP levies are paid at the point set by the DCP and the planning permit. For subdivisions this is usually before the statement of compliance is issued. For buildings it is often before the building permit or before works start. Councils can also accept works in kind or land instead of cash where the DCP allows it.
The new activity centre levy is paid later in the project. It falls due before the certificate of occupancy for dwellings, the statement of compliance for residential lots, or the certificate of final inspection for commercial and industrial floor space. That pushes the payment towards completion, but it also means it sits close to settlement, when lenders and purchasers are watching the numbers most closely.
GAIC is triggered by the first GAIC event after the land enters the contribution area, often the statement of compliance for a subdivision. It can be paid within three months or deferred in some circumstances. Deferred amounts attract interest, which is 5.6063 per cent for 2026 to 2027. Public open space contributions are usually paid before the statement of compliance on a subdivision.
Every one of these charges is indexed, and each uses a different method. DCP levies are indexed each 1 July according to the method set out in each DCP. The growth area ICP standard levies are indexed each 1 July. The activity centre levy is indexed each financial year using the ABS Producer Price Indexes for non residential building construction and for road and bridge construction in Victoria. GAIC is indexed by the consumer price index. A feasibility that holds today’s rate for a payment two or three years away will understate the cost.
Where contributions belong in a development feasibility
Contributions are statutory costs, not construction costs, and they should sit as their own lines in the feasibility rather than being buried in a contingency or a builder’s price. Each charge needs three things recorded: the amount at today’s rate, the indexation method, and the point in the programme when it falls due. Without all three, the feasibility cannot show the true cost or the true cash flow.
The starting point is due diligence on the land. A planning property report will show whether a DCP or ICP overlay applies, whether the site is in a growth area subject to GAIC, and whether it falls within one of the activity centres. The council’s schedule to clause 53.01 sets the open space rate. Any existing section 173 agreement on title should be read, because it may already commit the land to works or payments.
A worked example
Consider a 40 apartment project in one of the pilot activity centres, replacing two existing houses, with a planning permit issued in 2027. The net increase is 38 dwellings. The estimated construction cost is $20 million and the site is valued at $6 million. Assuming no existing DCP applies, the main charges at 2026 to 2027 rates would be:
| Charge | Basis | Amount |
| Activity centre infrastructure levy | 38 net new dwellings at $11,350 | $431,300 |
| Metropolitan Planning Levy | $1.30 per $1,000 on $20 million | $26,000 |
| Public open space contribution | 5 per cent of $6 million site value | $300,000 |
| Total | $757,300 |
Illustrative only. Rates are 2026 to 2027 and will be indexed before payment. The open space rate depends on the council’s schedule to clause 53.01, and an existing DCP would change the levy split.
That is roughly $19,900 for every new dwelling, before indexation, and it would not appear anywhere in a construction estimate. The Metropolitan Planning Levy is paid before the permit application is lodged, the open space contribution before the statement of compliance, and the activity centre levy before occupancy. All three need to be placed at those points in the cash flow, not averaged across the project.
Lenders will look for these lines too. A bank prefunding review will normally check that statutory contributions are identified, costed at current rates and funded, and a missing or understated contribution is a common reason a lender asks for more equity before the first drawdown.
Section 94 prepares construction budgets and developers cost reports for projects across Victoria and the rest of Australia, from our Melbourne office on Flinders Street and our Sydney head office. Our AIQS accredited quantity surveyors build feasibility budgets that separate construction costs from statutory charges, so contributions are visible, indexed and placed correctly in the cash flow.
Talk to Section 94 about a construction budget for your next Melbourne development.
Frequently asked questions
Is there a Section 94 or Section 7.11 contribution in Victoria?
Not under that name. Victoria’s closest equivalents are Development Contributions Plans and Infrastructure Contributions Plans, which apply through overlays in each planning scheme. Victoria has no percentage based levy like Section 7.12.
What is the difference between a DCP and an ICP?
A DCP calculates its levies from the cost of a specific list of infrastructure projects, so rates vary from plan to plan. An ICP uses a standard levy set by the Minister, with a supplementary levy only where an area has unusual needs, which makes it more predictable.
How much is the new activity centre infrastructure contribution?
For 2026 to 2027 it is $11,350 per net additional dwelling, $114 per square metre of new commercial floor space and $57 per square metre of new industrial floor space, above set thresholds. It applies to permits issued from 1 January 2027 in the 10 pilot activity centres and from 1 July 2027 in a further 48.
Does GAIC apply to my project?
Only if the land is growth area land zoned for urban use in Casey, Cardinia, Hume, Melton, Mitchell, Whittlesea or Wyndham. The State Revenue Office issues free GAIC certificates that confirm whether it applies.
Do I need a quantity surveyor’s cost report for contributions in Victoria?
Not to calculate DCP or ICP charges, which are not based on construction cost. An accurate estimated cost of development is still needed for the planning permit fee and the Metropolitan Planning Levy, and a construction budget is essential for the feasibility and finance.
This article is general information only and does not constitute planning, legal or financial advice. Contribution rates and rules are indexed and reformed regularly, so confirm the requirements for each site with the council and the relevant state agency.