$560 million in infrastructure levies unspent by Sydney council

The Property Council of Australia’s latest audit shows that local councils in Sydney are sitting on almost $560 million in unspent infrastructure levies.

“There is no good excuse for stockpiling almost $560 million in infrastructure levies,” NSW Executive Director Glenn Byres said. “Infrastructure levies are built into the cost of new houses and collected on the promise they will be spent on essential infrastructure and community facilities."

“Homebuyers will feel short-changed when they are desperate for essential infrastructure yet see so much money being stashed away.”
Byres said the figures show a 12 percent increase in unspent levies over the past 12 months – up from $499 million in 2008-09.More than $193 million in section 94 contributions were collected during 2009-10 – but only $168 million was spent.

Seven councils raised more in interest on unspent infrastructure levies in the past year than they spent thus collectively earning $14.7 million but spending $8.9 million. “Some councils do the right thing but there is a clear case for greater accountability in the collection and use of infrastructure levies,” Byres added.“Some of the worst offenders have sought exemptions from the cap on section 94 contributions and oppose development on the grounds of strained infrastructure.

“They would be better served by a regime that trims the amount councils can collect and then ensures it is spent effectively.
The Property Council of Australia is suggesting solutions to the issue:
• Alternative financing methods like Growth Area Bonds – where governments fund infrastructure with a bond then repay it with the growth in property taxes generated by the investment
• ‘Use it or lose it’ provisions when unspent money above set benchmarks is reallocated by the Local Government Grants Commission
• Stricter enforcement of caps on infrastructure levies and a greater role for IPART in scrutinizing s94 plans.