Dishonest councillors who use their position for personal benefit will be forced to hand over their ill-gotten gains under tough new laws to be introduced into NSW Parliament.

The sweeping reforms to NSW’s local government integrity regime will help restore confidence in the state’s councils, NSW Premier Mike Baird and Minister for Local Government Paul Toole announced today.

These new measures will ensure councils will no longer be able to decide on planning decisions that councillors have a stake in.

The NSW Government will also place a $2,500 cap on political donations for council elections.

Decisions made on planning applications lodged with a council in which a councillor or general manager, their spouse or relative has a financial interest must be made independently of the council. However, this requirement will not apply to routine development applications relating to their principal places of residence.

The legislation will also close a loophole that allows council officials to vote on planning matters in which they or a relative have a pecuniary interest, where the permissible use of land is not being altered.

“We want the community to have confidence in councils again,” Mr Baird said.

“Unfortunately this confidence has been shaken recently by councillors who have put self-interest ahead of community interest.”

Under the legislation, councillors may be forced to hand over any financial benefit they have received if they voted in a matter in which they had a pecuniary interest.

A person who, in the past seven years, has been convicted of a crime that carries a potential jail term of five years or more will be banned from standing for council.

Similarly, those convicted within the past two years of an offence under the Election Funding Expenditure and Disclosures Act 1981 will be prohibited from nominating as a council election candidate.

Candidates and elected councillors will be required to disclose if they benefit from income derived from property development.

“These tough and practical reforms will safeguard the community interest and help banish self-interest from the council chamber,” Mr Toole said.

“Councillors who attempt to use their position for personal gain will quickly find they’re wasting their efforts.

“Through greater transparency and powers to seize profits, the NSW Government is sending a clear message that councils don’t exist to enable dodgy get-rich-quick schemes.”