The Local Government Association of Queensland (LGAQ) has warned that if action is not taken to stop cost shifting, local councils and ratepayers could be footing the bill for a $2.2 billion infrastructure funding deficit.
The LGAQ said that new research conducted on its behalf has revealed councils will have to cover the enormous funding gap if the state does not increase the cap on how much councils can charge property developers for infrastructure vital for liveable communities.
LGAQ President, Mark Jamieson, said that the state-set infrastructure charges cap has not been appropriately indexed since it was introduced in 2011 and is placing enormous pressure on councils battling to protect ratepayers during a cost-of-living crisis.
“In South East Queensland, local governments are forecasting a trunk infrastructure funding gap of more than $1.54 billion over the next four years,” Mr Jamieson said.
“If councils were forced to pass that on, it could add an extra $269 each year to a residential rates bill.
“In regional Queensland, the forecast gap is more than $650 million over the next four years, which could add an additional $437 per annum to rates for regional residential properties.
“Queensland communities rely on councils to provide critical infrastructure like roads, parks and water and wastewater to keep pace with growth.”
LGAQ CEO, Alison Smith, said that trunk infrastructure provided the backbone of liveable communities.
“However, the system needs modernising because communities and their councils are getting the wrong end of the stick. Ratepayers deserve a fair deal,” Ms Smith said.
“When developers create new subdivisions and housing, each home needs access to power, water and sewerage, drainage and roads. This is funded through an ‘infrastructure charge’ on the developer that is set by the State Government, then collected and delivered by the council.
“Because the state’s infrastructure charging regime has been capped since 2011, it has not kept pace with the true cost to councils to provide this critical infrastructure.
“This is why Queensland councils want the cap increased and appropriately indexed – so that it is fit for purpose, so that it enables a user-pays system, so that developers are charged a fair price for infrastructure, and so that it does not keep gouging Queensland ratepayers.
“It is not fair that councils and ratepayers should shoulder the costs of others.”
Ms Smith said that even the State Government itself charges more for infrastructure in state-run Priority Development Areas (PDAs) – charging developers on average 50 per cent more for infrastructure than councils can charge outside of PDA boundaries.
“It’s one rule for the State Government, and another rule for councils.
“If it were true that higher infrastructure charges lead to higher home prices, you’d expect home prices in PDAs – where charges are higher – to be more expensive than home prices outside PDAs – where charges are capped. But evidence shows this isn’t the case.
“The price people pay for housing is the price the market is willing to pay – not simply the sum of its parts.
Ms Smith said that a modest increase in infrastructure charging won’t necessarily increase home prices – but it will help fund the critical infrastructure our growing state needs.
“Councils are just asking for fairness, especially given they have very little ability to fill the gap without impacting ratepayers.
“The answer is obvious – the State Government needs to modernise Queensland’s trunk infrastructure funding and charging framework so that Queensland communities are not footing the bill for new developments.”
The trunk infrastructure research follows on from the LGAQ’s Cost Shifting Report released in January that shows councils are having to plug a massive $360 million funding gap every year to cover services that the other levels of government are supposed to be providing but have either pulled out or pulled back from.
“Councils receive just three cents in every dollar of tax nationally, compared to 80 cents for the Federal Government with the rest going to the State Government,” Ms Smith said.
“We need a proper level of funding that is fair and can be relied on by councils and their communities.”
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