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Government slashes levies

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  • Government slashes levies

    Government slashes levies

    Catharine Munro
    October 12, 2007 - 2:09PM

    Building a new home in the growth centres on Sydney's fringe could be $25,000 cheaper after the government announced it would cut council and state levies on developers.

    The building industry would no longer have to help fund the construction of parks, libraries, schools, hospitals and police stations in new suburbs following treasury's review of infrastructure levies.

    "It's part of what we are doing to get young families into their first home," Premier Morris Iemma told reporters.

    Mr Iemma said rising interest rates were the major influence in housing affordability "but what we are doing is our bit."

    Treasurer Michael Costa said the slashing of levies would affect the budget in the medium term by $2 billion but would not impact on the state's AAA credit rating.

    The state government would also take control of more than $750 million in unspent infrastructure levies held by councils in the growth centres of Sydney's north-west and south-west.

    As it continued to conduct a inquiry into how councils are investing unspent infrastructure levies, some councils in NSW have been exposed to the downturn in the sub-prime mortgage market in the United States as a result of their investment of these levies.

    New development levies collected by councils would have to be spent within seven years under the state government's changes announced today to ensure that new home owners were not paying for infrastructure that was planned for future populations.

    The announcement was welcomed by the Property Council of Australia which has been a vocal critic of infrastructure levies and some councils administration of them.

    President of the Local Government and Shires Association, Genia McCaffery, called on the State Government to make up the expected shortfall in infrastructure funding.

    "If the government fails to do that then local communities will be left without childcare centre and community centres,'' she said.

    "Either they fund infrastructure or cut back on rate pegginig so we can fund these facilities ourselves."

    Cr McCaffery said there was no guarantee homes would be cheaper as a result of today's policy change.

    "How will we ensure developers don't pocket the money rather than pass on the savings to consumers?'' she said.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx