The Opposition has accused NSW Premier Mike Baird of reneging on a promise to cap the amount would-be councillors spend running their election campaigns.

Mr Baird has also been criticised for failing to ban property developers and real estate agents from becoming councillors, although he has ruled they must disclose their professions when they hit the hustings and they cannot vote on decisions where they have a direct pecuniary interest.

Mr Baird promised in May that he would cap political spending and donations in time for local council elections this September but he appears to have backtracked on part of his promise.

Opposition Leader Luke Foley said it was a mistake not to set limits on campaign spending.

“Mr Baird has broken a clear and unequivocal commitment to introduce spending and donation caps for council elections,” Mr Foley said. “Caps on donations are not much use without limits on election spending.

“Predatory interests will be able to spend as much as they like to capture control of a local council.”

But NSW Local Government Minister Paul Toole insisted the new rules would prevent councillors from using their position for personal gain and clean up local government.

The ban on allowing developers to vote on decisions where they have a direct pecuniary interest, for example on land rezoning or changes to development control plans, winds back the Local Government Amendment Act 2012. Prior to the 2012 Act, councillors used to have to leave the room during votes where they had a pecuniary interest.

The Local Government and Elections Legislation Amendment (Integrity) Bill includes:

• A cap on donations at $2500 per year from each donor to councillors, candidates and third-party campaigners
• A cap of $5,800 per year from the same donor to registered parties and groups
• A ban on councillors voting on planning decisions where they or a relative have a pecuniary interest
• Councillors breaking this rule will be forced to hand over any financial benefit gained from the decision
• Candidates who are property developers or real estate agents must disclose this when running for election
• A ban on people convicted of a crime within the past seven years from standing for council if that crime carries a potential jail term of five years or more
• Restricting people convicted of a court offence under the Election Funding Act from standing for council for two years

“Local councillors make an extremely important contribution to our local communities. Unfortunately this has been overshadowed by scandals involving a very small number of dishonest councillors,” Mr Toole said.

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

The new legislation comes after a series of scandals that have rocked NSW local councils, the most infamous involving Auburn Council in Western Sydney, where some councillors benefitted from planning and development decisions.