NSW councils need both carrot and stick in order to build much-needed homes and approve the thousands of development applications languishing in backlogs, industry figures say.
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Under a $200 million grant program set to be announced by the state government on Wednesday, up to 43 councils will be given new housing targets and rewarded with parks, sporting facilities and upgraded footpaths if they meet the goals.
NSW Premier Chris Minns says the program will encourage councils to spend, rather than sit on the more than $3 billion in contributions collected for local infrastructure.
"The parts of Sydney which drive more development will receive more funding for schools, hospitals and roads," he told the Committee for Economic Development of Australia during his State of the State address on Wednesday.
"An extra $200 million - to fund the green space, the footpaths, the parks and the local streets that build good communities.
"In other words, meeting and beating the housing targets will automatically translate to greater funding support."
Councils that approve more homes and meet their housing targets will be eligible for a greater portion of the funding, which will not be available if key milestones are not reached.
Their planning performance will be judged and compared under a soon-to-be published council league table.
But the Property Council of Australia said the NSW government needed to go further and impose clear penalties for councils that failed to deliver on targets.
"We won't close the housing gap without both carrot and stick," NSW director Katie Stevenson said.
A "red card" model for underperforming councils with greater use of the state's step-in planning powers would be a good first step, she added.
The property industry lobby also called for upcoming budget funding to help councils clear a lengthy backlog of residential development applications still awaiting decisions.
"We need to urgently clear the backlog of DAs stuck in the system for more than six months to help councils stand even a chance of meeting housing accord numbers," Ms Stevenson said.
Housing approvals for NSW remain well below the figures needed to meet the state's contribution of about 75,000 extra homes per year towards the national targets.
Meanwhile, developers are yet to begin work on 15,593 homes across the state - including 11,170 in Sydney - despite being granted building approvals, according to KPMG analysis released on Wednesday.
The number of new dwellings approved but not commenced in NSW climbed from 13,765 in the March quarter of 2023 to 15,593 by the December quarter, the report showed.
About 80 per cent of stalled projects were townhouses and apartments.
Australian Associated Press
