A suite of planning reforms for a decade of change: Victorian Housing Statement announced

On 20 September 2023, the Victorian Government announced its housing plan for the next decade, to respond to the critical lack of affordable housing in the state.

Victoria’s Housing Statement commits to a ‘bold target’ to build 800,000 homes in Victoria over the next decade, which is around 40% more than forecast by current trends.

This additional boost to supply is to be delivered through a plethora of new reforms, partnerships, bodies and measures. At the centre of the strategy is a philosophy that if more homes are built, they will become more affordable. Further, that it is essential to build ‘up and out’, reflecting a sharpened focus on urban infill opportunities to augment the urban growth areas boom that has occurred in the past.

There are numerous aspects of the Housing Statement, including measures to:

• bring forward funding for infrastructure works along growth corridors;
  
  
• support investment in housing, from first home buyers through to institutional investors;
  
  
• unlock development opportunities, through the release of surplus Crown land and the residential conversion of unused office space; and
  
  
• support social and affordable housing across the state, including:
  
  
  • significant new funding to support regional housing;
    
    
  • Australia’s ‘biggest ever urban renewal project’ being the redevelopment of all of Melbourne’s 44 high-rise public housing estates by 2051; and
    
    
  • government investment of A$1 billion in the Affordable Housing Investment Partnership, broadening the availability of low interest loans and government guarantees to affordable as well as social housing.

While there is much to be explored in the Housing Statement, the below is focused on the matters that relate to the planning system, being the regulatory framework and bureaucracy of planning permit decision-making.

Time to reset the planning system

The Housing Statement points to the backlog of planning permit applications before councils, and the rise of applications being determined by ‘unelected VCAT’, as evidence that the system isn’t working and that ‘the status quo is not an option’.

According to the Housing Statement, what is required is a reset. A more active planning system that is driven by government and that is clear, transparent and accountable, as well as quick, efficient and easy to navigate. This is summed up in the catchphrase “good decisions, made faster”. 

What is proposed?

The Housing Statement commits to a range of administrative, practical and legislative measures to reset the planning system. This includes:

• updating and expanding Plan Melbourne to cover the whole state;
  
  
• bolstering resources at the Department of Transport and Planning, including 90 new planners;
  
  
• making a dedicated team available to work with proponents, councils and referral agencies to resolve ongoing issues and avoid the need for VCAT review;
  
  
• ‘no hesitation’ in exercising Ministerial call-in powers where council decision making is lagging;
  
  
• expanding the Development Facilitation Program to broaden the Minister for Planning’s decision-making role and reduce application timeframes for medium to high-density residential developments that meet set criteria down to four months;
  
  
• new planning controls to boost activity centre development;
  
  
• Department-led delivery and coordination of priority precincts;
  
  
• broader planning permit exemptions for granny flats and single-dwelling extensions;
  
  
• new ‘deemed to comply’ residential standards to fast-track application processing times;
  
  
• improved apartment design standards, to ensure sustainable and fit-for-purpose homes;
  
  
• issuing an updated statement of expectations to water corporations, to compel early and ongoing engagement with developers and councils to speed up water connections; and 
  
  
• legislation to implement Red Tape Commissioner recommendations and other reforms to VCAT and planning panel powers, to be followed by more significant legislative reforms to ‘rewrite’ the Planning and Environment Act 1987 (Vic).

Immediate amendment of planning schemes

Steps have already been taken to begin implementing the proposed changes.

On 20 September 2023, the Victoria Planning Provisions were amended, including the introduction of two new particular provisions (clauses 53.22 and 53.23) to facilitate significant residential and economic development.

If either clause 53.22 or 53.23 apply to a proposal then the usual operation of the planning scheme will be modified, including by:

• the permit application being exempt from third party review rights;
  
  
• scope to vary otherwise mandatory building height and setback requirements (and for clause 53.23 mandatory garden area requirements) specified elsewhere in the relevant planning scheme; and
  
  
• the Minister for Planning being the responsible authority for the permit application.

Clause 53.22 potentially applies to a broad range of proposals of economic significance, including retail, industrial, office, health, rural and certain residential uses of a certain scale. Importantly, it is not linked to affordable housing, or limited to developments that have a residential component.

On the other hand, clause 53.23 is linked to affordable housing, and potentially applies to:

• developments where:
  
  
  • at least 10% of the dwellings within the development are affordable housing (or an alternative mechanism for the provision of the affordable housing is agreed with the responsible authority);
    
    
  • the estimated cost (verified by a quantity surveyor) of the accommodation being developed is $50 million for developments in metropolitan Melbourne, or $15 million for developments in regional Victoria; and
    
    
  • the financial feasibility of the project has been verified by the CEO of Invest Victoria;
    
    
• developments where the responsible authority has advised in writing that the accommodation is of significance having regard to a range of factors (including the percentage of the dwellings that will be affordable housing), and the financial feasibility of the project has been verified by the CEO of Invest Victoria; and 
  
  
• certain State-backed developments, where 10% of the dwellings are affordable housing.

Clause 53.23 is not limited to pure residential developments.

Relatedly, some residential zones have been amended to facilitate a range of non-residential uses (including retail and office uses) that are associated with a development to which clause 53.23 applies.

Implications

Anticipation about housing and planning reform has been building for a long time, following familiar development-stifling complaints about delays, uncertainty, ‘red tape’ and issues relating to urban sprawl, along with deteriorating affordability.

The Victorian Government’s Housing Statement sets out a roadmap to address housing issues, with the scale and variety of measures proposed giving industry, councils and the community plenty to consider. Much more detail is required to fully appreciate the impact of the announcement.

For now, key implications include:

• immediate development opportunities through new clauses 53.22 and 53.23, including:
  
  
  • the potential for greater development yield, with the capacity for variation of some otherwise mandatory built form requirements of the relevant planning scheme;
    
    
  • processing of the permit application by the Minister for Planning via the Development Facilitation Program; and
    
    
  • limitations on third party rights to apply to VCAT for review of developments that fall within the criteria of new clauses 53.22 or 53.23 (although the usual notice and objection process is not excluded);
    
    
• reduced decision-making autonomy for councils;
  
  
• shifting the dial on planning discretion in favour of State-wide economic and housing objectives;
  
  
• a more proactive and if necessary, interventionist government approach to planning decision making; and
   
• an era of significant reform, including a full re-write of the State’s planning laws, which is intended deliver a clearer framework with faster decision making and greater approvals certainty.