As foreshadowed in our December article Planning and environment: a recap of 2016 and what to expect in 2017, proposed amendments to the Environmental Planning and Assessment Act 1979 were released by the NSW Government in early January 2017. The primary purpose of the reforms is to "promote confidence in our state's planning system", not housing supply. We provide some brief comments on the stated reforms.

Why is reform of the Environmental Planning & Assessment Act important?

The Environmental Planning & Assessment Act (the Act) is the principal piece of environmental planning legislation in New South Wales. From a big picture perspective it does two fundamental things providing the regulatory framework for development:
  • authorises plan making for the detail of desired development within NSW
  • provides development assessment processes for development considered by these plans to be potentially appropriate
In simple terms, the Act and any reforms to it therefore impact on the natural and built environment we enjoy, the economy which provides goods and services, and all the enabling infrastructure. 

Reforms aim to promote confidence in NSW planning system, making it simpler and faster

More information about the reforms to the Act can be found on the New South Wales Government's Planning and Environment website, which sets out the following primary source documents:
  1. Summary of proposals
  2. Bill guide
  3. Draft Bill
  4. Stakeholder feedback
The reforms are significant in terms of both the number of changes being proposed (the draft Bill is 113 pages) and the significance and complexity. The complexity stems from the gaps that have not yet been resolved. In this regard, the reform package being proposed is broader than simply what is contained in the draft Bill. This makes it difficult to fully and properly evaluate and to form a concluded view on some of the changes. It also means you cannot read the Bill in isolation. While the Bill itself is 113 pages, the reforms espoused in the Summary of Proposals are being promulgated not just through the Act but also through a mix of departmental policies, procedures, codes, and proposed changes to the Regulations. Some of these documents are in draft, some are in place already, and others have not yet been released. 

The stated primary aim of the reform is about "promoting confidence" in the planning system ("confidence" is a recurring theme in planning reform). The primary aim is not promoting housing supply despite the rhetoric, and it is not even one of the four "underlying objectives" in the Summary of Proposals. Accordingly, there appear to be mixed messages being communicated about the aims of the reform as much of the commentary and "noise" about the reforms relate to housing supply rather than "promoting confidence". 

One of the Government's underlying aims is to make the system "simpler and faster". This, however, will not always be the case. New types of plans are proposed to be added to the system which create added complexity. The reforms to complying development, transitional Part 3A projects, and modification applications will inevitably add time compared to the processes for them under the Act as it currently stands.

The new Planning Minister, Anthony Roberts, has been handed a significant challenge in getting these reforms through, a task that Brad Hazzard MP was unsuccessful at doing back in 2013. 

Summary of the reforms

A detailed commentary on each reform is a massive task. However, we set out in the three columns below a summary of: 
  • the stated objective which will lead to the achievement of the primary aim of improving confidence in the planning system 
  • the stated reform being proposed either contained within the draft Bill or elsewhere 
  • our brief comments on the change
Our table draws on the Government's format summarising the reforms on page 4 of the Summary of Proposals
Overarching objective: promote confidence in our state's planning system
Underlying objective Reform         Comment
Enhance community participation
Enhancing community involvement in the key decisions that shape our cities, towns and neighbourhoods
Structural change to the Act - renumbering, removing repealed Parts, and creating new Parts to the Act. This should aid simplicity, readability, clarity, and is important to ensure an accessible Act. Those who have memorised section numbers will have to relearn them!
The Act will require Community participation plans (CP Plans) to be prepared showing how community participation will occur (unless the council has already prepared an engagement strategy under the Local Government Act 1993 that meets the Act's requirements).
For developers, the engagement processes will not be standardised across NSW meaning the participation requirements will vary from one local government area to another. Yet another plan will need to be navigated for any development application. For planning authorities, the challenge will be developing workable and meaningful community engagement that avoids "engagement fatigue", and then ensuring implementation of the plan given that the validity of a development consent can hinge on whether proper community participation has been provided.
New community participation principles (CP principles) are to be inserted into the Act.
Planning authorities will need to pay close attention to these principles in preparing their CP Plans. Principles include: the community has a right to be informed about planning matters that affect it, and planning information should be in plain language, easily accessible and in a form that facilitates community participation in planning. The principles won't necessarily yield the same result for each council's CP Plan.
A statement of reasons for decisions will be required under the Act, and the detail of that statement will need to be proportionate to the scale and impact of the decision.
Understanding why a decision has been made will assist developers to understand their options for a site if refused. According to ICAC, transparency is enhanced by giving reasons for decision-making*. However, this will also potentially broaden the rights to challenge decisions by not just developers, reducing the certainty of decision-making. It will be interesting to see whether this creates further administrative law grounds for review if reasons are, for example, illogical or irrational or impacted by bias. Decision makers will need to learn the art of drafting proper reasons.
*NSW Independent Commission Against Corruption (ICAC), September 2007, Corruption Risks in NSW Development Approval Processes, ICAC Position Paper, Sydney, p. 23.
New consultation requirements for major development which will flow out of the CP Principles and Departmental practice. No hard requirement is included in the Bill.
This will be introduced through CP Plans and (according to the Summary of Proposals) become a requirement of the Department for environmental impact assessments (EIAs). This reflects one of the CP Principles which needs to be considered in preparing CP Plans: "Members of the community who are affected by proposed major development should be consulted by the proponent before an application for planning approval is made."
Engagement tools to be expanded and updated. No hard requirement is included in the Bill.
The Summary of Proposals advises that a suite of tools is being explored to engage the community, particularly for strategic planning. More meaningful engagement is required. We have moved on from placing a notice on a sign, but at the same time mechanisms are needed which cut through the fog of organisations and business wanting to engage with the community.
Early consultation with neighbours - again, nothing is contained about this in the Bill, but the amendments will clarify the power to make Regulations to encourage this.
This has been foreshadowed by the previous Planning Minister for the last year. The Summary of Proposals indicates an incentive system of reducing fees where there is early consultation. Small-scale owners/developers will appreciate any fee relief for applications. Larger developers are becoming more sophisticated at community engagement, and this will entrench that trend.
Promote strategic planning and better outcomes
Improve upfront strategic planning to guide growth and development
The Act will require new local strategic planning statements (SPSs), and review of same every five years.
No council is an "island", and SPSs are proposed to "complete the line of sight from regional and district plans". The draft Bill appears to leave this requirement to be more fully coloured by the Planning Secretary who can prepare requirements for SPSs. Possibly, this is how they will require Government or Greater Sydney Commission sign off, which the Summary of Proposals foreshadows. The intent is for Councils to take their cues from higher order strategic plans applying to the area, rather than developing internally-focused SPSs that ignore how that area fits within the broader geography. Planning Proposals will need to give effect to SPSs. While this is important to ensure avoiding myopic or overly parochial planning decisions, it is possible this could be achieved with the current system. In this regard, SPSs add yet another plan to the mix; in the last year we have had introduced Regional Plans, District Plans, and if this is passed, SPSs.
The Act will require regular (five yearly) local environment plan (LEP) checks (as well as SEPPs)
While councils will possess the discretion to work out if the LEP should be updated after doing these reviews, hopefully the review process will at least alert strategic planners to changes that might be required. The changing face of Sydney brought about by population increases and infrastructure renewal makes this a sensible reform; as the recent years have shown, the suitability of a site's zoning can rapidly change. The challenge will be incentivising councils to procure the rezoning of the sites expeditiously, as inertia and cost can often stymy these processes even if there are proper planning grounds for rezoning.
The Act will be amended to require councils to conform to a standard development control plan (DCP) format
It's been years since the standardised LEP was introduced. This reform (while different to the processes for standard LEPs) should have occurred at the same time. There are a multitude of benefits in doing this: people can understand how DCPs work in one area, without having to relearn things when looking at DCPs in another area; professionals in the industry will have a uniform format across DCPs saving time and cost; and it will allow cleaner uploading onto electronic platforms (i.e. NSW Planning Portal).
Optional model DCP provisions (not included in the Bill)
The Summary of Proposals advises this will be developed by a working group comprising Government, councils and industry.
A new design object in the Act (among other changes to the objects)
The Act's objectives create a culture around the Act in the agencies that administer the Act. One of the key changes to the objects is to include a new object "to promote good design in the built environment". This dovetails with the recent release of the draft NSW Government's Architecture and Design Policy for New South Wales which lays the foundation for "design-led planning". The other changes to the objects are also significant. These objects are often used to self-validate decisions or proposals. If the changes are passed, the "orderly and economic use of land" (a common refrain of developers) will be deleted and replaced with "timely delivery of business, employment and housing opportunities (including for housing choice and affordable housing)". The "proper management, development and conservation of natural and artificial resources" will make way for "the social and economic welfare of the community and a better environment by the proper management, development and conservation of the state’s natural and other resources". The sheer number of objectives makes it a difficult balancing act, and allows the cherry-picking of them.
Design-led planning strategy
This is not contained in the Bill, but is to be developed by the Office of the Government Architect. There is little detail on what this will look like other than that the Summary of Proposals states that "it [presumably the strategy] provides a set of principles and guidance to support productivity, environmental management and liveability in NSW".
The Act will empower the Secretary to accept enforceable undertakings by persons in relation to planning matters, and where breached the Court can order:
  • compliance with that undertaking
  • payment to the state of an amount not exceeding the financial benefit indirectly or directly attributable to a breach of the undertaking
  • compensation to the person who suffers from the breach
  • the mitigation of damage to the built or natural environment from the breach, and
  • damage to be made good.
It will be interesting to see how in practice undertakings are made and whether we will see pressure imposed by consent authorities for such undertakings (in return for the grant of consents) as we have seen for Voluntary Planning Agreements (VPAs). Undertakings will provide another "arrow in the quiver" for authorities in the exercise of their regulatory functions, and will provide an attractive option for authorities to seek from applicants. The Summary of Proposals indicates the undertakings regime will enable the efficient application to the Court for enforcement of terms and that it will be faster and cheaper than prosecuting the original breach of the consent. Only time will tell how much more efficient the enforcement of undertakings will be - going to Court is rarely "quick and cheap". The range of orders available to the Court are significant and should disincentivise calculated breaches.
Improved EIAs
Not contained within the Bill. Rather this reform is set out in the Department's discussion paper that was open for discussion until 27 November, 2016. It is beyond the scope here to analyse the proposed changes, but the changes being mooted are broad, including consistency across EIA documents and conditions to projects, more certainty on timeframes, strengthened monitoring, audits and compliance reporting. The winds of change are already being felt here for proponents, for example, mines who face more rigorous monitoring, auditing and reporting requirements.
VPAs: The Act will:
  • empower the Minister to make determinations or give directions about the method of determining the public benefit provided by a developer under a planning agreement, and
  • planning agreements may be entered into for complying development proposals.
This is a welcome change and dovetails with the proposed new 2016 VPA Practice Note and Ministerial Direction. As the Summary of Proposals acknowledges, the flexibility around the use of VPAs can mean "there is opportunity for parties to a planning agreement to make unfair or unreasonable demands on what is required under a planning agreement". The change allows the Minister to step in to what is often the central issue in negotiating a VPA: the numerical value of the public benefit. For example, should the method allow FSR to be "purchased" at a rate of "50% of the nominated dollar value per sqm of GFA" as some councils have put forward. Methodology like this has the hallmarks of a tax given the fixed nature of the charge without regard to the circumstances. The language of "purchase" that authorities have historically used also militates against the policy that "planning decisions may not be bought or sold". While the opportunity exists to reign these practices in, the question for many landowners and developers is whether the Minister will exercise these powers!
In respect to the second change, we comment about this below.
Increase probity and accountability in decisions:
Improving transparency, balance and expertise in decision-making to improve confidence and trust in the planning system
Under the Bill, Part 3A arrangements will not be discontinued yet. Strictly speaking the transitional provisions will be moved to the Regulations. The Summary of Proposals indicates that:
Transitional Part 3A projects will become State Significant Infrastructure or State Significant Development, and further modification of Part 3A approvals will be prevented.
The talk about ending Part 3A has been part of the coalition government's discourse since taking office - it was part of the mandate for the O'Farrell government. This is welcome in that it simplifies and harmonises the number of approval pathways for development in NSW. Modifications of these types of projects will become subject to "substantially the same development" test which applies to development applications, which is more restrictive.
Part 3A will continue to linger, however, as transitional Part 3A projects will have two months after the commencement of the provisions in which they can lodge section 75W applications, and section 75W applications that have already received Secretary's Environmental Assessment Requirements will continue to be assessed under section 75W if an EIS is lodged within 12 months of commencement of the provisions.
Under the Bill, the Minister will be able to direct a council to establish a local planning panel to determine development assessments. According to the Summary of Proposals the direction would also require the membership of the panel be approved by the Minister, and set out the circumstances in which the panel is to exercise the determination function.
The Summary of Proposals  states that these changes would be used by the Minister to address "sustained community concern about the timeliness or quality of a council’s planning decisions, or about conflict of interest." While this presents a valid object to get past problems associated with conflicts in councillors making planning decisions if there is a reasonable community concern about the way particular planning decisions are determined in a particular area or delays in decision-making, the power in the draft Bill essentially confers on the Minister the power to orchestrate the membership of the Panels and does not refer to the circumstances where the direction might be used to establish panels. The power could be used broadly, such as where the Minister disagrees with the council's planning decision-making.
Improved environmental impact assessments See analysis provided above.
The Act will enable broader delegations to council staff. Under the proposed changes, the Minister will be able to direct the circumstances when a development application may be determined by a council delegate. The power may be used to expand the persons delegated to determine development applications.
This falls under the same power as the power to constitute planning panels. According to the Summary of Proposals, councils where development applications have higher rates of delegation, have faster processing times. This power has the potential to impact on the 5% of development and modification applications not determined under delegation (based on the 2014-15 figures set out in the Summary of Proposals).
Refreshed thresholds for regional development. While not contained in the Bill, the Summary of Proposals flags that thresholds triggering a development going from local to regionally significant development (and therefore determined by regional planning panels) might be increased.
The current thresholds were set in 2011 and are due for updating. The Summary of Proposals indicates that while Councils may have an expanded role in assessing and determining development with larger capital investment values than before, some types of development might be "designated by order where the council’s development assessment is considered unsatisfactory".
Name change: the Bill will (if passed) lead to the Planning & Assessment Commission's (PAC) name being changed to the Independent Planning Commission (IPC). But that is not all, there will also be some significant process changes to the PAC/IPC.
"What's in a name?" A lot according to the Summary of Proposals which states the name change "reflects the independent, expert nature of the Commission and the fact that its role is primarily one of determining State significant proposals". The main change here is not to the name, however, but the removal of its review function which is aimed at halving the processing time for state significant development (SSD). This reform is set against a backdrop where project assessment times for complex state significant proposals increased from 598 days in 2008 to 1089 days in 2014.
Model codes of conduct for planning bodies which will be included in the Regulations but not in the Bill.
Model codes have been in force for the JRPPs (now called Sydney Planning Panels for Sydney panels) for some time. The key will be ensuring that members of the Panels are aware of their obligations in the Codes, and the Chair and others holding members to account.
Preventing the misuse of modifications:
  • the Bill, if approved, will amend the Act to prevent planning authorities, including the Court, from approving a modification in relation to development in contravention of the initial development consent, except for minor departures to the consent.
  • The amendments in the Bill will also require consent authorities to consider the reasons for the grant of an original consent when considering proposed modifications.
The current system permits applicants to apply to modify a consent to regularise work already constructed in breach of the development consent. If meritorious and the modification is approved, the future use of the constructed works becomes approved. The changes are designed to end this, except for minor departures from the consent. Development that has been constructed in contravention of a consent will have two options: demolish the departures or apply for a building certificate (which prevent the council from making an order or seeking civil enforcement to require the building to be demolished or altered).
The second part of the changes to section 96 will encounter difficulties when people seek to modify consents that were granted before the new requirement for reasons. The provision will require consent authorities going back to the reasons to work out whether changes should be permitted. Under the changes, it will nevertheless be possible for the changes to be consented to even if there were good reasons for, say, a condition, it is just that those reasons will need to have been taken into account (and explained in the eventual reason for the decisions that will be required if the draft Bill is passed).
  Powers to update conditions on monitoring and environmental audit. The new provisions will clarify that the Minister may also vary or revoke monitoring or environmental audit requirements in existing approvals.
Conditions for SSD or SSI projects will be able to be varied or revoked by the Minister. This will apparently enable conditions to be updated to ensure: relevance; that they are contemporary; and remain enforceable. For proponents and contractors involved with projects, it will mean that conditions of approval will in a sense lack finality and may in the future be changed if enforcement of a condition becomes fraught, or if the condition needs (based on the Minister's views) to evolve with the practical realities of the project and its impacts. Uncertainty for projects comes at a price, so these changes may increase prices for carrying out major projects.
Promote simpler, faster processes for all participants
Creating a system that is easier to understand, navigate and use, with better information and intuitive online processes
The Bill provides for some efficiencies in obtaining approvals and advice from NSW agencies. The Secretary of the Department of Planning and Environment will be provided "step in" rights to make decisions on behalf of agencies where concurrence is required.
According to the Summary of Proposals, "NSW agencies provide some 8,000 pieces of advice on local development each year. Approximately 10 per cent of these take longer than 40 days. The annual value of development applications with more than one concurrence and/or referral is approximately $6.1 billion." While delays in seeking concurrence for development has become part of development folklore in NSW, the Secretary will still need to conduct an assessment against "State assessment requirements" to be provided for in the Regulations. Further, the changes will only apply to local development where councils are the consent authority, when some of the most significant blockages occur for larger projects that are SSI or SSD. The above means two things: the change is only as good as the Secretary's ability to carry out assessments against the State assessment requirements (while performing their other tasks); and it will not remove delays for larger infrastructure projects.
Standard DCP format Discussed above.
Optional model DCP provisions Discussed above.
One of the Bill's most significant changes is to the complying development pathway: Our comments in response to each point are below.
  • where a complying development certificate (CDC) does not comply with the relevant standards in the State Policy, it can be declared invalid
This overcomes the recent Court of Appeal decision (Trives v Hornsby Shire Council [2015] NSWCA 158) which held that the characterisation of complying development could only be made by the certifier, and that a court could not look into this matter as a question of "jurisdictional fact" - making it difficult to invalidate.
  • the regulations will be able to limit the type of development that can be certified by an accredited certifier
  • This will allow the government to play with the levers of housing supply. No doubt if or when supply catches up, the more intense types of complying development will be "turned off".
  • a new investigative power is proposed for councils allowing for work to be stopped for 7 days while work is investigated
  • The impact of improper or flawed complying development being built and having to deal with it later is fraught. While complying development is meant to be low impact, this helps to ensure that it remains that way when it is being constructed.
  • the power for the regulations to allow for a compliance levy to support councils in their role in enforcing complying development standards
  • The cost of ensuring compliance for complying development is being pushed back onto developers/landowners. This has the potential to increase development costs, and so care will need to be taken in setting a levy that does not militate against some of the key aims of the reform package.
  • allowing for the deferred commencement in certain circumstances
  • The Summary of Proposals indicates there is a need for deferred commencement conditions to allow CDCs where, for example, no lot has yet been created (a CDC cannot be issued in this situation). Such conditions will enable the activation of the consent once the lot is created. While this pragmatism is to be commended, the ability for the certifier to impose deferred commencement conditions appears at large.
  • allowing special infrastructure contributions to be required, and planning agreements to be entered into, for complying developments
  • This reflects the user-pay principle of ensuring that those who use infrastructure contribute to the cost of it. Again, this has the potential to increase development costs (particularly when the levy, and VPA costs are added in to the complying development mix), and so care will need to be taken in setting a levy that does not militate against the very aims of the reform package. This is particularly pertinent since complying development was initially intended to be low impact and low cost.
The Act will create a regime for transferrable conditions so that conditions in a development consent cease to have effect once another approval regime takes effect. This will be subject to the consent authority being satisfied that the matters regulated by the parallel regime conditions will be adequately addressed.
This is a common sense reform that will remove overregulation which can add to confusion and complexity. This is likely to arise where a development consent imposes conditions relating to that development, as well as an Environment Protection Licence, or for mining where a mining lease comes into place. It will mean the relevant regulatory authority responsible for enforcement may change hands during the life of development in respect of aspects of the development and its operation.
"Fair and consistent" planning agreements As discussed above.
Simplified and consolidated building provisions: Our comments in response to each point are below.
  • key provisions relating to building regulation and certification into a single part of the Act
  • A plain English drafting change which will provide clarity.
  • require a construction certificate (CC) to be consistent with the development consent
  • The death knell of Burwood Council v Ralan Burwood Pty Ltd (No. 3) [2014] NSWCA 404 has sounded; developers who carry out works inconsistently with the approved development will now be at risk of having any CC granted in respect of those works invalid. There will now be two prongs countering such practice: certifiers will be liable for issuing a CC inconsistent with the development consent; and developers will be at risk of having the CC declared invalid, which can cause significant downstream development issues if this occurs (e.g. bringing the works back into conformity with the consent).
  • the Court has the ability to declare a CC invalid if it is inconsistent with the consent
Again, this is responsive to the above Court of Appeal decision.

Impact of Environmental Planning & Assessment Act reform on developers, councils and the Department

The effect of the impacts will be different for different interest groups. 

Developers should expect new consultation requirements and generally a higher level of involvement consulting with the public. Development Applications will be aided by showing "good design". Developers will be buoyed by the reaffirmed policy position in relation to VPAs (whether it translates to experience is another matter), but may expect new pressures to enter enforceable undertakings. They will also need to take a cautious approach to works which are unapproved, given the reversing of various case law on CCs and modification applications making it more difficult to regularise. CDCs will also be subject to tighter scrutiny and enforcement, and will be open to a more realistic prospect of being invalidated where they are granted incorrectly. Finally, developers with transitional Part 3A projects will need to plan an exit strategy from this regime which now has a sunset. For some projects, developers can expect conditions to evolve with the life of the project rather than stay stagnate.

Councils will have new plan-making functions: CP Plans, CP Principles, and SPSs. Councils will need to ramp up LEP reviews, bring DCPs into uniformity with the standard DCP, and ensure in exercising their functions under the Act that the new objects are being promoted. They will have an improved smorgasbord of enforcement options (enforceable undertakings), increased scope to intervene over CDCs and CCs. Some councils will need to reign in their VPA practices and policies. Some councils may be directed to set up Planning Panels with a particular composition, and have their own delegations interrupted so that, for example, development applications can be delegated to council officers. 

At the state level, the Minister and Secretary of the Department will have expanded functions on a range of matters: 
  • conditions of approvals 
  • step in rights 
  • enforceable undertakings 
  • intricate involvement with councils such as delegating authority to staff within councils and directing councils to set up Panels
  • intervening in VPAs
The public consultation period for the Bill has been extended to 31 March, 2017. As this piece shows, there is so much to comment on. Any one of the reforms has impacts which you may want expanded on in a submission and you should consider contacting a lawyer for help with this.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.