When COVID-19 hit the NSW economy in March this year, the Berejiklian Government turned to the private sector for opportunities for private sector investment and support.

There was a consensus that the NSW Planning System was a bottle neck.  The NSW Productivity Commission says as much in its recently released Green Paper of Productivity Reform. The planning system in NSW is complex, costly and slow.  It is currently a hinderance to investment, housing and employment.

Planning Reform had been placed on the public agenda by the Premier in November 2019 when the NSW Productivity Commissioner called out the NSW planning system as the slowest in the nation. The early days of the pandemic were hopeful on the planning front. The Treasurer joined the Minister for Planning to announce, with some fanfare, the Planning System Acceleration Program (PSAP) and was greeted with warm embrace by industry.

Just last weekend, Minister Stokes triumphantly announced:

 “To date we’ve already accelerated 80 projects over the last four months pumping more than $22 billion into the State’s economy, creating opportunities for more than 48,000 jobs.”

So why are many in the property development and construction sector expressing concern that, COVID-19 notwithstanding, their prospects for maintaining employment and for the industry generally look grim as we move into 2021.

Government budgets across Australia are stretched and depend more and more on private sector investment to drag our economy out the other side.

The NSW Government was quick to declare that construction projects were essential employment activities and would be kept open (within safe working protocols).  Hours of operation were increased to help spread the employment load and prevent site over-crowding.  The payment of local and state infrastructure levies was pushed back from the start of construction to the completion of construction.

The Productivity Commissioner was appointed to investigate and report on infrastructure fees and charges.   Their Green Paper of Productivity Reform (released on 20/8/20 http://productivity.nsw.gov.au/green-paper) is an excellent and detailed analysis which contains a very welcome focus on the economic imperative. It makes salient recommendations for reform. Extra funding was allocated by Treasury to DPIE to support its new “Planning Delivery Unit”. $250 million was made available to fund local councils (up to $5.5 million per LGA) green space provided they committed to some form of fast tracking. The Treasurer was even talking of working with the Commonwealth to phase out Stamp Duty. This too has been explicitly supported by the Productivity Commission.  The key now is to implement this reform.

Planning System Acceleration Program – the results

Urban Taskforce decided to take a deep dive into the detail of the Planning System Acceleration Program (PSAP).

Urban Taskforce alone supported 80 projects for inclusion in the acceleration process.  In all, there were over 450 private sector projects submitted. The Urban Taskforce projects were published on our web site.  We were an open-book to public scrutiny.

Many Urban Taskforce members were very pleased that their projects were fast-tracked – and the economy will benefit from this. However, many more, often those with the projects which are economy-driving in their size and scale, were not fast-tracked, even though they met the brief as originally described by NSW Treasury. There is only one more “tranche” of projects to be announced under the PSAP.  Consideration should be given to broadening this program to allow focus on fast tracking high economic value projects and pulling them through the planning system to unlock the private sector investment inherent in them.

Our analysis reveals that the vast majority of projects approved are government projects and planning proposals. The PSAP was supposed to drive private sector investment – but instead, many of the projects that were fast-tracked were government projects or government (Council or State) sponsored planning proposals.

Of the 88 projects identified for “acceleration” under the 5 tranches of the PSAP, only 31 are development applications from the private sector, amounting to approximately $2 billion (8%) of the $25 billion worth of investment dealt with by the program. The remaining projects are government initiatives (which are also very welcome as they are all delivered in partnership with the private sector) or re-zonings and while many of these approvals are welcomed and supported, their capacity to proceed to construction or even DA within 12 or even 24 months is questionable.

The Government reports that the 5 tranches of approved projects (to date) will deliver in excess of 51,000 jobs, which if delivered in the next six to twelve months would make a welcome dent in the State’s rising unemployment rate. However, the ‘big-ticket’ projects in terms of jobs are overwhelmingly government initiated, previously announced projects; or are much longer-term Council sponsored (precinct based) planning proposals.

Snowy Hydro 2.0 supposedly contributes 2,000 jobs and $4.6 billion to the PSAP’s claimed outcomes. But when will this project begin?  Is this really a COVID-19 stimulus project? Public schools and TAFE colleges deliver another 3,500 jobs, while Stage 2 of Tweed Valley hospital contributes another 4,500 jobs.

Once you remove these types of projects from the picture and discount large-scale precinct based re-zonings (that in reality take years to realise due to – in many cases – fragmented land ownership), the jobs and private sector investment tally starts to look a little less impressive.

Nonetheless, the PSAP has been very worthwhile.  It has been the start of a change in culture which sees the planning system as being part of the solution. It shows that planning assessment times can be shorter without compromising the outcome or accountability. The PSAP should be continued beyond tranche 6 so more of the circa 450 private sector projects that were submitted can be processed and moved forward.

What can be done to boost the NSW Planning System’s performance?

Approvals data will show that Councils’ performance has dropped significantly as a result of COVID-19.  This is a decline from what the NSW Productivity Commission had already described as the worst in Australia. This is no surprise – their early focus was quite properly on public safety, sanitation and essential services.  But just when we needed strong central control of the planning system to drive approvals across the system – the tools were missing – or more importantly, were not being used.  DPIE’s focus on some of the bigger, more difficult precinct plans and corridor strategies will also take time to flow through the system.

Nonetheless, the Minister for Planning unambiguously has the power (COVID-19 or not) to streamline the planning assessment system and call-in “State Significant Projects” right now.  These can be defined as categories of projects defined by type, value or land use or designated area – large or small.  In the context of the current COVID-19 crisis, the applicability of “State Significance” has changed.

Under the existing provisions of the EP&A Act, the Minister can declare a development or class of development, and/or a site/specified land to be State Significant irrespective of the proposal’s consistency or otherwise with a Strategic Plan.

Clause 4.36 of the EP&A Act states:

4.36   Development that is State significant development

(1)  For the purposes of this Act, State significant development is development that is declared under this section to be State significant development.

(2)  A State environmental planning policy may declare any development, or any class or description of development, to be State significant development.

(3)  The Minister may, by a Ministerial planning order, declare specified development on specified land to be State significant development, but only if the Minister has obtained and made publicly available advice from the Independent Planning Commission about the State or regional planning significance of the development.

So, all he needs to do if he is going to declare a proposal to be State significant is consult with (or seek advice from) the now reformed and improved IPC (Clause 4.36 (3) above) OR he “may” choose to consult with the GSC if he invokes Clause 4.36 (2).

Clause 3.30 of the Act makes clear that the Minister is required only to consult with the GSC if:

(a)  the proposed instrument relates to land within the Greater Sydney Region, and

(b)  the Minister is of the opinion that the proposed instrument is likely to significantly affect the implementation of a strategic plan affecting that Region.

Another option available to the Minister to “free up” categories of development or land use (or relax development controls) is to review and make amendments under Clause 3.20 of the Act to the “Standard Instrument” (SI).  Any changes to the Standard LEP (the SI) are immediately taken to have been adopted as per the amending provisions in the relevant Local Environment Plan.

Further, Urban Taskforce has previously advocated the benefits of a Strategic Compatibility Certificate. A suggested regime follows:

1. Allow development that is prohibited (either by land use or by development standard) to be carried out (despite the prohibition) if a strategic compatibility certificate (SCC) has been issued by a consent authority and development consent has been granted.   This can be enacted by a provision in, say, the ‘Standard Instrument’.  Doing this will automatically amend all Standard-Instrument based local environmental plans.
2. The drafting of the new Standard Instrument provision would say that development consent must not be granted to a development application in reliance on the new provision unless:

• the development the subject of the consent complies with any standards (including performance criteria) set out in the SCC; and
• any matters that the strategic compatibility certificate nominates as matters that must be taken into consideration (prior to the grant of development consent) are so taken into consideration.

Clause 4.6 would be available to vary standards under 2(a) above when their application would be unreasonable or unnecessary in the circumstances of a case (and there are environmental planning grounds for the variation).

3. The new Standard Instrument provision would say that in determining an application for a SCC, the consent authority must give effect to the district plan (if any) and – subject to any such district plan — the regional plan (if any).
4. The new Standard Instrument provision would say that in determining an application for a strategic compatibility certificate, the consent authority must take into consideration (to the extent that it considers relevant):

• physical development potential
• market development potential
• infrastructure capacity
• quality of the public domain
• existing and anticipated neighbouring development
• open space
• biodiversity
• cultural heritage
• air quality
• noise

5. A proponent would be able to apply for a SCC alone, or simultaneous applications could be lodged for both strategic compatibility certificate and development consent.  Legal drafting would be necessary to ensure that the consent authority for both applications was always the same.
6. A development application lodged concurrently with an application for a SCC could be a development application for concept proposals as per Division 4.4 of the EP&A Act.
7. As the consent authority for both applications is the same, and the issue of the strategic compatibility certificate would be a precondition to the grant of development consent, if the development application is appealed to the Land and Environment Court the Court would also have the power to issue the corresponding strategic compatibility certificate (as per section 8.14(1) of the EP&A Act and section 39(2) of the Land and Environment Court Act 1979).  This effectively gives the Court the power to hear an appeal against a failure to issue a strategic compatibility certificate.
8. The new Standard Instrument provision could say that a consent authority cannot grant development consent in reliance on a strategic compatibility certificate without the concurrence of the Secretary of the Department of Planning, Industry and Environment.  The provision could also say that the Secretary in giving concurrence is to consider any state or regional land use planning matters he or she considers relevant (whether they were addresses in the strategic compatibility certificate or not).  This would constrain the ability for, say, a local council to grant development consent on the strength of its own strategic compatibility certificate without state approval.  However, this would not prevent the Court granting a consent on appeal (due to section 8.14(3) of the EP&A Act).   The Secretary would be entitled to be heard by the Court (as per section 8.12 of the EP&A Act).

COVID-19 has exposed some weaknesses in the processes of the public service in NSW.  For example, the NSW obsession with probity (we have to check that with the ICAC before we can move) stopped the PSAP process from including discussion with developers about who really was shovel-ready with quality projects.  In Victoria, their planners discuss in detail what projects have available finance and can be fast-tracked to deliver economic stimulus.  They have established safeguards and protocols to ensure transparency and accountability – but they do consult. It is time NSW moved on and worked together to get the best from industry, working towards better and deliverable projects, more housing, more jobs, greater amenity and driving housing prices down.  Surely this is better achieved with open dialogue with the private sector?

The idea that investment in new housing, retail or commercial centres would create public benefit through the creation of new homes, new jobs and new places of commerce and work is rarely considered in the list of “public benefits”. As the Productivity Commission’s Green Paper highlights, this is now the main game for the planning system.

Appointed Independent Planning Panels should have elite support

The Local and Regional Independent Planning panels have, to date, not been a success. Since they became ubiquitous, the performance of planning assessments has slowed. Their members are part time.  They are not supported by a dedicated secretariat of elite planners with experience in dealing with large, complex projects. The panels rely on Council assessments.  Most panel members have little personal investment in the speed of the process.

Some Councils require council planner reports to be referred to Council meetings for “information” prior to the matter being reported to the independent panel? This alone can add months to the determination time.

Councils would be more supportive of growth if they were actively rewarded for supporting it.  Changes to the rate-pegging system, as recommended in the NSW Productivity Commission’s Green Paper, along with additional grants to support growth, would go a long way to improving public open space, green space and recreation areas including the provision of community facilities.  This would go a long way to a change in community attitudes towards growth.

Panels should be supported with dedicated assessment teams.  Panels should be given a mandate to drive growth, while ensuring community concerns for amenity and open space are supported and ensure that assessments are completed in a timely manner.

In times of Crisis – It is all about Leadership

We need bold leadership. The blueprint starts with the independent analysis of the NSW Productivity Commission. Economic growth must be the primary public benefit consideration.

Bold leadership is needed.  The powers available under the EP&A Act are there to call in and drive planning approvals through State Significant Development designation and a more flexible and market responsive standard instrument which will see substantial growth in housing supply and development investment and activity.

We need to unlock private sector investment in new suburbs across Sydney around Western Sydney’s new Airport, at Little Bay, Penrith, Wilton and Appin.  We need to abandon the blanket sterilisation of land use change on all zoned industrial land and, where appropriate, support mixed use developments to revitalise dis-used and abandoned old, contaminated but well located industrial zones like Camellia and around Marrickville, Kingsgrove and Turrella stations.  We need to be bold and go high near all new Metro stations.  We need to maximise the leverage on the NSW Government’s massive and much needed motorway and transport infrastructure investments along Parramatta Rd, Sydenham to Bankstown, North Sydney to Chatswood – just like we have seen already around Central with the new Tech-Central precinct, Macquarie Park, Castle Hill and North West development approvals.

While not often said just now, take a leaf from the book of Victoria. Daniel Andrews won an election in 2018 by stating that he welcomed growth.  Growth in population, growth in immigration, growth in infrastructure (even if they had to borrow to pay for it) and growth in housing supply.

Growth is best delivered by the private sector with clear government direction and support. This is the focus we need in NSW to get us through and beyond COVID-19.

By Tom Forrest, CEO, Urban Taskforce

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