Restrictive and complex zoning and planning laws at various levels throughout Australia are holding competition in retail and other sectors, driving up prices and limiting consumer choice, a panel charged with reviewing competition policy throughout the country says.

The Competition Policy Review Panel, appointed by the government in March, released a draft report on September 22. Amongst a broad range of recommendations, the report called for governments at all levels to give due consideration to broader competition principles when making laws and regulations relating to planning and zoning.

Specifically, the panel found that:

  • Land use restrictions in many areas had an overly localised focus with little or no regard for the promotion of competition
  • A number of planning arrangements explicitly or implicitly favoured incumbent operators and created barriers to new entrants in local markets
  • Complex and time consuming procedures relating to land use differed from one part of the country to another.

“Without a clear shift away from a planning and zoning focus on specific residents or existing businesses, all other members of the community are likely to pay higher prices and have fewer choices into the future,” the panel said in its report.

“Regulations relating to planning and zoning often restrict competition and impede structural change. Such restrictions can be addressed by including competition principles among the objectives of the various state and territory laws dealing with planning and zoning to ensure that competition issues are always considered.”

Around Australia, concern about limits on competition from planning and zoning laws spreads across a number of sectors.

In retail, for example, supermarket chain Aldi cites difficulties obtaining suitable sites as the single biggest factor constraining its ability to expand.

In its submission to the inquiry, the company complained of a lack of appropriately sized land; a dearth of ‘as of right’ retail/commercial zones in and around activity centres; inadequate recognition of innovative retail formats; inconsistent and unclear guidelines regarding eligibility for alternative development assessment pathways and slow, costly and unpredictable land rezoning processes.

In the childcare industry, meanwhile, a PricewaterhouseCoopers report in 2011 found that in addition to physical environment requirements prescribed under the Education and Care Services National Regulations regarding aspects such as safety, fencing and facilities (which are considered necessary for child safety and well-being), developers of many new centres had to deal with extra council rules specifying things like maximum capacity, building design and appearance, parking requirements and even noise levels inside the building and the depth of sandpits.

Commenting on the broader review as a whole, review chairman Professor Ian Harper said the report’s recommendations sought to bring Australia’s competition policy “up-to-date.”

“Australia’s competition policy needs to be fit for purpose, and updated for the economic opportunities and challenges Australia will face in coming decades,” he said. “We face forces for change from increased globalisation, population ageing and new technologies, which are rapidly changing the way our markets operate.”

Consultation on the draft report will be open until November 17, with the panel expected to deliver its final report by March next year.