10 June 2026
Councils call for $5 billion infrastructure fund to unlock housing supply
Councils from across Sydney and NSW have come together to propose a new system for funding essential infrastructure to unlock housing supply in outer metropolitan and regional areas.
The Unlocking Homes plan, released today by Local Government NSW, includes a new $5 billion no-interest loans scheme for councils to bring forward construction of the roads, stormwater systems and the infrastructure needed to make housing development stack up in Western Sydney and regional NSW.
Mayors and leaders from eight Western Sydney councils will today (Wednesday) join LGNSW President Mayor Darcy Byrne at St Marys in Penrith to call on the NSW Government to back the plan, which would unlock up to 70,000 homes in these municipalities alone.
Housing completions in Western Sydney are languishing and need to be dramatically increased for NSW to meet its target of 377,000 new homes under the National Housing Accord.
The Unlocking Homes plan calls on the NSW Government to:
- Establish a $5 billion interest-free loan facility for councils to deliver local infrastructure needed for housing construction to commence. Councils would repay the Government when developer contributions were paid once construction commences.
- Commit to forward-funding $3 billion of State and regional infrastructure in growth areas, with costs recouped progressively from the State Government’s Housing and Productivity Contribution receipts so there is no added financial burden to Government.
- Update the list of infrastructure that developer contributions can be used for, to allow councils to build social infrastructure such as libraries, childcare facilities and pools, that make communities livable.
Mayor Darcy Byrne said the system for funding the infrastructure needed for new homes was broken and must be remade to solve the housing supply crisis in NSW.
“We agree with the NSW Government that the housing crisis is the number one challenge facing the State, but we also know that too little investment in the basic infrastructure needed for new homes is making the crisis worse,” Mayor Byrne said.
“Put simply, if we are serious about actually fixing the housing crisis, we need the NSW Government to do more to fix the infrastructure roadblocks that are preventing housing supply.
“We are seeing across Western Sydney, in particular, that without up-front investment in roads, water, sewage and stormwater, housing is simply not being built.
“Trying to attack the housing crisis without boosting supply in outer metropolitan and regional areas is like fighting with one hand tied behind your back.
“By making no-interest loans available to councils to build basic infrastructure right now, the Government could turbo charge housing construction in green fields sites, while still recouping all the funding from developer contributions paid to councils when the homes are built.
“This is a fiscally responsible solution for the NSW Government, which can access lower interest loans than councils, and will benefit from billions of dollars in stamp duty revenue when the homes are completed.
"Councils and the NSW Government are required to deliver essential infrastructure, but under this broken system the funding arrives too late. That means housing is delayed, communities wait longer for facilities, and the cost only goes up.
“Councils are also expected to build the social infrastructure needed to make communities liveable, such as libraries and community facilities, but under current rules, developer contributions can’t be used to fund those projects.
"The NSW Government has the power to fix this. By backing LGNSW’s proposals and partnering with councils, it can unlock the infrastructure needed to get housing moving.
"Local government stands ready to work with the State Government to deliver the infrastructure communities need and the housing NSW urgently requires.”
For further background information and case studies, download the Unlocking Homes proposal (PDF, 7MB).