Government’s own report damns its planning system

02 September 2010

A report commissioned by the NSW Government has exposed the dysfunctional nature of the states planning system.

The report Residential building activity in Sydney was prepared for NSW Treasury by economic consultants. It was completed in May 2010, although it is only now publicly available as a result of a freedom of information request by the Urban Taskforce.

The report finds that planning processes are slow and lengthy. It finds that the demand for extra housing in Sydney is likely to be between 25,000 and 50,000 dwellings per year, compared with the 15,000 produced in 2007/2008.

The experts who authored the report found that these housing targets are not achievable without major policy changes by government.

The report gives the state government a clear choice.

It says the government can pursue a low population policy, by accepting low levels of housing production and using escalating house prices and rents, and increased congestion as means of driving people away from Sydney. Or the state government can make policy changes to get housing construction more in-line with Sydneys requirements and the construction levels of other states.  The report acknowledges that a restrictive housing policy would also have negative impacts on economic growth and incomes in Sydney and NSW.

The government-initiated investigation found there is a lack of commitment of some state agencies to development, which results in restrictions on building activity. This independent report has concluded that in the last 10 years only a small amount of land has been rezoned for housing. The study finds that local government councils are preventing the apartment development that cities with Sydneys geography and infrastructure clearly need.

The report makes it clear that planning process is full of vague and ill-defined statements, leaving developers exposed to subjective, uncertain and unpredictable decisions. A lack of public infrastructure, particularly transport infrastructure, is also identified as a problem.

The report fatally undermines the NSW Governments flawed land release process. It found that it is difficult for anyone to develop fragmented land. The report concludes that government policy has been discouraging development in areas where there is one owner.

This policy is clearly wrong and is major reason why the government claims of record levels of rezoned land mean little, since most of the rezoned land is dominated by undevelopable lots with diverse ownership.

The report was right to conclude that the planning systems failure had made Sydney a relatively unattractive place for development compared with other major cities.

The report confirms that the state of residential development in NSW is dire; it observes that:

  • since 1999-2000, the number of new homes in NSW has halved falling from 32,000 homes to 15,000 homes in 2007-08;
  • between 2005/6 and 2007/8, fewer than 4,000 new houses a year were added to Sydneys housing supply; and
  • since the late 1990s, the value of NSWs residential construction activity has fallen from 36 per cent of Australian output to just over 20 per cent.

The reports verdict is clear.

Sydneys high house prices should have been enough to get residential development re-started, but the planning red tape has prevented this from happening.

Home buyers, renters and Sydney commuters will suffer if we cant get Sydneys annual housing production to the 25,000 to 50,000 home range set out in this report.

A two page overview, with key extracts from the report, is available here.

The full 86 page report is available here.