Newcastle's controversial business levy faces make-or-break survey

Newcastle councillors have voted to survey businesses about a controversial levy that has increasingly attracted criticism over transparency and cost-of-living pressures on local traders.

The Special Business Rate (SBR)—an extra charge imposed on top of standard commercial rates in designated precincts—will be put to public consultation. The decision to review its future follows a recent independent audit that flagged concerns about how the scheme's funds are levied, allocated, and spent.

The levy is not new, but resentment toward it appears to be growing. Business Newcastle, the peak body representing local traders, says many operators who pay the SBR question whether it delivers value. Some retailers have reportedly relocated from Newcastle to nearby Charlestown to escape the mounting cost burden.

What is the SBR?

The Special Business Rate is an additional tax imposed only on businesses within certain precincts in Newcastle's CBD and nearby commercial zones. Unlike the standard commercial rates every business pays to council, the SBR is meant to fund specific precinct improvements and services. In theory, it allows businesses in those zones to pool resources for targeted infrastructure or promotional spending.

City of Newcastle collected $65.9 million in total business rates during 2023–24, making it the second-highest-yielding council in New South Wales. The SBR represents a portion of this revenue, though the exact breakdown is unclear—a detail at the heart of the current controversy.

The transparency problem

The independent probe, triggered by council submissions, identified a critical gap: businesses paying the SBR struggle to see how their money is being spent and whether the scheme's goals are being met. This lack of clarity has eroded confidence in the levy's legitimacy.

Edward Duc, president of Business Newcastle, crystallised the frustration: "A large proportion of those who pay the SBR do not see the value in the scheme." He noted that high commercial rates—not just the SBR, but the overall tax burden—are pushing businesses out of the city. "The more money that traders have to give to the council, the more it just inhibits what they can do," he said.

Business Newcastle is now calling for the council to scrap the SBR entirely and absorb its funding into the general commercial rates budget—arguing that Newcastle's baseline commercial rates are generous enough to fund precinct improvements without a separate levy.

Why it matters

Newcastle's business sector already shoulders some of the heaviest commercial rate burdens in New South Wales. Adding an SBR on top creates a disincentive for businesses to remain or invest in the city. The survey represents a genuine inflection point: if the SBR loses community support, the council faces a funding shortfall that must be covered elsewhere—or precinct improvements must be curtailed.

The consultation will ask two direct questions: whether the SBR provides value for money, and whether it should continue. The answers could reshape Newcastle's business environment and the council's revenue model.