We are reviewing our methodology for calculating the discount rate for local government infrastructure contributions.
We use our methodology to calculate the discount rate that we recommend councils apply if they are using a net present value approach to calculate local infrastructure contributions
IPART calculates and publishes the discount rate every 6 months.
This review aims to ensure that our discount rate methodology is fit for purpose and consistent with the aim of timely provision of local infrastructure.
We have published our Draft Report
Our draft decision is to maintain a cost of debt-based approach to calculate the discount rate, with a new risk adjustment.
Our proposed update would continue basing the discount rate on councils’ cost of debt and include a new risk adjustment for a weighted-average debt margin for A and BBB rated bonds to derive a benchmark credit rating of A-.
We consider that this update to our method would better capture the level of risk and uncertainty faced by councils providing local infrastructure in new developments.
In short, the update would better estimate councils’ risk premium. This would likely result in a higher discount rate than in our past biannual updates.
Using the relevant market observations as at the end of January 2026, our draft decision would result in a nominal discount rate of 4.8%, compared to 4.0% using our current methodology from our February 2026 update.
Submissions are now open for our Draft Report
Your input is valuable to us as we undertake this review. You can have your say by making a submission to our Draft Report by 15 May 2026.
Stakeholders are welcome to contact us if they would like to meet to discuss the Draft Report. We do not intend to hold another public workshop on this review.
We will consider all stakeholder feedback, input from our independent experts and our own analysis before publishing our Final Report with our final decision.
We anticipate releasing our Final Report with our final decision in mid-2026.
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To find out more about IPART’s role in local infrastructure contributions plans, see here. To find out more about modelling local infrastructure contributions in a net present value framework, see our Technical Paper.
This review affects:
- local councils
- property developers.