By Tina Perinotto

19 April 2010 – The NSW Government today said it would strip away restrictions on retail competition contained in zoning laws, in a move designed to result in lower retail prices for consumers.

NSW Planning Minister Tony Kelly said the NSW Government would implement the recommendations of a review that looked into “promoting economic growth and commercial competition through the planning system.”

The Shopping Centre Council of Australia said the move should logically also include a more liberal attitue to  where shopping centres could set up.

And the Urban Task Force which has lobbied strongly to remove zoning restriction says the moves do not go far enough.

(See our related story on an new inquiry into zoning and planning rules announced by the Productivity Commission)

The recommendations of the NSW review report include:

  • A Competition State Environmental Planning Policy (SEPP) be developed to clarify that competition between individual businesses is not in itself a relevant planning consideration,
  • Any restriction on the number of a particular type of retail store or any proximity restriction
  • contained in a LEP or DCP is invalid.
  • Considering ways to increase opportunities for competition by allowing more types of shops into centres that currently only permit “neighbourhood shops?
  • Providing guidance on how to consider third party objections when assessing development proposals, including how to seek recourse for vexatious objections.
  • The Minister issuing a direction to councils under section 117 of the Environmental Protection & Assessment Act to ensure that, unless it can be justified on sound planning grounds, planning policies and instruments cannot apply retrospectively.

“NSW is the first state to strip back planning requirements that lead to anti-competitive behaviour in the retail industry,” Mr Kelly.

“We will be implementing these recommendations to increase competition in retail businesses.

“The planning system should not permit unnecessary or unjustifiable protections that impede competition and this report recommends measures to make this clear and enforceable.

“This will ensure NSW continues to encourage innovation in retailing as well as promote choice and lower prices for consumers in NSW.”

Shopping Centre Council of Australia chief executive officer Milton Cockburn said The SCCA welcomed the overall direction of the recommendations of the review.

“Shopping centres are robust competitors in the NSW retailing environment and any moves to remove restrictions on the location of retailing will also be to the advantage of future shopping centre developments and redevelopments,” Mr Cockburn said.

“For too long shopping centre owners have also been limited in where they can develop. If other retailing formats are going to be permitted the freedom to develop in locations not previously designated for general retailing, future shopping centre developments cannot be excluded from this freedom.

“Greater competition’ must cut both ways and must not simply provide special treatment to a handful of retail formats.”

TheUrban Taskforce chief executive officer, Aaron Gadiel, said that the review was good news but did not go far enough.

“Town planning laws have been reducing competition and consumer choice – leading to consumers paying up to 22 per cent more for basic food items and up to 39 per cent more for other household products,” Mr Gadiel said.

“The report foreshadows an end to some of the most blatantly anti-competitive practices in the
NSW planning system.

“Rules expressly restricting the number of supermarkets, convenience stores and other retail
outlets in an area will now be abolished.

“Rules that require retail outlets to be a minimum distance away from any competitor are also to be scrapped.

“The acknowledgment that it’s not the role of bureaucrats to second-guess the commercial
judgments of business people is a positive step forward.

“These are welcome, long-overdue, reforms.

“We’ve played a key role in highlighting these rules, so we’re obviously pleased that they are to
be abolished.”

However, Mr Gadiel said that the current anti-competitive rules which allow planning authorities to consider the impact of new businesses on the trade of existing businesses would be codified and preserved.

“On this issue, the paper merely proposes the codification of existing town planning requirements put in place by the High Court in 1979.

“These rules already prohibit planning authorities from considering the competitive impacts of
businesses within an existing retail precinct, but they leave a giant loophole that has boosted the market power of the incumbent retail landlords.

“Planning authorities will still be free to force new supermarkets seeking to set up outside of an established shopping precinct to produce evidence that they will not steal trade from  competitors located in the existing precinct.

“While the codification may stop some abuses of the current system, this measure does not represent a wholesale reform.

“We’ll be pushing for more comprehensive changes as part of the pending Productivity Commission review of state planning systems.

“Retail developments should be encouraged outside existing congested shopping centres, easing the transport burden and encouraging more pedestrian friendly communities.

“Retail developments should be free to locate where the customers are – rather than forcing customers to travel further by car for shopping needs.”

“The decision by the government to instruct councils to take a flexible approach to development control plans, in-line with their approach to local environmental plans, is welcome.”

“Although, further reform is required to ensure that council development controls plans do not prevent developments expressly envisaged by state and regional planning policies.

“There is too much duplication and overlap between federal, state and local council requirements.

“For example, apartment development is subject to the building code, a high prescriptive state government design code and then further provisions in local council development control plans.

“The scope of matters that can be dealt with by development controls plans should be limited, and developments that meet the standards already set by the state government should be entitled to approval, even if they don’t satisfy prescriptive provisions in a council policy.”

The SCCA’s Mr Cockburn added: “The Environmental Planning and Assessment Act, particularly as it has been interpreted by the courts, has long established that economic competition between individual trade competitors is not a valid planning consideration for consent authorities, although the overall economic impact of a development on the wider locality is a valid planning consideration.

“We believe the current law in NSW, and the effect of court decisions such as Fabcot Pty Ltd v Hawkesbury City Council in 1997, have been misrepresented so moves to clarify this in the forthcoming competition State Environmental Planning Policy, are welcome.

“We look forward to further discussions with the NSW Government on the drafting of the SEPP and the revised Activity Centres Policy.”

Mr Kelly said the NSW State Government review followed the Australian Competition and Consumer Commission and Productivity Commission reports on the effects of planning and zoning controls on the restriction of competition.

Mr Kelly said Coalition of Australian Governments also agreed to request the Productivity Commission to undertake a benchmarking report on state and territory planning systems.

“ A number of Commonwealth initiatives have been implemented to increase retail competition, including agreements between large retailers and the ACCC that restrictive provisions in retail lease agreements be removed.

The review process included a number of targeted consultations with a range of stakeholders including
retailers, developers, local councils and individuals, and the receipt of 44 written submissions.

From media statements and comments supplied by the NSW Department of Planning, the Shopping Centre council of Australia and the Urban Taskforce.
tperinotto@thefifthestate.com