From the Newsroom

CVC opposes changes to developer contributions system

Geoff Helisma|


Clarence Valley Council (CVC) has unanimously voted to support Local Government NSW’s (LGNSW) opposition to proposed changes to the NSW Environmental Planning and Assessment Act that “may force our council to delay or completely remove projects from our expenditure plan”.

At the August 24 CVC meeting, the mayor, Jim Simmons, warned councillors (in a mayoral minute) that if the draft reforms are legislated, it could have a “detrimental impact, not only on community wellbeing and participation in civic life, but also, crucially, on job creation”.

The LGNSW submission to the Parliamentary Inquiry into Infrastructure Contributions Bill, July 2021, points out that the “pre-eminent challenge facing NSW local government[s] is financial sustainability” and, as a result, “compound [the] impacts of growing responsibilities, rate pegging and other financial constraints”.

“Cost shifting by the NSW Government onto local government is currently estimated to be around $800 million per annum (representing over 6 per cent of total local government revenue),” the submission states.

Clarence Valley Council and LGNSW’s fear that “new permanent provisions [would] enable Ministerial Directions to set the timing of contributions payments at any time beyond the pandemic period”, which could result in “permanent deferral of contributions payments to councils [until] the OC [occupation certificate] stage”.

This, in turn, LGNSW argues, could “delay provision of essential community infrastructure, or require existing communities to carry the burden of paying for the infrastructure costs for new developments until the payments are made”.

The committee overseeing the enquiry highlighted the following draft reforms in a media release:

  • a regional infrastructure contributions system to collect levies on development in Greater Sydney, Central Coast, Hunter and the Illawarra Shoalhaven while preserving existing special infrastructure contribution arrangements;
  • requiring owners who benefit from their land being rezoned for development to contribute towards the provision of land for local infrastructure when their land is either sold or developed;
  • greater transparency and accessibility for Planning Agreements; and,
  • incentives for councils to fund infrastructure upfront, allowing councils to borrow and pool their funds.

The other most-concerning issue for CVC and LGNSW is the “major constraint on local government finances” due to 40-years of annual rate pegging, “which currently includes no provision for population growth”, as cited by the NSW Productivity Commission (NSWPC).

“Our analysis shows the costs of growth are not being fully met for NSW councils in general, with faster growing councils tending to be unable to recover additional revenue through general income in proportion to their growth,” writes the NSWPC.

Clarence Valley Council has written to an exhaustive list of politicians, outlining its concerns, and “affirmed its support to LGNSW and requests LGNSW [to] continue advocating on [CVC’s] behalf, to protect local government from any amendments to infrastructure contributions, which leaves councils and communities exposed to expending ratepayer funds on new infrastructure made necessary by new development, [which is] currently the responsibility of developers”.