In a stunning turn of events, after two and a half years of work by the NSW Government to design and implement a new and improved planning approvals system for NSW, many in the property and development sectors followed events in Parliament last week with a mix of disbelief and dismay as the proposed planning legislation came under a surprise attack from an ‘unholy alliance’ of opposition political parties in the upper house, who managed to force through significant changes to the legislation, leaving the Planning Minister with what he described as ‘bastardised’ and ‘vandalised’ legislation. There is now serious doubt as to whether the NSW government will choose to commence the legislation at all, or will instead wash its hands of it, and simply make do with the existing legislation, which dates back to 1979.

Background to the reforms

As most readers will recall, the current NSW Government came into power early in 2011 on the back of a firm election promise to entirely replace NSW planning laws (the 1979 Environmental Planning and Assessment Act). There was concern that the legislation was too old, too frequently amended (making it lengthy and complex), open to corruption at the highest level, and simply too slow and complex to attract investment in NSW and keep pace with Sydney’s growing population.  Recent estimates are that NSW’s population will grow by approximately 1.5 million to 2 million people in the next 25 years.  As recently as last week the Australian Bureau of Statistics predicted that Sydney may cease to be the largest city in Australia by 2053 – a situation no doubt exacerbated by the present housing shortfall of around 11,000 dwellings per year in NSW.

2.5 years of ‘unprecedented consultation’ and careful thought

Between June 2011 and September 2013, the NSW Government undertook a massive process of public consultation to gather ideas as to how NSW could achieve a world-class planning system.  An independent panel was initially established to roam far and wide throughout NSW in order to ‘listen and scope’, generally via public community forums. The Government considered the panel’s 374 recommendations, but then went further by considering reports on successful planning systems both nationally and across the globe, for example in Vancouver, Portland, Seattle, and Denmark.  In July 2012 the Government released its Green Paper, setting out a broad outline of proposed policy. In response, the Government received and considered over 1500 written submissions. In April 2013 the Government released a more detailed proposal in its White Paper and accompanying draft legislation. These resulted in over 5000 further written submissions being received and considered.

From our own experience, it is fair to say that most players and consultants in the property development or local government industries have poured considerable time, energy and resources into following and contributing to the preparation and evolution of the NSW Planning Bill over the past 2.5 years. Most have welcomed the opportunity to achieve what the Planning Institute of Australia recently described as ‘once-in-a-generation opportunity to achieve real reform’.

Notably though, the Opposition never lodged a submission in relation to either the Green Paper or the White Paper.  As such, after such an extensive and time-consuming period of careful consideration, analysis, and debate, last week’s events in the upper house of Parliament were astonishing.  

The Government’s amendments to the Planning Bill

It is important to be aware that in October 2013, the Government itself introduced a series of last-minute reforms to the draft legislation, in order to win the support of various industry groups throughout NSW, including Local Government NSW. Broadly, the key amendments included the following:

  • The concept of ‘Code- assessable development’ – essentially the signature reform of the new planning system, and similar to the systems utilised in QLD and Victoria - was significantly wound back. It would no longer apply throughout NSW, but would instead only apply where the local council wanted it to apply, and in growth areas, urban renewal areas and urban activation precincts (generally in those areas nominated for growth in regional and subregional plans).
  • Abandonment of the key target that 80% of all development applications should proceed by way of ‘code-assessable’ and/or ‘complying development’, in order to free up the traditional DA system and speed up approvals.  Previously, the Government had consistently quoted the statistic that 80% of development approvals in QLD and 76% of development approvals in Victoria are issued under the code and complying systems.
  • Development that did not fully comply with a code’s development standards would no longer be subject to partial code and merit assessment – instead the entire application would be subject to traditional merit assessment where the entire development (even the code-compliant aspects) could be refused by the local council, based on discretionary/merit considerations.
  • The Minister’s power to amend strategic plans without public exhibition was curtailed;
  • The proposal to consolidate and reduce zones (thereby effectively making a greater range of developments permissible in each zone) was abandoned.  The Government gave an undertaking that “the full range of the current land use zones will remain”.
  • In a series of communications with the ICAC, the Government gave an undertaking to effectively replace SEPP 1 (or clause 4.6 under the Standard LEP) so as to create a tougher regime whenever developers seek to vary development standards and controls. The tenor of those communications suggested that a less discretionary approach might be adopted, for example by imposing a maximum % limit (say 10%) on the extent of possible variation to a development standard.

These recent amendments were of themselves quite dramatic, and were generally seen as a win for local councils and community groups.  Nevertheless, most industry groups throughout NSW continued to support this amended legislation (even though many in the development industry were concerned that it had been significantly watered down). For example, a ‘Coalition for Planning Reform’ (which comprised the likes of the Planning Institute, the Architects Institute, the NSW Business Chamber, the Property Council and UDIA) issued an open letter to NSW Parliament on 11 November 2013, describing the current NSW planning system as “broken”, and urging all members to endorse the new legislation, which was described as a “best practice planning system”.

A sufficient number of the politicians were apparently not listening.

Last week’s upper house debate

Notwithstanding the broad base of support for the Planning Bill, and the fact that the legislation was the product of two and a half years of work and significant input from the community and key industry players, the Planning Bill appears to have become a proverbial political football in the upper house of parliament last week.

What Planning Minister Brad Hazzard later referred to as the ‘unholy alliance’ of Labor, the Greens, the Shooters and the Fishers Party, combined to force through 51 further amendments to the legislation. A number of other significant reforms were pursued by them, some of which were bizarre to say the least, and yet were only narrowly defeated.

Despite the large number of amendments, the most important changes relate to two key issues only – changes to the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP), described by Minister Hazzard as “destroy[ing] the possibility of tens of thousands of jobs in the mining sector”,  and removal of Code Assessable Development from the Bill. 

Repeal of clauses 12AA and 12AB of the Mining SEPP

Clause 12AA of the Mining SEPP creates a mandatory requirement when a consent authority is considering an applications for approval of mining that the significance of the resource (including the economic benefits, both to the State and the region in which the development is proposed to be carried out, including benefits such as employment generation; expenditure, capital investment; and the payment of royalties to the State) is to be the consent authority’s ‘principal consideration’.  

Clause 12AB provides for a number of development standards that a consent authority cannot impose more onerous conditions in relation to, such as noise, vibration and air quality criteria, and aquifer interference.

Although Minister Hazzard later laid blame on Labor, it was in fact the Shooters and Fishers Party who successfully introduced amendments to repeal clauses 12AA and 12AB of the Mining SEPP, to prohibit a strategic plan from enacting provisions similar to 12AA and 12AB, and to ensure that the repeal was given immediate effect, upon assent to the Planning Act.

These changes would remove a key consideration in the determination of mining development applications, and one which generally weighs in the proponents’ favour.  It would also allow for more varied and onerous conditions to be placed on mining developments in relation to important issues such as noise, air quality and aquifer interference.

We suspect these amendments would have placed internal pressure on Planning Minister Hazzard not to assent to the Planning Act, given that it would have impacts on other portfolios outside of Planning, for example the Resources and Energy portfolio under Minister Hartcher.

Removal of Code Assessable Development

Seen by many as the most significant planning reform of the Bill, and still worthwhile even in its watered down form after the Government’s amendments, Code Assessable Development was completely removed from the Bill by amendments successfully moved by Labor.

This would leave us with the existing system of full merit assessment for most development applications

Other changes

More minor amendments passed by the upper house include:

  • Affordable housing: reinstatement of affordable housing contributions, and broadening the ability of planning agreements to provide public benefits towards affordable housing, by removing the requirement that the affordable housing be identified in a strategic plan.
  • Limiting the Minister’s ability to declare particular development as public priority infrastructure to circumstances where the PAC has first provided him with advice about whether or not the declaration should be made, and that advice has been made publicly available.  This would essentially mean that the Government could not decide for itself what major infrastructure projects to pursue.
  • Limiting the scope of modifications permitted to State Significant Development – so as to apply the “substantially the same development” test.
  • Increasing the importance of environmental considerations by requiring that they be taken into account “to the fullest extent possible” in the assessment of a development application.
  • Imposing a limitation on the Minister’s power to decide not to exhibit a planning proposal (other than those of a minor nature only), as well as preventing subregional plans from being able to be made without compliance with all conditions precedent set out in the Bill.

The end result has been described by the UDIA as one which “bears little resemblance to the Bill that was introduced to Parliament”, and which “has left us with an unreasonable, uncommercial and uncompetitive planning system”.  The Property Council describe the Bill as having been “compromised beyond redemption”.  The Urban Taskforce believe it has been ‘crippled’ and ‘butchered’, and that if this version of legislation is implemented “the people of NSW would have the most confusing planning system in the country and this will drive investors away."

The Planning Minister himself described the week’s events as ‘planning vandalism’ and ‘the bastardisation of the Bill’, and refused to commit to introducing the new Act all. A decision will probably not be made before Parliament sits again in late February 2014.

However there must now be real doubts as to whether this legislation, in its revised form, will ever see the light of day. It seems to have the support of no one other than a handful of Labor and Greens politicians - even the few very vocal community groups whom they claim to support have come out publicly saying that the Bill should be scrapped in its entirety.

Where to from here?

Even prior to last week’s events, Minister Hazzard was placing greater emphasis on changing the culture of planning as being the key to stimulating development in NSW, and played down the significance of the proposed legislative changes under his version of the Bill.  A close review of the Bill reveals why – it is really not so different from the current Act, and it is hard to see how it could ever deliver on the promising reforms outlined in both the Green Paper and White Paper, unless accompanied by real cultural change amongst planners, landowners, and even developers in NSW.

With the amendments made by the Government prior to introducing the Bill to parliament, and the recent removal of Code Assessable Development, the development assessment system under the Bill would remain essentially the same as it is currently, and NSW’s current low rate of development is unlikely to improve.  Indeed, the Bill is actually likely to further stifle development, as:

  • The current cap on local contributions will be removed and regional contributions will be imposed on most development for the first time.  Development contributions will therefore be likely to increase.
  • Changes to planning agreements (VPAs) will make them far less flexible and far less attractive for both local councils and developers.
  • The Bill will take years to fully implement, and uncertainty is likely to result during the lengthy transitional period.
  • Local councils and the Department of Planning will spend tens of millions of dollars and many years, and tie up valuable resources, in attempting to implement the changes, which is likely to cause further increases in average development assessment timeframes.

In our view, implementing the Bill in its current form is likely to be more trouble than it is worth.  It has now been so watered down that it is bound to fail in its objective of stimulating development, removing red tape, and speeding up development assessment times.  This Bill is not the answer to the looming housing crisis in NSW, and it will not make NSW number 1 again.

There are however some good things remaining in the Bill, including the increased focus on strategic planning, introduction of the concept of subregional planning, and improvements in relation to infrastructure planning and delivery. 

If the Government is to proceed with its planning reform agenda, it may be preferable to simply take the good parts that remain of the Bill and insert these into the current Act, or to achieve the necessary reform through amendments to the current Regulations, and through SEPPs, which do not require the support of other political parties.

What is clear however is that the complexity of achieving real change in NSW, including cultural change, has been underestimated by one and all.