As Australia’s housing crisis continues, reform of planning regulations is front and centre in the Commonwealth Government’s policy agenda. 

But this is not the first time that planning – a State responsibility – has come under intense scrutiny from Canberra.

The last time was more than a generation ago and, oddly enough, that episode may have sown the seeds for at least some of today’s planning and housing woes.

It was the mid-1990s, and Australia was on the brink of its own Thatcher-esque or Reagan-ite economic transformation at the end of the long post war boom.  Led by a Labor Government steered by Prime Minister Bob Hawke and his Treasurer Paul Keating, a centre piece of this ‘micro-economic’ reform program as it was popularly referred to at the time was National Competition Policy (NCP).

Alongside World War 2 mobilisation, and maybe the early days of the COVID 19 response, NCP offers a great example of Australian federalism at its best.  The Commonwealth sought to ‘modernise’ the economy through corporatisation of government institutions, infrastructure privatisation and general stripping back of regulations which hampered market flexibility.  Many of these things were outside the Commonwealth’s jurisdiction.  The federal government brought the States along by sharing the tax dividend anticipated from a more productive national economy.  The States and Territories were given ‘sign on’ payments on top of normal intergovernmental funding flows, plus additional transfers as they reached agreed reform milestones.

As part of the deal, the States were to systematically review all regulations that could impede competition and innovation in markets.  Planning regulation – which created all manner of minor monopolies in prosecuting a designed vision for towns, cities and neighbourhoods – was duly placed in the dock.  These reviews generally found that restricting competition, by rationing development rights, may be acceptable if a net community benefit could be demonstrated.

While planning regulation escaped with its life during these NCP trials, its confidence and sense of purpose were badly shaken.

During the post war boom, planning regulation was seen as a largely technocratic process acting above the political fray in the public interest.  Just as patients never questioned their doctors, or expected to participate in decisions about their treatment, the appropriateness of planning schemes and development assessment was taken for granted.  Planning was rules based, highly prescriptive and inflexible.

This old school view of planning did not resonate with the new economic paradigm embedded in NCP, including the tenets of globalisation, free trade and unshackled private initiative.  The language and practice of planning regulation shifted accordingly.  Rather than ‘controlling’ development in the public interest, its mission morphed into ‘enabling’ and ‘facilitating’ development, also in the public interest but with far less conviction about what that interest might be.

In this environment, planning was expected to abandon prescription in favour of ‘performance based’ development regulation.  For housing development, a performance based approach would require planners to set clear expectations about project outcomes on matters like overshadowing, inter-dwelling privacy, open space provision and greening, management of run-off, accommodation of vehicles, streetscape consistency, retention of heritage values and so on, but proponents would be free to propose their own solutions about how these outcomes might be met.  For example, rather than being obliged to install a large pipe through the public realm to carry stormwater to the nearest main drain determined by the Council, a proponent could propose an on-site wetland or water-garden to retain run-off at pre-development levels.

In keeping with the broader beliefs baked into NCP, this performance based approach to planning regulation was expected to mobilise private sector ingenuity and enable more efficient ways of creating housing, neighbourhoods and cities.

Performance based planning regulation was, and continues to be, robust in principle.  But it requires disciplined practice.  There are two essential ingredients.  Firstly, the outcomes expected of development must be clear, unambiguous and, if at all possible, expressed in quantitative terms, so that their achievement or otherwise can be objectively determined.  Secondly, if proponents are not willing or able to devise their own solutions to achieve the required performance, there should be a default solution in the regulations which is ‘deemed to comply’ with these standards.  The deemed to comply solution will necessarily be a conservative one, so as to avert any risk of infringing the social, environmental and economic values reflected in the performance standards.

While the rhetoric of planning regulation has more or less universally shifted towards development facilitation, it is difficult to find many examples of the performance based approach in Australia where both of the above conditions have been met.

Ironically, with the abandonment of restrictive prescription, the regulation of housing development in many parts of the country has become more complex, burdensome, risk laden and generally problematic for proponents, especially for developers of large, high impact, projects.  In many (though not all jurisdictions and cases) such projects are routinely bogged down in extended negotiations about what planning authorities want by way of outcomes and the best way of achieving them.  Strategic planning might make sufficient development capacity available – vertically and horizontally – but getting approval to tap this resource has become unduly time consuming and costly.  This contributes to inelastic supply of housing.

The country would do well to return to the principles of performance based regulation to, among other things, help housing producers respond more swiftly to shifts in demand.  But let’s do it properly this time.

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