Local councils have criticised the Baird government's decision to not license brothels across NSW, arguing current laws are failing to clamp down on illegal parlours.
A parliamentary committee recommendation to develop a special police unit which would ensure brothels are licensed and don't have foreign sex workers was rejected by the state government on Tuesday.
Imposing such a scheme would risk re-criminalising sex work, Minister for Innovation and Better Regulation Victor Dominello said in a government response tabled to parliament.
But Local Government Association NSW president Keith Rhoades says the decision is short-sighted because "current laws simply weren't working".
"Minister Dominello says the government has strengthened the powers of investigation and enforcement and that should be enough," he said in a statement.
"And yet we have the ridiculous state of affairs in which councils are forced to waste ratepayers' money hiring private investigators to go undercover and actually buy sex from prostitutes to obtain the necessary proof to launch a prosecution," he said.
"The local government sector just wants a modern, sensible regulatory regime and a dedicated expert squad able to enforce the government's own laws and keep brothels away from inappropriate places, such as churches, schools and children's playgrounds."
Labor and Greens MPs have meanwhile welcomed the move to reject the committee's recommendation.
"Whilst the NSW government should never have even established such an inquiry dominated by conservative politicians, it is good to see they have refused to endorse the more extreme recommendations," Greens MP Mehreen Faruqi said in a statement.
Committee member and Labor MP Jo Haylen meanwhile said the decision would uphold the positive health and social benefits decriminalisation has allowed.
Sex worker organisations have also commended the government's decision.
"It's a relief to see good sense prevailed," Scarlet Alliance CEO Jules Kim said.
"Decriminalisation of sex work has delivered outstanding outcomes for sex workers' health and safety and that of the general community," she said.
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