Heads up! Productivity's down.

In a promising move, the NSW Government has requested that NSW Productivity Commissioner, Peter Achterstraat, produce a Green Paper to examine how the NSW Government can best support continued growth in living standards in the years ahead, recognising that higher productivity growth is key to ensuring this.

He has already produced a discussion paper which raises a number of issues for detailed investigation. This next stage, titled “Kickstarting the Productivity Conversation”, touches on many areas of the property development industry where significant reform and change is needed.

Currently, an average of $330,000 of the cost of  a new $1 million apartment is made of government fees, taxes, levies and charges. This staggering figure is a result of the cumulative impacts of costs added by all levels of government, as well as financing and holding costs due to the lengthy and onerous rezoning and development approval process. This red-tape burden is driving up the cost of housing production which hurts new home buyers and stymies the growth of the NSW economy. The lack of affordable housing affects our quality of life as workers live in cheaper areas and commute long hours to get to their place of employment.

Further, the complex and frustrating planning laws and practices in NSW result in the average time to get at DA approved being twice as long as is the case in Victoria and even worst for Queensland.

What is the solution to these issues? On the Urban Taskforce’s to do list for the NSW Government outlined in the submission, is a range of regulatory and policy changes which if enacted effectively could help lower the cost of housing production and boost economic productivity throughout the property sector.

These include:

  • The NSW Government should make the Department of Planning the rezoning and development approval authority for all land within a 1km radius of train stations and well serviced transport hubs, with the remit of efficiently facilitating appropriate high-density mixed-use development in these areas.
  • The Greater Sydney Commission should play a stronger role in ensuring state level strategies are translated coherently to local level plans (LEPs), rewriting LSPS’s or LEP’s if necessary. The GSC should develop a series of housing, employment and growth-related targets which councils must demonstrate are met. Should councils fail to do this, DPIE should be given the legislative authority to take on the role as the ‘relevant planning authority’ to complete councils’ local plans.
  • The Greater Sydney Commission should take on a stronger coordination role in facilitating the efficient provision of infrastructure in time with development.
  • Local councils should be required to keep an easily accessible online record of how much they collect from developers in local infrastructure charges and how this money is spent, including the details of that expenditure.
  • The Greater Sydney Commission should develop housing targets for each council as soon as possible and regularly monitor councils’ approvals and completions to ensure that councils are on track to achieve these targets.
  • The Department of Planning (DPIE) should commence producing the ‘Local Development Performance Monitor’ (which has not been updated since 2016) and maintain this monitor in real-time if possible.
  • Local Councils must produce information relating to infrastructure contributions, development assessment and planning proposal processing times in a transparent and easy to search online format (see suggested indicators provided above). These should be submitted to DPIE or NSW Treasury and published in a consolidated form.
  • Rate pegging should be abolished. This will incentivise councils to accept additional growth and density and allow local government the ability to respond to increasing expectations for its role as a community service provider.
  • Local Infrastructure contributions should be capped at a fixed rate of $20K per dwelling in an in-fill development location and $30K per dwelling in greenfield development locations by the NSW Government.
  • The Greater Sydney Commission should reverse its ‘review and manage’ or ‘protect and manage’ approach to industrial and urban services land and instead adopt a site-by-site approach to the proposed rezoning of industrial land to higher order uses such as residential and mixed-use development (particularly where job numbers can be enhanced).
  • NSW government should be taking every possible measure to boost economic activity and to ensure that inefficient regulatory constraints and planning system failures are removed so this economic opportunity can be realised (refer to all recommendations in this submission).
  • The Apartment Design Guide should be fundamentally redrafted with a view to minimising obligations and prescriptions to ensure maximum flexibility for housing consumer choice and enable housing to be delivered at multiple price points while maintaining, at a minimum, basic quality.
  • NSW State Government should establish a fund to support councils in their delivery of community open space in areas nominated for high-rise or high-density residential development.
  • A register which monitors the cumulative cost of the many local and state government fees and charges on development should be introduced and maintained by NSW Treasury, to ensure that the impacts of these charges upon the cost of housing production is monitored closely.
  • Establish regional planning ‘Centres of Excellence’ to support groups of councils by taking over responsibility for the writing of reports for Regional Planning Panels and the Independent Planning Commission so as to allow councils to focus on fast tracking standard development applications through the assessment process.

Urban Taskforce members welcome this new approach from the NSW Treasurer and would be delighted to see movement on all of these matters – but even a few would be a start.

By Tom Forest, CEO, Urban Taskforce