Sydney councils ignore $200 million infrastructure fund

25 January 2010

Sydney councils have put up their hand for only $38 million from a pool of up to $200 million for local infrastructure projects, according to the Urban Taskforce.

The Taskforces chief executive, Aaron Gadiel, welcomed NSW Premier Kristina Keneallys announcement today of $179 million in infrastructure loans, but Mr Gadiel was appalled at the lack of participation by Sydney councils.


The state governments new Local Infrastructure Fund targets high-population growth areas where new developments are underway or planned for construction.


The program leverages unspent development levies held by local councils. Mr Gadiel said that just 21 per cent of infrastructure cash is to go to Sydney councils.


Only six of Sydneys 41 councils have made successful applications, he said.


None of Sydneys inner suburban councils will participate in the fund – and only one of Sydneys middle ring councils will take part.


Thats despite the fact that 60 to 70 per cent of Sydneys future housing growth is supposed to occur within Sydneys existing urban footprint.


Mr Gadiel said the response of Sydneys outer suburban councils had also been disappointing.


Only five of Sydneys 15 outer suburban councils will take cash from the fund, he said.


Sydney will never get a strong supply of new detached houses with their own backyard unless outer suburban councils pull their weight on infrastructure provision.


The lack of interest by councils in this scheme is a reflection of the not-in-my-backyard approach most Sydney councils take to development.


Mr Gadiel said that the Local Infrastructure Fund, announced in last years state budget, was a sound policy measure.


The scheme had the potential to provide up to $200 million in interest free loans to NSW councils to fast-track local infrastructure projects.


Too many developer projects have been hamstrung by local councils failing to commit to building up local infrastructure, Mr Gadiel said.


The NSW government recognised this problem and came up with a welcome solution.


The scheme means that local councils have no excuse for sitting on the development levies theyve collected from home buyers, Mr Gadiel said.


Councils have previously claimed that they could not spend up to a $1 billion in development levies because the money was tied to specific projects, and they lacked the cash to fully fund their construction.


The state government has provided a simple mechanism for councils to top up development levies with an interest free government loan – enabling them to build local roads, roundabouts, bridges and playgrounds right now, when theyre needed.


Mr Gadiel said that NSW is producing less than half the new homes, per capita, than Victoria or Queensland.


The rate of new home production, per head of population, has halved in the last five years, he said.


Getting local councils to invest in infrastructure is a key part of getting new home construction back up to the necessary level.


Its a real shame that Sydney councils have not taken part in the scheme in large numbers – leaving the bulk of the money to be allocated to regional NSW.


Thats clearly great for regional areas, but it will do little to solve Sydneys urban growth challenge.


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 $78 billion to the national economy each year and creates 849,000 direct jobs



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