The key VCEC recommendations that form the basis of this submission are: Key recommendations that are commented upon:

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1 Victorian Planning and Environmental Law Association Submission: Streamlining Local Government Regulation Victorian Competition and Efficiency Commission (VCEC), April Summary of Comments: The purpose of the VCEC report is to identify possible improvements in Local Government operations that will reduce business costs and improve efficiencies. VCEC examines a number of Local Government activities that have an effect on the costs to business. It identifies that the operation of land use planning and development approval are two of the most significant activities that fall within the operational sphere of local Councils. Within this subject area, the report addresses the areas of land use planning regulation that effects business costs in two areas: Development assessment/approval processes, and Strategic planning The VPELA work group elected to focus on two main areas; the need to improve strategic planning processes and the relationship between state and local government. This should not be interpreted as an indication that, from the perspective of VPELA, the planning assessment processes are in good shape. Rather, it indicates a reluctance to re-commence on the processes and work that VPELA and other bodies have contributed to over many years. The key VCEC recommendations that form the basis of this submission are: Key recommendations that are commented upon: 1. Development Approval processes: The State Government should accelerate the process steps that will improve efficiencies (both in process improvements and through legislative changes to the structure of the processes) 2. Strategic Planning: A better alignment and prioritisation of planning policy is needed. The State Government has a responsibility to give guidance on the priorities of its objectives. These priorities then need to be translated into local planning policies. This will promote the development of good strategic planning at a local level; consistent with the state government s broader strategic direction. The priority of planning policy may require regional and sub-regional directions on policy implementation. 3. Other Comments: The efficiency of the system would be assisted by including an authority for the implementation of the planning and urban infrastructure provision, which also had the control of metropolitan or regionally significant projects. 1

2 1. Development Approval processes: In Victoria there have been a number of reviews of the planning process. These include: Reference Group on Decision making Processes (the Whitney Committee), September and November 2002 Better Decisions Faster, 2003 Cutting red tape in planning, August 2006 At the Federal level, the Development Assessment Forum has also proposed a Leading Practice Model for Development Assessment in Australia. Despite these reviews, there are only a small number of outcomes that can be recorded as successes. For example, the draft proposals for the Planning and Environment Act propose changes that would allow further improvements but included with these are proposals that would run counter to efficiency improvements. There is a need for a push to implement those changes that will deliver efficiency. The planning assessment process, at present, prioritises other principles such as public participation and property rights while consigning efficiency of process to be a secondary objective. VPELA is also aware that a number of organisations involved with land use planning and development will be focussing on the shortcomings of the existing processes. 2. Strategic Planning processes In Victoria, the planning schemes incorporate State planning policy within each scheme (SPPF) and then the inclusion of a Local Planning Policy Framework (LPPF). Local Government for a Better Victoria report indicates the following key issues for Local Governments: The need for alignment of State and Local government objectives for land use and development The growing State involvement in administration of land use planning regulation Coordination with state government and the tendency to look at the land use planning system to address the increasing number of other policy issues. Councils have prime regard for people within communities under the Local Government Act They have the ability to develop their own local government laws and planning 2

3 policies. This independence in local planning regulations results in variations between Councils. For example heritage vs. higher density and local government existing neighbourhood character vs. State government preferred neighbourhood character. The State Government planning policies contain no guidance as to what priority or weighting should be given to various policies. Furthermore it provides little direction to Council on whether State directions should take precedence over local polices. The Planning and Environment Act, S 7(4) directs that the specific provision takes precedence over any general provision and that any inconsistency between provisions (in the State and local sections) should be resolved by giving preference to the State provision. This does not resolve the problems between state and local planning policies where there is no direction as to what priority or weighting that should be given to policies. There are similar ambiguities within State Government objectives. There is no guidance as to the relative pertinence of State objectives nor is there direction provided to Councils on which State policies take precedence over local policies. In addition to this, local governments receive no direction as to how funds should be distributed amongst land use planning issues. Variations in local government policies and regulation result in different costs to similar developments across municipalities. Additional costs can also be incurred due to the geographic location of a municipality. These cost differences lead to decreased efficiency. State regulations which require the consideration of additional issues during the planning process, such as liquor licensing and Cultural Heritage Management Plans, increase costs to businesses. Councils (who may not be equipped to deal with such issues) face additional costs. Councils face skills shortages and cost resourcing, particularly in regional areas. In addition to this, each Council is diverse in terms of its geographical location, demographic, density, size and structure. Potential to ways to address the issue: The solution is to increase cohesion between State and Local policy objectives. This must begin with the State Government giving guidance on the priorities of its objectives. Consistency between plans and policies at the local level and the state government s broader strategic direction will also assist in aligning state and local government priorities. The priority of planning policy may require regional and sub-regional directions on policy implementation. For example the priority that might be given to settlement and coastline 3

4 protection could vary along parts of the Victorian coast. The priority given to policy objectives within an Urban Growth Zone area would be assisted if there was a clear weighting given to the conflicting objectives of delivering increased housing densities within new urban settlements and protecting native vegetation. For this to be achieved, specific planning directions for local and regional areas and subsequently a statement of land use management priorities would need to be established. A likely outcome would be a re-casting of the state planning policy section. This approach is in strong contrast to the policy neutral proposal that is currently under consideration. State vs. Local Government: Comments on why conflicting objectives will always operate to reduce efficiency Local Priorities and Politics: There is currently a divide between the priorities and objectives of councils and the state government. Councils are run to represent the community and as a result, influence from the local community can affect decisions at a local level. For example, residents are generally opposed to major change within the community. On the other hand, policy at the State level can be driven and responds to state wide issues such as housing supply. Policy at the state level is necessarily directed at current constituency needs. It is a fact that most developers are planning for the future buyer/purchaser/user. A lot of current policy (media grabbing policy) appears to be focused to metro Melbourne with rural areas falling off the radar as vote generating outcomes are often favoured in most cases. A current example of local government affecting development efficiency and cutting across activity centre policy is a refusal by a Council to make a decision on a report of the independent panel on an amendment that would allow a mixed use project within an activity centre. The inaction on behalf of the Council can be attributed to vocal local opposition. The Minister for Planning has the ability to intervene in this case and re-create the amendment using the completed steps. However to do this would be seen as a political act. In an election year, this action has not been taken. This illustrates a major flaw in a politically structured decision making process. 4

5 Internal Local Government operations There is also a lack of internal consistency where views differ between Council officers and/ or departments. For example, in a recent case cited to VPELA, the Strategic planning department of a council, during the due diligence phase of a property acquisition, advised that the developer s plans would be generally in accordance with the development plan. However, post the acquisition, the statutory planning department requirements were very different. State v Local standards: State government control over various planning elements is impacting on the governing ability of local governments. For example, the introduction of standardised road crosssections is affecting local government who already have their own standards. The state/local government power relations are exacerbating the division between the two levels, particularly where local governments are becoming resistant to state government initiatives. The lack of uniformity within local council, both internally and amongst the various municipalities, generates a level of uncertainty to developers; particularly in the current market where timeframes are tight and delays are costly and can be critical to the viability of a project. Also current delays surrounding VCAT is resulting to developers deciding to comply with restrictions imposed by council, as the 6-8 months wait for a VCAT hearing can have serious impacts on a projects financial return. It has been suggested that some Councils (aware of the delay) are using this to their advantage and are extracting a more favourable outcome from developers in return for a faster conditional approval. State planning but with no infrastructure support: Increasingly, local councils are refusing to facilitate state government objective on matters such as increased densities and housing affordability, until the required infrastructure in drainage, sewerage, transport services etc are provided. This is a recurring issue as state government s policy can leave a cost burden on local councils left struggling with the additional administration requirements. Councils are often unwilling or incapable of governing some areas such as native vegetation management etc. 5

6 State Government Agencies contribute to inefficiencies in outcomes There is a lack of internal interaction between state government agencies. The GAA was introduced to facilitate the planning process, where its role is to compile information and facilitate communication and compromises between various agencies. However the whole-ofgovernment approach to planning with state government agencies has proven to lead to lengthy delays as different state agencies conflict with one another (i.e. Vicroads vs. DSE vs. DPCD vs Melbourne Water etc). State Agencies often push their own agendas and priorities. For example, the current stance of the DSE on native vegetation and the Truganina Golden Sun Moth issue will potentially encumber large areas of developable land within the PSP in addition to the major time delays that have resulted from this issue. This is clearly a question of at what point should issues such as cultural heritage and native vegetation override development? Although the GAA involvement has facilitated the PSP process, the time factor is a major issue with the entire process taking in some cases, up to 4 years from pre planning to adoption. 3. System Flaws in Responsibility The efficiency of the system would be assisted by including an authority for the implementation of the planning and urban infrastructure provision, which also had the control of metropolitan or regionally significant projects. Development approvals and planning scheme amendments are largely in the control of local government. In a number of cases, this can lead to significant projects being refused or severely delayed due to local political sensitivities. VPELA observes that there is at present only one way to resolve issues that are considered of State significance. This involves the Minister taking responsibility. This can occur by way of the Minister making himself the planning authority for a parcel of land; or the Minister calling in a planning permit application. VPELA supports the authority of the Minister responsible for the planning legislation in Victoria to be able to take direct action in the case of state significant projects, policies and amendments to planning schemes. 6

7 VPELA also considers that the need to resort to Ministerial call-ins is indicative of flaws in the planning system. That is, there is a missing responsibility between the operation of a municipal authority as a planning authority and the Ministerial responsibility which should be as an oversight and as a policy setting role. While the Minister remains in this position, every call-in assumes a political character. VPELA strongly promotes planning to be a bi-partisan arrangement, given the need for long term urban and regional decision-making. Strategic Planning and operation of the State In recent times, the State Government has instead increased the range of circumstances in which Councils can have development assessment responsibilities taken away from them. The Planning and Environment Act 1987 and the Victorian Civil and Administrative Tribunal Act 1998 provide for the intervention of the Minister for Planning ( the Minister ) in planning processes. Specifically, the Minister has the power to: amend a planning scheme, with exemption from notice requirements, or to expedite an amendment to a planning scheme (to facilitate a proposed development), under section 20(4) of the Planning and Environment Act 1987; expedite an amendment to a planning scheme under section 185A of the Planning and Environment Act 1987; call-in a planning permit application yet to be decided by a responsible authority under sections 97B of the Planning and Environment Act 1987; call-in a matter before the Victorian Civil and Administrative Tribunal under clause 58 of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998, In the last few years, the Priority Development Panel operated to provide advice to the Minister on matters considered of state significance. More recently the Woolworth s Homewares/Hardware stores and Aldi projects have seen a switch to the use of the Advisory Committee vehicle. While all the circumstances in which intervention may be considered are not prescribed, the Minister may call-in a matter if it is considered that the proposed development is one of State or regional significance. 7

8 The outcomes of these investment decisions can have profound effects on the strategic planning positions of local governments. Given the scale of some of the projects, the local Councils are entitled to question the extent that they should be responsible for the future planning of the area. VPELA considers that the call-in process is unclear and open to political operation. The need for a State government to have the ability to manage major projects is not questioned. The issue is however one of transparency and clarity of process. The concept of having projects of a certain type or scale defined as major projects as becoming the responsibility of a non-local body (a metropolitan authority or the Minister) needs to be debated. This is included as a discussion point in the P&E Act review. It is clear that successful decision-making is reliant on clear lines of responsibility and accountability, effective coordination between local government and State government, and transparency about decision-making. Local governments are primarily responsible for the preparation and administration of planning schemes. Conversely, the State Government, through its roles in approving planning scheme amendments and intervening in planning processes through the exercise of the Ministerial call-in function also plays a key role. This means that in practice, State and local governments should work together to ensure that planning schemes deliver the intended outcomes. However, there is often a tension between local government and State government when the Minister s call-in powers are utilised. Local Government will often disagree with the State governments decision to call-in certain developments because it sees itself as quite capable of making an appropriate assessment that is more responsive to community needs. On the other hand the take-over of the decision by the State can often be supported by the local Council. Transparency is vital to clarifying the expectations of governments, and improving the planning interface between State and local governments. Call-ins are the subject of continued debate, reflecting the lack of community understanding of the circumstances in which this power can be used. 8

9 (It is observed that while the use of "call-in" powers for major developments is often employed as "fast-tracking", in that some public participation rights are curtailed, this does not necessarily mean that the process of approval is "faster".) It is difficult to identify publically available data on the timeframes for the administration of the call-in provisions. Given the concerns about lengthy timeframes for making decisions on applications that have been called-in, there is justification for the current public reporting (that occurs at a local government level) to also occur at a State government level. State Government management of the strategic planning process Local planning scheme amendments are subject to a number of state government bureaucratic steps. The authorisation process has come in for sustained criticism as being excessively specific before a proposed amendment is able to be exhibited. The time involved in the authorisation process from submission to outcome can often exceed 3 months. It is often difficult to ascertain the value in this step. For efficiency reasons, it should be made optional. In addition, approved amendments often are caught in a delayed system. It is recommended that performance indicators and benchmarks for planning processes administered by the State Government also include the administration of the call-in provisions. This could include a clear statement of the outcomes that the State government hopes to achieve through use of its call-in provisions, and consideration of how progress could be tracked against these outcomes in order to ensure clear accountability. This would assist in improving transparency, and provide a clear framework for all parties involved. A good reporting system would assist in providing incentives for improvements through performance transparency, and help policy-makers in local government and State government, as well as other stakeholders, evaluate the success of the call-in system and develop opportunities for improvement. Victorian Planning and Environmental Law Association, July 2010 Victorian Planning & Environmental Law Association PO Box 1291 Camberwell 3124 Telephone: