Rates versus Developer Contributions as Revenue Sources for Local Government

Kate Koutifaris, Vince Mangioni


Population expansion in many New South Wales (NSW) local government areas (LGA) has resulted in an increase in demand for local infrastructure and services that has far outstripped sources of local government revenue. This paper looks at two important sources of local government revenue in NSW, municipal rates and Section 94 contributions, as a source of funding increased demand and maintenance of infrastructure. It examines some recent and potentially long-term trends of both these revenues within different economic climates. An analysis and comparison of data over the period from June 2006 through to June 2010 against data collected for the period ending June 1993 forms the basis of this research.

The research objective is to compare changes in the relativity of these revenue types and assess their application as a source of local government revenue. Data collected from the Department of Local Government NSW is compared with the findings of an earlier study, conducted by Barnes and Dollery (1996), in determining their relativity.

The provision and maintenance of infrastructure by local government is essential for growth in the economy and is a valuable asset to be used by the community. Two types of funding for this infrastructure, among others, is sourced from municipal rates and developer charges levied under Section 94 contributions either by the developer providing the infrastructure, or a contribution towards its funding (Barnes and Dollery 1996).

Full Text:



Access Economics (2006) Local Government Finance in NSW - An Assessment for the Independant Review Panel

Applied Economics & New England Education and Research (2008) Local Government in Australia: Role, Finance and Taxation. Armidale: New England Education and Research

Arnott, R. (2000) Neutral Property Taxation. Program on Housing and Urban Policy. Institute of Business and Economic Research

Asadoorian, M. O. & Kantarelis, D. (2005) Essentials of Inferential Statistics, Oxford, University Press of America

Australian Bureau of Statistics (1996) Year Book [Online]. NSW. Available: http://www.ausstats.abs.gov.au/ausstats/free.nsf/0/C5A6730ACB89FF17CA2573DA007B95D2/$File/13010_1995_chapter19.pdf , accessed October 2012

Australian Bureau of Statistics (2012) 1301.0 - Year Book Australia, 2012 [Online]. Available: http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0~2012~Main%20Features~Cons umer%20Price%20Index%20(CPI)~158. accessed October 2012

Australian Federal Government (2011) Australias Future Tax System. Commonwealth of Australia

Australian Local Government Association (2007a) The Collection of Property Rates in Australia - a State by State Description Australian Local Government Association

Australian Local Government Association (2007b) Cost Shifting Australian Local Government Association

Australian Local Government Association (2007c) Study into Local Governments own-source revenue

Australian Local Government Association submission. ACT: Productivity Commission

Barnes, N. & Dollery, B. (1996) Developer Contributions: An Economic Analysis of Section 94 of the NSW Environmental Planning and Assessment Act 1979. Urban Poilicy and Research, 14 (2), 119-128

Carrozza, C. (2010) Privatising Local Public Services: Between Industrial Legacy and Political Ambition. Local Government Studies, 36, 599-616

Comrie, J. (2012) Strengthening Local Government revenue: Background Paper. Australian Centre of Excellence for Local Government. Sydney.

Cox, G. (1991) Financing of Urban Public Infrastructure from Developer Contributions - A Review of New South Wales and United States Practice. Planning and Research Centre, 115

Creswell, J. W. (2009) Research design: Qualitative, Quantitative and mixed methods approaches, Thousand Oaks California, Sage Publications

Croucher, J. S. (2008) Introductory Mathematics & Statistics for Business, Sydney, Mc Graw Hill/Irwin

Division of Local Government (2012a) How is the rate peg determined? [Online]. NSW: Department of Premier & Cabinet, NSW Government. Available: http://www.dlg.nsw.gov.au/dlg/dlghome/PublicTopicsIndex.asp?mi=0 & ml=10 & id=8#12 [Accessed October 2012]

Division of Local Government (2012b) NSW Local Government Grants Commission - Annual Report [Online]. NSW Government. Available: http://www.dlg.nsw.gov.au/dlg/dlghome/dlg_CommissionTribunalIndex.asp?areaindex=GC & index=22 [Accessed October 2012]

Dollery, B. 2005. Developer Contributions and Local Government Infrastructure. University of New England

Havman, M. & Sexton, T. A. (2008) Lessons from 30 years of experiences. In: PROPERTY FOCUS REPORT (ed.) Property tax assessment limits

Independant Inquiry into the Financial Sustainability of NSW Local Government (LGI) (2006) Are Councils Sustainable? Final Report: Findings and Recommendations. Sydney: Local Government and Shires Associations of NSW (LGSA)

Independant Pricing and Regulatory Tribunal (2008) Revenue Framework for Local Government: . Sydney: IPART

Mangioni, V. (2006) Land Tax in Australia Bondi NSW Australian Property Publications

Mangioni, V. (2007) Funding Urban Australia The Role and Rate Revenue of Local Government in New South Wales. Sydney: University of Technology Sydney

McGill, R. (2010) Building capacity for local government to perform. Commonwealth Journal of Local Governance

McNeill, J. & Dollery, B. (2000a) Financing Urban Infrastructure in New South Wales: An Evaluation of Water and Sewerage Developer Charges Policy. University of New England School of Economic Studies, 2000-10

McNeill, J. & Dollery, B. (2000b) Funding Urban Infrstructure Using Developer Charges: The Case of Section 94 Contributions and Road Financing in New South Wales. Public Works Management and Policy, 4(4), 297-304

McNeill, J. & Dollery, B. (2001) Equity and Efficiency: Section 94 Developer Charges and Affordable Housing in Sydney. Regional Poilicy and Practice, 10(1), 33-37

McNeill, J. & Dollery, B. (2003). Calculating Developer Charges for Urban Infrsatructure: A Feasible Method For Applying Marginal Cost Pricing. Engineering Economist, 48(3), 1-23

Miles, J. & Shevlin, M. (2009) Applying Regression and Correlation - A Guide for Students and Researchers, London, SAGE Publications Ltd.

Myers, J. & Well, A. (2003) Research Design and Statistical Analysis, New Jersey, Lawrence Erlbaum Associates

Pearson, L. (1994) Local Government Law in NSW, Sydney, Federation Press

PriceWwaterhouseCoopers (2006) National Financial Sustainability study of Local Government (PWC Report). Sydney

Productivity Commission (2008) Assessing Local Government Revenue Raising Capacity. Melbourne

Scorsone, E. & Plerhoples, C. (2010) Fiscal Stress and Cutback Management Amongst State and Local Governments: What Have We Learned and What Remains to Be Learned? State and Local Government Review, 42, 176-187

Simpson, W. (1989) An Inquiry pursuant to section 119 of the Environmental Planning and Assessment Act 1979 with respect to operation and practices associated with contributions under Section 94 of the Environmental Planning and Assessment Act 1979. Sydney: Commissioners of Inquiry for Environment and Planning NSW

Smiley, D. (1997) Land Rent Flows in Economic, Political and Environmental Transitions: An Inquiry into Ownership Rights in Land Rent. American Journal of Economics and Sociology, Inc., 56, 103-114

Sorensen, S. (1995) How to write research papers, New York, Mc Millan Press

Vickers, T., Sayce, S. & Morad, M. (2010) Landvaluescape for Green Property Taxes. GEI Conference 29-31

Walliman, N. & Baiche, B. (2001) Your research project: A step by step guide for the first time researcher, London: Thousand Oaks (Chapter 7)

Wijeweera, A. & Dollery, B. (2010) Time for Change? An Assessment of Rate-Pegging in New South Wales Local Government. Commonwealth Journal of Local Government, 6, 56-76

Zady, M. F. (2009) Coefficient of Variation [Online]. Westgard QC. Available: http://www.westgard.com/lesson34.htm#6 [Accessed December 2011]

DOI: http://dx.doi.org/10.5130/cjlg.v0i0.3057