Productivity Commission releases final report investigating planning; calls for reform

THE Productivity Commission yesterday released its final report, 'Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Development Assessments', which identifies wide-ranging differences in the ways all levels of government plan and zone land uses and assess development proposals.

The report, commissioned by the Council of Australian Governments (COAG), compared the regulatory frameworks, land supply processes, developer contributions, assessment and referral processes, and the impacts of planning and zoning on competition in retail markets of the jurisdictions.  Governance, community engagement and transparency and accountability were also explored.

The differences between state and territory planning systems highlighted in the report included the degree of integration between planning and infrastructure plans, and how capably the states manage their relationships with, and guidance for, local councils.

The report also noted that there are significant differences between jurisdictions for business costs (such as length of assessment times and extent of developer infrastructure charges), urban land release, provisions for appeals and alternative assessment mechanisms and community involvement in planning decisions.

The success of planning outcomes – in terms of timely and consistent decisions – at the local council level was found to be dependent on resourcing, organisational processes and state government guidance.

"The success of local councils in delivering timely, consistent decisions depends on their resources as well as their processes. It is also influenced by the regulatory environment created by state governments — in particular the clarity of strategic city plans, the coherence of planning laws and regulations, and how well these guide the creation of local level plans and the assessment of development applications."

The report states that competition restrictions in retail markets are evident in all states and territories, due to excessive and complex zoning; taking inappropriate account of impacts on established businesses when considering new competitor proposals; and by enabling incumbent objectors to delay the operations of new developments.

According to the report, the task of planning and zoning has a number of challenging features, such as positive and negative impacts on others, insufficient or 'asymmetric' information and conflicting preferred outcomes of different stakeholders. Further, the complexity of the task has grown because planners are required to address pressing and a wider range of problems.

It is also found that while state and territory planning systems have been subject to reforms, they are often not fully implemented or evaluated before being replaced with further reforms.

"City planning systems are characterised by 'objectives overload' including unresolved conflicting objectives, long time lags and difficult-to-correct planning mistakes. There is a significant risk that the systems' capacity to deliver on their objectives will deteriorate," says the report.

The report identifies numerous 'leading practices', which it says can contribute to smoother processes and improved outcomes for aspects such as governance, transparency, accountability and efficiency. Grouped under seven broad headings, the leading practices include:

Early resolution of land use and coordination issues, including integrated and truly strategic – not just aspirational – land use plans;

Engaging the community early and in proportion to likely impacts;

Broad and simplified development control instruments, including a reduction in the use of  prescriptive zoning and allowable uses;

Rational and transparent allocation rules for infrastructure costs;

Improving development assessment and rezoning criteria and processes;

Disciplines on timeframes, including more extensive use of timeframes to provide better discipline on agencies and give developers more certainty; and

Transparency and accountability, including greater public scrutiny of planning scheme amendments, measures to promote probity in planning decisions and appropriate availability of appeals processes.

"By its very nature, planning and zoning land to enable uses that will optimise the welfare of communities and the nation is complicated. However, this complexity can be managed better to deliver better outcomes," said Commissioner Louise Sylvan.

Following the release of the report, the Property Council of Australia and the Residential Development Council said they strongly endorse the Commission's broad findings and called upon the Federal Government and COAG to make an immediate commitment to step-up and address the challenges outlined in the report.

"The Productivity Commission's report shows what the industry has long been arguing – that there are far too many roadblocks in the planning system hindering delivery of housing. We have long called for consistency of planning across all states and we are pleased that the report adds another voice to the choir," said Property Council of Australia CEO Peter Verwer.

"Unnecessary planning delays and high levels of uncertainty in the outcomes mean that developments take far too long to deliver affordable housing and sustainable cities. This not only adds tens of thousands of dollars to the overall cost of a home, but does nothing to improve housing outcomes."

Urban Taskforce said the Productivity Commission report provides federal and state governments with a road map for the reform of the "nation's tired town planning laws."

The Urban Taskforce's chief executive, Aaron Gadiel, said there was now an opportunity to undertake the fundamental reform required to fix Australia's massive housing supply crisis once-and-for-all.

"This is a wide-ranging report that tackles almost everything that is wrong with Australian town planning laws."

"It's the most intimate examination town planning laws have ever been given by someone independent of the system… The Productivity Commission should be congratulated for its rigour, and avoiding the superficiality others' reviews," Mr Gadiel said.

The Productivity Commission report, Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Development Assessments, released on 16 May 2011, is available from the Productivity Commission website at <>.

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