Federal Budget Allocates $2 Billion for Local Infrastructure to Support New Housing

Treasurer Jim Chalmers will reveal details of a $2 billion Local Infrastructure Fund in Tuesday's federal budget. The money is earmarked for councils and state utility companies to build roads, pipes and wires that unlock new housing. The fund is expected to add an extra 65,000 homes over a decade.

The program continues earlier federal support, adding to the $1 billion the federal government gave state governments for a similar enabling infrastructure purpose in the last term. It differs from the Coalition's approach. The Coalition pledged $5 billion at the last election for enabling infrastructure focused exclusively on outer-suburban greenfield housing.

Peter Dutton promised federal resources for enabling infrastructure during last year's election campaign. The Coalition's 2025 election policy for enabling infrastructure was a $5 billion fund it said could deliver 500,000 new homes. That 500,000 homes figure was a rough approximation produced by developer lobby group UDIA assuming $10,000 per home.

Housing Minister Clare O'Neil said infrastructure was the boring but essential work that unlocks housing supply. She noted the program sets up water, power, sewerage and access roads for new homes and new communities, with $500 million reserved for the regions under the infrastructure program.

The centrepiece of Treasurer Jim Chalmers' fifth budget will be contentious changes to the capital gains tax and negative gearing.

Labor frontbenchers say they remain committed to bolstering supply even as those tax measures are delivered. "Building more homes is a big focus of this budget," Mr Chalmers said. " The federal budget will also include a pledge to make it free for construction companies to access mandatory Australian regulatory standards.

Making regulatory standards free is expected to save small firms up to $1,600. Further steps to cut housing red tape will be taken in conjunction with state governments. The government will encourage so-called modern methods of construction such as modular homes.

Australia's construction sector is less efficient now than it was in the 1990s. 2 million homes target. The Middle East war is expected to affect the construction sector which relies on fuel and oil-derived products such as plastic pipes.

Liverpool mayor Ned Mannoun supported the Coalition's enabling infrastructure policy and said federal intervention was definitely needed. 7 billion of new housing in its local government area in 2024. Naim Kurt, the mayor of Hume in Melbourne's north-west, said money for arterial roads was more urgently needed.

Abc reported the details of the budget measures and the reactions from local mayors.