Councils gain power to reopen development contributions on Fast-track projects

The Government will amend the Local Government Act 2002 to let councils reopen Development Contribution policies after Fast-track applications, so growth-related infrastructure costs can be recovered from future developments.

Housing and Infrastructure Minister Chris Bishop and Local Government Minister Simon Watts announced the changes on 14 August 2026. They framed the move as a targeted interim step while Development Levies are finalised for operation from 2029.

The amendments will be delivered through an Amendment Paper to the Local Government (System Improvements) Amendment Bill. Passage is expected in mid-September 2026.

Councils told ministers they cannot effectively recover enabling-infrastructure costs for unplanned or out-of-sequence growth. Under current rules, Development Contributions lock in once a resource-consent application is made.

The changes allow councils to amend DC policies for eligible Fast-track developments after application. Policy amendments must be adopted within six months of a Fast-track approval and published promptly.

Situations covered include projects proceeding ahead of council infrastructure planning, developments consuming network capacity intended for live-zoned land, and projects relying on infrastructure across council boundaries.

Cross-boundary recovery is enabled. Any authority collecting contributions on behalf of a neighbouring council must transfer the relevant share.

Bishop said the Government’s position is that growth should pay for growth, matching flexible funding tools to a more flexible planning system.

A key part of this Government’s plan to fix New Zealand’s economy and drive higher living standards is to say yes to growth more often. That’s why we are overhauling planning rules, progressing our Going for Housing Growth agenda, and removing unnecessary red tape. It’s also why we established Fast-track

Watts described the package as an interim bridge.

As a targeted, interim step on the path to Development Levies, the Government has agreed to amend the Local Government Act 2002 to provide councils with better tools to recover growth-related infrastructure costs from future Fast-track developments

Projects already Approved, or with a substantive application lodged when the amendment takes effect, are grandfathered. They will not face the new DC reopening powers.

Bishop said Fast-track panels already set conditions requiring roads, water, wastewater and other local services. Panels can decline projects whose adverse impacts, including infrastructure effects, are out of proportion to regional or national benefits.

He said some Fast-track projects still pressure wider networks beyond what councils can currently recover. The DC regime retains reasonableness guardrails. Developers and councils may still use development agreements for earlier certainty.

As of the 14 August announcement, 31 projects had been approved under Fast-track across housing, infrastructure, mining and quarrying, aquaculture and renewable energy. Bishop said they represent billions in investment and support tens of thousands of jobs.

Four days earlier, on 10 August, the expert panel approved the Delmore greenfield subdivision near Ōrewa—the 30th panel approval and 11th in Auckland. The project covers more than 61 hectares and more than 1,200 dwellings, a commercial node, parks, ecological areas and a State Highway 1 interchange.

Bishop said Delmore is predicted to contribute $1.22 billion to the local economy over 25 years. Auckland Council and Watercare opposed it as out of sequence with growth and infrastructure plans. Stage 1 relies on private water and wastewater, with limited summer off-site tankering of treated effluent under panel conditions.

On the same day as the Delmore decision, Auckland Mayor Wayne Brown and Queenstown Lakes Mayor John Glover wrote to Bishop seeking an immediate pause on Fast-track greenfield housing. They argued forcing large subdivisions into areas without sequenced public infrastructure produces congestion, service constraints and higher long-term costs.

In the letter, the mayors wrote that when central government forces ratepayers and taxpayers to subsidise development in the wrong places, “the only real winner is the developer who avoids paying the true costs of growth.”

Secondary media reporting has cited Auckland Council analysis suggesting ratepayer infrastructure subsidies could reach as much as $1.5 billion across the Fast-track pipeline if usual DC pathways are sidestepped. That figure has not been confirmed from a primary council paper in public reporting and should be treated as unconfirmed.

The Government did not grant the pause. Instead it hardened cost-recovery tools while preserving Fast-track consenting speed.

The interim fix sits inside Going for Housing Growth Pillar 2, announced in detail on 28 February 2025. That package diagnosed the 2002 Development Contributions framework as poorly matched to a planning system in which growth location and timing are less sequential. The preferred long-run answer is zone-based, service-separated Development Levies calculated from aggregate growth costs and expected growth units, with standardised methodology and intended regulatory oversight.

Earlier consultation material pointed to councils starting to charge new levies from mid-2028, with DCs sunsetting around 2030. The 14 August 2026 release states the new system will be operational from 2029. Final policy decisions and legislation remain pending.

The Local Government (System Improvements) Amendment Bill, into which the Amendment Paper will be inserted, aims to reduce rates pressure by refocusing councils on core services including network infrastructure. Local Water Done Well entities will also need charging tools interoperable with DCs and eventual levies.

For households, stronger recovery of growth capital expenditure is intended to limit general rates cross-subsidies when large greenfield projects proceed ahead of sequenced networks. For developers of future Fast-track projects, the six-month adoption window and grandfathering of lodged and approved stock create a clear effective date, while raising the value of early development agreements.

Bishop said the package maintains Fast-track effectiveness while making funding arrangements fairer.

This strikes an appropriate balance. We are maintaining the effectiveness of Fast-track, while ensuring infrastructure funding arrangements are fair.

As Fast-track development accelerates across the country, we need infrastructure funding settings that can keep up.

Parliament is expected to pass the System Improvements Bill with the Amendment Paper in mid-September. Councils in high-growth districts will then need to prepare DC policy update pathways for eligible future Fast-track approvals, pending the fuller Development Levies regime later this decade.