Greens push for billions’ worth of developer profit taxes in NSW

The NSW Greens will call for a 75% tax on the profits that landowners make when their land is rezoned. 

The party says those profits are currently untaxed and so landowners benefit from a “massive transfer of public wealth into private hands” when their land increases in value, due to rezoning decisions made by governments. 

A Greens policy document seen by Crikey says the tax would be levied at 75% of the difference between the officially assessed land value before the rezoning compared to the land value afterwards. 

Greens MP and planning spokesperson Cate Faehrmann said the current system left some suburbs with poor access to infrastructure while netting “eye-watering profits” for developers.

“Developers are making millions off the back of rezoning decisions made at the whim of the minister, yet they’re contributing almost nothing back to the communities,” she told Crikey.

“Our plan will ensure that the community are also beneficiaries from the huge profits made from rezoning.”

The charge would only apply when land is redeveloped, meaning homeowners whose land gets rezoned wouldn’t automatically have to pay anything even if their land value increases.

The fee “would discourage the parasitic large-scale land banking that drives up prices and rates for everyone”, the Greens claim, and the tax revenue would be used to pay for local public infrastructure.

The party has taken the same policy to elections in other states in recent years, including Queensland and South Australia.

Analysis from Sydney University, presented to the NSW Productivity Commission in 2020, said such a tax could bring in more than $8 billion per year. 

The academic behind that analysis, postdoctoral research associate Cameron Murray, told Crikey no one has noticed that the state has been “giving away billions of dollars for free”. 

He said the ACT has had a 75% “betterment levy” in place for decades, and that NSW used to have a 30% levy in place for a short period in the early 1970s.

He said that in his view, it would be better for the public to “sell” property rights than to “give them away”.

“It’s always a tough battle because obviously the landowners would rather have free money than not,” he said. 

The office of NSW Planning Minister Anthony Roberts said the state government had considered replacing the existing system of special infrastructure contributions with a “simpler, broad-based charge” in the area around greater Sydney, but that the proposal “did not proceed following stakeholder feedback”. 

Special infrastructure contributions are fees levied on developers working near major projects. 

A spokesperson for the minister said the government would introduce an amended package to implement these changes this year, “taking into consideration the submissions received during the public consultation process”.

“This is expected to increase revenue by $924.2 million over three years to 2025-26, which will be used to support the delivery of infrastructure projects in the regions where the revenue is collected, unlocking new housing supply,” the spokesperson said. 

Labor’s planning spokesman Paul Scully dismissed the Greens’ proposal altogether. 

“NSW Labor has no plans to introduce new taxes at this election,” he said.