New “competition” planning rules merely preserve the status-quo

27 July 2010

Proposed new town planning rules in NSW merely preserve the status-quo and will do little to stop anti-competitive decisions, according to the Urban Taskforce.

The Taskforce’s chief executive, Aaron Gadiel said today’s 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.


“Town planning laws have been reducing competition and consumer choice – leading to consumers paying up to 22 per cent more for basic food items and up to 39 per cent more for other household products,” Mr Gadiel said.


“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 retailers.

“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, but there is something wrong with blocking a new retail outlet because it will compete with existing businesses.”


Mr Gadiel said the proposed new Competition State Environmental Planning Policy merely codifies the approach already adopted by the courts.


“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.


“It seems nothing will change.


Mr Gadiel said he drew 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, and it authorises almost all of the anti-competitive decisions already routinely made under the current town planning laws.


“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.


“This objection is often made and it is difficult to disprove, particularly when most local councils have little appreciation of the importance of competition.”


Mr Gadiel said that the current situation was untenable, and hoped that real reform would still happen.


“The current 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,” Mr Gadiel said.


“As the current shopping centres become increasingly congested and expensive, consumers will demand real reform. “We’ll keep asking the NSW Government to reform the planning system, but we’ll also be raising these issues with the Productivity Commission who is currently reviewing the anti-competitive nature of state planning systems.”


In 2008, the Urban Taskforce released Choice Free Zone, a report by former ACCC Chairman, Professor Allan Fels, to examine some of the regulation of retail development in NSW. His report concluded that shoppers are paying far too much for their groceries because of restrictive out-of-date planning laws.


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 $78 billion to the national economy each year and creates 849,000 direct jobs.

NOTE: Background information on the 1979 High Court decision, which explains the existing law, is in the PDF below.



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