Federal Budget 2026–27: Local Infrastructure Fund and housing

The 2026–27 Federal Budget included a $2 billion Local Infrastructure Fund to help deliver the roads, water, power and other infrastructure needed for new housing. Here’s what the fund is designed to do, why enabling infrastructure matters and what happens next.

Updated 7 October 2026

Housing supply depends on more than identifying land or setting targets for new homes.

Before many new homes can be built, land needs the infrastructure and services that make development possible. That can include roads, water and wastewater networks, electricity connections, drainage and other local infrastructure.

The 2026–27 Federal Budget put those practical requirements at the centre of a new housing measure: the $2 billion Local Infrastructure Fund.

What is the $2 billion Local Infrastructure Fund?

The Australian Government established the Local Infrastructure Fund under the Housing Support Program to help local governments and state utilities deliver infrastructure that enables new housing.

Eligible infrastructure can include local roads, water and wastewater infrastructure, stormwater and drainage, electricity connections and some public transport works needed to service new housing areas.

Treasury says the fund is intended to support up to 65,000 homes over the decade. The Federal Budget also states that it takes the Government’s investment in housing-enabling infrastructure to $6.3 billion since coming to government.

The funding is linked to broader housing reform. Budget documents say it will be available in states and territories that commit to measures aimed at improving housing-sector productivity, including faster and simpler approvals, making more land ready for new homes and simplifying the National Construction Code.

What happens next with the Local Infrastructure Fund?

The fund is moving from announcement towards implementation.

As at 7 October 2026, Treasury says funding will be delivered through two rounds, with $500 million reserved for regional Australia. Applications for the first round are expected to open later in 2026, with a second round expected in mid-2027. Guidelines and supporting information will be released before applications open.

That distinction matters. Funding being announced is not the same as infrastructure being delivered or homes being completed.

Why does enabling infrastructure matter for housing supply?

Land can be identified for housing without being ready for development.

Water and wastewater capacity, electricity networks, roads and drainage can all influence when development can proceed. That is why the Australian Government describes the Local Infrastructure Fund as targeting the essential infrastructure needed to support new housing.

Housing delivery also relies on the wider development chain: serviced land, planning certainty, approvals, skilled labour, construction capacity and a sector able to turn approved plans into completed homes.

Cedar Woods Managing Director Nathan Blackburne said the focus needs to remain on those foundations.

“If we want to deliver more homes, we need to keep focusing on the foundations that make housing possible: serviced land and infrastructure, planning certainty, as well as more labour and competition in the construction sector,” he said.

How States are addressing housing supply barriers

The Federal fund sits alongside State measures addressing different barriers to housing delivery.

In Western Australia, the 2026–27 State Budget includes more than $1.3 billion for land development, including investment in power, water and other enabling infrastructure intended to unlock and deliver more land supply.

That includes $522 million for power and water infrastructure in major growth corridors and other locations across the State.

Victoria has taken a different approach in part of its housing package. The temporary off-the-plan duty concession for eligible strata apartments, units and townhouses has been extended so it can apply to eligible contracts entered into on or before 20 April 2027.

The concession reduces the dutiable value of an eligible property by deducting construction costs incurred after the contract date.

These measures are different, but they reinforce an important point: increasing housing supply involves removing practical barriers at several stages of the delivery process.

For Cedar Woods, the same principle applies at community level: new housing needs to be considered alongside the infrastructure and services that help communities function as they grow.

What will matter next?

The Local Infrastructure Fund is an important input into housing supply, but the announcement itself is not the outcome.

The test will be what happens over the years ahead: whether funding and reform translate into infrastructure on the ground, land becoming ready for development and more homes being completed.

That will continue to require coordination between governments, utilities, developers, builders and communities.

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