Planning Submission Green Paper

To Whom It May Concern:

My name is Lesli Berger and I am the General Manager of Fivex Commercial Property ( old.fivex.com.au ) a private investment and development firm that concentrates predominantly on commercial property investment with some ancillary development.

I have read the Green Paper on the New South Wales Planning system and I make this submission in my personal capacity.

My General thoughts on the Green Paper titled a “New Planning System for NSW”

I am highly supportive of the green paper. I think the focus on strategic planning as opposed to individual development assessment is welcome, implementation of the separation of powers doctrine is sensible and that properly implemented information matching requirements and a fairer development levy system will have a real impact on housing affordability. Of course the most challenging aspect to a new Planning regime will be cultural change, particularly at the elected Councillor level, however that can be addressed so long as appropriate accountability mechanisms are introduced.  

Implementing The Separation of Powers Doctrine

I think that elected officials whether it be Councillors or former Planning Ministers under Part 3A have spent significantly too much time and energy on individual development assessment as opposed to strategic planning. I think the Green Paper’s proposal to properly implement the separation of powers doctrine for development assessment will fix this anomaly and put the focus on strategic planning, which is where our elected officials should be focusing their energy and attention.

As a matter of principle, development assessment should be carried out solely on the merits of the application and not based on a political decision making process where often “who you know”, whether you are an applicant or an objector, is more important than the strength of your argument.

Enforcing the separation of powers between the legislature (the Minister and local Councillors) and the executive in terms of development assessment is sensible and will help ensure that development assessment is de-politicised.

As part of implementing the new system, the retention of the Joint Regional Planning Panel (“ JRPP ”) is sensible, however, consistent with the separation of powers doctrine and the explicit recommendations in the Green Paper, Councils should be prohibited from appointing elected officials or their delegates as members of the Joint Regional Planning Panel.

Unfortunately, the current JRPP process has not been fully de-politicised because many Councils appoint 2 Councillors as their representatives to the JRPP and for controversial development applications the goal of the Councillors who are members of the JRPP is to influence at least one of the expert panel to vote against or significantly modify the development application so that the proposal is no longer economic in order to stop the development application from proceeding.

I experienced this scenario first hand when the JRPP assessed the development application for 33 Cross Street, Double Bay, which included a very popular 5 screen cinema proposal as part of the development application.

Unfortunately, notwithstanding the significant public benefits associated with the proposal for the Double Bay commercial centre, the JRPP decided that a full floor of the proposal should be removed. That decision was made notwithstanding the fact that no economic analysis was undertaken before making this decision and the reduction in height by one storey would not lead to any appreciable improvement to the amenity of surrounding residential property. Based on my discussions with some of the parties involved in the decision, the two Councillor representatives on the JRPP managed to convince one of the expert panel to their way of thinking and as a result, the approval was given on the condition a full floor of the proposal be removed, without any input from the applicant, and as a result the proposal has not proceeded as at today’s date.

Clearly, when JRPP’s were introduced it was never the intention that elected officials be appointed as members to the panel and I believe the current membership of the JRPP system can lead to perverse outcomes as described above.

My view is that the membership of the JRPP should either be completely appointed by the State Government or if it is considered desirable for Councils to continue to make two appointments to the JRPP that Councils only be authorised to appoint two senior staff members with requisite planning expertise and that Councillors or their nominees be prohibited from serving on the JRPP.

I think there needs to be a strong focus on ensuring a true separation between development assessment and elected officials in a practical sense. Elected officials need to be banned from lobbying Council Officers either to support or oppose an individual development application. Significant penalties need to be introduced should the ban not be properly followed.

Strategic Planning

The current EPA Act only pays lip-service to economic outcomes and the Green Paper’s recommendation that economic modelling is properly considered as part of Strategic Planning is sensible, means that strategic planning decisions are not made in a theoretical vacuum and puts a reality check on what is actually likely to be built based on suggested building envelopes based on expert economic evidence.

I think the Green Paper’s focus on building envelopes is welcome, however, I think there is a need to remove Floor Space Ratio controls as a planning tool, because they are a crude planning instrument and so long as the envelope controls are properly defined, are completely redundant.

Further, it is the practice of most New South Wales Councils to propose envelope controls in their town planning instruments, with very low FSR controls, which are not in harmony with the envelope controls. My personal theory is that Councils do this as a means to limit the economic development of land and to ensure Council has a discretion to reject a development application even in circumstances where it complies with the envelope controls, particularly for political purposes. Clearly, that is a highly undesirable outcome.

In the case of City of Sydney Council, the motivation for proposing generous envelope controls and very low FSR controls relates to the City’s and the former South Sydney Council’s policy of requiring developers to buy ‘bonus’ floor space as a revenue raising method. Notwithstanding the fact that this practice is clearly contrary to a proper s79C assessment under the current EPA Act, this policy has infected the current City of Sydney Council and the Council has developed a ‘bonus floor space guide’ where developers are required to enter into a ‘voluntary’ planning agreement in order to obtain a development approval. Clearly, this sort of questionable practice needs to be outlawed and the simplest way to do this is to remove FSR controls as a planning control, not to mention to clean up the imposition of development levies to a more transparent system, which I will touch on later in my submission.

I know from personal experience, this is how the City of Sydney Council operates because I was once so bold as to suggest I would not ‘voluntarily’ enter into a VPA with City of Sydney Council to pay for bonus floor space in circumstances where our development was supportable on merit. Without further notice the Council Officers recommended refusal of our development application notwithstanding the fact that the site had an existing development approval on the site for substantially the same building envelope we were now seeking to internally modify with a new DA.

So far no one in a position of authority, not even the Minister for Planning when I addressed him publicly on this issue at a Property Council breakfast was willing to tackle this area of maladministration and abuse.

I believe the Green Paper, properly implemented has the ability to stop Councils from unreasonably abusing their powers and fixing some of the non-transparent behaviour evident in the current planning system.

Information Matching Requirements

Matching information requirements to the complexity of the development assessment is a brilliant suggestion and long overdue. Currently, applicants are forced to spend an inordinate amount of money designing what is tantamount to a virtual building that is almost ready for construction, without even knowing if the basic envelope of the development is supportable on merit. Of course this is a massive waste of public and private resources in terms of the assessment of superfluous material and the preparation of that material and I applaud the Green Paper for properly addressing this issue.

Clearly, the information requirements need to be mandatory and the discretion provided to Council to seek additional information which is not relevant to the proper assessment of a development application given its level of complexity needs to be prohibited.

How to fix the development levy system?  

I personally believe that a needs based system, as exists in current s94 contributions, is highly subjective and can create economic anomalies in terms of the development taxes associated with different parts of Sydney and New South Wales. Further a needs based system creates a perverse incentive for Councils to produce so-called expert reports maximising the needs related to new development.  

I am personally opposed to voluntary planning agreements and see them as an area of gross abuse of power. However, if VPA’s are to be kept, they need to be capped, so that a Council cannot request more money through a VPA either in kind or in terms of a financial contribution greater than what the s94 contribution for the development would otherwise be.

My personal recommendation is that if you want to fix the development levy system and make it equitable, simply apply a fixed percentage development levy (as opposed to the complex system proposed in the Green Paper) to all new development, based on the assessed cost of construction for the new works. The levy could have a ‘levy-free’ threshold, so that minor works are excluded. E.g. any works up to $200,000 have no levy applicable, however, any works above $200,000 will be levied at a fixed percentage of the construction costs for any amount above the threshold.

I also believe that the long-service levy that applies to new development projects needs to be removed. The scheme is a rort and the truth is that should the scheme continue the fees collected should be collected from employers and not directly from land holders.

How to ensure a world class planning system is properly implemented

As properly identified in the Green Paper cultural change is needed. There needs to be a change of focus for assessment officers from “how can we justify rejecting the application before us?” to “how can we approve the application before us?” That would be a far more constructive approach and will ultimately lead to better development outcomes.

However, in my opinion, cultural change needs to be more than just professional development. I think an enforcement and accountability mechanism is needed in order to achieve this and the simplest mechanism I can think of is a local government ombudsman who is tasked with ensuring Councils are properly administering the new planning legislation, with investigative powers to tackle potential areas of abuse.

The proposed local government ombudsman would need strong investigative powers, the ability to enforce change and follow up its investigations and most importantly would need to be properly resourced. Spot checks of local Councils would need to occur and I think the ombudsman would even need to go so far as to lodge dummy development applications with Councils to see first-hand how the development assessment system works in practice in particular local government areas.

Thank you for your consideration of my submission.

Yours truly,

Lesli Berger