Government to replace development contributions with new levies
Wednesday 16 September 2026 · 3 outlets · 3 reports · updated In this story Chris Bishop
Minister Chris Bishop has announced plans to replace the current development contributions system with new development levies. The change aims to address an estimated $11 billion infrastructure funding shortfall. Councils will be permitted to use these levies for various growth-driven costs starting from 2029.
Key facts
4 facts
- The estimated infrastructure cost recovery shortfall is $11 billion between 2021 and 2031.
- Councils can start charging levies in 2029 and must start by 2030.
- Legislation is planned for introduction in early 2027 and passage by the end of 2027.
- The Commerce Commission will oversee the levy calculation methodology.
The full story
1 min read · 3 outlets
The Government is replacing the current development contributions system with a new system of development levies to cover infrastructure costs driven by growth. This change aims to prevent existing ratepayers from subsidising an estimated $11 billion shortfall in infrastructure cost recovery between 2021 and 2031.
Under the new rules, councils will be permitted to charge levies for water supply, wastewater, stormwater, transport, reserves, and community infrastructure. Councils can begin charging these levies from 2029, but must do so by 2030. The Government intends to introduce the necessary legislation in early 2027 and pass it by the end of that year.
The new system will include core Crown institutions, such as the Police, Health, and Justice, which will no longer be exempt from paying levies when building new infrastructure. The Commerce Commission will be tasked with developing the methodology for calculating levies and providing regulatory oversight.
Infrastructure Minister Chris Bishop stated, “The new development levy system will make sure that growth pays for growth, and that the beneficiaries of new housing and the developers building that new housing are charged appropriately for the costs of that growth”. Bishop also insisted the charge is a levy rather than a tax.
Where reports differ
- Finance Minister Nicola Willis previously stated that levies and taxes are the same, while Infrastructure Minister Chris Bishop maintains that the new charge is a levy and not a tax.
Compiled from reports by NZ Herald, Stuff and 1News.