It is now an accepted, though uncomfortable, truth amongst most: we have a housing supply crisis across NSW and, as a result, we have a housing affordability crisis.

Today is one year after the NSW Government mandated the new fast-tracked LEPs must be completed.  It is one year after the LEPs which were funded $2.5 million per council to deliver a plan to meet housing supply demands.  So why did it so spectacularly fail to deliver? Parents and grandparents are increasingly concerned about the prospects for their children and grandchildren living close to them, or in many cases, in the same city. We risk losing our best and brightest because they can’t afford to live here.

The NSW Productivity Commission forensically identified the systematic under-supply of housing over the last decade and identified this in their first Report in 2019.  The more recent NSW Productivity Commission White Paper 2021 bluntly stated as its first “key finding” (page 26) that”

“Housing supply has failed to keep up with demand. That has led to an undersupply of housing, increasing the cost of living for households and making New South Wales a less attractive place to live and work”.

This is a clear failure of Government oversight and regulation.  It is the job of the planning system to ensure that enough housing supply is available to meet demand.  Not just to mark and punish applicants; not only to consider the impact on NIMBYs or even reasonable objections but, among other things, most critically to find a balance that ensures that housing supply meets demand. The current home affordability crisis will not go away. Its genesis is a case of the NSW planning system, and those actors within it, causing rather than correcting market failure.

How did this happen?

In 2016/17 and 2017/18 the NSW Government was starting to make inroads in what the GSC had already found was an accumulated under supply of housing arising from the GFC.

Then, a number of critical events occurred which, together, caused housing approvals to plummet.

• The Forced Council Amalgamation abomination was abandoned and Mike Baird Resigned in 2017
• Hon Gladys Berejiklian was elected Premier and the message went to all Ministers to NOT pick fights with Councils in the lead up to the State election in 2019
• The Premier Commissioned Glenn Stevens to investigate the cause of the what even then (in 2017) was a housing affordability crisis
• His Report recommended a more flexible planning system capable of responding to market demand and cited under supply as the primary cause of rising prices
• The Stevens Report was buried – unable to be found on any Government web page – and the recommendations were ignored
• The Greater Sydney Commission concocted an elaborate labyrinth called the Strategic Planning framework
  • A new Regional Plan for Greater Sydney – “A Metropolis of Three Cities”;
  • 5 new “District Plans” to give effect to the Regional Plan;
  • New “fast-tracked” Local Environment Plans (LEP’s) for Amalgamated Councils;
  • New Local Strategic Planning Statements (LSPS’s) to inform the new LEPs; and
  • New Local Housing Strategies to feed into the LSPS documents
• There was an offer of $2.5M per amalgamated Council to bring forward the new LEPs – with a vague set of rules (different things said to different audiences) and qualified auditing – which in fact simply gave effect to the new reality of the failure to supply Councils with sufficient detail n housing targets to properly inform the development of meaningful LEP’s or LSPS’s
• In the meantime, the GSC was to establish housing targets for the relevant planning period for these new LEP’s and LSPS’s (2021-2026)

It all went very wrong.  When approvals fall, completions fall.  When completions fall, supply falls.  When supply falls, prices rise!

In mid-2017, the GSC, through its District Plans, effectively prohibited the conversion of old, dilapidated industrial sites, into mixed use (employment and residential) developments (thus eliminating a key source of new, often high density mixed use and residential development).  While this may not have been their intent, Councils took the “Protect and Manage” policy to mean “no change to employment land at all”. In 2018, the GSC called a “moratorium” on planning approvals in the Ryde LGA.  News spread fast – the order was out.  STOP approving new homes!

The Department of Planning handed back strategic planning for precincts and corridors to local Councils.  This, despite all the good work that had been done in many of these areas – but the Government (which initiated the central management of these plans) abandoned the Department of Planning.  It is no-wonder those same public servants are gun-shy now.

The worst aspect of all was the GSC’s failure to set Housing Targets till after the LSPS’s were required to be completed by Councils and submitted.  The preparation of Councils’ most significant planning tool (the Local Environment Plans) were not properly informed by updated GSC housing targets for 2021-2026. The GSC targets were provided after Councils had already exhibited their proposed LEPs.

We might now have a suite of Strategic Plans – but is there any wonder there is a housing supply crisis? The wonder is explained by the detail.

The Greater Sydney Commission held fast to the dates for the completion of the Local Strategic Planning Statements (LSPSs) and DPIE (where the staff had completely lost interest) just wanted the new LEPs done – even if they were worthless.

So, they were completed, but without the 2021-2026 housing targets and are therefore were immediately redundant.

This lax process engendered a lax attitude towards housing target setting, meeting or enforcement among everyone in the NSW Planning System.

How can the LEP’s be completed without the benefit of being informed by LSPS’s or Local Housing Strategies or targets?  Once the Urban Taskforce pointed out the manifest holes in the process, in a panic the GSC undertook a “LSPS Assurance” process which included letters to Councils – but again – they did this, in many cases, without seeing even draft Housing Strategies. It was too little too late.

Then, after creating a local Strategic Planning quagmire and failing to determine the very Housing Targets that were essential to producing meaningful documents, the Greater Sydney Commission abandoned the housing supply field mid Pandemic (2020) under new management and leadership.

All this has occurred with no political direction or will from the Minister for Planning (it was tough for him because the GSC reports to the Premier, not the Minister for Planning).  For a very long time, there was a flat denial of either a housing supply or approvals problem.  The Reserve Bank was chastised for failing to understand the special characteristics of the Sydney typography and landscape.  The early work of the NSW Productivity Commission which found NSW to be the slowest in the nation was, at first, dismissed.

All of this arises from a lack of political will to hold Councils (and all those in the planning system) accountable for the belated GSC local housing targets 2021-2016.

Many Councils have now submitted Local Housing Strategies (Urban Taskforce has analysed each and their actual performance since) which do not go close to addressing the GSC LSPS targets. Rather than hold Council to account, DPIE has again buckled to political pressure not to upset Councils with the local government elections now close (September 2021).

How do you get a crisis in housing supply?

• First: Deny there is a problem
• Second: Remove pressure on Councils by creating an “imperative” for the completion of a suite of strategic plans
• Third: Do nothing about plummeting approvals rates (ignore any claims of a problem)
• Fourth: Restrict the use of old dis-used industrial sites for mixed use or residential development
• Fifth: Keep denying there is a problem
• Sixth: Fail to produce housing targets in time for the mandated submission of LSPS’s (thus making it impossible to be informed by Housing Strategies)
• Seventh: The very body which had overseen most of these steps (the GSC) then abandons the field and says they will now focus on employment – and leave housing to DPIE and Councils
• Eighth: No matter how much Councils ignore the belated LGA housing targets – don’t do anything to enforce them – just write them a letter of approval with “comments” on where they could do more
• Ninth: When it is clear that housing supply really is driving up prices – continue to do nothing to offend any Council
• Tenth: If in doubt, deny there is a problem!

In the 2021/22 NSW Budget announcements – the words “Housing Supply” barely rated a mention.