This article is from the Australian Property Journal archive
THE Kenneally Government has lifted the cap on local council development levies, in a move that would reap $5.4 billion in taxes from NSW home buyers, according to the Urban Taskforce.
CEO Aaron Gadiel said the NSW Government has decided to raise local council development levies from $20,000 to $30,000.
“Make no mistake, this decision will make everyday home buyers much worse off. Less new homes will be built, those that are built will be more expensive, and fewer people will have the opportunity to own their own home.
“NSW has hit new record low levels of housing construction every year from the past four years – and high development levies have been a major cause of our housing undersupply. NSW produces less new housing per head of population than any other state in Australia,” he added.
Gadiel said the lack of new homes in Sydney is having a profound social impact with only 64% of Sydney households owning their own home – down from 70% at the beginning of the decade.
“In contrast, Brisbane’s level of home ownership has increased from 63% to 68%.
“Victorian local council development levies are below $20,000, and they’re managing to produce twice NSW’s level of housing, despite their small population base,” he continued.
Gadiel said this was the third time the NSW Government had flip-flopped on development levies.
“In October 2007, the NSW Government announced that ‘levies paid to local government in the growth centres [were] to be held in trust by the State Government to be spent on agreed programs’.
“The government claimed that ‘the average local government charge [in the Western Sydney growth centres] will be cut from $45,000 to less than $30,000’. The government promised that plans for levies ‘will need to be endorsed by a delegate of the Minister for Planning’.
“The trust was never established, no requirement was ever introduced for the ministerial approval of all levy plans and development levies in excess of $30,000 remained widespread,” he added.
“In December 2008, the NSW Government announced that it was ‘capping infrastructure contributions payable to local councils at $20,000 per lot’.
“Several months later this reform was subsequently watered down, and the “cap” was re-designated as a “threshold”. Almost all levies in excess of $20,000 a lot were subsequently green lighted by the government,” Gadiel said.
The latest cap recently came under challenge in the Land and Environment Court, where the Court rejected arguments that the cap was unreasonable.
“The Land and Environment Court was prepared to back the NSW Government levy cap, but the government itself isn’t,” he concluded.
Australian Property Journal
