The most recently proposed reforms to the Business zones in Victorian planning schemes propose to consolidate the 5 current business zones (B1-B5) into 2 new zones, being the Commercial 1 and Commercial 2 zones.

As is the case with all schemes in Victoria, those zones will be the same irrespective of the municipality in which the zoned land is located. The essence of the reforms is that many of the previous prohibitions that concerned shops, supermarkets and bulky goods/restricted retail premises have been lifted.

The Commercial 1 Zone (C1Zone) will be a consolidation of the Business 1, 2 and 5 Zones. Within the new C1Zone, no permit will be required for any retail use or for accommodation uses (including dwellings) and there will no longer be any restriction on the use of land in that zone for office use. The proposed controls will free up uses in the C1Zone to facilitate the development of truly multi purpose activity centres/town centres that include offices and residential accommodation.

The Commercial 2 Zone (C2Zone) will be a consolidation of the Business 3 and 4 Zones. Within the C2Zone, permits will no longer be required to use land for a restricted retail premises (ie a bulky goods premises) and trade supplies, food and drink premises (cafe, restaurants etc) and cinema. Further, the maximum floor area restriction for office uses will be removed.

The most significant change though concerns the use of land for supermarkets in the new C2Zone in which a supermarket with a floor area of up to 2000m2 plus 500m2 of associated shops will no longer be prohibited on land that was in the Business 3 and 4 zones (usually land located outside of town/activity centres).

In addition to the introduction of the commercial zones, restrictions on the use of land for shops and offices in the Industrial 3 Zone have been reduced.

These zones are not yet introduced. The government is consulting concerning the detail of the zones. The government has appointed an Advisory Committee to consider the submissions made and to report to the government by the end of 2012.

There are interesting implications for established town centres and homemaker style centres.

The free market economists say there’s nothing to worry about and that the market will ensure that the amendments to the controls will not deliver any adverse planning outcomes. On the other hand, there are strong planning concerns that changes to the structure of urban form and particularly the role of the traditional town centre is something to be genuinely concerned about in respect of these reforms.

What is known is that the reforms will bring about different changes in different retail settings – the implications for an inner city strip shopping centre are different from Regional towns which are different again from middle – outer suburban locations or the Growth Areas. Indeed, it is possible that in the growth areas the former prohibitions on shops in Industrial 3 zones or Business 4 zones will be re-introduced by way of a schedule to the Urban Growth Zone in order to provide a new town centre with unrestricted opportunity to establish itself as a vibrant, active centre without risk of competition from a supermarket and speciality shops to be located on land that is outside of the designated activity centre.

The proposed reforms facilitate a new opportunity to apply for something that was previously prohibited. The question remains as to whether the planning system, the new controls and existing retail policies are sufficiently aligned to deliver the reasonable retail outcome – that is, a reasonable outcome that is not only driven by the retail economics evidence or blind faith in the market being capable of delivering good outcomes. There are many in the planning sector who are particularly concerned about a possible threat to activity centres and the deregulation of the distinction between restricted retail premises and shops. Inevitably the planning system has a role to play in tempering the two extremes of the debate. In fact, more responsibility is being delivered to the planning system as a consequence of these controls – much of what was previously prohibited now needs a permit – the planning permit application system will have greater opportunities to impose its own balance in the debate.