Investment risk for big NSW projects just increased, again

01 July 2009

Investors in politically contentious big urban development projects will now face even greater risks when investing in NSW, with the loss of the right to appeal decisions to the Land and Environment Court.

The Urban Taskforce chief executive, Aaron Gadiel, said that last Friday changes to the state planning policies were quietly gazetted requiring all residential, commercial and retail projects of $100 million or more to be dealt with under Part 3A of the Act. The changes take effect today.


NSW has just become a less attractive place to invest $100 million, Mr Gadiel said.


Until now, $100 million plus urban developments could be dealt with in one of two ways.


Local councils could make the decision and developers had a right to appeal poor decisions to the Land and Environment Court.


Alternatively, a developer could apply to state government to deal with the project under Part 3A.


The Part 3A approvals process has been the only part of the planning system that comes close to functioning properly so it has been well supported by industry.


But there is downside to Part 3A. When the Planning Assessment Commission is involved a developer loses the right to appeal unfair decisions to the Land and Environment Court.


There have even been cases of Part 3A project applications languishing in the bureaucracy without any decision being made. A developer has no right to take the decision to court if the Planning Assessment Commission has carried out a review.


A home owner who wants approval for a $100,000 home extension has a right to appeal a slapdash decision; but someone investing more than $100 million will be denied an equivalent right.


It may now be harder to make politically contentious projects stack up.


NSW faces losing even more investment to other states.


Until 2007, NSW had always had more building activity than NSW, but the traditional positions between the states have now been reversed.


Last year, the total value of building activity in Victoria reached $19.5 billion while in NSW it fell to $16.9 billion.


The latest decision comes hard on the heels of legislation last month, supported by both major parties, allowing private property held by anyone, including developers, to be compulsorily acquired by local councils for re-sale, without full compensation.


The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.


For every $1 million in construction expenditure, 27 jobs are created throughout the broader economy. The construction activity made possible by property developers contributes $69 billion to the national economy each year and creates 709,000 direct jobs. The construction industry is Australias third largest source of employment.



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