Inner West Council Stashing Millions

BY BENEDICT BRUNKER

The newly amalgamated Inner West Council has spent less than half of the $29m in development ‘contribution levies’ earmarked for projects designed to cope with increased density in the area, bringing its total in unspent contributions up to $58.4m.

A third of the council’s investments are tied to development contributions, allowing local councils to hide in the shadow of Sydney’s booming property market.

The council’s reluctance to spend makes it the biggest net beneficiary of development contributions in Sydney, fitting a broader pattern of questionable behaviour amongst Sydney’s local councils. Neighbouring City of Canada Bay Council’s unspent contributions sit at $38.9m, and Strathfield’s at $28.5m.

Executive Director of the Property Council of NSW, Jane Fitzgerald, expressed concern about the council holding back on new spending to meet increased density in the area: “Developer contributions increase the cost of development which means they add to the final price of a home – developer contributions should be used to create new community infrastructure that a growing populations needs.”

“If this is not happening, then it is the community who will suffer.”

“It is accepted that sometimes it is necessary for contributions to be paid when a development places additional demand on local services and infrastructure, but there must be a clear nexus between the money provided and new infrastructure.”

“The system must also be clear and transparent in terms of what is being charged and what new infrastructure will be provided.”

Ms. Fitzgerald speculated that the council’s reluctance to spend: “could be due to a number of reasons including a lack of strategic planning, a lack of communication between levels of government, or it is being used as a backup fund of savings.”

“We are concerned that the system is not being used as it was designed in some circumstances, and that new infrastructure is not being delivered in a timely manner with the contributions developers provide.

“In the end, developer levies increase house prices and local council should not rob the community of the infrastructure they are intended to fund.”

A Spokesperson for the Inner West Council firmly repudiated any suggestion: “that Inner West Council is somehow ‘stockpiling’ developer funds”, saying such a notion: “shows a misunderstanding of… the financial risks that inappropriate expenditure of these funds could expose the community to.

“Each year as part of the budget process, Council allocates funds from S94 and S94A reserves [developer contributions] towards various infrastructure projects.

“Prior to the amalgamation in May 2016, allocation of funds was determined by the former Ashfield, Leichhardt and Marrickville councils.”

When asked why the funds aren’t being spent on measures to cope with increased density, the Spokesperson explained that: “often these contributions only fund part of new infrastructure.

“In most cases, until all the planned development has occurred, there is a shortfall of funds.

“Projects are rolled out as resources become available.”

The spokesperson pointed out that since the establishment of Inner West Council in May, the council “has spent $8.1 million in developer funds.”