08 December 2020

State planning system adapted for a post-covid economy

Covid-19 has had a devastating impact on our lives and the economy. The NSW Government has responded by implementing changes to its Planning System designed to inject investment into the economy and keep people in jobs. Below is a summary of the most recent changes.

The ePlanning Program

From 1 July councils and registered certifiers began using ePlanning Digital Services to process planning applications. From 31 December all planning applications must be processed this way.

This has required amendments to the Environmental Planning and Assessment Regulation 2000, making use of the portal mandatory when lodging planning applications. This includes development applications, including modification applications, applications for CDCs and for certificates under Part 6 of the Environmental Planning and Assessment Act 1979 (EP&A Act). Applications must also be assessed through the portal.

The purpose is to improve efficiency and transparency of the planning system.

Guidance on what constitutes “Physical Commencement”

The introduction of the COVID-19 Legislation Amendment (Emergency Measures – Attorney General Act) 2020 (COVID Act) has extended the date that certain development consents will lapse under the EP&A Act.

On 15 May 2020, a new clause was added to the EP&A Regulation clarifying the work required to ‘physically commence’ a development and also specifying works that do not meet the criterion. As well as providing clarity, this will also help developers and landowners expedite more substantive works approved under a consent.

Under the recent amendments ‘physical commencement’ does not include:

  • Creating a bore hole for testing

  • Removing water or soil for testing

  • Carrying out of survey work (including the placing of pegs or other survey equipment)

  • Acoustic testing

  • Removing vegetation as an ancillary activity to those activities approved under the development consent

  • Marking the ground to indicate how the land will be developed.

The new thresholds will only apply to consents granted after 15 May 2020.

Extension of Lapsing Period

Development consents that are operational (that is, not lapsed) at 25 March 2020 will lapse an additional two years later than provided for by the consent. This change also applies to deferred commencement consents.

The changes introduced under the COVID Act also revive development consents that lapsed between 25 March and 14 May 2020, which will also receive a two year extension of the lapsing period.

Development consents granted after 25 March 2020 will remain subject to the five year lapsing period. However, consent authorities will not be able to reduce the lapsing period to less than five years (as was previously possible under the EP&A Act).

These changes will give developers and landowners time to recover from the economic impacts of the pandemic before proceeding with their approved development consent.

Extending time to appeal determinations or refusals

Amendments to the Act have also extended the time to appeal determinations or refusals, including deemed refusals.

If the right to appeal a determination or refusal of a development application fell between 25 September 2019 and 25 March 2022, that right is now extended from the usual 6 months to 12 months after the date of the determination or refusal.

Deferring payment of local infrastructure levies

In July 2020, a new ministerial direction was made to temporarily defer payment of local infrastructure contributions and levies until the issuing of the occupation certificate. This is seen as a means of stimulating activity in the housing sector.

Additional requirements for certifiers

Recent amendments to the EP&A Regulations requires certifiers to confirm there are no outstanding infrastructure contributions or levies before issuing an occupation certificate for projects over $10 million.

Lifting maximum cap on section 7.12 developer contributions

The EP&A Regulation sets 1% as the standard highest maximum percentage which councils can levy under a section 7.12 development contributions plan. However, land in six local government areas are listed in the EP&A Regulations as having higher maximum percentage levies.

On 14 August 2020 (for the first time since 2012), the NSW Government approved an exceedance of the 1% cap. However, the Department is currently considering a series of criteria to be considered to assist with the assessment and determination of a request to increase the maximum percentage levy to ensure the process of assessing requests for a higher maximum percentage levy is efficient and transparent.

What’s next?

In addition to the above changes, the Department of Planning, Industry and Environment is considering the following changes to the NSW planning system:

  • A new Housing Diversity State Environmental Planning Policy to facilitate diverse, affordable housing for the state’s growing population. The changes will encourage more social housing, particularly build-to-rent, student and co-living. The Explanation of Intended Effect was on exhibition from 29 July 2020 to 9 September 2020.

  • Amendments to the EPA Regulation to improve transparency in the infrastructure contributions system through better reporting of contributions received and spent for individual contributions plans and planning agreements.

  • Draft Special Infrastructure Contributions Guidelines on the purpose and objectives of the SIC framework, the method for determining a new SIC, and the process for allocating SIC revenue to infrastructure investment once received. These were exhibited from 15 April 2020 to 12 June 2020.

The Department is also considering the following changes to local infrastructure contributions plans:

  • Increased value thresholds for triggering the review process

  • An annual indexation mechanism for the thresholds that trigger the review process based on the CPI

  • Reviewing the IPART terms of reference

  • Removing exemptions to the review process

  • Removing requirements for councils to re-exhibit an IPART reviewed contributions plan following receipt of advice from the Minister.

We will continue to monitor and provide updates.

Authors: Dennis Loether & Julide Ayas