15 April 2010
The Productivity Commission’s review of town planning laws, details of which have become available today, is an opportunity to tackle the last great bastion of 1970s style over-regulation, according to the Urban Taskforce.
“There’s a legion of detailed planning controls governing every aspect of urban development, yet in most parts of Australia, even developers who meet all of the express requirements of these rules can still be refused planning approvals,” Mr Gadiel said.
“Policy makers seem to have forgotten the importance of property rights and secure title in attracting investment. “This has led to an undersupply of commercially developable land both in the inner and middle ring suburbs of major cities, and on the edge of our cities.
“Even when land is theoretically available for development, commercial development can be made impossible by planning rules, delays and levies that rob projects of feasibility.”
Mr Gadiel said that ever-increasing development levies are requiring home-buyers to bear the burden of growth infrastructure at an unaffordable rate.
“In NSW key councils levy between $30,000 to $60,000 on the cost of each new home. In Queensland, key councils impose levies ranging from $20,000 to $40,000,” he said.
“In Victoria a council levy of $15,000 is not surprising.
“State governments are getting in on the act, with an $11,000 home levy in Western Sydney and a $6,000 to $7,000 home levy on the edge of Melbourne.
The Productivity Commission has been asked by the Federal Government to examine and report on the operations of the states and territories’ planning and zoning systems, particularly as they impact on:
- business compliance costs
- competition
- the overall efficiency and effectiveness of the functioning of cities.
The Commission has been specifically tasked to seek reforms that:
- prevent ‘gaming’ of appeals processes
- put processes in place to maintain adequate supplies of land suitable for a range of activities
- eliminate any unnecessary or unjustifiable protections for existing businesses from new and innovative competitors.
Mr Gadiel said the focus on competition was welcome.
“The undersupply of commercial developable land has given land owners too much bargaining power when negotiating with developers.
“As a result, prime sites lie idle while land owners hold out for higher prices, safe in the knowledge that they are protected from lower bids by rival property owners and by town planning laws.
“The lack of competition makes housing more expensive than it needs to be and stifles the development of business parks, but its effect are most obvious in relation to retail development.”
In a report commission by the Urban Taskforce in 2008, Choice Free Zone, Professor Allan Fels found that shoppers are paying far too much for their groceries because of restrictive out-of-date planning laws.
The report argued that an overhaul of town planning policies would allow greater competition, leading to consumers paying up to 18 per cent less for food staples and up to 28 per cent less for other household products.
Professor Fels warned at the time that “The planning laws restrict competition. They basically protect the big shopping centres. … Australia is changing and we have got more and more competition in different parts of the economy. But in the retail area, we’re 20 years behind. With … the Hilmer Report … they got rid of a lot of anti-competitive restrictions, but retail is still protected, particularly the retail landlords.”
Mr Gadiel said that the Urban Taskforce would participate strongly in the Productivity Commission review.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
The construction activity made possible by property developers contributes $78 billion to the national economy each year and creates 849,000 direct jobs.
