Council plans to fix the housing crisis with its own new taxes

The coastal Mornington Peninsula Shire Council, centred on Rosebud and Hastings, this week voted to ask ratepayers for feedback on its plan to introduce a 3.3 per cent levy on new developments.

The shire is about an hour south of Melbourne and says it has been forced to find "innovative ways" to tackle a growing housing crisis "devastating families and individuals in our community".

Mornington Shire is among many Victorian councils who have been calling on governments to do more on housing.

Developers have already hit back at the planned new tax, pointing out social housing has long been the responsibility of state and federal governments.

They fear if this shire's plans go ahead, other councils will follow with their own property taxes.

The proposal requires planning permit applicants to contribute 3.3 per cent of the market value of all developments which result in a net increase in the number of dwellings on the peninsula or an increase in industrial or commercial floor space.

The State Opposition has suggested the proposed tax could add $35,000 to the cost of a median new home.

The opposition's spokesman on local government, Nationals leader Peter Walsh, said it was not the role of councils "to add tens of thousands of dollars to the cost of a new home".

Applications to build more accommodation for rural workers are among the proposed exemptions.

The council says other developments exempt from the scheme would include renovations to existing homes, new homes which replace an existing home, granny flats, public buildings like schools and community facilities, accommodation which already provides a community benefit, such as aged care facilities plus small-scale extensions to industrial and commercial developments.

The council claims its region has seen "next to nothing" from existing government spending programs.

"We are therefore asking our community if they would consider a development contribution scheme, which would treat social housing as essential infrastructure, much like public open space, car parking and drainage," the council said in a statement.

"After considering all community feedback, council will decide whether to take a proposal for a development contribution scheme to the Victorian government."

The council has identified a shortage of 4716 social housing units across the shire which would balloon to 8051 housing units by 2041.

Funds raised would be directed towards social housing initiatives within the municipality, such as the development of new social housing projects or support for existing housing programs delivered by government or local registered housing providers.

Mornington Peninsula Mayor Simon Brooks said council expected the consultation to generate a lot of community interest.

"Already, we are hearing from our homeless service providers how this will help ease the housing and homelessness crisis," Cr Brooks said.

"There are understandably also concerns about the impact of the proposed scheme on future developments. All views will be carefully considered before any decision is made on whether to proceed."