Australia: NSW planning laws update - mixed blessings

Real Estate Markets Insights
Last Updated: 19 December 2010
Article by Nick Thomas

In the last few months, and especially this month, development stakeholders have been given mixed blessings in changes to planning law and policy in NSW.

This article highlights some of the events of the last few months and comments on what we can look forward to in 2011.

Development contributions

In September, in an effort to accelerate housing development and keep downward pressure on real estate prices, the NSW Government introduced some important policy changes for the development contributions system.

Key features of the changes are:

  • a $20,000 cap per dwelling or per residential lot on development contributions for local infrastructure;

  • a $30,000 cap per dwelling or per residential lot in specified greenfield development areas, "which the Government says is "to recognise the higher costs of creating well-planned communities in these areas" (NSW Department of Planning Circular PS 10-022);

  • an exception from the caps for development areas in which development applications (DAs) for more than 25% of the expected yield from the relevant area or the applicable development contributions plan had been received by 31 August 2010.

These changes are effected by a Ministerial direction under section 94E of the Environmental Planning and Assessment Act 1979 (Planning Act), issued on 16 September 2010.

The changes don't apply to:

  • section 94A levies (ie. flat rate development contributions which reflect a percentage of the development cost);

  • voluntary planning agreements and other non-monetary contributions; and

  • affordable housing contributions.

In addition, a council can apply for an exemption for a specific development proposal.

The Government also proposes to apply more rigour the preparation of development contributions plans, by:

  • involving IPART in the review of draft contributions plans which propose contributions above the caps1;

  • issuing detailed guidelines for the preparation and implementation of contributions plans; and

  • requiring councils to report on development contribution activity in the 2010-11 financial year.

Unfortunately, however, the new Planning Act regime for development contributions, which Parliament passed in 2008, has still not commenced.

Changes to planning reviews and appeals

NSW Parliament passed the Planning Appeals Legislation Amendment Act 2010 late last month. That Act makes some significant changes to the review and appeal arrangements in the Planning Act for DAs and applications to modify a development consent. For example:

  • the merit appeal time-frame for decisions on DAs will be cut from 12 months to 6 months2;

  • the merit appeal time-frame for decisions on modification applications will be extended from 40 days to 6 months;

  • the requirement for the Land and Environment Court to make costs order against a developer who amends its development plans after appealing to the Court will be clarified, so it will cover only costs thrown away by the amendment;

  • an applicant for modification of a development consent by a local Council will be able to obtain an internal review of the council's decision with regard to that modification application, in much the same way as a council can review its determination with regard to a DA.

The amendments have not yet commenced.

New Planning Regulation

A draft Environmental Planning and Assessment Regulation 2010 was placed on public exhibition from September to November 2010. The new regulation will replace the existing regulation under the Planning Act. Although the new regulation will reproduce most of the existing regulation, there are some significant changes proposed, including:

  • limiting the use of "stop-the-clock" provisions in setting the time-frames for determining DAs, which should speed up DA determination time frames, but could lead to more DA refusals if consent or concurrence authorities are pressured into making decisions without the information they need to properly assess these applications;

  • introducing new determination times of 50 days for simple DAs and 90 days for more complex DAs (which is an increase from the current time frames of 60 days for "designated development" DAs and 40 days for other DAs); and

  • raising the bar for what amounts to "physical commencement" to prevent the lapsing of a development consent (survey work will no longer be enough).

Will Part 3A survive in 2011?

Last week, the NSW Independent Commission Against Corruption (ICAC) delivered a report on the major developments regime in Part 3A of the Planning Act, which contained several important criticisms of the scope of Part 3A and the way in which it has been used since it was introduced in 2005.

ICAC's key comments included:

  • Part 3A should not be used to approve proposals which are prohibited under existing environmental planning instruments, and the Joint Regional Planning Panels should determine rezoning proposals for prohibited aspects of Part 3A projects instead of the Planning Minister.

  • The Planning Minister should give the Planning Assessment Commission the decision-making role for more classes of Part 3A applications than it currently has, and the PAC should also provide an independent review of all proposals to "call in" private sector projects for determination under Part 3A.

  • The process for making development sites State Significant Sites under the Major Development SEPP (which, in effect, provides a site-specific zoning and land use regime) should be made more rigid and more transparent.

The NSW Opposition has announced that it will scrap Part 3A if it is elected to Government in March 2011, but there is little detail currently available on what the alternative would be.

Roll on 2011

It's clear, from the high level of activity in the last few months, that there will be lots more change to the NSW planning regime next year. 

1. The Department of Planning released guidelines for IPART assessment of contributions plans on 24 November 2010.

2. Amendments to the Planning Act in 2008 would have cut the appeal time-frame from 12 months to 3 months, but those amendments have not yet commenced.

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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