The economic data published yesterday is a wake-up call for the NSW Planning System. A 7% decline in GDP is not just an economic recession, it’s a human disaster. Australian Gross Domestic Product (GDP) fell 7.0 per cent in the June quarter, the largest quarterly fall on record, according to figures released by the Australian Bureau of Statistics.
People’s jobs are disappearing in front of them. Businesses are struggling. The Government subsidies are being wound back – but that could well make things worse. Government revenue has plummeted. Deficits are at record levels. Yet the NSW planning system seems to be wantonly oblivious to the changed economic environment.
So maybe this is the time for Planning Minister Rob Stokes to place his leadership credentials on the table. Along with NSW Treasurer Dominic Perrottet, they will lead a welcome summit of business leaders in an effort to find ways to enliven the economy prior to Christmas. But it is tougher than that. This level of recession demands significant reform – and we are yet to see any of that.
Developers want to employ people to build more housing, more workplaces, more retail facilities, more logistics centres, for manufacturing houses. Property development and construction represents over 10% of the economy. Investment in this sector is labour intensive, thus creating a significant multiplier effect (more jobs in banking, retail, logistics as the money flows through the economy).
Minister Stokes has been speaking of Planning Reform since November last year – and we have seen some promising COVID-19 related short term improvements – but nothing substantial. It is time for something substantial.
The EP&A Act should be changed to highlight jobs, employment and the creation of housing and workplaces as the primary public benefit objective of the Planning System. In the meantime, the Minister should make SEPPs to fast track the delivery of housing and investment in jobs. Despite some well-meaning media releases, the Department of Planning seems hell-bent on prioritising the views of organised community lobby groups who seek to protect their own lifestyle over the future of the economy. Recent decisions limiting growth to unfeasible levels at Camellia, Crows Nest and St Leonards highlight the problem.
It takes a strong leader to represent economic growth. It’s easy to represent NIMBYs. Now it is time to see if Rob Stokes and Dominic Perrottet are prepared to lead.
Paul Keating and John Howard did the unpopular. Keating drove the economy forward, floating the Australian dollar, deregulating the financial markets, removed tariff protection, opened up Australian trade with Asia, produced steady improvements in productivity by deregulating the industrial relations system and allowing for enterprise bargaining. None of these things were popular. But they were necessary. Howard put his neck firmly on the block in 1998 by promising to introduce a GST which, after 2000, resulted in a greatly improved, though far from perfect, taxation system.
Mike Baird was brave. He went to an election with a promise to privatise electricity to enable the construction of much needed public transport infrastructure. Similar proposals had been attempted by Bob Carr, Kerry Chikarovski (from Opposition) and Morris Iemma. All had failed.
NSW needs strong leadership in Planning now to help out the thankless tasks which confront the Treasurer. Senior leaders in the Planning department in NSW will quite brazenly assert that the feasibility of development is not their responsibility. Well it is. It is the responsibility of the planning system to plan for jobs, for growth, for new homes to make up for the shortfall and keep up with demand. New homes do not get built if projects are not feasible. Banks will not lend money to projects that can not show a profit – particularly now.
The Planning System should be an agent for economic growth. The NSW Draft Housing Strategy calls for housing growth. The NSW Productivity Commission is calling for the planning system to maximise growth where there is available infrastructure. The Reserve Bank of Australia has called out NSW Planning for adding 68% to the cost of delivery of apartments in Sydney (compared to Melbourne where the effect of the planning system is an extra 20% and Brisbane where the effect of the planning system is only 2%).
Planning was in trouble before COVID-19. Approvals had already declined by the end of 2019 and the system was well known to be the slowest in Australia.
An army economically illiterate keyboard warriors were created to oppose Part 3A of the EP&A Act in the dying years of what had become a moribund NSW Labor Government. The planning system – and even the amended Act, has pandered to this army in recent years and is now having trouble changing direction.
The impact of COVID-19 is clear. NSW and Australia are in a massive recession. That means root and branch change to policy is needed – not just tinkering at the edges. The ALP needs to focus on what is good for workers, for tradies, for employment, lest it risk never being relevant to Western Sydney again.
Political leadership sometimes means pushing an unpopular line. Every effort must be made to encourage the private sector to invest. If that means greater height to make a development feasible – then so be it. Government Agencies should work with industry on the common goal of creating housing, employment for the future and jobs for today.
By Tom Forrest, CEO, Urban Taskforce