Councils fear illegal brothels will continue to spread after nsw government rejects law reform

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ILLEGAL brothels look set to continue to flourish in Sydney, frustrated local councils say.

Councillors have criticised the NSW Governments decision to not support a proposed new brothel licensing regimen, arguing that current laws make it impossible to stamp out a thriving underground trade.

Councils spend hundreds of thousands of dollars trying to shut down illegal brothels, including paying undercover investigators.

Last year, Hornsby Council lost a landmark court battle with a local massage parlour after spending more than $100,000 on such an investigation, yet failed to meet the legal standard of proof required to establish that the business was operating as a brothel.

A parliamentary committee recommendation to develop a special police unit which would ensure brothels are licensed, and dont have foreign sex workers, was rejected by the Baird Government on Tuesday.

Its inquiry heard evidence that illegal massage parlours offering sexual services were spreading through Sydney at an alarming rate, with criminal networks believed to be operating in the industry and workers being exploited.

But cracking down on the industry could risk recriminalising sex work, Minister for Innovation and Better Regulation Victor Dominello said in a government response tabled to parliament.

Local Government Association NSW president Keith Rhoades said the decision was shortsighted because current laws simply werent 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 regimen and a dedicated expert squad able to enforce the governments own laws and keep brothels away from inappropriate places, such as churches, schools and childrens playgrounds.

Sex workers had campaigned against the proposed changes, arguing that reforms could lead to corruption and illegal activity, and put them at risk of blackmail and extortion.

A Sydney woman known as Fleur told news.com.au she feared a situation where we would routinely either have to pay off police, provide sexual services or be arrested.

Police corruption was one of the key reasons behind sex work being decriminalised in NSW in the mid-1990s after evidence emerged in the Wood royal commission that brothel owners would regularly ply officers with alcohol and sexual services in an attempt to keep their business activities under wraps.

Labor and Greens MPs have welcomed the Governments decision to reject the committees 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.

The peak body for sex workers in NSW, Scarlet Alliance, opposes any laws specific to the industry, arguing that their profession is a job like any other.

WARNING - Graphic Content: These women appear to lead normal lives, but they each have second jobs, catering to the most basic of human desires.