Rezoning and approvals have carried the housing supply debate. The Productivity Commission’s interim report puts the water, sewer, power and roads underneath them on the same footing, and describes where approved land stalls.
A rezoning tells you what land is allowed to become. It does not tell you when the water main, the sewer, the power connection or the road will reach it.
That gap now sits near the centre of the national housing debate. The Productivity Commission’s interim report on housing supply regulation, released on 27 July, found that relaxing land use controls and better coordinating enabling infrastructure are the reforms most likely to lift housing supply and affordability. Submissions on the report closed on 30 September. The final report goes to government in March 2027.
Zoning took most of the attention when the report landed. The infrastructure chapter is quieter, and for builders it may matter more. It describes where approved land stalls before anyone pours a slab.
The Commission treats infrastructure as a gate, not a follow up
Much of the supply debate treats infrastructure as something that arrives after approvals. The interim report treats it as a condition of supply.
Coordinating housing with infrastructure is one of the four principles the Commission says a better regulatory system should rest on. The report describes infrastructure coordination as a key constraint once land has been released, and frames the real question as whether suitable land is being turned into serviced, developable land fast enough.
Commissioner Alison Roberts made the same point at release, noting that when housing plans and infrastructure plans do not line up, land rezoned for housing can sit unused for years.
Every new lot sits on infrastructure owned by several different agencies
The report sorts housing enabling infrastructure into two groups. Basic infrastructure is what a home needs to function: power, water, gas, sewer, stormwater, telecommunications, and local roads, footpaths and street lighting. Social infrastructure is what makes an area liveable: parks, local public transport, schools, health services and community buildings.
It then splits both by reach. Local infrastructure serves a development and its surrounds. Regional and state infrastructure, such as sewage treatment plants, reservoirs, state roads and major hospitals, serves a much wider population.
That split is where the delays live. Councils plan, fund and deliver local infrastructure and collect local contributions. States and territories plan and fund regional infrastructure and set the framework councils work within. The Commonwealth funds some of both. Utilities and their economic regulators sit alongside all three, on their own planning and pricing cycles.
So a single estate can depend on a council for its roads, a utility for its water and sewer, a network business for its power, and state agencies for its school and its bus route. Each works to its own budget and its own timetable. None of them issues the development approval.
What the Commission means by development ready land
The interim report distinguishes land that is merely zoned residential from land that is also serviced, approved, infrastructure ready and commercially feasible to develop. The Commission has asked whether governments should report a separate land measure on that basis, so that zoned capacity and genuinely developable supply are not counted as the same thing.
The delays are already on the record
A 2025 survey of residential developers, cited in the report, found a lack of social and transport infrastructure was holding back development on 24 per cent of undeveloped residential land in greater Melbourne and Geelong, 16 per cent in Greater Sydney and 13 per cent in greater Perth and Peel.
The National Growth Areas Alliance told the inquiry about a growth area near Perth with nearly 10,000 approved lots that could not be developed for want of enabling infrastructure.
Master Builders Australia put utility connection delays at 6 to 12 months or more, and said some Queensland members were seeing electricity connections expected to take 6 months regularly run to 18, sometimes beyond project completion.
The report points to Torana Estate in Sydney, rezoned for housing in 2013, where construction was delayed by several years after land was bought in 2020 because sewer connections lagged.
Sequencing can fail in the other direction too. On Sydney’s north west rail corridor, new stations including Bella Vista and Kellyville opened in 2019. The rezoning for higher density housing around them took effect in late 2024. The trains arrived about five years before the homes were permitted.
We saw the same mechanism at a single site in September, when SA Water could not confirm capacity for 340 homes at Kadina and the funding question moved into a 2028 pricing cycle. The Commission names it directly. Among the causes of slow utility connections raised with the inquiry are timing mismatches between infrastructure planning and the price review cycles utilities operate under.
Each works to its own budget and its own timetable. None of them issues the development approval.
Councils are carrying growth with limited room to fund it
Local infrastructure is where most builders meet the problem first, and it is where funding is thinnest.
A 2024 survey of 130 councils, cited by the Commission, found a lack of infrastructure funding was the most common barrier to delivering new housing. Eighty per cent said they could not cover trunk infrastructure costs, and 40 per cent had cut new infrastructure projects for lack of money.
The report lists unindexed contribution caps, rate pegging in New South Wales and Victoria, and irregular grant funding among the constraints. It also links rules that limit early spending to some councils holding large unspent contribution balances while infrastructure lags.
The sums are significant. Infrastructure Victoria estimated enabling infrastructure, excluding transport, at about $80,000 to $214,000 per home in greenfield areas in 2018 dollars, two to four times the cost in infill areas.
Uncertain charges can do more damage than large ones
In theory, developer contributions are absorbed into lower land prices over time. The report finds that only holds if the charge is known before the land is bought. Developers told the inquiry charges were often variable or unknown until after purchase, and some said that uncertainty was a bigger risk than the size of the charge.
Timing matters as well. One example put to the inquiry was an inner city apartment project levied about $70 million in contributions that incurred an extra $23 million in financing costs because of when the payments fell due. It is the same pressure a builder feels when money leaves a job well before it comes back, and it lands directly on the cash flow of a building business.
The reform directions follow from that. Contributions estimated upfront, before land release or acquisition, with online tools to check them. Payments staged or due later in the development. One consistent method across councils within each state. Fewer separate levies. Public reporting of what is collected and what is delivered.
Where estimates prove too low, the report suggests governments carry the overrun, with Commonwealth support for shortfalls, bridging finance, and the first developer in an area who would otherwise fund infrastructure for everyone who follows.
A different land count would change the supply conversation
The idea in the report with the widest reach may be a measurement change.
The Commission notes that Western Australia reports a 27 year supply of non urbanised land for development, even as metropolitan Perth land prices have risen substantially. Zoned supply and usable supply are different numbers, and only one is routinely published.
Approvals have long been the headline measure of housing supply. A developable land count would show how much of the pipeline is actually ready to build on, and which constraint is holding back the rest.
For builders, that is the difference between a pipeline on paper and work that can be programmed. An approval says a house may be built. The infrastructure underneath it decides when.
The Good Builder Take
The Commission has done something useful here. It has taken a problem builders deal with on site and in the office, the lot that is sold but cannot be connected, and placed it in the same chapter of national reform as zoning.
Whether governments act on it will be settled after March 2027. The clearest early signal will be the land measure. A state that starts publishing serviced, infrastructure ready land alongside its approvals is signalling it is prepared to be judged on the harder number.
Hear more conversations about what is really shaping the pipeline on The Good Builder Podcast, and follow us for our coverage of the final report.
Frequently asked questions
It is the infrastructure a new home needs to function and the services that make an area liveable. The Productivity Commission groups it into basic infrastructure, such as power, water, gas, sewer, stormwater, telecommunications and local roads, and social infrastructure, such as parks, public transport, schools and health services. Some of it is local to a development and some, like sewage treatment plants and state roads, serves a whole region.
Its interim report of 27 July 2026 found that relaxing land use controls and better coordinating enabling infrastructure are the reforms likely to have the greatest effect on housing supply and affordability. It proposed that governments align infrastructure plans with housing objectives, show how infrastructure will be funded and sequenced with land release, and set clear responsibilities for councils, states and utility providers.
An approval confirms a land use is permitted. It does not guarantee that water, sewer, power, roads or other infrastructure will be in place. Evidence cited in the interim report includes nearly 10,000 approved lots near Perth that could not be developed for lack of enabling infrastructure, and a Sydney estate delayed for several years by lagging sewer connections.
Its reform directions include estimating contributions upfront before land release or purchase, allowing payments to be staged or paid later, applying a consistent method across councils in each state, bundling separate levies, and publicly reporting what is collected and delivered. It also suggests governments carry cost overruns where upfront estimates prove too low.
The final report is due to the Australian Government in March 2027. Under the Productivity Commission Act 1998 the Government must table it in each House of Parliament within 25 sitting days of receiving it. Submissions on the interim report closed on 30 September 2026.
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Last updated 2 October 2026. This article reports the Productivity Commission’s interim findings and reform directions as published on 27 July 2026. The final report, due in March 2027, may change them.
General Information Only. This article reports on a published Productivity Commission interim report and the evidence cited in it. It is general information only and does not take account of the circumstances of any particular business, project or site. It is not legal, financial or planning advice.
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