Sylvia Hrovatin, general manager approvals for Walker Corporation is fed up with some of the arguments about the challenges of meeting urban housing demand. This is the view she presented to national conference held by the Urban Development Institute of Australia at Darling Harbour on 8-11 March this year –

– 8 April 2010 – I hate the term “urban sprawl”. It conveys such an ugly negative image that has no bearing in truth to how people choose to live. I hate jargon terms and if I see one more document with wanting to create healthy, vibrant, happy, sustainable communities achieving triple bottom line outcomes I will scream. And development is not a dirty word.

What does this have to do with the challenges of urban renewal? Everything and nothing. Today, my talk is contained to the challenges of urban renewal in Sydney. My apologies to the lovely people in the audience from other states.

The NSW government has adopted a planning policy to encourage urban consolidation. The government sees urban consolidation as a means of achieving a number of environmental objectives, these being: reduced competition for land; lower energy use; reduced greenhouse gas emissions from transport, reduction in waste generation and improved health of citizens through an increase in cycling and walking.

Town planners like to group all these objectives into one jargon term: sustainable development. Thus, urban consolidation is seen as a more sustainable form of development over new housing in suburban estates on the edge of the city. However, the debate as to whether urban consolidation is a sustainable form of development is considerably polarised.

A number of studies have looked at what form of development is better for our environment. The studies favour both forms of development. A recent study undertaken in Adelaide, compared the energy consumption and greenhouse gas emissions of city centre apartments with suburban dwellings. The study confirmed more compact housing development provides significant reductions in transport emissions.

The same study also concluded that a combination of high embodied energy in building materials, inefficient design and low occupancy rates of apartment dwellings results in higher energy use and greenhouse gas emissions than for suburban dwellings. This study found that the most carbon efficient form of housing was town houses and villas in inner suburban areas.

Just because problems have been highlighted with particular forms of development does not mean they should not occur or that one form of development should be favored over another. You can address the transport emissions associated with suburban development by investing in public transport and adopting policies which encourage the use energy efficient vehicles. And the apartments could be designed to reduce emissions by adopting energy efficient designs and energy efficient building materials.
However, the study of most interest is an analysis that associated higher environmental effects with higher incomes and smaller household sizes.

That means, the type and location of accommodation you live in, whether it is an apartment close to town or a house in new suburbia is not a factor in whether a better environment is achieved. Household consumption in fact is the broader driver of environmental pressure. It is the purchase of numerous clothes, electrical equipment, white goods, cars, books, plane trips, BBQs, lawn mowers and the list goes on that contributes to adverse effects on our planet.

In light of these studies the environmental merits of urban consolidation policies adopted in Australia’s capital cities should continue to be the subject of debate. Because, maybe the solution does not involve being so rigid in the split of medium density versus houses in new suburbs.  Maybe we should just concentrate on making sure the total number of dwellings required to satisfy supply each year are delivered.

Putting this argument aside, the NSW government has decreed that 70 per cent of new housing is to be contained to existing urban areas and 30 per cent of new housing is to be located in new suburbs. Sydney needs to provide about 25,000 dwellings every year. Of these 18,000 dwellings are to be located in existing urban areas and 8000 in new suburbs to accommodate a growing population.

“The growing population” – such a bland term to describe those people that will need housing in the future. Who are these people that need this housing? They are sons, daughters, brothers, sisters, cousins, nieces, nephews, grandchildren, separated people, single people, double income no kids people, people from overseas, others interstate, professional people, trades people. They can just as easily be you or me.

The use of bland terms and jargon allows bureaucracies to hide the truth, not admit there is a problem or that they may have contributed to the problem and it allows them not to care about the people they need to be serving in the years to come.

The problem is we haven’t been meeting the overall 25,000 target, the 18,000 target for medium density or the 8000 target for dwellings in new suburbs. Two years ago 15,000 dwellings were approved (medium and detached) and the figure is virtually the same last year. Two years ago 8700 building approvals were issued for medium density development. Last year it was 8000. Remember the target? 18,000.

So what happens if we continue to miss the targets? There are some possible scenarios. Economic growth and job creation could be lost interstate and Sydney’s status as Australia’s only global city could be threatened. If housing supply does not meet demand housing becomes less affordable for your son, your daughter and all the people I described. They are not nameless and they are not faceless. There is ample evidence that where demand exceeds supply, prices go up and so it is with housing. Sure, there are other factors which influence house prices, such as monetary policy, migration patterns, employment, etc but for now let’s just consider supply in its simplest terms.

What are the challenges to meeting this target of 18,000 new dwellings in existing areas? The answers are contained in hundreds of reports and papers by various groups comprising the likes of property industry lobby groups, academics, professional bodies, local government, state government and federal government. I could show you endless figures, or show you numerous graphs expressed as bar charts or pies or quote from the miles of research that has been undertaken in answering the question. The topic has been analysed and written about to the extent that there are more goals, actions, aims and objectives to solve the problem than you can pole vault over.

There are also many untruths about the lack of supply which are peddled by various groups (this includes local and state governments). If we want to solve the problem we have to be open and honest in our examination of the problem.
At the end of the day, we need to stop talking and writing about the barriers to the delivery of this 18,000 target and just get on with it. But how does one get on with it, when faced with the following barriers:

Lack of commitment: Existing policies, strategies and legislative mechanisms are not being used and are not supported by a commitment in government to deliver good urban renewal projects.

Confused governance: The Department of Planning has shirked their responsibilities for overseeing and facilitating urban renewal, they have showed a lack of strength and leadership in making clear to local government their responsibilities and they have done little to resolve some key centres and corridors across Sydney that are split between several councils.

Challenging economics: Policy makers don’t understand or don’t want to understand the economics behind implementing urban renewal, existing planning frameworks often do not offer sufficient development capacity to facilitate urban renewal, and levies on development are simply too high to deliver a project. Two excellent papers have been written dealing with this problem. But what happens? Take the example of one report. It concludes the densities recommended by the state government, together with the levies imposed make apartment development not profitable. Feasibilities are supplied. The government does not accept the conclusions.

The state government report that is unworkable receives an award from a professional association for a truly remarkable achievement. I would have thought it would have been better to hand out an award that demonstrates that it actually delivered what it promised. So delusion continues.

Lack of community awareness: There is little public debate about the benefits and opportunities associated with urban renewal, often resulting in a community backlash to growth and change. It is all very well to contend your home is your castle, but that does not make the area where your home is located, your kingdom.
Out of date planning frameworks: Many local plans are out of date, do not plan for the residential or employment growth Sydney needs, and are not premised on positively facilitating urban renewal.

Planning Hurdles: There are still long lead times on planning decisions, particularly re-zonings and the preparation of new Local Environmental Plans is behind schedule.

Infrastructure Planning and Funding: Infrastructure development levies slow growth. Better funding mechanisms need to be considered. What funding can or should be expected from government? Is it actually necessary that the developer carry all the costs and then, either face an uneconomic project or be in a position where there has to be an increase in cost to the purchaser to ensure that the development can be justified along normal business lines? If there is to be little or no contribution from outside sources, is it just a matter of ‘bad luck’ for the purchaser that in order to live in an area he is limited to by price etc, he has to chip in and make ends meet. All this in a situation where the government may very well have lacked the foresight to see the need for that type of development in the area.

Site Amalgamation is problematic: The amalgamation of sites within areas with fragmented ownership is very difficult and putting together development sites is hampered by people with who have unrealistic expectations of sale price.

Strata Title straightjacket: Current legislation makes it virtually impossible to dissolve a strata scheme to allow the appropriate re-development of underutilised sites. The current framework requires that all strata owners must consent to the termination of a scheme. This effectively sterilises a number of key locations that could accommodate increased densities. Reform is required which would allow termination of a strata scheme with 75 per cent of owners consent.

Some standards are not realistic: Design and sustainability standards and associated costs are increasing and are not being offset with appropriate incentives.

The solution most often suggested is leadership at the federal, state and local level. Leadership is needed to explain policies to the community, (not to sell policies because that process has been hijacked by the spin doctors to peddle untruths and the community is mistrustful of this and rightly so). Leadership is needed to provide certainty and consistency to the private sector and leadership is needed to ensure  there is significant investment in utilities, public transport, hospitals, schools, parks, libraries, swimming pools and services to make urban renewal work.

Is there sufficient land to accommodate 18,000 dwellings every year for the next 25 years? Many people say there are only enough sites to deliver 25 per cent of Sydney’s infill housing to 2031. Some people say there is more land than people. For example the state government, in the form of the State Transit Authority and the State Rail Authority, have over the last ten years sent a number of expedition forces to talk to developers about developing underutilised government sites of which there are many. The response has been piecemeal. And yet many sites continue to be underutilised.

Another way of looking at the problem of supply is to look at who is expected to deliver the target of 18,000 dwellings. In the main there are probably about seven large developer firms. Some of these are capable, given the right environment, of producing 2000 dwellings a year and some about 1000.

All up you could expect about 10,000 dwellings from them, again given optimum operating conditions. This leaves about 8000 to be delivered by others such as smaller developers including mum and dad developer. Just take the example of dual occupancy development (two dwellings on the one block). When this form of development was allowed to be subdivided, a typical Local Government Area in Sydney would have about 200 of these developments under construction each year.

But subdivision has been limited. Sydney has 43 Local Government Areas. If we just took the 20 largest of these and applied the historical figures, about 4,000 dwellings are capable of being added to the supply target.

The most recent government response (the NSW government) to the problem of supply was the release of yet another policy document called the Metropolitan Transport Plan. The plan canvasses the idea of establishing an autonomous authority that would be charged with delivering urban renewal projects.

This is great if it is responsible for ensuring that anyone and everyone who is delivering dwellings is assisted to achieve the target of 18,000. But if it is just another authority with its own rules and regulations it is not the solution. It is an unacceptable, piecemeal approach, not a level playing field and will favour one developer over another.

It is easy to say the problem is too hard, but courage and conviction is required to steer the proper course. And someone has to rise to this challenge.