Commission backs Urban Taskforce view

21 March 2011

The case for reforming the planning system has been strengthened, following the release last month of a draft research report by the Productivity Commission. The Urban Taskforce has been participating in the Commissions inquiry and has made detailed submissions.

The Productivity Commission is the Federal Government’s independant economic advisor and its final report will be provided to the Council of Australian Governments for consideration.

The report has found that the planning system suffers from objectives overload.

The report also said that inflexible rules create a need for ad-hoc ˜fixes to the planning and zoning system, resulting in increased uncertainty, inefficiency and an anti-competitive unlevel playing field.

The report found that planning laws impact adversely on competition. It said that a new entrant’s effects on existing businesses should be eliminated as an appropriate planning consideration.

The wide-ranging report singled out NSW for special criticism. The report found that:

  • In 2009-10, NSW had the highest residential infrastructure charges imposed on developers at an average of $37,300 per lot for greenfield developments, which also covered the broadest range of infrastructure items.
  • In 2009-10, NSW ($550,000 per hectare) and Queensland ($340,000 per hectare) had the highest infrastructure charges applying to commercial and industrial land.
  • Highly prescriptive and limited zonings have led to a need for many case-by-case variations. These are inefficient and create an anti-competitive, unlevel playing field. The Commission said that NSW appears more susceptible to this approach than the other jurisdictions.
  • Queenslands and NSWs planning rules are the most difficult to find and use.
  • NSW particularly appears to have difficulty in establishing cooperative state-council relations.
  • In NSW over 220 local and state statutory instruments provide the bases for referrals. In contrast, all of South Australias referral requirements are contained in one location (its planning legislation).

The report said that development levies need to be applied against better criteria. The Commission opposes levying development in existing urban areas for ˜system-wide infrastructure upgrades, even though this is exactly what local councils are doing across Sydney, Newcastle, Wollongong and the Central Coast.

Theyve also found that broadly dispersed social infrastructure should also be funded from government through general revenue, not development levies. In our view, levies in the Western Sydney growth centres breach this requirement.

The Productivity Commission had an important message for those who want the state government to butt out of planning decisions. The Commission said that no single local council or group of citizens can be expected to adopt the overarching perspective needed by state and territory governments and leadership will be required at the elected political level.

On the negative side, the Commission has raised the possibility that a betterment tax may be worth examining.

The report is still in draft form and submissions will be considered by the Commission provided they are lodged by 31 March 2011.

The full report is available here.