OPINION: The NSW Department of Planning and Environment (DPE) has quietly dumped a controversial spot rezoning reform that would have shifted the power for decision making further away from councils and their communities. At the same time, a controversial program that invites speculative spot rezonings progresses.
In the final days before caretaker mode for the NSW election, the DPE quietly dumped A new approach to rezoning in NSW.
One of the central tenets of the reform was to add an additional appeal mechanism (there is already one in place – more on that later) for industry that would have stripped councils from having the final say in rezonings.
The appeal to a NSW DPE appointed Planning Panel would’ve been able to overrule councils and approve or make amendments to proposals.
The stated aim of this “reform” was to reduce the timeframe for rezonings and to “overcome delays and progress rezonings that are consistent with strategic plans”.
An earlier iteration of this reform was offering developers a cash-back planning guarantee, whereby they’d get a refund for failed speculative spot rezonings
This approach would have kept bad planning proposals (rezonings) alive in the system and emphasised a “development facilitation” culture, rather than a public interest one, where anyone who tries hard enough for long enough would eventually succeed in their rezoning plans.
Indeed, an earlier iteration of this reform was offering developers a cash-back planning guarantee, whereby they’d get a refund for failed speculative spot rezonings.
In reality, the reform would have undermined our strategic plan-led system (that is, strategic plans driving planning decisions) would have diminished the importance of strategic planning.
It would keep bad proposals alive, further shift the balance of power away from councils and their communities and would have made spot rezonings (planning proposals) more like development applications (DA), rather than a genuine policy development exercise.
The increased ability for forum shopping would have reinforced the signal to industry that persistence will get a negotiated outcome – just like a DA.
The Planning Institute of Australia was right to call out that the “measures intended to elevate proponent-led planning proposals would not be in the public interest”.
Finally, this reform would not have done anything to solve the major delays in the rezoning process, which is fundamentally infrastructure funding arrangements, delays in NSW government agency feedback and resolution of agency issues.
Appeal rights to policy making is problematic…
If you’ve read some of the recent coverage in mainstream media about the NSW zoning and planning system you’d be led to believe that a Byzantine planning system and NIMBYs block the benevolent development industry from solving our housing woes.
A more discerning reader might note that these spot rezonings aren’t the product of a planning purgatory but instead are the result of a planning system that has allowed speculative rezoning proposals to survive and flourish.
Until relatively recently councils and their communities had significant power in making their zoning rules in the Local Environmental Plan (LEP), with limited NSW government intervention. In 2012, the NSW DPE introduced the Rezoning Review.
To be able to appeal the policy development process itself is a unique issue to planning, and one which increases the risk of corruption – capturing the system to have it deliver windfall gains.
The ability to appeal a rezoning decision is a unique appeal right. An appeal to a refused development application might be a perfectly reasonable part of our judicial system, where there is a contest around the interpretation of laws. Similar to processes beyond the planning world.
But to be able to appeal the policy development process itself is a unique issue to planning, and one which increases the risk of corruption – capturing the system to have it deliver windfall gains.
…so we should get rid of the existing rezoning review?
There is concern that the current rezoning review can be akin to a rubber stamping process, where less than one in five reviews have upheld a council’s refusal.
In my most recent experience in defending a council refused speculative rezoning, I was comforted that council’s Local Strategic Planning Statement (LSPS) – a Greater Cities Commission endorsed strategy no-less – was explicit in underscoring council’s position on this matter.
According to the Act, the LSPS is “the basis for strategic planning in the area,” but at its very first test the LSPS was ignored.
Wrong way to go
An appeal process is ultimately a sub-optimal way to develop policy because in reality it treats the strategy development and plan-making process like a DA – making relatively arbitrary decisions on a site by site basis, with no bigger picture thinking.
Whoever is the planning minister after the election – whether there is a change of government or not – should heed the words of former NSW Planning Minister Rob Stokes, who indicated that:
“Where a spot rezoning is all about the developer’s interest and the case for public interest is not crystal clear and compelling, it [Rezoning Review] simply should not happen, under the new planning system, we need to move away from one that allows for assessment by faceless men.”
The appeals process should “not be providing endless backdoor opportunities for disreputable developers to push their proposals”.
Former NSW Planning Minister Rob Stokes
So, a victory for common-sense in the dumping of the proposed additional review, but food-for-thought for the NSW DPE on the existing rezoning review as well.
Rezoning Pathways Program – a rent-seekers paradise
As I’ve written previously, we need to be careful about dressing up rent-seeker giveaways as genuine reform.
However, in December last year, the NSW DPE announced the Rezoning Pathways Program, which allows a pathway for “state-assessed planning proposals” where the NSW government invited industry to bypass local councils and send large rezoning proposals – over 1000 dwellings in metropolitan NSW – to be assessed by the NSW DPE.
In early December the guidelines were clear that previously refused planning proposals were not eligible, but this exclusion quickly disappeared. It’s allowed proposals such as the Meriton’s “giant, concrete zombie” at Little Bay to rear their head again.
Sydney has had record high housing approvals and completions in the past decade and there is significant housing supply in the pipeline as well.
The Rezoning Pathways Program has arisen in t with the subtext that it would create “much needed supply” and increase affordability.
As I’ve articulated here and here, Sydney has had record high housing approvals and completions in the past decade and there is significant housing supply in the pipeline as well.
Programs like this wouldn’t improve affordability and would at best redirect housing supply, at an aggregate level, in the short-term.
Fail to (strategic) plan, plan to fail…
The planning system must be strategic plan-led because the community, various stakeholders and governments adoption of a strategy is the best expression of the public’s interest in the allocation of rights to the use of land.
Broader area or precinct strategies enable plans to incorporate trade-offs across multiple balanced issues up front with all factors considered, such as environmental issues.
Whereas ad hoc, isolated spot rezonings are seen through the narrow lens of a single site and do not enable holistic consideration of trade-offs – this is a key reason they are an inferior public process at reflecting public values.
The public interest is not only expressed in the achievement of valued place outcomes – but also the need for the public to achieve orderly development and an optimum return on investment in public (and private) infrastructure and services alongside growth.
Strategic plans coordinate land use and infrastructure growth to ensures that infrastructure investment is efficient and optimised, particularly transport infrastructure.
A risk with large unplanned spot rezonings is that new housing can be relatively isolated from infrastructure and services, with underutilised infrastructure in other planned growth fronts – a terms economists ‘coordination failure’.
We should celebrate that we actually have a good strategic planning hierarchy developed by the Greater Cities Commission – from the Greater Sydney Region Plans through to the District Plans, LSPS, LEPs and DCPs. The Planning Institute of Australia was right to call this reform a “loss for good planning outcomes”.
Rent-seeking: what gets rewarded, gets repeated
Inasmuch as strategic plans provide a clear market signal to developers, communities and businesses, isolated decisions that encourage and reward rent-seeking behaviour will only generate more speculative rent-seeking for spot rezonings.
Why pay the market price for developable land, when you can easily buy a cheaper site elsewhere, have it upzoned and make a windfall? And as any parent knows with behaviour – what gets rewarded, gets repeated.
A strategic plan-led system is more timely and efficient. It is a pre-requisite for a “risk weighted” planning system.
It enables assessment pathways for strategically aligned development to proceed in a more streamlined manner, while higher risk applications are scrutinized more rigorously.
This optimises use of planning resources and workforces, which are wasted pursuing reviews and keeping ill-founded zombie rezonings alive.
Importantly, it respects the time and effort behind community and stakeholder input focused on plan-making when all the issues and trade-offs are on the table.
Genuine innovate spot rezoning solutions should remain – it’s just the zombies and rent-seeking spot rezonings that needs to stop
In conclusion we want a planning system that promotes an outcomes culture not an output culture – based on strategies that are a good expression of the public values we want to achieve as we manage growth.
Adopted strategies and plans are not some secret regulatory burden that property industry should be encouraged to circumvent.
To continue to facilitate and actively encourage spot rezonings and endless appeals undermines the integrity of our strategic plan-led planning system and further erodes community trust in the NSW planning.
