We are a new development Body Corporate and the Developer tells us that he does not have to pay levies on his units. Is this true?

It is possible for the Developer to amend the Management Rules of the scheme – before opening the Sectional Title register.  In these rules he can change the calculation of levies.

The STSM Act states the following:

Section 11(2) (a) Subject to section 3(1)(b), the developer may, when submitting an application for the opening of a sectional title register in terms of the Sectional Titles Act, or the members of the body corporate may by special resolution, make rules under section 10 by which a different value is attached to the vote of the owner of any section, or the liability of the owner of any section to make contribution for the purposes of section 3(1)(a) or 14(1) is modified. 

If the Developer has not done so before opening the sectional title register, he cannot do it afterwards.  Once the Body Corporate has come into existence (transfer of the first unit from the Developer to another person/entity) then there is a special resolution by the members needed to change the calculation of levies.

There are also conditions to this in the STSM Act:

Section 11(2)(b) Where an owner is adversely affected by such a decision of the body corporate, his or her prior written consent must be obtained.

(c) The member of the body corporate may not make rules by which a different value is attached to the vote or liability of the owner of any section as contemplated in paragraph (a), until such time as there are owners, other than the developer, of at least 30 per cent of the units in the scheme.

You will have therefor have to check the Rules that apply to your scheme to determine how levies should be calculated and raised and if the Developer pays levies or not.