Competition SEPP on exhibition

27 July 2010

The NSW Government has placed the draft State Environmental Planning Policy (Competition) 2010 on exhibition. The SEPP relates to development assessment, with zoning decisions to be covered by a new Activity Centres policy that is still in the works.

This SEPP was foreshadowed in a report on the competitive impacts of the planning system release by the government in April.

On the positive side, the relatively rare rules expressly restricting the number of supermarkets, convenience stores and other retail outlets in an area will be abolished. The equally rare rules that require retail outlets to be a minimum distance away from any competitor are also to be scrapped.

However, the main source of anti-competitive decisions, the requirement for the economic assessment of new retail outlets that might compete with established centres, goes untouched.

The draft policy retains the current anti-competitive rules which allow local councils to consider the impact of new businesses on the trade of existing businesses (see clause 9(2) and (3)).

The current law – put in place by the High Court in 1979 – allows councils to routinely block new retail development on the basis that it will compete with existing retail outlets.

Many new retail outlets have been stopped by local councils because of the risk that they will compete with existing businesses. This new state policy will allow this existing anti-competitive conduct to continue.

Of course, there’s nothing wrong with planning rules that protect the community from retail development that will generate too much traffic or destroy the visual amenity of an area. However we think there is something wrong with blocking a new retail outlet because it will compete with existing businesses.

We take little comfort from the assurance that competitive impact of a new business will only be considered when there may be an “overall adverse impact on the extent and adequacy of local community services”. This giant loophole is not new. It is copied from the existing law. It means that any groups of businesses impacted by a new entrant will continue to use planning laws to block the competition; by claiming that increased competitive pressure may drive existing businesses away.

The current situation is untenable. The mega-shopping centres littering NSW are not the product of consumer choice, but a result of anti-competitive town planning laws that limit smaller-scale retail competition. As the current shopping centres become increasingly congested and expensive, consumers will demand real reform.

The media release issued by the NSW Government is here.

The draft state environmental planning policy is here.

Submissions are due by 26 August.  Details are here.