(image via Google Maps) Victoria should abolish the most restrictive category of zoning which is applied to major residential areas across Melbourne, an industry forum has heard.

And other changes are needed in order to meet the state’s housing and development requirements.

During the recent Victoria Growth Summit hosted by the Property Council of Australia in Melbourne, a panel session explored how the state’s planning system should evolve in order to cater for rapid population growth and long-term housing needs.

Panellists included Colleen Peterson, Chief Executive Officer of planning and urban design consulting firm Ratio; David Allington, General Manager, Communities at Stockland; Jessie Wright, Executive Director, Integrated Land and Transport Planning at the Department of Transport and Planning; and Brian Haratsis, Chief Executive Officer of urban planning firm Macroplan.

The session comes as the Victorian Government is currently preparing a blueprint which is expected to guide development across the state’s cities, towns and regions between now and 2050.

According to Peterson, Victoria’s planning system requires radical change.

In particular, she would like to see:

• Continuation of current efforts to fully codify the state’s residential code.
• Abolition of the Neighborhood Residential Zone (NRZ) – the most restrictive residential zone which is currently in place under the state’s planning provisions.
• Abolition of third-party involvement in development assessments within the Commercial 1 Zone – a zone which promotes commercial centres for retail, office, entertainment and community uses.
• Evolution of the planning system to provide greater flexibility to enable co-living.

Of the above points, Peterson is particularly passionate about abolishing the Neighborhood Residential Zone.

Introduced as part of an overhaul of  Victoria’s planning laws in 2014, the NRZ is the most restrictive of all residential zones. It is applied to neighbourhoods to which local councils either desire little change or prescribe as having special heritage, environmental or landscape value.

To preserve the low-density single or double storey nature of this area, developments within these zones are subject to height limits of 9 meters or two storeys.

Since its introduction, the NRZ has been the subject of contention amid concern that councils across wealthier and established areas of inner Melbourne have used this designation to restrict development across large areas within their municipality.

This led to concerns that large swathes of land in established inner areas are being locked up to new housing development despite these areas being well serviced by transport, universities, employment and amenity.

An example which Peterson sites is the City of Boroondara – a municipality in Melbourne’s inner east which spans 60 square kilometres and takes in wealthy and leafy suburbs such as Kew, Camberwell, Hawthorn, Canterbury and Balwyn.

With its location only 6-12 kilometres (approx.) from the Melbourne CBD and being serviced by multiple train, tram and bus routes as well as being home to excellent amenity and Swinburne University, the municipality represents an ideal location for medium and higher density housing development.

Despite this, 90 percent of the city’s 50,000 (approximate) lots have been designated as NRZ. As a result, mutli-residential development is effectively prohibited across a huge swathe of the municipality.

Were only one in ten of those lots which are currently stuck within the NRZ able to accommodate as few as up to five dwellings per lot, Peterson says that as many as 25,000 new dwellings could be unlocked without major impact upon local character.

“This is one of my peeve grips with the planning system in Victoria,” Petersen said of the NRZ.

“That is a zone that whether intended or not has effectively locked out large portions of some of the most well-resourced parts of inner and middle Melbourne from residential development.”

In another critical measure, Peterson says that current work being undertaken by the state’s planning department to fully codify the Residential Code is critical.

Whilst precise outcomes from these efforts are being worked through, Petersen would like to see deemed-to-comply- provisions along with specific and measurable criteria applied to each zone and in particular the NRZ.

Councils would be bound to grant permits to developments which fell within these criteria – with third-party input not being required.

Third, Petersen would like to see the abolition of third-party involvement in the Commercial 1 Zone.

This is a zone which is commonly applied to retail and commercial areas (such as shopping strips) and aims to promote commercial centres for retail, office, business, entertainment and community uses as well as residential use.

This zone is ideal for promoting development around transport nodes and activity centres. However, Peterson says that third-party involvement and objections to development applications in these areas too often boil down to ‘gripes between landowners’ as opposed to furthering optimal planning outcomes.

Abolishing the ability of third parties to object to development within these zones would enable planners to largely go about their work without the ‘noise’ created by third party input. This would enable development decisions to be determined more quickly whilst still ensuring that permits are considered in a thoughtful manner.

To highlight this point, Peterson points to the example of the Melbourne CBD, where third party objection rights do not exist.

In her own office, Peterson describes a running joke that it is easier to gain approval for a 50-storey tower in the CBD than to do likewise for a first-storey extension in a heritage area in nearby Fitzroy.

Finally, on co-living, Peterson says that the planning system needs to evolve so that people are afforded the flexibility to trade personal amenity for community amenity should they wish to do so.

((Image from the Boroondara Planning Scheme.) Despite being in an ideal location for multi-residential development, the Neighborhood Residential Zone indicated in pink above has been applied to 90 percent of the municipality.)

Victoria’s 2050 Blueprint

As mentioned above, the panel discussion comes as the Victorian Government preparing a blueprint to guide the state’s future development. This work is being undertaken by the Victorian Departmetn of Transport and Planning.

The plan’s development comes as the state is anticipating rapid population growth and is attempting to ramp up new housing delivery in order to meet its growing dwelling requirements.

In terms of population, the Victorian Government last year projected that the state’s population would expand from 6.8 million in 2023 to 10.3 million in 2051 (refer Victoria in the Future report published in December 2023).

This includes an additional 2.9 million people in the Melbourne Metropolitan Area alone, taking the city’s metropolitan population from 5.1 million to 8.0 million.

Under its Housing Statement, meanwhile, the Victorian Government is pursuing a target of delivering 800,000 homes over the next ten years.

According to Wright, the planning department is currently undertaking widespread consultation in regard to the blueprint across industry, local government, schools and communities.

All up, almost 60 community pop-ups have taken place during recent months whilst around 17,000 pieces of feedback have been received.

Wright says the Department has avoided pre-formed ideas and is adopting an open attitude to consultation findings across various locations.

Whilst the plan will need to have clear outcomes from the beginning, the blueprint is not intended to be a static document but rather a live one which can be adapted as circumstances and needs evolve.

Strategic Land Rezoning

Outside of Peterson’s reforms referred to above, Allington says there is a need to be more strategic about approaches to greenfield land releases and rezoning.

According to Allington, Victoria has historically performed well in getting sufficient quantities of land to the point of rezoning for residential uses but has lost its way in this area over the past three or four years.

Whilst there is broad agreement that fifteen years of zoned supply represents an ideal quantity to ensure that suitable land is available for development when it is needed, there is limited visibility in Victoria at the moment about how much of that land is suitable and ready for market.

This can cause problems where parcels of land are landlocked, constrained in terms of infrastructure provision or owed by those who do not wish to purse residential development opportunities (for example farmers).

Instead, Allington says it is important to adopt a strategic approach to ensure that land which is rezoned can be supported by infrastructure and has ownership that brings with it the capability to be able to execute for residential development upon delivery.

To help to deliver upon this, Allington says that the establishment of targets for local councils along with rewards for meeting those targets would be helpful.

Also important are governance structures that align each of the parties and government agencies who are involved across the land development process with clear accountability for delivering upon outcomes.

(Victoria needs to be more strategic about land rezoning.)

Radical Change Needed

Overall, Peterson says that Victoria requires a new approach not only in the planning system but also in terms of other levers which can help to unlock housing.

“We need radical change in the planning system,” Peterson said.

“The increase in the amount of housing that we need to provide is two to three times what we are currently producing.

“We don’t make that extended change without making what we referred to as radical changes in not just the planning system but also various other levers.”

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