[+] State of Confusion: Inside Victoria’s Planning Dilemma

Simplify, streamline, escalate, expand, ensure, improve ... and modernise. Those eight words are liberally sprinkled throughout a 144-page discussion paper reviewing Victoria’s planning and building process. The inquiry was headed by economist Anna Cronin, who carries the dubious title of Red Tape Commissioner. The report—released at the end of 2019— made 27 recommendations as to what short and medium-term improvements could be made to the state’s building approvals process, which the commission described as “complex and time-consuming.” But nearly three years after Cronin and her three-person advisory board began their work, frustrated developers and builders are still walking away from deals and going interstate to invest and build. The shortage of qualified planners, the varying levels of expertise within local government, the pace of the rezoning process, and questions over which authorities have what powers are all to blame, according to the industry. Wel.Co is a Melbourne-based developer specialising in building communities. “Look, the planning system in Victoria was probably what made me look to diversify into other states, including Queensland, which has been a really good growth market for us over the last couple of years,” says Wel.Co founder and managing director Andrew Welsh. Wel.Co’s bread and butter has been Melbourne’s Growth Corridor Plans—the Victorian capital’s integrated land use and transport schemes which will decide the region’s growth in the coming decades. But Welsh says they’ve struggled to find value in Melbourne’s growth corridors during the past couple of years. ▲ Wel.Co founder and managing director Andrew Welsh: struggle to find value in growth corridors. “It’s not because I think they’re overvalued as a piece of dirt,” he said. “I just think your time to get that lot out of the ground—because of the planning regulations—would have smashed the IRR (internal rate of return) because you only need 12 months to blow out a project that you’re paying good value for, and your IRR is hit.” Welsh says a common hold-up on zoned land is tapping into trunk infrastructure, such as water. “To develop your paddock, you need to show that you can demonstrate an outpour to the ultimate basin or creek, wherever that may be,” he says. “To do that in the growth corridors you’ve got to negotiate with up to 30 landowners, at times, for that access to be granted,” he says. “So, you can imagine the time that takes, and if you have one of those key people in that chain that doesn’t agree, even though on the rezone plan it might say that is where that watercourse needs to go as a natural point. “Current planning controls don’t allow Melbourne water to enact on opening up those properties.” Welsh estimated there are currently as many as 10,000 lots held up across Melbourne growth corridors because of lack of co-ordination between different planning authorities. Boutique residential developer Samuel Property has had its own frustrations with what its managing director described as “the hit and miss” of Victoria’s planning process. Illan Samuel said he had walked away from a property in Ballarat—where he planned a hotel in time for the Commonwealth Games— because he “couldn’t get answers quick enough.” ▲ Illan Samuel walked away from a Ballarat hotel project because “the left hand didn’t know what the right hand was doing”. “This was prime property in the middle of the Ballarat CBD, we had a short-stay operator lined up who would take the space, so we had the ability to add 50 to 60 rooms to the CBD near the train line near Ballarat hub,” Samuel says. “But the left hand didn’t know what the right hand was doing, and we just couldn’t get competence to move forward. It took two months to get meetings organised, and ultimately, you can only keep deals together for so long.” Samuel says he is jealous of the system that exists in Queensland. “The code is accessible, where you can get a permit without advertising in four to five months, as long as you tick off the boxes,” he says. “If we ever saw that sort of reform in Victoria, I think we’d see supply come to market much quicker.” In response to questions from The Urban Developer , Ballarat City Council’s director of development and growth Natalie Robertson says comparing its planning scheme with any projects in Brisbane was difficult, because the two states have contrasting planning procedures. “The City of Ballarat had prepared for a pre-application meeting with the applicant (Samuel Property), however, the applicant cancelled before discussions could progress,” Robertson says. Robertson acknowledges the shorting of planning staff was a challenge. “The city shares the state-wide challenge for Victorian councils, particularly in the regions, in terms of attracting and retaining planning staff,” she says. ▲ A shortage of planners is causing huge problems for the industry in Victoria. “We continue to look for diverse ways to attract and retain staff and improve our position within the recruitment market.” That view is echoed by the property industry’s national lobby group. “Some local governments have well resourced, talented, and enthusiastic planning departments, whereas others see massive delays primarily due to understaffing,” Property Council of Australia Victorian executive director Cath Evans says. “If you’re a developer choosing where to invest your money, these issues are often a determining factor in the decision-making process.” Evans wants to see planning studies made more of a priority within tertiary education. “Planning is a highly technical and complicated field of study,” she says, “and while governments have prioritised and incentivised many STEM courses at our universities, planning has not seen the same take-up.” Evans is urging the state government to offer incentives to students to stay in Victoria after finishing their planning studies, using their qualifications to relieve the burden on the planning system. Cronin’s 2020 review of the planning and building approvals process estimated the cost of avoidable delays in what was then a $33 billion construction sector, was probably between $400 million to $600 million a year—or up to 2 per cent of the total value of the sector. The review made 27 recommendations on how to overcome the delays, including “expand the workforce of building surveyors, inspectors and fire safety engineers.” ▲ Avoidable delays are costing the Victorian economy literally hundreds of millions of dollars. Others included streamlining the process for Melbourne’s 119 Precinct Structure Plans (PSPs), reduce response times for referrals, escalate planning for sites of strategic importance ... and improve planning resources for councils. “The differences in capabilities and capacity across local government in Victoria is considerable,” says the PCA’s Evans. But she has some sympathy for the municipalities, saying local government authorities were at the coal face of the Victorian economy, with decisions in council planning departments being some of the most consequential economic decisions impacting prosperity and the built environment. The PCA continues to advocate for the adoption of all 27 recommendations in Cronin’s 2020 inquiry, and to some degree there has been progress since the report’s release. The recommendations were turned into five programs. About $38 million was allocated in the 2020-21 state budget to implement the reform package. The Department of Transport and Planning has created a new online portal for State applications and established regional planning hubs. However, one of the most significant changes—the Development Facilitation Fast Track process—was not identified in the reform recommendations but born out of Covid-19. That process has had some success in kickstarting approvals for major project development. For its part, the Victorian government points to data from the Australian Bureau of Statistics showing Victoria leads the nation in the supply of new homes. The ABS data shows in the 12 months to January 2023, nearly 62,000 new homes were approved for construction in Victoria. About 37,000 of these approvals were for detached houses, about 11,000 for medium-density units and townhouses, and about 14,000 for higher-density apartments. During the same period NSW had about 52,000 approvals and Queensland about 37,000. “During the past two years to December 2022, the Victorian Planning Authority—the Victorian government agency that plans for Melbourne’s greenfields—delivered 50,000 lots, double the pace of South-East Queensland at 25,000 lots and more than three times the pace of metropolitan Sydney at 15,000 lots,” a spokesman says. “We continue to support growth and development while building on Melbourne's legacy of distinctiveness, liveability and sustainability.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] State of Confusion: Inside Victoria’s Planning Dilemma

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