Australia: Developers Take Note: What You Need To Know About Proposed Changes To The Environmental Planning And Assessment Act 1979

Last Updated: 24 January 2017
Article by Christina Renner and Jodie Wauchope

After his predecessor failed to push through a whole new Planning Act in 2013, the current Planning Minister, Rob Stokes, appears to have accepted that he is stuck with the ageing Environmental Planning and Assessment Act 1979 and he is proposing a major facelift of it.

The Act is one of the most frequently amended in NSW history and after enduring numerous amendments every year since its commencement 37 years ago, the poor Act is a bit unwieldy. Many of the amendments proposed are aimed at fixing this problem and reorganising the Act, although the substance of the Act will not greatly change.

There are a few key changes that developers should take note of which we examine below.

End of Part 3A transitional provisions

The Government wants to end the Part 3A transitional provisions. Importantly, this will put an end to section 75W modifications so that future modifications of these approvals will be subject to the "substantially the same development" test that applies to normal development consent modifications. This test is far more restrictive than the broad power of modification that currently exists under section 75W.

It is proposed that section 75W applications that are already underway and have received the Secretary's Environmental Assessment Requirements will continue to be assessed under section 75W if an environmental impact statement is lodged within 12 months of the changes commencing. New modification applications under section 75W will also be received for two months after the Bill is passed. After this time, developers will not be able to access the section 75W modification path.

We anticipate that there will be a rush of section 75W modifications if the Bill is passed.

New restrictions on modifications of development consents

The Government has expressed a desire to restrict the use of section 96 modifications by developers seeking to reinstate parts of an application that were rejected as part of the initial determination. It is proposed that this will be achieved by making the reasons for the original determination a mandatory matter for consideration in assessing any modification application.

As part of the suite of changes proposed by the draft Bill, consent authorities will now need to publish a statement of reasons for their decisions. Where a development is approved subject to deletion of certain parts of the development proposed by the applicant—for example, deletion of the top storey of a building—the reasons for this change will need to be explained in the statement of reasons. If the developer later comes back and seeks to modify the consent by adding the extra storey, the original reasons for deletion of that storey will be a mandatory matter for consideration. Although this will elevate this particular consideration, it is a matter that would generally need to be addressed in such an application in any event as a matter of common-sense, so this proposed change may not have a significant impact on developers.

More importantly, the draft Bill proposes to prevent a developer from being able to modify a development consent to remedy works carried out in breach of the consent. If a person does not construct in accordance with the consent, they will not be able to subsequently modify the consent to address non-compliances. This would mean that the only means to address such non-compliances would be a building certificate (which will be renamed "building information certificate").

However we see some problems with this approach, as it may prevent the issue of an occupation certificate where a prerequisite condition of consent has not been complied with and is not able to be subsequently complied with. This would be the case even where Council staff agree that the requirement is no longer relevant or where they are happy with the alternative approach that may have been adopted by the developer. This new prohibition is also likely to cause additional problems when coupled with the changes proposed to construction certificates, explained below.

Construction certificates—new requirement for "consistency"

The current requirement is that a construction certificate must be "not inconsistent with" the development consent. "Not inconsistent" has been found by the court to not mean the same thing as "consistent", so that construction certificate plans can be different from development consent plans.

The extent of the differences that may be allowed before the construction certificate breaches the "not inconsistent" requirement has always been a difficult question. Where a construction certificate is challenged in court on this basis, the court has allowed certifiers' broad discretion to subjectively determine the question of whether or not the plans were "not inconsistent". The court has been reluctant to engage in its own assessment of whether or not the plans objectively meet this requirement.

Under the proposed changes, there will be an express requirement that a construction certificate must be consistent with the development consent and the court will be given the express power to invalidate a construction certificate where it forms the view that the plans and specifications or standards of building work specified in the certificate are not consistent with the development consent.

It is proposed that the Department will issue guidelines to help certifiers determine what is required by this new test of consistency.

As a result of these proposed changes we expect that certifiers will be much more reluctant to approve deviations from the development consent plans, in approving construction certificate plans. Councils may be swamped with a plethora of modification applications by developers seeking minor changes to their approved plans that they would previously have dealt with in their construction certificates, and the commencement of construction work will be delayed.

Legal challenges to construction certificates are likely to become increasingly common. They are also more likely to be successful if judges are now expressly permitted to objectively determine whether or not the construction certificate is consistent with the development consent.

The Bill proposes that construction certificates will only be vulnerable to legal challenge within three months of being granted.

Complying development certificates

The Government has an objective to increase the take up of complying development by:

  • introducing a medium density residential code;
  • updating the codes to make them more user friendly;
  • simplifying development standards; and
  • implementing an education program for councils and certifiers.

However, none of the above form part of the draft Bill's suite of reforms. In fact, the changes proposed to complying development in the draft Bill will potentially reduce, at least in the short term, the incentive to use this pathway. The changes include:

  • a new regulation making power to specify classes of development for which an accredited certifier is not authorised to issue a complying development certificate (CDC);
  • allowing CDCs to be subject to deferred commencement conditions;
  • extending planning agreements to apply to CDCs;
  • allowing special infrastructure contributions to be levied on CDCs (although we are of the view that the Act already permits this);
  • establishing a compliance levy to fund compliance and enforcement actions by councils in relation to CDCs, which will be part of the fee structure for CDCs. Details of the levy are as yet unknown and will require further work;
  • granting councils a new investigative power to issue stop work notices (for a period not exceeding seven days) pending an investigation into compliance of CDC work with applicable development standards;
  • extending the notification requirements for a CDC to require a certifier to give prior notice of his/her intention to issue a CDC to council and direct neighbours (the period of prior notice is not specified), and to provide a copy of the CDC and endorsed plans to the direct neighbours once the CDC is granted; and
  • requiring the court, when faced with a legal challenge to a CDC, to objectively determine for itself whether it is in accordance with the relevant standards and to declare the CDC invalid if it is not.

These provisions are generally aimed at tightening up the CDC regime by strengthening investigative and enforcement powers, and making it easier for neighbours to police compliance themselves. While the rationale for these changes is fairly obvious, they clearly have significant potential to slow down the CDC process, even for fully compliant developments.

Occupation Certificates

Interim occupation certificates will cease to exist under the draft Bill.

The Act currently provides for two different forms of occupation certificate, including an interim occupation certificate which allows occupation and use of a partially completed new building.

Under the proposed changes it will be possible to obtain an occupation certificate for parts of a building but those parts will, arguably, need to be complete. Any conditions of consent expressed as needing to be satisfied "prior to the issue of an occupation certificate" will need to be complied with. This is likely to create barriers to obtaining an occupation certificate for a completed portion of a partially completed building.

The draft Bill also clarifies that an occupation certificate is not required for exempt development and permits the Regulations to create further exemptions from the requirement of an occupation certificate.

A new requirement for an "owner's manual" is proposed before an occupation certificate can be issued for buildings of a class specified by the Regulations.

Subdivision works

A new type of certificate called a "subdivision work certificate" is introduced by the draft Bill. Ostensibly this replaces a construction certificate for subdivision work. However, it is also accompanied by the new term "subdivision work", which is broadly defined as "any physical activity authorised to be carried out in connection with a subdivision under the conditions of a development consent for the subdivision of land...".

The Bill will create a requirement that no "subdivision work" can be carried out until a Principal Certifying Authority (PCA) is appointed and a subdivision works certificate is issued. Because "subdivision work" is so broadly defined, it is possible that it could capture physical survey work such as pegging and, if so, this is likely to have adverse consequences in terms of lawful physical commencement of subdivision consents. In essence, this could mean that a development consent for subdivision cannot be lawfully commenced until a PCA is appointed, a subdivision works certificate is obtained, and physical work is then carried out in accordance with the subdivision works certificate.

Limiting development approvals by Councillors

The Government would like to limit the amount of development applications that are dealt with by unqualified Councillors and instead ensure that applications are determined by people who are appropriately qualified in relevant areas of expertise, such as architecture and town planning.

To achieve this, the draft Bill would allow the Regulations to require that councils establish a local planning panel. Many councils have already established Independent Hearing and Assessment Panels (IHAPs) but this is voluntary and each IHAP operates differently and with different delegations.

The draft Bill would replace IHAPs with local planning panels and would aim to harmonise the use of these panels by ensuring that they all operate under the same framework and by specifying, by way of section 117 direction, what types of applications should be determined by the panel.

The explanatory materials accompanying the draft Bill explain that it is only proposed that a council will be directed to establish a panel where it is warranted to improve the quality and timeliness of planning decisions, or to manage conflicts of interest or corruption. However, the regulation making power contained in the draft Bill is not itself limited in this way.

A new power is also proposed to allow the Minister to direct councils in what circumstances an application should be determined under delegation by an appropriately qualified employee.

Threshold for regional development

It is proposed to move the thresholds for regional development out of the Act and into the Regulation, where they may be more easily updated. The Government proposes to consult with the community about how the current thresholds should be updated in the new Regulation, but it has indicated that it is considering increasing the basic threshold for regionally significant development from AU$20 million to AU$30 million.

Appeal time limits

The time limits for commencing appeals in relation to certain matters will be reduced from 12 months of refusal/deemed refusal to six months (which brings these appeal periods into line with appeals in relation to development applications), including:

  • appeals in relation to construction, occupation, and subdivision certificates;
  • appeals in relation to security; and
  • appeals in relation to building certificates (now renamed "building information certificates").

Where a developer wishes to appeal against a council's failure or refusal to release the security, where the security is provided in respect of contingencies that may arise after completion of the work to which the security relates, the appeal can't be commenced earlier than three months or later than six months after completion of the work.

This new time limit is, in our view, unworkable, because section 80A(6)(c) specifically allows a council to retain security for a six months defects liability period, by which time a developer would have already lost its right of appeal against a failure to release the security.

Changes to the objects of the Act

The draft Bill proposes to create completely new objects for the Act. While the explanatory materials state that this is a modernisation only, which does not change the intent or effect of the objects, it will be interesting to see how the court interprets the new objects.

The developer's favourite object—to encourage the promotion and co-ordination of the orderly and economic use and development of land—will go and will be replaced by the promotion of "the timely delivery of business, employment and housing opportunities (including housing choice and affordable housing)".

Legally speaking, the objects of the Act are significant as they are given substantial weight by the court in interpreting the Act and they tend to be most relevant to cases where a legal challenge to a planning decision is brought. However, for practical purposes, we expect that a change to the objects of the Act is unlikely to have a significant impact on the day to day operations of a developer.

The new objects proposed in the draft Bill are:

  1. to promote the social and economic welfare of the community and a better environment by the proper management, development and conservation of the State's natural and other resources;
  2. to facilitate ecologically sustainable development by integrating relevant economic, environmental and social considerations in decision-making about environmental planning and assessment;
  3. to promote the timely delivery of business, employment and housing opportunities (including for housing choice and affordable housing);
  4. to protect the environment, including the conservation of threatened and other species of native animals and plants;
  5. to promote the sustainable management of built and cultural heritage (including Aboriginal cultural heritage);
  6. to promote good design in the built environment;
  7. to promote the sharing of the responsibility for environmental planning and assessment between the different levels of government in the State; and
  8. to provide increased opportunity for community participation in environmental planning and assessment.

Other changes of note

  • Developers may be required, by the Regulations, to carry out community consultation before lodging a development application or modification application.
  • Councils will now have to make their own strategic planning document, known as a Local Strategic Planning Statement, which will need to explain how higher level strategic plans at the regional and/or district level are given effect at the local level.
  • Community participation plans, which were an aspect of the failed Planning Bill 2013, will be revived as part of the draft Bill.
  • The Bill contains a new regulation making power to allow the Minister to require the standardisation of Development Control Plans (structure only, not content).
  • A new power to impose a condition on a development consent requiring financial assurance by bank guarantee, bond, or other security to secure funds to be used towards the carrying out of works or programs (such as remediation work) under a consent is proposed. The draft Bill also contains a consultation note that consideration is to be given to whether special provisions should be made with respect to conditions relating to offsets for the impacts of proposed development.
  • If an approval body for integrated development fails to respond or if two or more approval bodies provide GTAs that are inconsistent with each other, the Planning Secretary can give an approval on behalf of an approval body.
  • New regulation making power to create offences punishable by a maximum penalty of up to AU$110,000.

Beware the Regulation

The Act already contains broad regulation making powers, and the draft Bill proposes to expressly expand these powers in some interesting ways. We expect that much of the detail of the Government's proposed reforms will be found in a new or updated Regulation, which is yet to be drafted.

Further changes to facilitate development are proposed occur by way of State Environmental Planning Policies, such as the proposed development of a medium density code.

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