Australia: Property Investment Risk and the Rule of Law

Planning and Development
Last Updated: 5 October 2010

By Sarah Persijn (Senior Associate) and David Nicholls (Partner)

It has been said that the rule of law means "...that government in all its actions is bound by rules fixed and announced beforehand - rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one's individual affairs on the basis of this knowledge" (FA Hayek in "The Road to Serfdom"). In Queensland, is it possible to foresee with fair certainty how the State is likely to act under its legislative powers regarding citizens' ability to use or develop privately owned land? Considering current planning and development laws, is it reasonably possible for land owners to plan their individual affairs regarding land use and development?

These are fair questions in the context of today's complex planning laws, given the widely held view that the regulatory and political systems have combined recently to put the development of privately owned land beyond the capacity of most people. As was evident from the High Court's decision in Lloyd v. Robinson in 1962, statutory development control overrides private proprietary rights in the interests of the overall well-being of society. These statutory controls have increased in volume, complexity and detail, especially over the last six years.

It is interesting to note that with the Integrated Planning Act 1997 (IPA), the Queensland Parliament legislated to subject itself, with some limited exceptions, to development control laws. The State was previously under the shield of the Crown and immune from their operation. Under both the IPA and the Sustainable Planning Act 2009 (SPA), the State has started to move away from subservience to its own laws for land development. It is a curious irony that the planning system has reached a level of sophistication and complexity that to achieve an appropriate level of land supply that meets the needs of the growing population, the State finds it necessary to work outside the statutory planning system.

The rise and rise of statutory development control: a timeline of events

Modern land use and development controls in Queensland have their origin in the Local Government Act 1936 (LG Act). The LG Act was replaced by the Local Government (Planning and Environment) Act 1990 (P&E Act), the substantive provisions of which commenced in April 1991. Both legislative regimes were similar, with one of their key components being the division of land into zones under local government planning schemes, accompanied by the table of zones governing land use and development.

Central to the flexibility of this scheme was the notion of "rezoning", by which a planning scheme could be amended by the Governor in Council upon application by local government. Applications for rezoning were to be refused in circumstances where the application conflicted with any relevant strategic plan or development control plan, and there were not sufficient planning ground to justify approving the application despite the conflict. In practice, the application of this test meant that, where a land use was prohibited in a particular zone, the relevant land may nevertheless qualify for "rezoning" in circumstances where, for example, the proposed use was demonstrated to be consistent with the forward planning for the land set out in the strategic plan, or where there was a demonstrated need for the development. In this way, the former land use and development controls were at once relatively certain, but also maintained a level of flexibility, allowing the planning regime to adapt, for instance, in unforseen circumstances.

The substantive provisions of the IPA commenced in March 1998. Among the raft of changes introduced was the removal of "strategic plans" and "prohibited development" in favour of "desired environmental outcomes" and "performance based planning", intended to bring greater flexibility and adaptability to the planning system. One of the IPA's touchstones was that "a local planning instrument may not prohibit development on, or the use of, premises. Coupled with this was the move toward an "integrated" system of development assessment. The IPA established a complex network of referral agencies, intended to eliminate the need for multiple approvals by "rolling-in" the requirements of a vast array of planning and environment related legislation to one "Integrated Development Assessment System".

Under the IPA, State-led planning was initially confined to State planning policies (SPPs), which had a role in development assessment and the preparation of local planning instruments, together with the application of "laws and policies" by referral agencies under the development assessment system. A number of early SPPs were drafted, and indeed applied, broadly, as "policies" in the true sense of the term, recognising their role as strategic, "higher order" policy. One of the first significant departures from this approach may be the State Coastal Management Plan, which commenced in February 2002. While the series of "coastal management outcomes" supported by "principles" and "policies" appeared permissive of "performance-based" solutions, in reality the "policies" were often applied rigidly without recognition that alternative methods may achieve the coastal management outcomes. At around this time, a trend toward prescriptive development control was emerging, most obviously in the legislative regime regulating the clearing of native vegetation.

The Vegetation Management Act 1999 (VMA)1 interacted with the IPA to regulate "development" which involved clearing native vegetation. The Vegetation (Application for Clearing Act) 2003 (VACA), significant legislation introduced in 2003, had serious ramifications for landowners' rights to clear native vegetation. It essentially introduced a ban on broadscale clearing of native vegetation. The VACA, a "stop-gap" piece of legislation, was repealed by the Vegetation Management and Other Legislation Amendment Act 2004 (VMOLAA 2004) in 2004. The VMOLAA 2004 at the same time introduced Section 22A of the VMA, which replicated the provisions of the VACA, so the restrictions on broadscale clearing continued, despite the repeal of the VACA. The combined effect of this legislation, in conjunction with the IPA, and particular concurrence agency "policies" used in development assessment was, in some circumstances, to make clearing native vegetation to facilitate development nearly impossible, and in others, to stop an application for clearing from even passing go. The emergence of the vegetation management regime marked the introduction of true Stateimposed "prohibitions", despite the IPA's underlying tenet of performance based planning, which was to be amplified with the advent of regional planning and regulatory provisions in the following year.

2004 was watershed year for State-led statutory development control. The Integrated Planning and Other Legislation Amendment Act 2004 (IPOLAA 2004) introduced powers designed to give greater effect to the Queensland Government's commitment to regional planning in the key growth area of South East Queensland (SEQ). IPOLAA 2004 inserted a new Chapter 2, Part 5A into the IPA dealing with regional planning in the South East Queensland region. The draft SEQ regional plan was released for public consultation in October 2004. The first SEQ regional plan was made in June 2005, and has been superseded by a number of drafts and amendments, and a new SEQ regional plan which was made in July 2009.

The regulatory provisions are the real "teeth" of the SEQ regional plan in terms of development control, with the capacity to regulate land use and development throughout the SEQ region and to prohibit aspects of development in specified locations. From the initial draft in October 2004, the regulatory provisions have had an especially restrictive effect on land development within the designated "Regional Landscape and Rural Production" (RLRP) area. The RLRP area has effectively been "locked away" from development through a combination of prohibition on subdivision and nearimpossible to satisfy requirements for carrying out particular "urban activity" or rural residential development. By contrast, the regulatory provisions do not contain specific mechanisms designed to promote urban development in the identified "Urban Footprint". The SEQ regional plan and regulatory provisions model has been since rolled out to other regions across Queensland.

The SEQ regional plan has enshrined, in one form or another since the first draft in October 2004, special planning processes for regionally significant urban development areas. In September 2007, the IPA was significantly amended by the Urban Land Development Authority Act 2007 (ULDA Act). In addition to establishing the Urban Land Development Authority, the ULDA Act extended the use of the Major Development Area designation to other identified areas proposed for urban development throughout Queensland (renamed "Master Planned Areas") and established a complex specific planning process for these areas, involving the preparation of structure plans (a local government-led process) and master plans (an applicant-driven process, undertaken when required, after the adoption of the structure plan).

The master planned area development regime was, and is, intended to enable a co-ordinated, whole of government approach for the master planning of large greenfield sites. Where possible, planning for State interests is to be resolved at the front end, reducing the role of the State in subsequent detailed planning and development assessment. Though well-intentioned, in reality the master planned area process has proven time-consuming, resource intensive and cumbersome. To use a recent example, the draft Structure Plan for Maroochydore Principal Activity Centre runs to one binder for the structure plan itself, with another binder of associated material. All of this is particularly concerning in circumstances where the process is being used as the preferred method of delivering much of the greenfield land supply identified by the Queensland Housing Affordability Strategy.

Toward the end of the life of the IPA, the role of regulatory provisions expanded. The IPA was amended to allow the Minister to make State planning regulatory provisions, operating in a similar fashion to the SEQ regional plan's regulatory provisions, for any part of the State. Most recently, State planning regulatory provisions have been rolled out to address such diverse issues as SEQ koala conservation, motor sport activity, the location of adult stores, and the development of particular land at Guragunbah. Under the Sustainable Planning Act 2009 (SPA), State planning regulatory provisions may be made in a broad range of circumstances. The potential for State planning regulatory provisions to be rolled out at an alarming speed as an "issue specific" solution is particularly concerning in terms of private property rights and the ability of individual landowners to plan their affairs - a concern brought into sharp focus with the recent series of SEQ koala conservation State planning regulatory provisions, which extend prohibitions on certain urban development into the Urban Footprint. The experience with the SEQ koala conservation provisions, and the level of uncertainty and instability that such rapid-fire regulatory intervention creates, should encourage more sparing, careful use of State planning regulatory provisions as a means of development control.

The SPA commenced on 18 December 2009, repealing the IPA. It has been described as "evolutionary" rather than "revolutionary" legislation, and shares many of the hallmarks of its predecessor. The SPA formalises the clear shift in statutory development control which had its beginnings under the IPA, with the State's pre-eminent role formalised by the hierarchy of State planning instruments established under Chapter 2, comprising:

  • State planning regulatory provisions;
  • regional plans;
  • SPPs;
  • temporary SPPs;
  • standard planning scheme provisions.

In an acknowledgment of the nature in which development control evolved under the IPA, the SPA reintroduces the concept of "prohibition", with the consequence that an application can not be made for development if it is prohibited development

The role of SPPs is elevated under the SPA. The new decision rules require refusal of an application if it conflicts with an SPP (ie a "relevant instrument") and one of the "departure rules" (eg sufficient grounds) is not available. This applies to both code and impact assessable applications. The consequence of this seems likely to be more prescriptively drafted SPPs than before, with a view to their implementation through assessment of individual development applications.

A parallel planning system

This timeline of events highlights the increasingly interventionist role of the State Government in planning processes. Further, this summary only scratches the surface, as there is insufficient space to devote to a description of Ministerial call-ins and directions; the regulation of environmentally relevant activities; works under the Water Act 2000 and Coastal Protection and Management Act 1995; development in respect of "heritage places"; wetlands; and any number of other development-related constraints.

Unsurprisingly, when we consider the web of complex, sometimes irreconcilable statutory regulation which now exists, we see a new trend emerging - one of the State Government circumventing the system within which most private landowners must operate in favour of delivering land supply and development outside of the statutory planning and development framework.

The ULDA Act was introduced with the intention that it "support the government's Housing Affordability Strategy..." by "removing logjams and process inefficiencies, bringing land to market in priority areas in a timely manner and ensuring a fair apportionment of infrastructure costs". Under the ULDA Act, the Authority is charged with planning and assessment responsibilities in declared UDAs. The planning and assessment processes for declared UDAs differ significantly to the regime established by the SPA. The implication of the State Government's recent decision to vest responsibility for three major Greenfield development areas at Ripley Valley, Greater Flagstone and Yarrabilba in the Authority is that the ULDA Act mechanisms, which sit outside of the SPA, are best placed to "fast track" co-ordinated and efficient development of these areas. This is true despite the fact that the SPA, reform legislation expressly intended to deliver "streamlined plan making" and "streamlined development assessment", is barely six months old.

What the ULDA Act mechanisms (and other processes which sit outside the general system) may be able to achieve in terms of speed of delivery must be weighed against some of the added uncertainties associated with them - the ULDA Act, for instance, lacks a number of the "checks and balances" (eg particular rights of appeal) which are enshrined in the SPA. Recourse to one of these alternatives does not necessarily bring with it any added certainty regarding the way in which the Authority will act.

Concluding thoughts

Navigating private development in Queensland through the regulatory system is undoubtedly more complicated, costly and slower today than it was under the repealed LG Act and P&E Act. For the better part of a decade, statutory planning and development controls have been escalating, adding layer upon complex layer, and have hit warp speed, with no signs of abating.

It is becoming almost impossible for property owners to foresee with any certainty how the statutory planning regime might operate in respect of the use and development of their land. The recent introduction of the SEQ koala state planning regulatory provisions acutely highlights that the planning and development landscape in Queensland can literally change overnight.

The State Government's most recent response to the Growth Management Summit does little to quell concerns that the current system, despite its recent makeover, is too complex and uncertain to achieve cost-effective and efficient outcomes. The answer surely does not lie in circumventing established processes on a case-by-case basis.

The State Government recently announced a State Planning Instruments Program. The policy paper includes some long overdue aims, including acknowledgment of a need for more structured planning for development and implementation of SPPs to better manage the number and type of instruments being developed, and the impact and interrelatedness of these.

Unfortunately, the Program also includes some thirteen State planning instruments to be rolled out between July 2010 and September 2013. Rather than entrenching a "two-speed" development system, the planning system might be better served by temporarily halting the stream of new planning instruments and legislation to focus on understanding the relationships between instruments and their effect on the ability of the planning system to deliver ecologically sustainable planning outcomes - balancing ecological, economic and social considerations.

© HopgoodGanim Lawyers

Gold Employer of Choice - ALB magazine, April 2010
Finalist, Brisbane Law Firm of the Year, ALB Australasian Law Awards 2010

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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