A NSW Productivity Commission report three years in the making has identified 60 reforms across a range of areas intended to boost productivity and prosperity across the state. 

Among the recommendations are changes to development planning to increase housing supply and density in high demand areas, which representatives of the property industry welcomed.

In the past, similar calls for planning reform have been rebuffed as an oversimplification that current regulations are restricting supply, or as ideological opposition to government regulation.

Peter Achterstraat

NSW Productivity commissioner Peter Achterstraat said the report was intended to guide a broad reform agenda to improve wages and living standards and drive economic recovery from COVID-19.

“When we improve educational opportunities, from cradle to retirement, reduce road congestion and change the way we commute, we unlock greater efficiencies and improve our citizens’ quality of life,” Achterstraat said. 

Recommendations of the broad-ranging report included investing in better education and skills training, adapting business regulations and tax systems, improving outcomes from infrastructure and transport, and ensuring sustainable water and energy supply.

The report also recommended reforming planning structures to increase housing supply by avoiding excessive regulation.

According to the report, development applications took longer to assess in NSW than other jurisdictions while “prescriptive rules” on land were inflexible and unable to accommodate business innovation.

Proposed changes included replacing stamp duty with a broad-based land tax, reducing approval waiting times, introducing an Urban Development Program to monitor and report on the housing market, as well as a housing supply council to advise on housing targets, and introducing incentives for small government to meet targets. 

The report called for a review of the Design and Place State Environmental Planning Policy (SEPP) and advocated for non-regulatory approaches wherever possible, although it added to “include the regulations where benefits to society are greater than the costs”.

It also noted that green spaces were important for productivity, public health, creating connected communities, and making cities more resilient against climate change and recommended a more consistent way of measuring these benefits. 

Property Council NSW executive director, Jane Fitzgerald called for certain recommendations relating to the state planning system to be urgently adopted.

“Housing affordability is a dire challenge that is causing distress for people right across NSW and the White Paper rightly calls for local housing delivery processes to be scrutinised and for the state to step up to ensure a strong pipeline of housing,” Fitzgerald said. 

However, not everyone agrees that excessive regulation is the cause of Sydney’s housing affordability crisis. Planning expert Tim Sneesby has previously stated in The Fifth Estate that housing supply in Sydney has in fact been a “success story” and that while the system had its issues it was not the barrier to development that many painted it as. 

Sneesby said that some in the property industry ignored evidence that in recent years Sydney had in fact “approved and built record numbers of new dwellings” and that demand for dwellings outside the inner and middle-ring suburbs was relatively slow.

“Approvals have dropped, but not approval rates. No one is buying, so no one is building, so no one is putting in applications, so there’s less to approve. That is not a problem with the planning system,” Sneesby said.

“If supply is the issue, why don’t lobbyists advocate for large-scale social housing construction?”

The white paper pointed to higher demand in the low density, widely sought after inner suburbs and said that without change a mismatch between housing preferences and location would continue to harm productivity in Sydney.

“Restrictions on the density of development have the effect of reducing housing supply where constraints are binding—that is, in locations where developers would like to build more apartments than the regulations allow. These locations are typically inner
suburbs close to jobs,” the report stated.

Housing supply forecasts suggest that LGAs within 10 kilometres of the CBD would account for just 20 per cent of new dwellings.

“These restrictions push more of the population into middle and outer suburbs, reduce the number of dwellings overall, increase the cost of dwellings, and prompt more people to share dwellings,” the report said.

“Without significant change to planning regulations, housing choice in areas of greatest demand will be increasingly scarce.”

NSW Treasurer Dominic Perrottet said the recommendations of the report would be taken into consideration by the government, with some of the advice proposed in a preliminary draft paper released last year such as reducing regulatory restrictions for small businesses already in the process of being implemented. 

“We will carefully consider the ideas in this report and our collective challenge is to debate these opportunities, identify those that we should proceed with, and then find practical pathways that lead to a better New South Wales as a result,” Perrottet said.

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  1. NSW must be very careful about using the new SEPP to remove sustainability measures in new housing with the intention of improving housing affordability. We risk creating thousands of inefficient houses that are expensive to run and put a huge burden on power and water infrastructure.

  2. Boosting productivity – meaning more output per person – means either less people working or increased production of the things that create greenhouse gases .

  3. The NSW government is granting exempt development status to the entire Airbnb industry. The research shows that tourist platforms are consuming housing, making housing more insecure and impacting residential amenity. Put the thousands of Airbnb apartments back in the regular rental market. Now is the time to regulate Airbnb industry more tightly according to the Australian Urban Housing Institute.