Councils crying poor while hoarding hundreds

“The local council associations are trying to stop the NSW Government from forcing them to spend taxpayer revenue on taxpayer facilities,” Ken Morrison NSW executive director said."The fact is that councils in Sydney have hoarded over $600 million in unspent development levies. This is money which should be spent on community facilities, not sit in council bank accounts.

“Instead of encouraging councils to get on with the job of delivering community facilities, the LGSA has spent thousands of dollars placing big ads in major newspapers asking for the NSW Government to back off.

“We recognise that many councils are cash strapped, but the never ending increase of levies on new housing is not the answer.

“Councils have to recognise their housing affordability responsibilities.”

Figures compiled by the Property Council, taken from council’s 2006 financial statements, reveal that Sydney councils held $603 million in unspent development levies – money that should have been spent on local roads, libraries and childcare services. These funds are collected as Section 94 Contributions as part of the consent requirements attached to new developments.

“We don’t have a problem with section 94 levies per se, but the fact is that things have got way out of hand in NSW. Since 2000, local government levies on new housing in Sydney have grown by up to 17%, adding over $56,000 onto the cost of a new home,” Mr Morrison said.

“We would be happy to join with local government in a campaign to abolish rate pegging as part of a wider reform agenda.”

A draft report issued by the Productivity Commission today highlights the impact of rate capping in NSW in limiting local council revenue raising abilities (NSW is the only state with rate capping). The report found the growth in council rate revenue in NSW has been the lowest Australia-wide.

“Development levies add to the cost of new housing, they are unfair and inefficient and councils are too slow to spend the money they collect.

“Rather than cry poor over levies, local councils should get behind driving serious reform to the NSW rate system.

“We urge the NSW Government to keep reforms that force council to spend levy revenue and look to end rate pegging to enable councils to be financially sustainable.”

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Marc Pallisco

Marc Pallisco

A freelance property writer and analyst, Marc is a co-founder of realestatesource.com.au.

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