16 September 2008
Local councils need to explain how the collapse of Lehman Brothers will affect local communities, according to Aaron Gadiel, CEO of the Urban Taskforce.
Council levies on new homes are supposed to cover the cost of community amenities needed by residents of new housing developments.
These local council levies have been skyrocketing every year. A home buyer could face an extra $50,000 for their own home just to cover local council levies, Mr Gadiel said.
Instead of spending their levies straight away on new community facilities, many councils have been putting the cash into massive investment portfolios.
Some councils have been amassing a massive hoard while essential infrastructure is ignored.
Unfortunately, many of these investments involved purchasing securities from failed investment bank Lehman Brothers.
Local councils need to explain to their communities the implications of the bankruptcy of this firm for local roads, bridges, footpaths, kerbs and gutters, buildings and drainage infrastructure.
Mr Gadiel said that the best thing local councils can do for their local communities is provide services not speculate on risky investments.
Every levy a council slaps on new homes makes them more expensive for young families, Mr Gadiel said.
If councils have made further large losses it will be a blow to home buyers who have been paying large levies to prop up council investment portfolios, Mr Gadiel said.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.