We are now only days away from the start of critical new planning laws that will govern the assessment of all major development projects in NSW (State Significant Development), following the coalition government's repeal of Part 3A of the Environmental Planning and Assessment Act shortly after the March election. Planning Minister Brad Hazzard recently said that he has already signed the new State Environmental Planning Policy (SEPP) and that it will commence this Saturday, 1 October.

Breaking news: this timing is now confirmed by proclamation published yesterday, 28 September.

By way of background, readers will recall from our May 2011 newsletter here that Part 3A was introduced in 2005 to depoliticise decision-making on large, important development projects and important sites (given their importance to the State and its economy) by taking the decisions away from parochial or partisan local councils (given the pressure placed upon them by local resident groups), and instead having those important projects impartially assessed by staff at the NSW Department of Planning, and then generally approved or refused by the Minister for Planning personally. Ironically, Part 3A ultimately became highly politicised, with the coalition constantly attacking it as being "rotten" and "giving the Planning Minister sweeping powers to approve developments at the stroke of a pen" and therefore prone to corruption and "shady deals". It came as no surprise then when the newly elected government swiftly repealed Part 3A in its first months in government.

Equally though, without a system or process to replace Part 3A, the development industry in NSW has bemoaned the "months of paralysis" in the planning system that have followed the March election, describing 2011 as "a lost year for urban development". Developers have effectively had no ability to even lodge new major project applications due to the absence of legislation to deal with such applications. According to Planning Minister Brad Hazzard, a cure for this paralysis will finally commence on 1 October 2011, but will now only apply to "projects of genuine state significance". The key elements of the new system are set out below. For further information, please contact us.

The new SEPP and legislation to repeal Part 3A

In late August, a draft 'State and Regional Development' SEPP was placed on public exhibition, to replace entirely the previous Major Project SEPP which has been in place since 2005, but was effectively repealed on 13 May 2011.

Importantly, the new SEPP is accompanied by significant reforms to the Environmental Planning and Assessment Act 1979 (EP&A Act) (via the Environmental Planning and Assessment (Part 3A Repeal) Act 2011 passed on 22 June 2011) which honours the Government's election promises by removing the contentious Part 3A from the Act altogether. The new legislation will commence this week, together with new Regulations which have not been publicised.

The combined effect of the new SEPP and amending legislation is as follows:

High level observations

  • The SEPP itself now does very little other than 'identify' the types of development that will be dealt with as 'State Significant Development' and 'State Significant Infrastructure' and 'Regional Development' (some examples of these are discussed below). Of particular note is that the aims of the SEPP are merely to identify those types of developments, whereas the previous SEPP also had express aims to "facilitate" the development of important sites that are of "economic, environmental or social significance to the State", and to "provide for the development of major sites" and to "facilitate" development of significant sites "for the benefit of the State". These express aims of facilitating development that is important to the wider State and its economy are all gone.
  • From a legal perspective, this has important consequences at the decision-making stage, because the new legislation essentially requires these large, State Significant developments to be assessed under the old s.79C of the Act, which has a very localised focus – for example, it requires the development to be considered in light of the local council's LEP and any draft LEP, and the social and economic impacts "in the locality", and any public submissions received – which are usually submitted mainly by local residents. At best, the requirement in s.79C that "the public interest" be considered might bring with it a consideration of the benefits of the development to the broader State and economy, including for example by way of job creation. But there is certainly no clear aim to facilitate or encourage State Significant Development, nor any legal mechanism requiring decision makers to do so.
  • Importantly however the new SEPP expressly states that local council development control plans (DCPs) do not apply to State Significant Development. This appears to recognise that DCPs are often highly restrictive and localised, with Departmental literature explaining that DCPs "are typically not prepared with major, complex classes of development in mind and often do not provide appropriate planning provisions for the types of proposals that are considered of genuine State Significance", and that excluding DCPs will ensure that "site specific factors and the individual merits of each proposal" are recognised.
  • Because s.79C of the Act will apply to State Significant Development, this means that development standards in local environmental plans (LEPs) and SEPPs will apply, such as height and floor space ratio. Readers may recall that under the previous SEPP and legislation, the Minister could but was not required to have regard to such planning instruments. The practical consequences of the new SEPP are that where State Significant Development would breach development standards such as height or bulk, they will only be legally capable of being approved if they are accompanied by a SEPP 1 objection which is then accepted by the decision maker. However SEPP 1 objections are notoriously difficult to successfully use, because they must establish for example that complying with the relevant controls (such as height or bulk) is unreasonable and unnecessary, and that the non-complying development somehow achieves the intention of those controls in any event, and that compliance with the controls would be contrary to the objects of the EP&A Act! For more details, see our January 2008 newsletter on SEPP 1 objections here. It is likely that State Significant Development will now have to closely reflect localised LEP requirements.
  • Under Part 3A, the Minister had the power to approve development even if it were wholly prohibited by an LEP or SEPP. This meant that no rezoning was required. The new legislation will allow the Minister to approve State Significant Development where it is partly prohibited, but not wholly prohibited. This begs the question of what extent of the development needs to be permissible? A tokenistic element would technically overcome the ban on "wholly prohibited" development. In any case, where a development is wholly prohibited, a concurrent rezoning can be applied for to overcome the prohibition. In this scenario, both the development application and the rezoning need to be approved by the Planning Assessment Commission, rather than the Minister or local council.

Procedure for State Significant development

  • In terms of procedure, applications relating to State Significant Development will be dealt with under Part 4 of the Act (which also applies to ordinary development applications such as new homes), but applicants will be required to also submit an environmental impact statement (EIS) with their application, which is a very detailed assessment that can often take many months to prepare. The EIS will need to meet specific requirements of the Director General of Planning (known as Director General's Environmental Assessment Requirements or DGRs), and applicants will therefore need to approach the Director General to obtain those requirements, before being able to prepare the detailed EIS, and ultimately lodge their applications. The application will then be publicly exhibited for a minimum 30 days before they are assessed and determined. The process is likely to be rigorous.
  • Applications that are amended after the public exhibition phase do not need to be re-exhibited unless they "substantially differ from" the original application and the environmental impact has not been "reduced". This will avoid increases in height or bulk, for example, escaping public scrutiny.
  • State Significant development applications, once approved, can be modified in the usual way via s.96 of the Act, which requires that the modified development remain "substantially the same as" the original approved development. This is more limited than the modification power that applied to Part 3A approvals under s.75W of the Act (before its recent repeal).

Who will assess and determine applications for State Significant development?

  • Applications will be lodged with the Department of Planning rather than the local council. The assessment of the applications will be conducted by the Department, although local councils will be entitled to lodge submissions setting out the council's position.
  • The Minister is technically the consent authority but will delegate his decision-making power "for all projects lodged by private developers". The delegation will typically be to the Planning Assessment Commission (PAC), which is ostensibly an independent panel of experts appointed by the Government. The PAC will be broadened, including full time, part time and casual members, to cope with the additional workload and responsibilities.
  • On less controversial applications – those where there are less than 25 objections and the Council does not object to the application - the Minister will delegate his decision-making power to staff at the Department of Planning. The figure of 25 objections appears somewhat random and would be easily manipulated by savvy and well organised objectors.

What types of development will be State Significant?

  • The Government is heavily emphasising that the new SEPP will only identify "genuinely state significant proposals", and "will approximately halve the number of proposals dealt with by the State when compared with the former Part 3A system".
  • The SEPP as exhibited lists 24 classes of State Significant Development, such as mining and extractive industries, petroleum production, chemical and other manufacturing, food and beverage processing, warehouses and distribution centres, hospitals, etc. However the categories also specify minimum levels of size or intensity, based on factors such as the cost of the development (often a minimum $30M) or the minimum tonnage of extraction or throughput. Department literature explains that the categories typically reflect "major projects that have the potential to deliver a significant economic input to the NSW economy and large-scale or complex projects that may involve significant environmental impact".
  • The Act also enables the Minister to identify specific sites as being of State significance and to therefore be singled out by the SEPP. The draft SEPP identifies 16 such sites including the Sydney Opera House, Sydney Olympic Park, Luna Park, Barangaroo, and Darling Harbour.
  • Importantly, coastal subdivisions and residential development have been culled from the SEPP entirely, meaning that virtually all residential development applications will be dealt with via development applications submitted to local councils (sometimes determined by Joint Regional Planning Panels, typically where the cost of the development exceeds $20M). The previous SEPP included retail, residential and commercial development at a cost of over $100 million, but was savagely attacked by the Coalition prior to the election on the basis that residential housing was rarely likely to be a matter of state significance. Those bemoaning the housing shortage in NSW and the consequential crisis of affordability would beg to differ, seeing the issue as one squarely for state planning, not local decision-making. Nevertheless, residential development will now only be classified as State Significant where it is specifically 'called in' by the Minister (as identified below), or is on a site listed in the SEPP.
  • There is a special power in s.89C(3) of the amending Act to allow the Minister to 'call in' development that is not already listed in the SEPP, but only where the Minister first obtains and makes publicly available advice from the independent Planning Assessment Commission "about the State or regional planning significance of the development". This is ostensibly to ensure that only "genuinely state significant proposals" are called in, although the Act does not say that the proposal must actually be of state or regional planning significance, only that advice be obtained about the significance of the proposal.

  • Appeals

    • Applicants will continue to have appeal rights to the Land and Environment Court other than where the Planning Assessment Commission has held a 'public hearing'. The calling of such public hearings, if over-utilised, could routinely deprive applicants of their entrenched appeal rights, but is expected to be used sparingly.
    • Third parties (objectors) can only appeal against approvals where the development would otherwise have been 'designated development' (prior to the new Act and SEPP). This will frequently be the case, but is not new, and will have been expected by developers.
    • Applications will be deemed to be refused after 90 days, meaning an appeal to the Land and Environment court may be lodged. Alternatively, an appeal may be lodged after an application has actually been refused – whether that is sooner or later than 90 days. For a copy of our Guide to Land and Environment Court Appeals, please email us.
    • Leaving aside merit appeals, any person will still be entitled to challenge the lawfulness of an approval for State Significant Development, in judicial review proceedings (limited to questions of legality rather than merit).

    What about State Significant Infrastructure?

    • The new SEPP and amended Act also make separate provision for 'State Significant Infrastructure', with classes of infrastructure listed in the SEPP (such as railways, roads, electricity transmission networks, pipelines and ports), and others able to be declared by the Minister from time to time. These will be assessed under a new Part 5.1 of the Act, which is not dissimilar to the previous Part 3A. For further information on State Significant Infrastructure, please contact us.

    Regional Development – JRPPs

    • A new schedule has been added to the Act which lists the development for which regional panels can exercise the consent authority functions of councils. It excludes development within the City of Sydney.
    • The general threshold will be increased from development with a cost of $10M now up to $20M, to better reflect truly 'regionally significant' development. This means typically all applications costing less than $20M will stay with the local council, whereas previously applications over $10M would have gone to the JRPPs. This reflects the Coalitions promise to return planning powers to local councils.
    • There are some exceptions where lower thresholds apply, for example a $5 million threshold applies for affordable housing, child care centres, educational establishments, or places of worship, and for applications where Council is the developer or owns any of the land.
    • Some coastal subdivisions into more than 100 lots will have a $5M threshold after which they go to the JRPP; and
    • Interestingly, for development that has a CIV of between $10 million and $20 million and where the DA has not been determined within 120 days after it was lodged, the applicant can request that the application be dealt with by a JRPP. This is plainly to avoid undue delays, but the JRPP can refuse the request if the JRPP considers that the applicant has caused the delay.
    • Development within the area of a council where the Minister believes the performance of the council is unsatisfactory. This appears to be a 'keep the councils honest' provision.

    For more information, please contact:

    Sydney

    Anthony Whealy

    t (02) 9931 4867

    e awhealy@nsw.gadens.com.au

    Jodie Wauchope

    t (02) 9931 4778

    e jwauchope@nsw.gadens.com.au

    Christina Renner

    t (02) 9931 4701

    e crenner@nsw.gadens.com.au

This report does not comprise legal advice and neither Gadens Lawyers nor the authors accept any responsibility for it.