Government to unwind some anti-competitive rules

19 April 2010

In May 2009, the NSW Department of Planning and the Better Regulation Office released a discussion paper to facilitate discussion on what elements of the NSW planning system promote or detract from opportunities for competition and economic growth.

The final report was released today: Promoting Economic Growth and Competition through the Planning System.

The report takes some steps in the right direction, but it also backs the status-quo in key areas.

On the positive side:

  • Rules expressly restricting the number of supermarkets, convenience stores and other retail outlets in an area will now be abolished.
  • Rules that require retail outlets to be a minimum distance away from any competitor are to be scrapped.
  • Planning authorities will be prevented from making judgments about the commercial viability of businesses.
  • The prospect of allowing new centres to emerge is flagged.
  • Consideration of competition between centres is to be prohibited.
  • Consideration will be given to allowing more types of shops into lower-order centres.

These are welcome, long-overdue, reforms. We’ve played a key role in highlighting these rules, so we’re obviously pleased to see action on this front.

However the current anti-competitive rules which allow planning authorities to consider the impact of new businesses on the trade of existing businesses would be codified and preserved (in a “Competition State Environmental Planning Policy”). On this issue, the paper merely proposes the codification of existing town planning requirements put in place by the High Court in 1979.

For example, according to the new policy, “the potential economic impact of a large new supermarket proposed on an out-of-centre site close to a regional town could have the effect of significantly affecting trade in the town centre to the extent of threatening the viability of the town centre and undermining the continuing viability of that regional social and cultural hub. In those circumstances, there could be a clear public benefit to refuse the application. As an alternative, the new supermarket could locate adjacent to the main street in the regional town, reinforcing its status as a regional hub, while competing with existing businesses on or adjacent to main street.”

While the codification may stop some abuses of the current system, this measure does not represent a wholesale reform. We will be pushing for more comprehensive changes as part of the pending Productivity Commission review of state planning systems.

Retail developments should be encouraged outside existing congested shopping centres, easing the transport burden and encouraging more pedestrian friendly communities. Retail developments should be free to locate where the customers are – rather than forcing customers to travel further by car for shopping needs.

More information is available here.