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Planning reform in Victoria – What is the current state of play?

By Guest Contributor, Eleni Roussos | Director, Urbis

• 19 May 2022 • 6 min read
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The planning system in Victoria is in a constant state of change. It is a dynamic space where practitioners are regularly updating their toolbox with VCAT Red Dot decisions, local planning policy changes and State-based policy changes. The planning scheme is getting bigger and more complicated with proponents and their project teams navigating through this complex web to obtain that elusive planning approval.

Planning reform has long been discussed as the silver bullet to fix all the industry’s issues and cut through the red tape. But is it really?

Red Tape Commission

The most recent iteration of planning reform can be traced back to 2015 when Anna Cronin was appointed the Commissioner for Better Regulation. In 2018 this role expanded to Red Tape Commissioner. In March 2019, the Treasurer and Minister for Planning asked the Red Tape Commissioner to undertake a review of State and local government processes surrounding building and planning approvals, and early building works infrastructure approvals. The request was to identify opportunities to streamline processes and reduce delays.

The review focused on how to eliminate unnecessary delays while improving the necessary scrutiny that planning and building applications need to ensure quality outcomes. Funding to the tune of $38 million was allocated in the 2020/21 state budget to implement the reform package.

The cost of the identified delays and the value to the state of this reform has been modelled by all the key economic groups and associations and whichever metric you look at the impact is significant – potentially in the order of $7 billion in benefits (as announced by the state government in March 2022).

The review looked at the root causes for why planning and building approvals have become so complex and time consuming and, in many cases, less effective than they should be. The 2019 discussion paper identified twenty-seven points in the approvals chain where specific short and medium term improvements could be made at the four key stages of the process. Those being:

  1. Strategic approvals
  2. Statutory approvals – permits
  3. Post permit approvals
  4. Building approvals.
Source: Planning and Building Approvals Process Review – Discussion Paper, State of Victoria, 2019

These twenty-seven recommendations evolved into five programs to reduce unnecessary delays and costs centred around:

  1. Better Planning Rules
  2. Better Planning Processes
  3. Better Reporting
  4. Better Capabilities
  5. Better Building Approvals.
Source: Turning Best Practice into Common Practice, State of Victoria, 2021

Development Facilitation

The timing of this twenty-seven point plan for reform and the disruption caused by COVID-19 created opportunities for innovation to be implemented and increased government facilitation of projects which delivered economic activity. Improved approval efficiency, improved economic activity and performance of the State’s property industry is at the absolute core of the reason for reform.

The most notable of the COVID-19 interventions is the Development Facilitation Fast Track process. This was not identified specifically in the reform recommendations but has proven to be an effective method of facilitating approvals to kickstart major project development. Development Facilitation is continuing with specified criteria for key sectors. The current criteria on what constitutes a ‘priority project’, in addition to being ‘shovel ready’, varies depending on the ‘priority sector’. The project needs to include a priority sector that represents no less than 60% of the overall use and development. The overall use and development of a project may comprise less than 60% if the project is one of three things:

  • State funded
  • a regional housing and/or employment project; or
  • provides greater than 20% affordable housing.

The private sector is therefore strongly encouraged to only put forward projects identified under the key sectors. Some of these being:

  • advanced manufacturing and defence
  • agricultural and rural industry
  • digital technologies
  • health and education centres
  • large mixed use within an activity centre
  • office and retail
  • regional housing and employment projects
  • visitor economy, arts and recreational facilities
  • manufacturing, warehouse and logistics.

There is a clear driver for projects with ongoing economic activity – notably pure residential projects in the Metropolitan area are not on the priority sector list.

Current status

Outside of the Development Facilitation program, the Department of Environment, Land, Water and Planning (DELWP) have been implementing some of these reforms broadly under the 5 programs noted above. As of the end of 2021, progress was occurring in areas such as establishing a State project concierge, creating a new online portal for State applications, establishing regional planning hubs, delivering on the streamlining for growth program and improving the operation of ResCode.

Some of the reform items have not required legislative change to be implemented. The implemented initiatives fall under this category. However where legislative change is required for implementation the politics of the day becomes a factor in the discussion. In March 2022 the twenty-seven point reform plan was ceremoniously removed from the state government’s agenda after having been linked (in a legislative sense) to a proposed social housing tax. While this might be the case, the reform which does not require legislative change continues on. The Development Facilitation unit and Regional Hubs teams in DELWP continue to operate and the budget commitment is valid for the current financial year. Given the State election anticipated in November 2022 both parties will need to provide a commitment for the industry to be assured change is coming.

Where to from here?

What does this mean to cutting red tape and reducing authority and approval timeframes? You might need a crystal ball to find the answer with a Federal and State election this year. The only guarantees are that planning will continue to evolve even without significant intervention through wholesale reform, and that the policy context will likely become more burdened and complex unless decisions are made beyond election cycles to deliver a better system for the State to prosper.

By Guest Contributor, Eleni Roussos | Director, Urbis

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