Councils’ cash stash is growing each year

Tuesday, July 3, 2018

HUNTER councils have stashed $132 million of cash meant for infrastructure, despite never-ending cries that they don’t have enough money.

The money pile is growing each year, amid calls for state reforms to allow the cash to be spent faster.

However, the state government insists councils have been given the power to do this.

Lake Macquarie, Maitland, Newcastle, Cessnock and Port Stephens councils have collected $132million, but they spent only $23million of their stash in the 2013-14 financial year.

The cash stash totalled $125million the previous year.

The money comes from developers who pay councils under state laws for infrastructure in areas they develop.

Lake Macquarie council’s latest financial report showed it had accumulated $70 million in developer contributions.

It received $11 million in 2013-14, but spent only $4 million that financial year.

Lake Macquarie councillor Brian Adamthwaite said the state government should allow more flexibility, so the council could prioritise spending the money ‘‘in a more appropriate way’’.

However, the NSW Department of Planning said councils were allowed to ‘‘adopt a flexible approach’’ using developer contributions, based on demand for infrastructure.

They could ‘‘prioritise certain projects, borrow funds against future contributions or utilise general revenue’’.

The department had ‘‘provided a guide for councils on how to pool funds’’ to build priority projects, ‘‘rather than holding contributions in separate accounts for extended periods’’.

A Lake Macquarie council statement said the state government had been ‘‘reviewing the development contributions system for more than seven years and the review has not been finalised’’.

The council said it was improving its spending of contributions through a review, which it expected would lead to more ‘‘efficient and effective use’’ of the money.

With some councils under threat of merger and no end in sight to a push for big rate rises, some say it’s not a good look for councils to be sitting on big cash piles.

Lake Macquarie councillor Rob Denton suspected councils used the money to ‘‘make their bottom line appear to be a lot better than it is, rather than building the necessary and required infrastructure’’.

Cr Denton said this type of ‘‘creative accounting’’ was unacceptable.

McCloy Group managing director Brian Swaine said developer contribution plans need improvement.

‘‘The system hasn’t been able to provide the infrastructure that the community requires,’’ Mr Swaine said.

Despite the cash stash, delays in building infrastructure mean councils sometimes have to dip into general revenue to cover cost shortfalls.

Councils do collect interest on the money, but sometimes it doesn’t keep pace with construction costs.

Cr Adamthwaite said it would be better to build infrastructure earlier in the development process to save costs and provide for the community.

‘‘The later you build it, the more it costs – then you often don’t have the money to do it,’’ he said.

The NSW Planning Department said a draft Lower Hunter Regional Growth and Infrastructure Plan was being prepared for release soon.

This would outline regional priorities and help councils with infrastructure decisions.