THE state government has been called on to finalise its investigation into Lake Macquarie City Council's controversial $44 million internal loan scheme and make the findings public.
The Newcastle Herald reported in February that Lake council had loaned itself more than $44 million from a special fund of public money - collected from developers - meant to be spent on critical community infrastructure.
Despite the fact that Planning and Public Spaces Minister Rob Stokes, who oversees the planning legislation that allows councils to collect development contributions, raised concerns about the scheme, no action has been taken.
"If these claims are true, this is an unacceptable breach of the public's trust and a misuse of public funds earmarked for important public infrastructure," Mr Stokes said.
A spokesman for the Office of Local Government said this week that it was still waiting on further information from Lake council about the scheme.
"Please note that the Office of Local Government does not comment publicly on matters it may or may not be investigating," he said.
The Housing Industry Association, Urban Development Institute of Australia and Lake Macquarie-based developer Johnson Property Group (JPG) have all lobbied the government to take action.
JPG chairman Keith Johnson said this week that he didn't understand why there had been such a long delay in the government deciding if the loan scheme was legal.
Mr Johnson, who is locked in a dispute with council over a voluntary planning agreement that sets out its commitment to invest in infrastructure due to its development of Watagan Park, Lake Macquarie's largest new residential subdivision, said the money should be spent on community infrastructure projects, not used as council's internal piggy bank.
"The NSW government has acknowledged that an investigation is being carried out into the loans and the public has a right to know what is going on," he said.
"Nothing has happened since this came to light and it's about time the government told us what was going on."
A Lake council spokeswoman previously said it relied on independent legal advice that the loan scheme - that involved $44 million over 20 years - was permitted under the legislation.
Opposing legal advice, obtained by JPG, described the scheme as "unlawful".
Lake Macquarie mayor Kay Fraser has described it as "clever" because it has the potential to save council up to $7 million in interest, compared to borrowing externally.
The government has announced it is considering major reforms to the planning system, including development contributions.