Planning red tape adds 24% to unit cost

By Michael Matusik, 5th September 2012

Did you know that the Queensland government has 204,500 full-time equivalent state employees?  One in eight full-time Queensland workers is currently employed by the state; one-third of which have been just deemed as non-frontline … and one assumes somewhat expendable.

There are three departments which have no frontline full-time employees including State Development, Infrastructure & Planning (995 employees); Premier & Cabinet (356) and Energy @ Water Supply (298).  Whilst it is tempting to tell Premier Newman who he should sack in his own department and ditto regarding energy and water, I want to focus on state planning.

There is little doubt – although some readers will try to correct me – that Queensland suffers from poor urban governance.  Much of it is the fault of the state.

Poor urban governance more often than not results in higher holding charges and compliance costs; loss of trade and opportunity due to delays; greater difficulties in getting finance and sales; inconsistent advice and just plain frustration.

A recent study found that just over half of the businesses across Australia lost business or money when confronted with a land-use or planning regulation issue.  I am surprised that it wasn’t higher.

To illustrate just how bad things have become in little old Queensland, it takes on average about four years to get a basic residential development approved.  There are numerous examples where what was originally submitted by the developer was only changed marginally after four years of compliance rigmarole and so little is actually changed that the yields remain the same and the butter paper drawings, when held up against the glass, are almost identical.

And it costs. For example, the typical cost breakdown for a new townhouse in Brisbane, after four years of this planning BS, is as follows:

• Consultant fees 2% (see we don’t get paid much at all!)
• Developer profit 5% (why bother!)
• Holding costs 5%
• Land cost (inc taxes) 16%
• Construction (inc taxes) 49%
• Town planning compliance 24% or $86,000

So what to do?  Yes, we can continue to sack more state government workers, but we need to change the rules. We also need to change the culture. That will take different people or the same people with a different attitude.

There are ten town-planning things in Queensland that should be changed:

1. Benchmarking.  There is no performance regarding time, cost or charging when it comes to planning assessment.  Amend the Act to require strict accounting based on time and costs.

2.Cap stuff.  Fees for the assessment of operation works should be capped (0.25%) as a percentage of expected costs.

3.Outsource.  Assessment for op. works should also be done by private certified practitioners. Likewise applicants should be able to nominate that the planning report be prepared by a qualified non-government town planner.

4.State-wide rules. A state-wide planning code for houses, small-lot houses, townhouses, plexes and walk-up apartments. Lifted apartment product usually needs a bit more planning input. Ditto regarding a design manual that is deemed to comply across the whole state. Remove objections based on aesthetics and/or personal taste e.g. glass balustrades or fonzie flats.

5.Appropriate detail.  The level of detail required for a DA has increased, defeating the idea about an approval system which works from the broad to the more specific. Reset the amount of detail required accordingly. Again, set statewide rules.

6.Set parameters. Planners currently want to reinvent the wheel when it comes to a lower order approval (i.e. lot reconfiguration) and revisit matters than have been established in a higher order approval.  Set up some clear parameters.

7.Extensions & changes.  Simplify the ability to extend the life or nature of an approval. Market forces determine when a project will occur and what will be in demand. Allow product change up to a set amount of tolerance. Have such tolerance set in the original approval.

8.Infrastructure. Cap infrastructure charges – say $20,000; charge at buyer settlements and have them paid to a central authority. Councils to compete for monies based on need, priority and efficiency. Supply infrastructure – water, sewerage, electricity, cable – to everywhere within the urban footprint.

9.Material change/self-assessment. Exclude the trivial from the definition of a “material change of use” i.e. a coffee shop should be as-of-right at a garden centre; a duplex in a residential area should also be as-of-right. The same mindset should apply to self-assessment. For example, a pet shop should be allowed in a shopping centre, as should office space within a light industrial area.

10. Tighter sales contracts. Reform the Act so that it is harder for buyers to terminate contracts on the grounds of minor technical breaches of the Act. Better still, shoot all the lawyers.  Well, okay, most of them.

 PS: I am a qualified town planner, with first class honours and a string of awards (yippee!) for UQ.  

Michael Matusik

Michael Matusik is a leader in residential market analysis and property advice in Australia.

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