In 1997, Australia’s national Planning Officials Group (POG) conducted a ‘performance review’ of state and territory planning systems. The POG has functioned in recent years as a national forum for senior planning officials from the state, territory, and Commonwealth governments. POG seems to desire a set of measurable performance criteria that could form the basis of a service contract. Put differently, the result of the project might be to permit the ‘outsourcing’ of public planning services to, presumably, the most cost-effective supplier. The idea is hardly new—it is one consequence of the new local government legislation in Victoria but its apparent support at the national level suggests that the practice may become more widespread.
By mid-1998, it appeared that the POG reform agenda had made little institutional progress. At this time we were informed by one senior public sector planner that the review had been ‘shelved’, and had been overtaken by the other two main neoliberal reform agendas for planning, NCP, and the proposals forwarded by the Property Council of Australia. We turn now to consider the latter reform initiative whose aim, ostensibly, is to standardize Australia’s state-based development control regimes. This proposal is embodied in a joint submission to Australia’s planning, housing, and local government ministers by various development lobby and professional interests, and coordinated by the Property Council of Australia.
“The Australian market had emerged from a cyclical downturn which started at the beginning of 1995. After falling to just over 9,600 dwelling approvals in January 1996, the industry recovered with dwelling approvals increasing by 49 per cent to 14,300 in June 1998. The underlying housing demand prepared by the Indicative Planning Council for the Housing Industry (IPC) in 1997 suggested an underlying demand of 138,000 dwelling units nationally.” (Williams International Property Report (1998-2001)
The report explicitly lauds the reforms to planning controls that have been undertaken by the government of Victoria in recent years. The reduction in the number of zoning categories in the state planning regime from 2871 to just 25 wins warm praise from development lobby interests while also, however, drawing criticism from community and environmental groups. Thousands of zones may certainly have been excessive, but there is a strong case that flexibility in zoning definitions is warranted to enable localities characterized by great social and ecological diversity to make their own regulatory choices. (Western Australian Planning Commission (2003) While developers may demand administrative efficiency and regulatory simplicity, it is equally true that democracy requires regulation that is sensitive to social and ecological differences.
The report also opposes any exclusive public control of regulatory approval processes as an ‘artificial monopoly’ that is, by nature, ‘inefficient and anti-competitive, and explicitly endorses the application of NCP to planning. By contrast, little is made of the environmental and social failings (or strengths) of the current regimes, and how these might be addressed. Only one of the 20 recommendations made by the report touches on social and environmental objectives—even here the rhetoric of efficiency is invoked, with the report arguing that a tight focus on defined outcomes will help the government’s rationalized land use. (Jamieson, 2004, 121-30)
“The housing affordability crisis in WA will not be resolved any time soon if lazy public policy solutions like mandatory development taxes are introduced. If the Premier is serious about fixing the housing affordability crisis then his recently announced inquiry of land and housing markets in WA should undertake a full review of the far-reaching implications of mandatory development taxes.”
The Property Council report notes that, while Australia’s state-based building controls were harmonized within a new national system. The document announces that its vision of a uniform national development control regime will deliver better planning outcomes, offer business and the community greater certainty, and lower business and community costs. It might well be argued that a national system of development control would realize community benefits by reducing or even removing the pressure on state and city governments to employ continuous planning deregulation in the competition for development capital. However, that is not what the Property Council intends.
“The housing sector had experienced a strong period of growth following the downturn in activity after the introduction of the GST in July 2000. This growth had been largely due to increasing housing affordability associated with the current low interest rates and the doubling of the First Home Owners Scheme grant for buyers of new homes. Residential investment fell by 2.2 per cent in September 1998 after rising consecutively for previous seven quarters.” (Williams International Property Report (1998-2001).
The experience of reform to Australia’s state-based system of building codes may reveal what the Property Council has in mind for planning. The standardization of state-building regulations within the national AMARCORD framework ‘was part of the campaign to reshape the attitudes of Australians to their cities and to get them to accept lower standards. He argues that the shift to uniformity in building law lowered the general standard of such controls as state codes were standardized around the lowest regulatory common denominator. The private sector wants to use a highly centralized institutional structure behind which it can hide in achieving the deregulation of planning and development. If the PCA has its way, land use planning will become a process to support the market needs of the development industry.
Whereas, if we have a look at the recent past scenario, it transpires as Dr. David Rees director of research, Mirvac Group says, “In 2003, investor demand for housing was rising sharply, if temporarily, and first home buyers had declined to a low proportion of mortgage lending. The Productivity Commission was invited to examine the problem, and its 300-page report placed much emphasis on investor demand as a cause of low affordability. In 2006, borrowing by first home buyers is roughly backed on trend and investor demand is sharply lower. But affordability remains mysteriously low. While the nagging problem of affordability remains the same, the answer keeps on changing. Meanwhile, the entry fee to the owner-occupied housing market in Australia remains persistently high.” (David, 2006).
Unlike the POG reform initiative, the Property Council’s proposals seem to have gained powerful momentum in institutional settings. Although by mid-1998 the RAPI had withdrawn its official support, the Property Council’s agenda secured an endorsement from a national meeting in Adelaide of an elite forum of powerful planning interests, made up of planning officials, development industry lobbyists, and the representatives of various professional groups. This forum met to discuss the Unfinished Business document and concluded with an agreement on a draft outline for a proposed national development assessment system. (State Homelessness Taskforce 2002) From the minutes of this meeting, it is obvious that the proposed development assessment system mirrors very closely the framework suggested by the Property Council.
“Historically low mortgage rates had contributed to a steadily improving housing market in most of Australia’s capital cities. Low and stable interest rates fuelled activity in the residential market in the past several years. However, with interest rates rising and changes in the taxation structure in 2000, the residential market, Australia-wide, experienced substantial shocks during 2000. The new housing market had slowed substantially in the second half of the year, following a splurge in activity prior to the introduction of the GST.” (Williams Talhar and Wong, 1998-2001).
If viewed from an economical point of view, house prices reveal quite a complex scenario. As narrated by David, “We conventionally measure affordability by reference to median or average house prices. But what matters more for first home buyers is the cost of the entry level, not the median, home. And the evidence on the affordable cost of bringing a new home to market is persuasive. Project home prices, as measured by the Australian Bureau of Statistics, show a rise of 4.8 percent per annum across all eight capital cities between 1996 and 2005. Over the same period, wages rose by 4.6 percent per annum. Not much sign of eroding affordability here. But project home prices significantly exclude that ingredient vital for every home – land.” David, 2006).
Investors in residential property are in the business of supplying accommodation. No one wins when an investment apartment is vacant. Orthodox economics says that a subsidy to suppliers, all things being equal, will increase supply and a fall in the price of that product. (Bridge, 2003) And since renting accommodation is a close substitute for homeownership, as the sharp take-up by apartment tenants in response to the FHOG demonstrated, a subsidy to residential investors should result in an increased supply of rental accommodation, lower rents, and a reduction in the demand for, and prices of, owner-occupied dwellings as well. (Troy, 2002) Tax breaks for the road transport industry do not cause freight congestion on the railroads.
As regards this Ken Morrison is of the view that “A recent National survey has found that nearly one quarter of the cost to produce the average house and land package in the Hunter comprises $85,687 in Government costs and charges. The Australian-first research, commissioned by the Residential Development Council, reveals government costs are now the second largest component of the final cost for new housing buyers in some areas of Australia, even ahead of the price of land. Residential Development Council Executive Director Ross Elliott said the research exposed the myth that housing affordability had been squeezed in recent years due solely to supply constraints or free-market conditions such as investor demand and rising construction prices.” (Ken Morrison, 2007).
The same situation is also highlighted by Peter Verwer in his article. He thinks, “The experts say there’s a shortage of 150,000 affordable dwellings in Australia right now. Others estimate there’ll be a million stressed households within a decade. ‘Stress’ occurs when more than 30 per cent of household income is chewed up by accommodation costs. In Brisbane alone, there’ll be 25,000 homeless this coming Christmas day. While experts argue about the definition of affordability, the Property Council divides the issue into three categories: the homeless, the welfare dependent and the working poor, the last of which includes nurses, fire-fighters, teachers, clerical staff, young families and the like. All require a mix of public policy solutions with a common thread – more dwellings.” (Peter Verwer, 2002).
References
Williams C.H. Talhar and Wong, International Property Report (1998-2001). Web.
Affordable Housing: Where Is The Problem? 2007. Web.
David Rees. Hunter Housing Affordability Suffering; 2007. Web.
Jamieson, N. & M. Huxley, 2004. Australian Housing and Urban Research Institute, Working Paper 6, Melbourne. 121-30.
Troy, P. 2002 ‘Introductory remarks’ The End of Public Housing? ed. R. Coles, Urban Research Program, Australian National University, Canberra.89-94.
Ken Morrison; Residential Development Council PROPERTY COUNCIL OF AUSTRALIA, 2007. Web.
Peter Verwer; Affordable Housing: There’s a Super Alternative: 2007. Web.
Bridge, C., Flatau, P., Whelan, S., Wood, G., and Yates, J. (2003) Housing Assistance and Non-Shelter Outcomes, Australian Housing and Urban Research Institute final report, 2003. Web.
Western Australian Planning Commission (2003), Greater Perth: Population and Housing, Discussion Paper 2, Western Australian Planning Commission, Perth. Web.
State Homelessness Taskforce (2002) Addressing Homelessness in Western Australia, Department of Housing and Works, Western Australia. Web.
Western Australian Planning Commission (2002), Residential Design Codes of Western Australia, Western Australian Planning Commission, Perth. Web.