Queensland councils say property levy limits must be changed.

A $2.2 billion funding shortfall is projected to place significant financial burdens on local councils and ratepayers over the next four years, stemming from capped charges that Queensland councils can levy on property developers for essential infrastructure. 

The issue has sparked calls for reforms to the state's infrastructure charging framework to ensure more equitable distribution of costs associated with new developments.

New research, commissioned by the Local Government Association of Queensland (LGAQ), highlights an urgent need for the state government to adjust the cap on infrastructure charges, which has remained unchanged since its introduction in 2011. 

According to LGAQ President Mark Jamieson, the cap is increasingly untenable, especially amid a cost-of-living crisis, and threatens to shift undue financial burdens onto local ratepayers.

“In South East Queensland, local governments are forecasting a trunk infrastructure funding gap of more than $1.54 billion over the next four years,” he said. 

“If councils were forced to pass that on, it could add an extra $269 each year to a residential rates bill.” 

He further noted that regional Queensland faces a predicted gap exceeding $650 million, potentially hiking annual rates by an additional $437 per household.

The infrastructure in question, often referred to as ‘trunk’ infrastructure, includes critical elements such as roads, parks, and water and wastewater facilities, essential for accommodating growth and maintaining community standards. 

LGAQ Chief Executive Officer Alison Smith said such infrastructure is a backbone for liveable communities, and that the outdated financial model forces local governments to absorb costs unfairly.

This imbalance is exacerbated by the state government’s own practices within Priority Development Areas (PDAs), where it imposes infrastructure charges approximately 50 per cent higher than those allowed outside PDAs. 

This disparity could prevent higher charges from leading to increased housing costs, as evidenced by stable home prices within PDAs compared to areas subjected to capped charges.

In response to these challenges, Queensland councils are advocating for an increase and proper indexing of the cap on developer charges to realign it with the actual costs of providing essential services. 

The call for reform aligns with the findings from LGAQ's earlier Cost Shifting Report, which revealed an annual $360 million shortfall borne by councils due to reduced support from other government levels for various services.