How the planning system can help boost a COVID-19 economic recovery in NSW

Australia is facing a severe economic downturn. Managing the economic impacts of the COVID-19 pandemic will require, amongst other initiatives, cooperation between government and industry. In this respect, there are various ways that the NSW planning system could be used to support the economy during and post-COVID-19. 

What has already been done?

The NSW government has taken a number of initial steps to bring flexibility into the planning system in its COVID-19 response, including the introduction of measures to ensure retail premises, home-based industries and businesses can operate 24 hours a day, and to allow supermarkets and other retail outlets in NSW to receive deliveries 24 hours a day.

Four additional orders have been made as at 3 April 2020, permitting:

• the extended operation of existing retail and home businesses outside the hours of their development consents;
  
  
• various changes of use and temporary construction for the purpose of health service facilities;
  
  
• the use of existing structures or the construction of temporary structures for the purpose of temporary workers’ accommodation at two key power stations;
  
  
• wider use of food trucks and commercial kitchens for the purpose of preparing and serving takeaway meals.

These are important initial responses, but further steps can be taken to support and buffer the economy. In this respect, Minister Stokes has indicated just this morning that a Planning System Acceleration Program (Program) has been established by the NSW Government.

While the precise details of the Program are yet to be revealed, the Minister has announced that in an effort to sustain the economy throughout the COVID-19 crisis and to drive economic growth once it is over, the Program has been designed to:

• create opportunities for more than 30,000 construction jobs in the next six months;
  
  
• fast-track assessments of State Significant Developments, rezonings and development applications (DAs), with more decisions to be made by the Minister if required;
  
  
• support councils and planning panels to fast-track local and regionally significant DAs;
  
  
• introduce a ‘one stop shop’ for industry to progress projects that may be ‘stuck in the system’;
  
  
• clear the current backlog of cases stuck in the Land & Environment Court with additional Acting Commissioners; and
  
  
• invest $70 million to co-fund vital new community infrastructure in North West Sydney including roads, drainage and public parks to unlock plans for the construction of thousands of new houses.

We are keenly awaiting the release of further information and the additional planning system reforms promised for the coming weeks, and will be providing an update on the likely impacts and effectiveness of any new measures. In the interim, there are also a number of other opportunities that could be considered in the short to medium term.

Short term opportunities to expedite approvals of critical infrastructure

In the short term, expediting the assessment and approval of critical infrastructure should now be considered.

Expediting critical health and education infrastructure

Already the NSW Government has introduced new legislation to expedite development during the COVID-19 pandemic. The COVID-19 Legislation Amendment (Emergency Measures) Act 2020 came into effect on 25 March 2020 and empowers the NSW Minister for Planning and Public Spaces to authorise development to be carried out on land by order, without the need for any approval under the Environmental Planning and Assessment Act 1979 (EP&A Act) or consent from any person.[1] The effect is that the making of an Order is taken to be a grant of development consent.

But this power is not unqualified, and the Minister must consult with the Minister for Health and Medical Research and be reasonably satisfied that the order is necessary to protect the health, safety and welfare of members of the public during the COVID-19 pandemic.[2]

One option for the Government is to consider widening the scope of this power to allow the Minister to prioritise critical infrastructure projects that would not otherwise qualify for expedited approval. This could include health and education infrastructure projects, such as the development of new hospitals or new classrooms.

Expediting shovel‑ready projects

Another option is to expedite and prioritise shovel‑ready projects that generate employment or will contribute meaningfully to housing supply. The lead time of large infrastructure projects, combined with impacts to supply chains, means that the economic benefits of projects may not be seen for years to come. Identifying and prioritising shovel‑ready projects that will create jobs now is critical.

The NSW Government and industry can work together to identify these projects and the Industry Associations are no doubt working with Government to assist with this process already as suggested by this morning’s announcements. It is important though that there are a specific category of developments that are treated as a ‘first priority’ as resources may become an issue if the NSW Government casts the net too wide. No doubt this will be considered. A new State Environmental Planning Policy may be required in order to fast-track approval for these projects, which may be declared on a site‑by‑site basis or potentially by category with appropriate capital expenditure and other thresholds.

An example of how this approach has been used previously is the Nation Building and Jobs Plan (State Infrastructure Delivery) Act 2009 No 1 (NSW), which the NSW Government introduced to give effect to the partnership agreement between the States and the Federal government during the Global Financial Crisis (GFC). That Act created the power for certain Government funded infrastructure projects to effectively be fast‑tracked, by exempting approved projects from all or any specified development control legislation. 

Medium to long-term opportunities for building development

There are also long term opportunities for substantive changes to the NSW planning system which could help kick-start a post-COVID-19 economic recovery.

Code assessable development

One such measure would be adopting a form of ‘code assessment’, like that which applies in Queensland.

The latest and most significant attempt to move towards a broad code assessment framework in NSW was the partially-deferred Low Rise Medium Density Housing Code (Medium Density Code).

The Medium Density Code, which is expected to come into effect in a further 45 council areas on 1 July 2020, sets standards for the approval and construction of dwellings such as terrace houses and dual occupancies, allowing this development to take place in a similar fashion to Queensland’s code assessment regime.

The application of code assessment in Brisbane’s planning scheme provides a good model for the NSW Government to consider for Sydney. In Brisbane, code assessment is a significant part of the planning mix of a local area, and Council’s Planning Scheme contains codes for a number of types of development.

Brisbane’s Planning Scheme has a multiple dwelling code, similar to the NSW Medium Density Code, but also features codes for childcare and community centres, retirement and residential care facilities, and industrial uses such as service stations and industry. The opportunities for NSW are not just in ensuring good design outcomes and facilitating the right kind of development, but ensuring that housing and job-generating projects get off the ground with less fuss and occur where they are most needed.

Code assessment presents a longer-term opportunity to ensure a steady pipeline of appropriate development across Sydney and the state.

Extension of physical commencement timeframe for planning approvals 

Another measure to ensure that the planning system is equipped to flexibly respond to the impacts of the COVID-19 pandemic is to extend the lapsing period of development consents.

Under the EP&A Act, development consents can be granted with a shorter lapsing period than the maximum five years.[3] As the impacts of the COVID-19 pandemic continue, there is a risk that a shorter period will not be long enough for developers to obtain finance and physically commence construction work, so as to prevent the consent lapsing.[4]

To address this issue, the government could consider introducing a statutory amendment to the EP&A Act to prevent consent authorities from reducing the maximum five year lapsing period when granting development consent for the next 12 months.

While developers can already apply for a one year extension of their development consent under the EP&A Act, up to the maximum five year period, a more thorough and simplified approach would be to legislate that all existing development consents have their lapsing period automatically extended to the maximum five year period.

This form of statutory amendment has was previously introduced in NSW during the GFC to extend the lapsing period of existing development consents.[5]

Of course, there are other opportunities that could be considered, including:

• expanding the categories of exempt and complying development;
  
  
• expedited rezoning assessments and reviews (this appears to now be under consideration as of this morning);
  
  
• expansion of the use and duration of site compatibility certificates; and
  
  
•  the introduction of statutory timeframes associated with priority precincts.

All of the above are options that are always on the table, but may now have more merit in the context of ensuring, for example, affordable housing and the supply of essential goods and services. All of the above, of course, requires sufficient State and local Government resources to facilitate expedited approval timeframes, whilst simultaneously ensuring appropriate and fulsome assessment of each proposal. The current disruption to employment in many sectors may present an unusual opportunity in this regard.

We look forward to updating you on the further announcements regarding the ways in which the NSW planning system will assist the economic recovery in NSW.

This article is part of our insight series COVID-19: Navigating the implications for business in Australia and beyond. To get notified by email when new COVID-19 insights are released, please subscribe for updates here.