Claims that Australia’s housing woes are due to restrictive planning and building regulations remind me of a classic scene in the celebrated Monty Python movie ‘Life of Brian’. 

‘Reg’, the leader of Judean resistance fighters in Palestine at the time of Christ, denounces the occupying Romans  for ‘bleeding their nation dry’ and endeavours to rouse his comrades by asking…’what have the Romans ever done for us?’.

After a pregnant pause, one of the fighters nominates ‘the aqueduct’.  A torrent of other nominations follows.  An exasperated Reg eventually responds …   “All right, but apart from the sanitation, medicine, education, wine, public order, irrigation, roads, the fresh water system and public health, what have the Romans ever done for us?”

So, what have planning and building regulations ever done for us?

Well, like the Romans, they have preserved our access to clean drinking water – through planning regulations on housing development in catchments.  And they have made sure our homes have reasonable access to ventilation, sunshine, daylight and privacy. They have conserved treasured landscapes like the Yarra Valley, Blue Mountains and Hawkesbury River. They have managed the exposure of homes and businesses to flooding and fire risk. They have provided assurance that our buildings are sound in their construction. They have ensured that our neighbourhoods have convenient access to local shops and services. They have equipped our suburbs with parks and gardens within walking distance of most homes. They have saved our built heritage in places like Carlton, Surrey Hills, New Farm and the Adelaide Parklands. Finally, they have helped us get the best value out of our investment in roads, drains, public transport, schools, hospitals and other infrastructure by facilitating orderly rather than random development.

Apart from that, what have planning regulations done for us?  The list would stretch well beyond those of Roman achievements in beleaguered ancient Palestine.

We could stretch the analogy to say that it is not the substance of planning regulation which should be at issue but the way it is transacted. Presumably, were Reg’s crew to be triumphant, they would want to retain all the benefits brought by the Romans but deliver them in a self-determined way.

The analogy breaks down in that notwithstanding their prowess in civil engineering and urban management, the Roman occupation of Judea was brutal and certainly was not inevitable.

In contrast, planning and building regulation is inevitable; at least that’s what Economics 101 tells us.  Housing development in the context of city building demands management of market externalities; that is, benefits and costs which have value for us but which have no traded price in regular commercial transactions.  Without regulation, we would waste resources and forego a multitude of environmental, social and business benefits. I do not expect that this scenario would find much favour in the wider community.

Deregulation, therefore, is not the best way to think about planning and building rules in relation to housing development.

Instead, regulatory reform could usefully focus on three imperatives. These are designing planning and building rules correctly within a ‘performance based’ philosophy; applying subsidiarity in decision making over planning rules and development consents; and automating administration of regulations wherever possible.

We’ve known about performance-based approaches to regulation for four decades at least. As a nation, however, we are yet to implement these on a consistent basis. The Building Code of Australia is probably the best example we have of this approach. Even this, however, is not without opportunities for improvement.

In terms of planning, a performance-based approach requires several elements. These include the establishment of clear objectives (preferably quantitative) along with standard for the outcomes of what is expected of a development proposal. These should be backed by a set of non-negotiable, black and white rules. Compliance with these rules would be ‘deemed to comply’ with the outcome standards.

The idea is that proponents can come up with their own ways of meeting the objectives and outcome standards. This gives them an outlet for creative and entrepreneurial initiative.  However, if they cannot show that they can meet the outcome standard, they would be required to design and build in accordance with the deemed to comply rules, no ifs or buts.

Subsidiarity in planning decision making means that matters affecting regional, state and national communities should not be left to local authorities to make.  It also means that higher spheres of government should keep out of local matters where they have no competence.  Much of the angst in the debate about the impact of planning regulation on housing supply stems from a misallocation of decision making power against the subsidiarity principle.

Automation and harnessing technology must continue to play a key role in the development assessment process.  It is unhelpful to conceptualise city building and housing development as essentially straightforward and to hark back to the days when regulations were ‘simpler’.  The good old days were, in many respects, disastrous in managing negative externalities and optimising the spillover benefits of urbanisation.  City building is an inherently complex and enormously expensive investment which, once sunk, is difficult to shift.  As with any other major investment, undertaking due diligence of impacts and returns is essential, not an expendable nuisance.  Happily, ongoing technological advances, including in AI, will help speed up the due diligence process without assuming away the complexity involved in creating the cities, towns, neighbourhoods and housing we all want.

Dr Marcus Spiller, Principal & Partner, SGS Economics & Planning Pty Ltd

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