Developers welcome new rules to force council responsibility

10 May 2009

Property developers today welcomed NSW government plans to require greater financial responsibility from local councils.

The Urban Taskforce chief executive, Aaron Gadiel welcomed the new requirement, announced today, for local councils to develop 10-year financial plans.


Some local councils have been a bastion of financial irresponsibility, Mr Gadiel said.


These new rules will make it harder for councils to sign up to projects they cannot afford.


We hope these new rules encourage councils to stick to their core business.


Councils need to concentrate on community amenities, such as local roads, bridges, footpaths, kerbs and gutters, playgrounds, bus stops and drainage infrastructure.


They need to avoid grandiose schemes and risky business ventures that they simply cannot afford.


Last year it was revealed that councils across NSW were sitting on a $1.2 billion unspent fortune in development levies.


Every levy a council slaps on new homes makes them more expensive for young families.


Local governments have been hoarding this cash to spend on unachievable white elephant projects.


We hope these new rules will ensure that levies imposed on new homes will be spent straight away on local community facilities.


Mr Gadiel said that last year Port Macquarie-Hastings Council was sacked following the disastrous development of a cultural and entertainment centre where costs blew out from $6 million to $41 million.


The council had been amassing a $79 million hoard in development levies while essential infrastructure was ignored.


In 2004 Port Macquarie-Hastings Council said it had an infrastructure shortfall amounting to $144 million.


A public inquiry found that the centre will be a drain on the councils budget, even if its fully utilised 365 days a year.


Todays changes will require councils to develop:

  • A strategic plan in which a council sets out its priorities for the next 10 years;
  • An action plan showing how these priorities will be delivered during the council’s four-year term; and
  • An operational plan showing how the revenue will be obtained to fund the projects.


Councils will also have to develop a strategy showing how they will manage all their resources, such as property, investments and workforce. Each outgoing council would have to show how it has implemented its long-term plans at the end of every four-year term.


The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.


For every $1 million in construction expenditure, 27 jobs are created throughout the broader economy. The construction activity made possible by property developers contributes $69 billion to the national economy each year and creates 709,000 direct jobs. The construction industry is Australias third largest source of employment.



Download PDF Version