Local councils are taking longer to decide on large development applications and are driving investment away from NSW, according to the Urban Taskforce.
The Local Development Performance Monitoring Report 2009-10 was released by the NSW Government this week.
The taskforce's chief executive, Aaron Gadiel, said that long processing times for development applications - and the uncertainty about outcomes - are major reasons why people haven't been investing in NSW.
"An application for a project of more than $5 million to $20 million in value is stuck in council bureaucracy for an average of 257 days, up from 230 days in the previous year," he said.
"This compares with an average of 67 days for all development applications.
"Councils are wilfully ignoring the current benchmark - which is between 40 and 60 days to decide development applications."
Gadiel said that projects valued at more than between $5 million and a $100 million now take an average of 268 days to process, up from 245 days in the previous year.
"These delays can increase the cost of building new homes and business premises by 15 per cent - through extra interest payments on debt and through the money tied up in unproductive capital," Gadiel said.
"Until 2007, NSW was the nation's number one state for building activity - this shouldn't have been surprising given that it's Australia's most populous state," he said.
"However, in 2007, Victoria stole NSW's title. Victoria has never looked back - in the last financial year, for every dollar spent by builders in NSW, $1.20 was spent in Victoria.
In the last financial year, work started on 52,000 new Victorian private sector homes, while in NSW work started on 26,000.
