Infrastructure Victoria: Draft 30-Year Infrastructure Strategy

Transcription

1 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy As Australia s fastest-growing city, the Bureau of Statistics projects that by 2051 Melbourne s population could double to nearly 8 million, and Victoria s regional population could grow to 2.1 million people- which will require the construction of up to 2.2 million new homes across the state 1. This presents significant opportunities for Victoria s economy, community and the building and construction industry but it also highlights the substantial infrastructure required to accommodate the growth. Master Builders Association of Victoria (Master Builders) recognises that new infrastructure policies and funding must not be dependent on short budget cycles and bi-partisan politics; and that implementation must be transparent and well sequenced. Master Builders represents members from across the broad spectrum of the building and construction industry, including suppliers and manufacturers, apprentices, commercial contractors, residential builders and tradespeople. Our members deliver the built environment in Victoria, including sports stadiums, parks, roads, public transport, hospitals and housing. Delivering the second largest full time employment, important economic contributions as well as the living standards we have come to enjoy in our State- our industry is an extremely important voice in this discussion. That is why we welcome Infrastructure Victoria s commitment to guide the state s infrastructure priorities for the next 30 years. We are optimistic that the plan will be transparent, independent and deliver a clear pathway for the industry which will ensure the continued economic prosperity and productivity of the sector and the Victorian community. Master Builders welcomes the opportunity to comment on the Infrastructure Victoria Draft 30-Year Infrastructure Strategy (the Draft 30-Year Strategy) and its accompanying 134 draft recommendations. Following on from Master Builders submission to All Things Considered in June and in the context of Melbourne s significant anticipated growth, Master Builders commends Infrastructure Victoria for presenting options that go some way to addressing four of the state s major challenges as identified by Master Builders: 1. Establishing a clear and consistent planning system; 2. Investing in, and building, key public infrastructure; 3. Investing in future skills and technology; 4. Investing in appropriate, sustainable and quality social infrastructure. Not only have we provided recommendations to deal with these challenges in our previous submission (Attachment 2), Master Builders has also called for these reforms in a range of other publications, including our State Budget document Master Builders Priorities : Building for Growth (Attachment 3), our submission to the Residential Zones State of Play (Attachment 4); and our planning policy paper Planning for Growth (Attachment 5). These submissions are attached. 1 Victoria in Future 2016: Population and household projections to 2051, Department of Environment, Land, Water and Planning, 2016 Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03)

2 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy In the context of the 134 draft options, Master Builders commends Infrastructure Victoria for narrowing the focus by prioritising three recommendations. These are: 1. Increasing densities in established areas to make better use of existing infrastructure; 2. Introducing a comprehensive transport pricing regime to manage demands on the network; 3. Investing in social and affordable housing for vulnerable Victorians to significantly increase supply. 2 While Master Builders strongly supports the first priority to increase densities in established areas, and the third priority to invest in social and affordable housing, we believe that the success of both would be dependent on a more solutions based recommendation that addresses the structural problems of our planning system. Master Builders holds the view that the Victoria planning system has largely contributed to the lack of affordable and suitable housing options, especially in key existing suburbs where social infrastructure to support further densification is available. The current planning system is characterised by a disconnect between overarching strategic state planning policies and what councils are delivering. For example, in Plan Melbourne Refresh, the State Government is considering locking down the Urban Growth Boundary 3 and accommodating population growth through a policy of a 70/30 split (requiring 70 per cent of new housing to be built in existing suburbs). However, an analysis of how residential zones have been applied in established areas demonstrates that, in some instances, restrictive zones are being applied broadly to prevent housing growth in established areas. For example, in the City of Glen Eira which is seven kilometres from the city, over 80 per cent of the municipality is subject to the most restrictive zone, Neighbourhood Residential Zone (NRZ). Excessive red tape in the current planning system is delaying the delivery of building and construction work, and costing the economy. The Victorian Competition and Efficiency Commission (VCEC) 2010 report Local Government for a Better Victoria: an Inquiry into Streamlining Local Government Regulation found that the total costs to business of complying with land-use planning and building regulations are between $500 million and $875 million per year. This includes a cost of around $180 million each year due to unexpected delays in planning decisions. As well as council delays, the scope for objections in Victoria is vast and means that planning gets further entangled in VCAT appeals: Victoria 1 in 10 planning applications are appealed, compared to 1 in 83 in NSW and 1 in 1000 in Queensland 4. These delays and costs impact the state s efficiency to build new houses, roads and other key public infrastructure. Master Builders is concerned and disappointed that the option for planning reform through a centralised planning scheme (CPS1) has been removed from the Draft 30-Year Strategy, and that 2 Infrastructure Victoria 30-year Draft Strategy, page 41 3 Plan Melbourne Refresh Discussion Paper, page 4 4 Jane Francis Kelly, The Houses We d Choose Grattan Institute, 2011 page 32 Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 2 of 14

3 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy residential and commercial property densification (RCP) 5 has also been removed. These options are much needed solutions to the lack of delivery of infrastructure and housing caused by delays and inconsistencies in the current planning system. Master Builders has prepared a detailed discussion into how the Draft 30-Year Strategy can comprehensively address the systemic planning challenges Victoria faces (see Attachment 1). While Master Builders is in support of an Affordable Housing Plan (SCP) being developed, we believe it does not go far enough, and must be extended to be a comprehensive housing strategy. The benefit of a comprehensive housing strategy is twofold. First, it would include useful information on housing mix, size and affordable housing needs that would inform a strategy that details where housing should go, the timeframe within which the growth should be achieved and the consequences if these targets are not reached for example, if a Council does not meet the agreed target, planning decisions could be called into a centralised decision maker. The second major benefit of a housing strategy is that it would provide a comprehensive response to Melbourne s housing affordability crisis. We know that, right across the housing spectrum, affordability is a serious problem it is a crisis that impacts our economy, the building and construction industry and society as a whole. Lack of housing affordability prevents home ownership, locks out first home buyers and leads to high rental prices. It presents a significant constraint on new building activity and ongoing work, and also impacts the availability of social or affordable housing. This crisis is only getting worse - CoreLogic s figures show that in August 2016, the median dwelling price for Melbourne was $840,000, 9.1 per cent higher than it was a year earlier 6. While Master Builders supports Infrastructure Victoria s priority recommendation investing in social and affordable housing for vulnerable Victorians to significantly increase supply - the housing problem must be viewed with a bigger lens than just social housing; and the solution must be more innovative that relying on government to invest in additional housing. Master Builders has concerns with the second priority recommendation to introduce a comprehensive transport pricing regime. While Master Builders recognises that there is a problem with congestion on Melbourne s roads that will worsen over time if not addressed, we do not consider that user charges is the appropriate response. The recommendation, in part aimed to change commuter behaviour and dis-incentivise non-essential travel in peak hours, could disproportionately impact on the building industry, whose car based travel is, in most cases, not discretionary. Apprentices, tradespeople and builders all have to use their car to transport their tools, and all have to drive to certain locations at certain times for work. Given that building and construction accounts for the largest portion of firms in Victoria (16.5 per cent) 7 this recommendation could disproportionately impose a financial penalty on a large section of the Victorian economy - whose travel is not discretionary. 5 Ibid, page CoreLogic data, August Based on ABS data: the number of construction firms in Victoria, prepared by Urbis for Master Builders Association Victoria Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 3 of 14

4 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy Therefore, instead of introducing additional charges to use the roads, Master Builders recommends that the government investigates ways to provide alternative transport options for road users who may not have to use their car for example, investing in key infrastructure. Population growth will place additional stress on some of Victoria s ageing key public infrastructure. An audit by Infrastructure Australia found that the annual cost of delays on Melbourne s roads will triple to more than $9 billion in the next 15 years if the problem is not fixed 8. Master Builders supports Infrastructure Victoria s commitment to invest in and build much needed infrastructure. Master Builders strongly supports the option to build the Eastern Freeway to CityLink connection (EWE) 9. This is a vital link that is missing from Melbourne s current road network. Infrastructure Australia s audit found that if the link is not built, the cost of delays inflicted by traffic congestion along the road corridor will double over the next twenty years, from $73 million in 2011 to $144 million by We applaud Infrastructure Victoria for providing independent advice that it should be built despite the cancellation of the East West Link. We also strongly support the construction of the North- East Link (NEL) 10 in the near future. As part of the much needed investment into Victoria s road network, a pipeline of work that is certain is extremely important for Victoria s economic growth as it gives both investors and businesses strong confidence. That is why Master Builders supports the option for school investment pipeline (SIF) 11 that would remove decision making from short-term budgets and require the government to publish a proposed plan for school capital works (new and upgrades) against a proposed time line for delivery. Master Builders also supports options for a range of other key infrastructure commitments. A thirty year infrastructure plan is a unique opportunity to invest future technologies and the knowledge industry. As stated in the Draft 30-Year Strategy Disruptive technologies have perhaps the greatest potential to change the way Victoria s society, economy and environment functions. They are also the greatest unknown from an infrastructure planning perspective. 12 Master Builders was disappointed that the education and medical research precincts linking with the private sector (SEP) 13 option has been removed from the Draft Strategy. This option seeks to establish new precincts that bring sectors together, driven by private sector demand for increased collaboration with the tertiary education and the vocational training sector. Master Builders considers that this option has potential to invest in learning and developing construction technologies such as BIM. Master Builders also considers that options to foster greater collaboration with industry RTOs, particularly in the building and construction sector, is essential given the skills 8 Infrastructure Australia, Australian Infrastructure Audit Report Infrastructure Victoria Draft 30-Year Strategy, page Ibid, page Ibid page Infrastructure Victoria 30-year Draft Strategy, page Infrastructure Victoria Draft Options Book, page 146 Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 4 of 14

5 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy that will be needed to meet the construction demands in the future. We support other recommendations aimed at investigating future technology, such as driverless freight vehicles (DFV) 14, driverless vehicles (ACT) 15 and extending VET into schools (STE) 16. As well as an effective planning system that can deliver housing, roads and transport infrastructure, delivery of social infrastructure must be included in the discussion about Victoria s thirty year plan. As stated in the Draft 30-Year Strategy, infrastructure across a range of sectors, from health and education to transport, is struggling to keep pace with demand 17 and therefore solutions to the increased pressure on social housing, health and education facilities and environmental issues must be addressed. 14 Infrastructure Victoria Draft 30-Year Strategy, page Ibid, page Ibid, page Infrastructure Victoria Draft 30-Year Strategy, page 47 Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 5 of 14

6 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy Options Master Builders strongly supports Overview of options Centralised Planning Scheme (CPS1) Eastern Freeway to CityLink connection (EWE) Options Master Builders supports Policies to enable greater densification and planning for population growth: Urban development in established areas (UDC) Residential and commercial property densification (RCP) and setting agreed housing targets Affordable housing plan (SCP) Affordable housing planning mechanisms (SAH, AHR) Affordable housing fast track approvals (SHS1) Affordable rental housing provision (ARH, SHE) Crisis and transitional accommodation (CHP, TSA) Aged care facility approvals (UPA) Integrated government service/ infrastructure planning (SIP) Development in/around employment centres (STO) Employment centre mass transit (MTN) A pipeline of key infrastructure such as: Arterial road network employment centre (ARN) Melbourne Metro 2 (MMS) Regional Rail eastern corridor dedicated rail track (RRE1) Outer Metropolitan Ring Road (OMR) North-East link (NEL) Port of Melbourne container terminal expansion (PMC) Melbourne Airport heavy rail line (MAH) Clyde Rail extension (CRE) School Investment Pipeline (SIF) City Loop Reconfiguration (CRE) Fishermen s Bend tram link (CCT) Melton Rail electrification (MRE1) Metropolitan rail upgrades (MRC) Regional rail upgrades (RRC) Outer metropolitan arterial roads (OMA) Wallan rail electrification (WRE1) Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 6 of 14

7 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy Western Intermodal Freight Terminal (WIF) Development of key social infrastructure such as: Public high rise housing estate renovation (PHR) Social housing asset rationalisation and refresh (SHA) Social housing utilising the Defence Housing Australia rental model (SHD1) Health infrastructure coordinated planning (HIC) Health and aged care repurposing of facilities (HAC) Health care smart facilities (HCS) Schools shortages (SSS) Early childhood education corporate office facilities (ECE3) Energy effect development (EED) Future skills and technology Driverless freight vehicles (DFV) Driverless vehicles (ACT ) Tertiary education / VET in schools (STE) Additional options Master Builders supports Extension of the affordable housing plan to incorporate a comprehensive housing strategy Expand the codified as-of-right process Expand the Melbourne International Airport Consider ways to avoid the prohibitive costs associated with the Industrial Relations EBA taking away valuable funding for infrastructure. Invest in developing new technologies such as BIM and prefabrication Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 7 of 14

8 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy ATTACHMENT 1: Infrastructure Victoria s 30-Year Strategy: a prime opportunity to establish a planning strategy that is clear and consistent Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 8 of 14

9 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy Infrastructure Victoria s 30-Year Strategy: a prime opportunity to establish a planning strategy that is clear and consistent The Victorian planning system must evolve if it is to accommodate the rapid population growth forecast for Victoria, while still ensuring the continued viability of the building and construction sector and strengthening Victoria s reputation as a place for investment and prosperity. The population of Melbourne is forecast to almost double in the next thirty years to 8 million people- which makes the question of where the additional 2.1 million dwellings will be located so pressing. Major strategic plans will need to be made- and followed through- to ensure that growing communities, both new and existing, have access to the appropriate living standards, services and amenities. Master Builders supports Infrastructure Victoria s recommendations for development in established areas (UDC) and development in/around employment centres (STO) to increase densities in established areas to make better use of existing infrastructure; which, as a stated in the Draft 30- Year Strategy, is the...most sustainable and equitable solution to manage high growth... [and] it s also likely to save on infrastructure costs 18. As identified in the Draft 30-Year Strategy, the recommendation for development in established areas (UDC) is intended to: Intensify housing development in the established areas of Melbourne, Geelong, Ballarat and Bendigo that are already well serviced with infrastructure by amending planning schemes within 0-5 years. This should initially focused on Melbourne s eastern and southern suburbs, and in particular around trains stations on the Lilydale, Belgrave, Glen Waverly, Alamein, Frankston, Sandringham, Pakenham and Cranbourne lines, as these are expected to experience fewer capacity constraints over the next 30 years 19. It is widely agreed that increasing density of housing in established areas is an appropriate way to manage growth in fact, this is not a new policy. Previous major strategic state planning documents including Melbourne 2030 and Plan Melbourne already identified high density development in established areas as a priority- however; evidence indicates that merely stating the issue does not necessarily achieve the results, and instead there needs to be an overhaul of the planning system if this priority is to be achieved. Relying on local councils to zone for greater housing densification has been demonstrated not to work The current planning system is characterised by a disconnect between the state government s strategic vision for growth and the decisions implemented by local councils, which is very problematic for a state that is preparing for rapid population growth. 18 Infrastructure Victoria 30-Year Strategy, page Ibid, page 49 Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 9 of 14

10 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy In Plan Melbourne it is stated that in part, future growth will be accommodated through focusing on medium- and high-density development in defined areas in the existing urban area. 20 This was to be delivered through determined Activity Centres, which are defined as: Suburban centres that provide a focus for services, employment, housing, transport and social interaction. They are usually large centres with a mix of activities that are well served by public transport and have an especially important role to play as a focus for community activity, services, investment and change in retail, office, community, service and residential markets 21. In Plan Melbourne Refresh, the state government is considering the option to lock down the urban growth boundary (UGB) and obtain 70 per cent of Melbourne s new housing supply from existing suburbs. Despite these stated visions of growth, analysis of how zones have been applied by local councils demonstrates that some of them have used zoning to prevent growth occurring in their municipality. Consider the Boroondara Council, which is:...serviced by the Alamein, Belgrave and Lilydale railway line, numerous tram and bus routes as well as access to CityLink and the Monash Freeway...key retail strips and parklands... a centre for education, with many public and private schools located in the municipality. Swinburne and the University of Melbourne also have campuses in Hawthorn. 22 This established location appears to be ideal to accommodate a substantial amount of Melbourne s projected population growth and new housing- in keeping with the State Government s vision. However, in reality, 75.7 per cent of residential land in Boroondara is zoned the Neighbourhood Residential Zone (NRZ), which is the most restrictive zone. This suggests that there will not be a lot of additional housing developed in the area. This is one example of a systemic problem. The NRZ, which is intended to restrict housing growth, has been applied to varying degrees across municipalities, with 29.2 per cent of residential land in the Eastern Subregion zoned NRZ, compared to 11 per cent in the Northern Subregion and 10 per cent in the Southern Subregion. In the City of Glen Eira, which is around 7 kilometres from the Melbourne CBD, 80.8 per cent of the residential land has been zoned NRZ. This evidence demonstrates that the existing state policy is not being delivered in key areas - in particular in the south and east of Melbourne and that some councils do not implement state strategic policy direction when it comes to zoning strategic areas. Given this, there is no reason to believe that a mere recommendation to increased density in established areas will change the status quo. 20 Plan Melbourne, 2014 page Ibid 22 Residential Zones State of Play Eastern Subregion, page 13 Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 10 of 14

11 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy That is why Master Builders strongly recommends that the option for a Centralised Planning Scheme (CPS1) be reinstated in the final strategy. By transferring planning decision making and infrastructure coordination from local councils to a centralised authority such as the proposed Victorian Planning Authority, this option directly addresses the major issue in the current planning system: local council decision making. Master Builders support for this option is echoed in Master Builders Priorities , Master Builders 2016 Planning for Growth and Master Builders submission to the review of Residential Zones. A centralised planning scheme could compliment the recommendation for integrated government service/ infrastructure planning (SIP). The intention of the SIP is to Formalise and simplify a whole of government service and infrastructure and planning process that would facilitate investment prioritisation at a spatial leave 23. A centralised planning scheme would be very well placed to implement policy and development opportunities identified as part of the SIP. A centralised planning scheme could also address concerns in the building industry around delays in, for example, the release of land titles that are experienced in the growth areas. A review of the existing problem and consideration given to streamlining the process could be undertaken by a central authority. As development continues in the growth suburbs of Melbourne, connectivity to major infrastructure should continue to be a priority. Master Builders supports extra initiative to resource areas so that the people who live in there have access to quality and reliable roads, schools, and other transport hubs like airports. A Centralised Planning Scheme reduces costs and inefficiencies in our planning system. As stated in the All Things Considered, the main economic benefit of a centralised planning scheme would be derived from improved efficiencies associated with infrastructure planning and procurement compared to current practice. 24 Planning delays cost Victorian builders and consumers a great deal. The Victorian Competition and Efficiency Commission 2010 inquiry found that the total cost to business of complying with land-use planning and building regulations are between $500 million and $875 million per year, including around $180 million each year due to unexpected delays in planning decisions. 25 As well as council delays, the scope for objections in Victoria is vast and means that planning gets further entangled in VCAT appeals: Victoria 1 in 10 planning applications are appealed, compared to 1 in 83 in NSW and 1 in 1000 in Queensland. 23 Infrastructure Victoria 30-Year Strategy, page Infrastructure Victoria Draft Options Book, page Victorian Competition and Efficiency Commission report Local Government for a Better Victoria: An Inquiry into Streamlining Local Government Regulation (2010) Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 11 of 14

12 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy Data from the Department of Transport, Planning and Local Infrastructure s Planning Permit Activity in Victoria Annual Report 2013/14 confirms that only 67 per cent of the total 56,411 planning permit applications received were decided within the 60 day statutory time frame. Transferring the decision making from councils to a central authority such as the proposed Victorian Planning Authority is likely to speed up the decision making process and reduce the costs and delays currently experienced. A Centralised Planning Scheme could increase the consistency of the application of zones across Victoria, which will assist the State Government to implement its strategic planning vision. The implementation of the 2013 Residential Zones was heavily weighted in favour of individual councils, rather than as part of an overarching strategic plan for Melbourne and Victoria. Councils were given 12 months from July 2013 to amend their planning schemes to implement the new residential zones. This meant that as long as a council could justify their proposed application of zones- be it through existing housing strategies or a combination of character, heritage and activity centre policy- they ultimately were able to decide their own zoning. This process lent itself to ad hoc application of zoning across councils. For example, consider the Eastern Region. In Monash nearly all (96 per cent) of residential land is zoned General Residential Zone (GRZ) and is spread widely across the municipality. This contrasts to Manningham, a neighbouring municipality, which just under 50 per cent is GRZ. Considering the most restrictive zone, the NRZ, some councils such as Knox do not apply it at all, where Boroondara applies it to 75.7 per cent of residential land. Transferring major decision making power from local councils to a centralised planning scheme, as suggested in All Things Considered, could resolve the disconnect between the state government s strategic plans and their implementation. Master Builders is optimistic that this solution could facilitate a greater level of certainty and coordinate decision making in areas that require further densification. Master Builders considers it likely that its creation will also help reduce the mismatch between supply and demand for infrastructure services, as well as better location of population growth with the location of existing services. Master Builders recognises the good work councils do in contributing appropriate and localised knowledge to the design precinct structure plans, and therefore we suggest that, under a centralised planning scheme, there will still be a very valuable role for councils. Establishing a centralised planning scheme would form a strong basis to implement other options that Master Builders supports in the Draft 30-Year Strategy. Given the significant costs that are imposed by the current planning scheme, as well as the inefficiencies in delivery of key infrastructure in existing suburbs, we consider that this option should be a high priority as it could have a large impact on the Victorian economy and community. We therefore recommend that further consideration of this option is undertaken, and it be reinstated in Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 12 of 14

13 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy the plan, with an increase in the rating of contribution to meeting the need raised from moderate to high 26. A centralised planning scheme could oversee the implementation of the comprehensive housing strategy- and deliver housing densification where it is needed The Centralised Planning Scheme could also be appropriate to oversee the implementation of a comprehensive housing strategy in Melbourne. Master Builders supports the development of an Affordable Housing Plan (SCP) but believes that this should be extended to be a comprehensive plan. The SCP should be expanded to become comprehensive housing strategy that provides a greater level of certainty of housing densification in established areas Master Builders recommends that the State Government articulates a clear strategy that would include information on housing mix, size and affordable housing needs. The strategy could identify where Melbourne s population growth should be targeted, identify an agreed timeframe for councils to make necessary changes to allow for that growth, and make it clear to councils that if the agreed targets were not met in a reasonable timeframe, that the decision making power would be called in. A housing strategy could also provide a comprehensive strategy to address Melbourne s housing affordability crisis. While Master Builders support Infrastructure Victoria s priority recommendation investing in social and affordable housing for vulnerable Victorians to significantly increase supply - the housing problem must be viewed with a bigger lens than just social housing; and the solution must be more innovative that relying on government to invest in additional housing. A comprehensive housing strategy could address affordable and social housing shortages, as well as housing affordability more broadly The housing affordability crisis impacts the entire spectrum of the housing market, so the solution should not be exclusive to one section of the housing market. The Victorian housing affordability crisis impacts our economy, the building and construction industry and society as a whole. Lack of housing affordability prevents home ownership, locks out first home buyers and leads to high rental prices. It presents a significant constraint on new building activity and ongoing work, and also impacts the availability of social or affordable housing. As the cost of housing in Victoria soars, Master Builder continues to urge the State Government to take steps to improve housing affordability. As demonstrated in the graph below, CoreLogic s figures show that in August 2016, the median dwelling price for Melbourne was $840,000, 9.1 per cent higher than it was a year earlier. The increase in house prices in Victoria means that higher income households who would previously have entered the home ownership market are now renting. This competition in the private rental 26 Infrastructure Victoria Draft Options Book, page 101 Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 13 of 14

14 Infrastructure Victoria: Draft 30-Year Infrastructure Strategy market drives up rental prices and places additional stress on lower income households wishing to rent. Following on from this is additional pressure placed on the public housing system. According to the Draft 30-Year Strategy, between 75,000 and 100,00 vulnerable, low-income households are not having their housing requirements met and that there are over 30,000 applications for public housing. Master Builders is pleased to see Infrastructure Victoria exploring a range of other options to increase housing through the planning controls. Affordable housing inclusionary planning controls (AHR) for example, requires significant investigation to ensure that the most appropriate way of delivery it is identified. Considerations should include minimising any impact on housing affordability and maintaining a strong investment in building development. Other mechanisms, including affordable housing fast track approvals (SHS1) and aged care facility approvals (UPA) are also supported by Master Builders as good use of planning mechanisms to allow more housing to be built. These mechanisms could form part of the comprehensive housing policy to deliver a more diverse range of housing options in appropriate locations. Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03) Page 14 of 14

15 Attachment 2: All Things Considered Overview As Australia s fastest-growing city, the Bureau of Statistics projects that by 2051 Melbourne s population could double to nearly 7.7 million, requiring construction of up to 1.6 million new homesincluding 480,000 apartments 1. This presents significant opportunities for Victoria s economy, community and the building and construction industry but it also highlights the substantial infrastructure required to accommodate the growth. Master Builders Association of Victoria (Master Builders) recognises that this new infrastructure funding must not be dependent on short budget cycles and bi-partisan politics and its implementation must be transparent and well sequenced. Master Builders represents members from across the broad spectrum of the building and construction industry, including suppliers and manufacturers, apprentices, commercial contractors, residential builders and tradespeople. As such our members deliver the built environment in Victoria, including sports stadiums, parks, roads, public transport, hospitals and housing. Our industry is therefore extremely important - delivering the second largest full time employment, important economic contributions as well as the living standards we have come to enjoy in our State. That is why we welcome Infrastructure Victoria s commitment to design and implement a 30 year strategy that is transparent and independent delivering a clear plan for the industry which will ensure the continued economic prosperity and productivity of the sector and the Victorian community. Master Builders welcomes the opportunity to comment on All Things Considered and its accompanying draft options. In the context of Melbourne s significant anticipated growth, Master Builders commends Infrastructure Victoria for presenting options that address four of the state s major challenges: 1. Establishing a clear and consistent planning system; 2. Investing in, and building, key public infrastructure; 3. Investing in future skills and technology; 4. Investing in appropriate, sustainable and quality social infrastructure. Master Builders has called for these reforms in a range of our publications, including our State Budget document Master Builders Priorities : Building for Growth, our submission to the Residential Zones State of Play; and our planning policy paper Planning for Growth. These submissions can be found here. Master Builders strongly supports Infrastructure Victoria s consideration to address major challenges in the Victorian planning system. The current planning system is characterised by a disconnect between overarching strategic state planning policies and what Councils are delivering. For example, 1 Policy & Communications Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03)

16 Attachment 2: All Things Considered in Plan Melbourne Refresh, the State Government is considering locking down the Urban Growth Boundary 2 and accommodating population growth through a policy of a 70/30 split (requiring 70 per cent of new housing to be built in existing suburbs). However, an analysis of how residential zones have been applied in established areas demonstrates that, in some instances, restrictive zones are being applied broadly to prevent housing growth in established areas. For example, in the City of Glen Eira which is seven kilometres from the city, over 80 per cent of municipality is subject the most restrictive zone, Neighbourhood Residential Zone (NRZ). Excessive red tape in the current planning system is delaying the delivery of building and construction work, and costing the economy. The Victorian Competition and Efficiency Commission (VCEC) 2010 report Local Government for a Better Victoria: an Inquiry into Streamlining Local Government Regulation found that the total costs to business of complying with land-use planning and building regulations are between $500 million and $875 million per year. This includes a cost of around $180 million each year due to unexpected delays in planning decisions. As well as council delays, the scope for objections in Victoria is vast and means that planning gets further entangled in VCAT appeals: Victoria 1 in 10 planning applications are appealed, compared to 1 in 83 in NSW and 1 in 1000 in Queensland 3. These delays and costs impact the state s efficiency to build new houses, roads and other key public infrastructure. That is why Master Builders strongly supports the Infrastructure Victoria option to introduce a centralised planning scheme (CPS1) 4, and through that a focus on urban development in established areas (UDC) 5, and residential and commercial property densification (RCP) 6. These options are much needed solutions to the issues in delivering infrastructure and housing caused by delays and inconsistencies in the current planning system. In addition, Master Builders recommends consideration of codified planning process to ensure the ease of infrastructure and housing development. Population growth will place additional stress on some of Victoria s ageing key public infrastructure. An audit by Infrastructure Australia found that the annual cost of delays on Melbourne s roads will triple to more than $9 billion in the next 15 years if the problem is not fixed 7. Master Builders supports Infrastructure Victoria s commitment to invest in and build much needed infrastructure. For example, Master Builders strongly supports the option to build the Eastern Freeway to CityLink connection (EWE) 8. This is a vital link that is missing from Melbourne s current road network. Infrastructure Australia s audit found that if the link is not built, the cost of delays inflicted by traffic congestion along the road corridor will double over the next twenty years, from $73 million in 2011 to $144 million by We applaud Infrastructure Victoria for providing independent advice that it should be built despite the cancellation of the East West Link. 2 Plan Melbourne Refresh Discussion Paper, page 4 3 Jane Francis Kelly, The Houses We d Choose Grattan Institute, 2011 page 32 4 Infrastructure Victoria Draft Options Book, page Ibid, page Ibid, page Infrastructure Australia, Australian Infrastructure Audit Report Infrastructure Victoria Draft Options Book, page 143 Page 2 of 16

17 Attachment 2: All Things Considered As part of the much needed investment into in Victoria s road network, a pipeline of work that is certain is extremely important for Victoria s economic growth as it gives both investors and businesses an important level of confidence. That is why Master Builders supports the option for school infrastructure funding certainty (SIF) 9 that would remove decision making from short-term budgets and require the governments to publish a proposed plan for school capital works (new and upgrades) against a proposed time line for delivery. Master Builders also supports options for a range of other key infrastructure commitments. A thirty year infrastructure plan is a unique opportunity to invest future technologies and the knowledge industry. Master Builders supports the education and medical research precincts linking with the private sector (SEP) 10 option that seeks to established new precincts that bring sectors together, driven by private sector demand for increased collaboration with the tertiary education and the vocational training sector. Master Builders considers that this option has potential to invest in learning and developing construction technologies such as BIM. As well as an effective planning system that can deliver housing, roads and transport infrastructure, delivery of social infrastructure must be included in the discussion about Victoria s thirty year plan. As stated in the Options Paper, infrastructure across a range of sectors, from health and education to transport, is struggling to keep pace with demand 11 and therefore solutions to the increased pressure on social housing, health and education facilities and environmental issues must be addressed. 9 Infrastructure Victoria Draft Options Book, page Infrastructure Victoria Draft Options Book, page Infrastructure Victoria Options Paper, page 38 Page 3 of 16

18 Attachment 2: All Things Considered Options Master Builders strongly supports Overview of options Centralised Planning Scheme (CPS1) Eastern Freeway to CityLink connection (EWE) Options Master Builders supports Policies to enable greater densification and planning for population growth: Urban development in established areas (UDC) Residential and commercial property densification (RCP) and setting agreed housing targets A pipeline of key infrastructure such as: Arterial road network employment centre (ARN) Melbourne Metro 2 (MMS) Regional Rail eastern corridor dedicated rail track (RRE1) Outer Metropolitan Ring Road (OMR) North-East link (NEL) Port of Melbourne container terminal expansion (PMC) Melbourne Airport heavy rail line (MAH) Clyde Rail extension (CRE) Development of key social infrastructure such as: Public high rise housing estate renovation (PHR) Social housing asset rationalisation and refresh (SHA) Social housing utilising the Defence Housing Australia rental model (SHD1) Health infrastructure coordinated planning (HIC) Health and aged care repurposing of facilities (HAC) Health care smart facilities (HCS) Schools shortages (SSS) Early childhood education corporate office facilities (ECE3) Energy effect development (EED) Additional options Master Builders supports Expand the codified as-of-right process Expand the Melbourne International Airport Consider ways to avoid the prohibitive costs associated with the Industrial Relations EBA taking away valuable funding for infrastructure. Invest in developing new technologies such as BIM and prefabrication Page 4 of 16

19 Attachment 2: All Things Considered 1. Establishing a planning system that is clear and consistent 1.1 Centralised Planning Scheme The Victorian planning system must evolve if it is to accommodate the rapid population growth forecast for Victoria, while still ensuring the continued viability of the building and construction sector and strengthening Victoria s reputation as a place for investment and prosperity. Master Builders strongly supports the option for a Centralised Planning Scheme (CPS1) in Victoria. By transferring planning decision making and infrastructure coordination from local councils to a centralised authority such as the proposed Victorian Planning Authority, this option directly addresses the major issue in the current planning system: local council decision making. Master Builders support for this option is echoed in Master Builders Priorities , Master Builders 2016 Planning for Growth and Master Builders submission to the review of Residential Zones (attached). With Melbourne s population forecast growth necessitating the construction of up to 1.6 million new homes 12 over the next 35 years, major strategic plans will need to be made- and followed through- to ensure that growing communities, both new and existing, have access to the appropriate living standards, services and amenities. A centralised planning scheme will provide Victoria with a clear scheme that is capable of delivering on state planning policy objectives and ensuring an efficient and effective building and construction industry. Master Builders endorses Infrastructure Victoria s comments that: This option is expected to help reduce the mismatch between supply and demand for infrastructure and services, as well as better match the location of population growth with the location of existing services Draft Options Book, page 101 The current planning system is characterised by a disconnect between the state government s strategic vision for growth and the decisions implemented by local councils, which is very problematic for a state that is preparing for rapid population growth. For example, in Plan Melbourne Refresh, the State Government is considering the option to lock down the urban growth boundary (UGB) and obtain 70 per cent of Melbourne s new housing supply from existing suburbs. However, analysis of how zones have been applied by local councils demonstrates that some of them have used zoning to prevent growth occurring in their municipality. Consider the Boroondara Council, which is served by the Alamein, Belgrave and Lilydale railway line, numerous tram and bus routes as well as access to CityLink and the Monash Freeway...key trail strips and parklands...as a 12 Page 5 of 16

20 Attachment 2: All Things Considered centre for education, with many public and private schools located in the municipality. Swinburne and the University of Melbourne also have campuses in Hawthorn. 13 This established location appears to be ideal to accommodate a substantial amount of Melbourne s projected population growth and new housing- in keeping with the State Government s vision. However, in reality, 75.7 per cent of residential land in Boroondara is zoned the Neighbourhood Residential Zone (NRZ), which is the most restrictive zone. This suggests that there will not be a lot of additional housing developed in the area. This is one example of a systemic problem. The NRZ, which is intended to restrict housing growth, has been applied to varying degrees across municipalities, with 29.2 per cent of residential land in the Eastern Subregion zoned NRZ, compared to 11 per cent in the Northern Subregion and 10 per cent in the Southern Subregion. In the City of Glen Eira, which is around 7 kilometres from the Melbourne CBD, 80.8 per cent of the residential land has been zoned NRZ. A Centralised Planning Scheme would help reduce costs and inefficiencies in our planning system. As stated in the Draft Options Book, the main economic benefit of a centralised planning scheme would be derived from improved efficiencies associated with infrastructure planning and procurement compared to current practice. Planning delays cost Victorian builders and consumers a great deal. The VCEC 2010 inquiry found that the total costs to business of complying with land-use planning and building regulations are between $500 million and $875 million per year, including around $180 million each year due to unexpected delays in planning decisions. 14 As well as council delays, the scope for objections in Victoria is vast and means that planning gets further entangled in VCAT appeals: Victoria 1 in 10 planning applications are appealed, compared to 1 in 83 in NSW and 1 in 1000 in Queensland. Data from the Department of Transport, Planning and Local Infrastructure s Planning Permit Activity in Victoria Annual Report 2013/14 confirms that only 67 per cent of the total 56,411 planning permit applications received were decided within the 60 day statutory time frame. Transferring the decision making from Councils to a central authority such as the proposed Victorian Planning Authority is likely to speed up the decision making process and reduce the costs and delays currently experienced. A Centralised Planning Scheme will increase the consistency of the application of zones across Victoria, which will assist the State Government to implement its strategic planning vision. The implementation of the 2013 Residential Zones was heavily weighted in favour of individual Councils, rather than as part of an overarching strategic plan for Melbourne and Victoria. Councils were given 12 months from July 2013 to amend their planning schemes to implement the new residential zones. This meant that as long as a Council could justify their proposed application of 13 Residential Zones State of Play Eastern Subregion, page Victorian Competition and Efficiency Commission report Local Government for a Better Victoria: An Inquiry into Streamlining Local Government Regulation (2010) Page 6 of 16

21 Attachment 2: All Things Considered zones- be it through existing housing strategies or a combination of character, heritage and activity centre policy- they ultimately were able to decide their own zoning. This process lent itself to ad hoc application of zoning across Councils. For example, consider the Eastern Region. In Monash nearly all (96 per cent) of residential land is zoned General Residential Zone (GRZ) and is spread widely across the municipality. This contrasts to Manningham, a neighbouring municipality, which just under 50 per cent is GRZ. Considering the most restrictive zone, the NRZ, some Councils such as Knox do not apply it at all, where Boroondara applies it to 75.7 per cent of residential land. Transferring major decision making power from local Councils to a centralised planning scheme, as suggested in All Things Considered, would resolve this disconnect between the state government s strategic plans and their implementation. Master Builders is optimistic that this solution could facilitate a greater level of certainty and coordinate decision making for high change areas. Master Builders considers it likely that its creation will also help reduce the mismatch between supply and demand for infrastructure services, as well as better location of population growth with the location of existing services. Master Builders recognises the good work Councils do in contributing appropriate and localised knowledge to the design precinct structure plans, and therefore we suggest that, under a centralised planning scheme there, there is will still a very valuable role for Councils. Establishing a centralised planning scheme would form a strong basis to implement other options that Master Builders supports in All Things Considered. Given the significant costs that are imposed by the current planning scheme, as well as the inefficiencies in delivery of key infrastructure in existing suburbs, then we consider that this option should be a high priority and would have a large impact on the Victorian economy and community. We therefore recommend that further consideration of this option is undertaken, with an increase in the rating of contribution to meeting the need raised from moderate to high Other important planning reforms The option for urban development in established areas (UDC), which seeks to direct population growth and movement to specific areas where there is existing or planned infrastructure through zoning, is an appropriate and much needed solution to ensure that we will continue to be able to build new housing to accommodate the growth. This option, supported by Master Builders, could be carried out through the centralised planning scheme. Options such as locking down the UGB and emphasising higher densities in existing suburbs will require a realistic look at how land supply and appropriate mixes of housing can be delivered. As part of this, Master Builders welcomes the suggestion to set agreed housing targets for local government areas, outlined on page 397 of the Draft Options Book, which is consistent with the detailed Housing Strategy that Master Builders called for in our Planning for Growth document. This 15 Infrastructure Victoria Draft Options Book, page 101 Page 7 of 16

22 Attachment 2: All Things Considered Strategy could incorporate a Housing Plan, which could include information about housing mix, size and affordable housing needs as well as land supply locations to meet those needs. Master Builders also supports the option for residential and commercial property densification (RCP) that seeks to use planning provisions to significantly increase residential density on the periphery of key employment centres, and increase density of commercial and business within these employment centres. In this instance, the centralised planning scheme would be important to help ensure that there is sufficient land set aside for future housing and employment growth of employment centres. In addition to these options, Master Builders considers the expansion of the codified as of right process would complement these options and facilitate housing growth in strategic areas. This might occur in development zones around principal activity centres and major public transport networks and in Neighbourhood Residential & General Residential Zones. This could apply to secondary dwellings, dual occupancy, low-rise townhouses, apartments and other forms of medium - high density housing. 2. Investing in, and building, much needed infrastructure Population growth will place additional stress on some of Victoria s ageing key public infrastructure. An audit by Infrastructure Australia found that the annual cost of delays on Melbourne s roads will triple to more than $9 billion in the next 15 years if the problem is not fixed 16. Of concern, the level of work in the non-residential and engineering construction markets are not forecast to grow in coming years. $ billion 25 Work Done on All Building & Construction, Victoria Value of work done, at constant 2013/14 prices Source: ABS , , , MBAV forecast 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Residential Non-residential Engineering construction In addition to providing much needed infrastructure to support growth, investment in infrastructure creates new jobs. Construction experienced the third largest growth of jobs during the period , accounting for 238,000 jobs, or 8.2 per cent of the total workforce 18, making it the state s 16 Infrastructure Australia, Australian Infrastructure Audit Report State Government of Victoria, 2015 Victoria s Future Industries: Construction Technologies Discussion Paper 18 Ibid Page 8 of 16

23 Attachment 2: All Things Considered second-largest full time employer. As well as building the state s infrastructure and housing, this sector is a massive economic contributor. Vital to accommodating Melbourne s growth is investing in- and following through with building- key road networks. Infrastructure Australia s landmark report earlier in 2016 reported that the East West Link is high priority initiative, and found that if the link is not built, the cost of delays inflicted by traffic congestion along the road corridor will double over the next twenty years, from $73 million in 2011 to $144 million by That is why Master Builders strongly supports the option to build the Eastern Freeway to CityLink connection (EWE). This major road would improve connectivity across the city from east to west linking the Eastern Freeway to City Link. Master Builders also supports a range of other options to build new infrastructure. These include: Arterial road network employment centre (ARN) 19 Melbourne Metro 2 (MMS) 20 Regional Rail eastern corridor dedicated rail track (RRE1) 21 Outer Metropolitan Ring Road (OMR) 22 North-East link (NEL) 23 Port of Melbourne container terminal expansion (PMC) 24 Port of Melbourne to metropolitan container shuttle (PMM) 25 As part of the much needed investment into in Victoria s road network, a pipeline of work that is certain is extremely important for Victoria s growth. A guaranteed pipeline of work that is publically available gives both investors in our state and businesses an important level of confidence. Master Builders supports the option for school infrastructure funding certainty (SIF) that would remove decision making from short-term budgets and require the governments to publish a proposed plan for school capital works (new and upgrades) against a proposed time line for delivery and alongside a long term funding allocation for the proposed pipeline. Master Builders also supports options to improve key public transport infrastructure, including: Melbourne Airport heavy rail line (MAH) 26 Clyde Rail extension (CRE) 27 Geelong and Werribee rail upgrade (GWR) 28 Central city tram network extension (CLR) Infrastructure Victoria Draft Options Book, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page 96 Page 9 of 16

24 Attachment 2: All Things Considered Doncaster tram services (DTS) 30 High speed rail from Sydney to Melbourne (HSR) 31 Melton rail electrification (MRE1) 32 Train station car parking improvement (TSC) 33 Wallan rail electrification (WRE1) 34 Wollert Rail Extension (WRE2) 35 While noting that the concepts still require further development, Master Builders notionally supports the following: Growth areas train station upgrades (GAT) 36 International airport in south-east Melbourne (IAS) 37 South Yarra Metro Station (SYM) 38 Bendigo rail full metropolitan separation (BRF) 39 Metropolitan level crossing completion (MLC) 40 New port (NCP) 41 Western intermodal freight terminal (WIF) 42 In addition, Master Builders suggests expanding the Melbourne International Airport to accommodate the increased air traffic and road congestion as the population increases. The way in which Victoria will be able to pay for this much needed infrastructure is a serious and practical consideration. Beyond considering the state s income, Master Builders urges the government to consider its expenses. In particular, Master Builders is gravely concerned about the unsustainably high wages for government funded building and construction. In May this year Master Builders released an updated report by Deloitte Access Economics Victorian Construction Labour Costs and Productivity which highlighted that construction industry Enterprise Bargaining Agreement (EBA) wages have been growing at unsustainably high rates and costing Victorians jobs and much needed infrastructure. The report highlighted that EBA real unit labour costs have grown by 2.4 per cent per annum more than can be justified by productivity increases. If EBA wages continue to increase at the same rate of 5 per cent over the next four years, the Victorian government (using taxpayer funds) will have to 30 Infrastructure Victoria Draft Options Book, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page Ibid, page 420 Page 10 of 16

25 Attachment 2: All Things Considered spend more than $800 million just to meet current commitments made. That is the equivalent of 40 new secondary schools, which would be lost to Victorians in a windfall gain for already highly paid EBA workers. Union EBA carpenters and entry level labourers already earn far more than nurses, defence force members, fire fighters, police or teachers. Unrealistic wage costs and their implications need to be properly understood. A responsible construction EBA agreement needs to provide a sustainable wage increase justified by meaningful flexibility and productivity improvements. Master Builders recommends considering ways to avoid the prohibitive costs associated with the Industrial Relations EBA taking away valuable funding for infrastructure. 3. Investing in future skills and technology Master Builders endorses Infrastructure Victoria s statement that preparation and planning for the future needs to be open to the possibilities presented by new technologies 43 - Infrastructure Victoria All Things Considered In developing a thirty year infrastructure plan, Infrastructure Victoria has a unique opportunity to invest in future technologies and the knowledge industry. As summed up in Super Connected Jobs: Understanding Australia s Future Workforce (2015), there will be demand in the future for skills to build houses and infrastructure to accommodate the bigger population. This poses three interesting challenges for Victoria: 1. To ensure the construction workforce grows so that it can keep up with demand and that people have the desire to enter the building and construction industry as a career path; 2. To embrace technologies to improve productivity; and 3. To ensure the workforce has the skills required to use new technologies to deliver new housing and infrastructure. So that the Victorian building and construction industry can keep up with the demand for housing and infrastructure, we need to invest in new ways of delivering constant high quality outcomes. Master Builders supports investment in learning and development about new building and construction technologies. The Productivity Commission s Inquiry into Public Infrastructure suggested that innovative approaches to design and expanding the use of prefabrication or pre-cast elements offered the greatest opportunities for productivity growth 44. This was supported by the US National Research Council that reported on five areas as having the potential for breakthrough productivity improvements. The findings included the widespread take up of Building Information Modelling (BIM) and greater use of off-site pre-fabrication. BIM provides a common platform for data across all construction projects and for facilities management. Allen Consulting Group estimates more widespread uptake of BIM could deliver an 43 Infrastructure Victoria All Things Considered page Productivity Commission, 2014 Page 11 of 16

26 Attachment 2: All Things Considered immediate boost to Australia s economic output by at least 0.2 basis points and as much as 0.5 basis points by Master Builders is hopeful that the Victorian Government will support the use of BIM to improve efficiency and outcomes, noting that the increased use of BIM will require new skills, processes and capabilities across the workforce. Offsite construction or use of pre-fabrication and/or modular building components is another important advance in construction technology. Off-site production involves producing complete buildings or sections of buildings including toilets and kitchens. This form of construction can offer reduced construction times, costs, project payback times and waste, while improving workplace safety. In the interests of the consumer, pre-fabrication can contribute to improved productivity by reducing time lost due to bad weather; it reduces traffic congestion and general disruption to those around worksites. That is why Master Builders supports the education and medical research precincts linking with the private sector (SEP) 46 option. This option seeks to establish new precincts that bring sectors together, driven by private sector demand for increased collaboration with the tertiary education and the vocational training sector. Master Builders considers that this is a unique opportunity to invest in new construction technologies and the skills required for this. In addition, Master Builders suggests that the government invest in developing new technologies such as BIM and prefabrication. It is vital that we continue to look at ways that the building and construction workforce can evolve to work with and adapt to them. 4. Investing in appropriate, sustainable and quality social infrastructure As well as an effective planning system that can deliver housing, roads and transport infrastructure, delivery of social infrastructure must be included in the discussion about Victoria s thirty year plan. As stated in the Options Paper, infrastructure across a range of sectors, from health and education to transport, is struggling to keep pace with demand 47 and therefore solutions to the increased pressure on social housing, health and education facilities and environmental issues must be addressed. As the price of housing continues to soar in Victoria, investing in a new and expanded social housing agenda is very important. We commend Infrastructure Victoria for identifying the need to provide better accesses to housing for the most vulnerable Victorians 48. The cost of housing continues to grow: Master Builders figures show there has been a 21 per cent decline in housing affordability across Victoria in the past decade, and in the last 12 months the price of dwellings has increased by 11 per cent. This price hike has meant that higher income households who would previously have entered the home ownership market are now renting. This competition in the private rental market drives up rental prices and places additional stress on lower-income households wishing to rent. 45 Allen Consulting Group Infrastructure Victoria Options Paper, page Ibid, page Ibid, page 64 Page 12 of 16

27 Attachment 2: All Things Considered Following on from this is additional pressure placed on the public housing system. The most recently published public housing waiting list indicated that over applications are waiting for housing 49, which, according to the Victorian Public Tenants Association, represents more than 60,000 people. A recent report by the Victorian Auditor-General revealed three public housing redevelopments with a total of 554 units had run at least two years late 50. Given this, Master Builders supports Infrastructure Victoria s option for public high rise housing estate renovation (PHR) 51 to undertake a comprehensive refurbishment of existing high rise public tower estates to provide more functional and fit-for-purpose public housing stock. We also support the social housing asset rationalisation and refresh (SHA) 52 to refresh suitable assets and invest in better purpose-built accommodation dwellings through the sale of old unsuitable assets. Master Builders commends Infrastructure Victoria for considering innovative models to fund new social housing, such as social housing utilising the Defence Housing Australia rental model (SHD1), applying the Defence Housing Australia model for social housing to enable available nongovernment apartment and housing stock to be leveraged. Population growth, an aging population and the rise of chronic diseases will place additional pressure on the Victorian health system. We commend Infrastructure Victorian for identifying the need to respond to increasing pressure on health care, particularly due to aging 53. In response, additional government investment in health infrastructure is needed as well as consideration of new and innovative approaches to respond to the need. The option for health infrastructure coordinated planning (HIC) 54 to develop a 30 year health infrastructure strategy that responds to forecast population growth and supports all components of the health system is supported, as it could be a strong foundation for investment. This could also compliment the option for a centralised planning scheme (CPS1) 55 by supporting one centralised body to plan and deliver the right kind of infrastructure in the appropriate areas. Master Builders supports the option for health and aged care repurposing of facilities (HAC) 56 that seeks to relocate health service points of care to meet demand for these services using new or existing facilities. We also support the option in invest in health care smart facilities (HCS) 57 by renewing health infrastructure to remain fit for purpose and be flexible to respond to innovations in technology and models of care. As the Victorian population grows there will be more students requiring early childhood, primary, secondary and tertiary education. Schools education institutions are paramount to ensuring 49 Public Housing Waiting and Transfer List, Department of Human Services, March Managing and Reporting on Performance and Cost of Capital Projects, Victorian Auditor General, June 2016, 51 Infrastructure Victoria Draft Options Book page Ibid, page Infrastructure Victoria All Things Considered, Page Infrastructure Victoria Draft Options Book, page Ibid, page Ibid, page Ibid, page 195 Page 13 of 16

28 Attachment 2: All Things Considered Victoria s global competitiveness and enabling workforce participation 58. That is why Master Builders supports the option to address schools shortages (SSS) 59 to plan and deliver new schools where localised demand exceeds supply. Other innovative approaches to increasing capacity to accommodate changes to the education workforce are also supported, such as the option for early childhood education corporate office facilities (ECE3) 60 to offer incentives (tax concessions or similar) for building owners to offer discounted rental/ purchase agreements to accommodate early childhood education facilities in areas with high demand for these facilities. The impact that population growth and infrastructure development will have on the environment has to also be considered in this thirty year plan. As stated in the Options Paper, transitioning to a lower carbon future will present a number of challenges and opportunities for Victoria over the coming decades. Master Builders believes there is a good opportunity for the government to trial implementing energy efficiency measures in new government building and housing construction. For example, the energy effect development (EED) 61 option to revise building regulation to improve energy efficiency across existing and new stock could be trialled on government owned stock. 58 Infrastructure Victoria All Things Considered, page Infrastructure Victoria Draft Options Book, page Ibid, page Ibid, page 159 Page 14 of 16

29 Attachment 2: All Things Considered Master Builders Overview Master Builders Association of Victoria (Master Builders) is the peak body representing employers in Victoria s building and construction industry. Our membership consists of around 9,000 builders, subcontractors, manufacturers/suppliers and students. More than 80 per cent of our professional members are small businesses with an annual turnover of $2 million or less. We are a leading provider of products and services to the building and construction industry not just our members but all builders across the industry, students, apprentices and consumers. With over 140 years of operations, we have a long-running influence and support of Victoria s building and construction industry. Member Services We assist our members, whether they are a large or small business, to win work and perform their work. We provide a range of free services such as legal, OHS, industrial relations and builder registration advice. Training We deliver the best training for the industry members and non-members by offering a range of courses including OHS, IR, leadership and Certificate IV in building and construction (Building). Simulation Training We have the only simulation training centre in Australia, which can provide unique simulated training experiences, using actors and filming and recording technology, to provide realistic scenarios. The courses provided at the Building Leadership Simulation Centre (BLSC) include leadership and management skills, onsite industrial relations and managing site safety. Merchandise We provide products for builders, like contracts, signage, diaries and work clothing. Advocacy & Policy We provide advocacy support for our members to Federal and State Governments and industry stakeholders like the media and the Victorian Building Authority (VBA), to ensure that the views and needs of our members are represented. Insurance Services Builders can also access insurance services through MBA Insurance Services, a subsidiary of Master Builders. Assist Page 15 of 16

30 Attachment 2: All Things Considered Our call centre Master Builders Assist team provides responsive and helpful advice to members, consumers and the community who call on a range of issues pertaining to the building and construction industry. References Master Builders Publications Bills, G January Economic Profile 2016 Master Builders Priorities : Building for Growth 2016 Master Builders Submission: Residential Zones State of Play 2016 Planning for Growth 2016 Victorian Government publications Department of Human Services, Public Housing Waiting and Transfer List, September 2015 Victoria s Future Industries: Construction Technologies Discussion Paper 2015 Victorian Competition and Efficiency Commission Local Government for a Better Victoria: An Inquiry into Streamlining Local Government Regulation 2010 Infrastructure Victoria All Things Considered: Exploring options for Victoria s 30-year infrastructure strategy 2016 Infrastructure Victoria Draft Options Book: version 1.1 Release for consultation 20 May 2016 Other Reports Allen Consulting Group 2010 Productivity in the Building Network: Assessing the Impacts of Building Information Models Kelly, J, The Houses We d Choose Grattan Institute, 2011 page 32 Websites Australian Bureau of Statistics Metropolitan Planning Authority Commonwealth Department of Employment website 12 month average to February 2015 Page 16 of 16

31 Attachment 3: Master Builders Priorities Building for growth As Australia s fastest-growing city, the Bureau of Statistics projects that by 2051 Melbourne s population could double to nearly 7.7 million, requiring construction of up to 1.6 million new homesincluding 480,000 apartments 1. This presents significant opportunities for Victoria s economy and the building and construction industry but it also highlights the substantial challenges that need to be addressed. For the Victorian economy to continue to prosper and embrace the forecast growth, Master Builders has identified eight key areas of reform in this submission: 1. Planning 2. Housing affordability 3. Trades registration 4. Domestic Building Insurance (DBI) 5. Infrastructure investment 6. Enterprise Bargaining Agreement (EBA) 7. Training and skills 8. Construction technology The Victorian economy s outlook is, for the most part, positive, with the building and construction sector making a strong contribution to its success. New housing increased by four per cent in the final quarter of 2015, with work on multi-units 22 per cent higher than a year earlier, and work on houses up 3.9 per cent. This is forecast to increase from $8.6 billion in 2014/15 to $9.4 billion this year, and close to $9.8 billion in 2016/17. Work in Victoria s non-residential sector was unchanged and consistent by the end of 2015, generating an annual rate of $9.8 billion for the economy. Of concern is the outlook for non-residential activity, which is not as positive as its residential counterpart, with activity forecast to fall by six per cent this year to $8.9 billion 2. As the volume of work increases, so does the workforce. Construction experienced the third largest growth of jobs during the period , accounting for 238,000 jobs, or 8.2 per cent of the total workforce 4, making it the state s second-largest full time employer. As well as building the state s infrastructure and housing, this sector is a massive economic contributor. Growth in building and construction is set to continue, in keeping with the population growth forecast for Victoria. In 2014 Victoria s growth rate of 1.8 per cent was faster than any other state or territory, ahead of Western Australia s 1.6 per cent and well ahead of the 1.4 per cent reached in New South Wales and Queensland. The figures show Victoria attracting far more migrants from the Geoff Bills, January Economic Profile As at December 2014, State Government of Victoria, 2015 Victoria s Future Industries: Construction Technologies Discussion Paper 4 Ibid Policy & Communications Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03)

32 Master Builders Priorities rest of Australia than any other state. This continued in 2015, with the Bureau of Statistics reporting that Victoria gained an extra 101,500 residents in the year to December- Melbourne gained an extra 95,600 5 people. The opportunities that come with population growth should be embraced and adequately planned for. As a major economic contributor, the building and construction industry can play a key role in delivering the homes, infrastructure and jobs for Victoria s future. Priority 1: Establish a clear strategy for planning Excessive red tape in the planning system is delaying the delivery of building and construction work, and costing the economy. The Victorian Competition and Efficiency Commission (VCEC) 2010 report Local Government for a Better Victoria: An Inquiry into Streamlining Local Government Regulation found that the total costs to business of complying with land-use planning and building regulations are between $500 million and $875 million per year. This includes a cost of around $180 million each year due to unexpected delays in planning decisions. As well as council delays, the scope for objections in Victoria is vast and means that planning gets further entangled in VCAT appeals: Victoria 1 in 10 planning applications are appealed, compared to 1 in 83 in NSW and 1 in 1000 in Queensland 6. Local council planning delays and third-party appeals must be reduced as a matter of priority. Priority 2: Address Housing Affordability The cost of housing continues to grow: Master Builders figures show there has been a 21 per cent decline in housing affordability across Victoria in the past decade, and in the last 12 months the price of dwellings has increased by 11 per cent. This price hike has meant that higher income households who would previously have entered the home ownership market are now renting. This competition in the private rental market drives up rental prices and places additional stress on lower-income households wishing to rent. This is occurring in a policy environment where changes are being considered, which could have the unintended impact of further driving up the cost of housing. We need a clear strategy for achieving housing affordability. Priority 3: Introduce mandatory trades registration The building and construction industry also faces challenges within the regulatory environment. The current lack of mandatory trades registration means that only 2000 trades people are registered in Victoria, compared to 40,000 in NSW and 46,000 in Queensland. This means that a lot of the building work in Victoria is being performed by people who may have neither the training nor skills to do the job, and because they are not registered, cannot be held accountable for the shortcomings of their work. We know trades registration is a priority issue for Victorians: over 1250 people signed the 5 Australian Bureau of Statistics 6 Jane Francis Kelly, The Houses We d Choose Grattan Institute, 2011 page 32 Page 2

33 Master Builders Priorities Master Builders petition calling on the government to Introduce Mandatory Registration of Trades in Victoria. The next round of building legislation reforms must create an efficient and effective environment to benefit consumers and the industry. The lack of registration in Victoria means poor-quality outcomes, no accountability and, ultimately, acts to the consumer detriment. Priority 4: Reform Victorian Domestic Building Insurance Domestic Building Insurance is an important consumer protection measure. In May 2015 the Victorian Auditor General identified three major issues with domestic building insurance: (1) the costs of administering the scheme; (2) possible reduced premiums from alternative policy options; and (3) consumer awareness about what their certificate entitles them to 7. Master Builders considers that the costs of administering the DBI scheme can be significantly reduced. The low risk model that Master Builders proposes retains DBI Advisers (formally known as Brokers ) as an essential element of the scheme. The savings from Master Builders scheme could be used to tackle other issues of concern raised in the VAGO Report, such as reducing premiums for consumers and spending on consumer awareness programs. Domestic Building Insurance needs to be reformed to protect Victorian consumers. Priority 5: Invest in infrastructure Population growth will place additional stress on some of Victoria s ageing key public infrastructure. An audit by Infrastructure Australia found that the annual cost of delays on Melbourne s roads will triple to more than $9 billion in the next 15 years if the problem is not fixed 8. The graph below demonstrates that work done in non-residential building and engineering construction is forecast to decline. $ billion 25 Work Done on All Building & Construction, Victoria Value of work done, at constant 2013/ Source: ABS , , , MBAV forecasts forecast 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Residential Non-residential Engineering construction 7 Victorian Auditor-General s Report, Victoria s Consumer Protection Framework for Building Construction Infrastructure Australia, Australian Infrastructure Audit Report 2015 Page 3

34 Master Builders Priorities With a rapidly growing population, a strong pipeline of infrastructure and commercial investment is crucial. Priority 6: Create a sustainable industrial relations environment In August last year Master Builders released a report by Deloitte Access Economics Victorian Construction Labour Costs and Productivity which highlighted that construction industry Enterprise Bargaining Agreement (EBA) wages have been growing at unsustainably high rates and costing Victorians jobs and much needed infrastructure. The report highlighted that EBA real unit labour costs have grown by 2.4 per cent per annum more than can be justified by productivity increases. If EBA wages continue to increase at the same rate of 5 per cent over the next four years, the Victorian government (using taxpayer funds) will have to spend more than $700 million just to meet current commitments made. That is the equivalent of 40 new secondary schools, which would be lost to Victorians in a windfall gain for already highly paid EBA workers. Union EBA carpenters and entry level labourers already earn far more than nurses, defence force members, fire fighters, police or teachers. As the Victorian building and construction industry prepares for the Enterprise Bargaining Agreement discussion, Master Builders believes these unrealistic costs and their implications need to be properly understood. A responsible construction EBA agreement needs to provide a sustainable wage increase justified by meaningful flexibility and productivity improvements. Priority 7: Invest in industry training and skills development We need to examine building and construction workforce training, skills and capacity. Simultaneous with a steady decline in funding for the sector across Australia, a shortage of available skilled tradespeople is becoming evident. The industry needs a greater diversity of skills to deal with the challenges associated with Victoria s population growth and new emerging technologies in the sector. As a training provider, industry RTOs like Master Builders focus on achieving good outcomes for students. As well as providing tailored industry content, Master Builders provide students with expert support and guidance. Of particular note, we have a specialised Learning Enrolment Team consisting of dedicated administrators and expert learning consultants who: conduct pre-enrolment testing and interviewing, training and careers advice, literacy and numeracy testing, targeted learning and literacy support, individualised attention from a learning enrolment officer throughout the student s course of study, and extra tutorials for students if required. The importance of Industry Registered Trade Organisations needs to be recognised for a strong future building and construction industry. Page 4

35 Master Builders Priorities Priority 8: Invest in construction technology As summed up in Super Connected Jobs: Understanding Australia s Future Workforce (2015), there will be demand in the future for skills to build houses and infrastructure to accommodate the bigger population. This poses three interesting challenges for Victoria: 1. To ensure the construction workforce grows so that it can keep up with demand and that people have the desire to enter the building and construction industry as a career path; 2. To embrace technologies to improve productivity; and 3. To ensure the workforce has the skills required to use new technologies to deliver new housing and infrastructure. So that the Victorian building and construction industry can keep up with the demand for housing and infrastructure, we need to invest in new ways of delivering constant high quality outcomes. As investments continue into developing new technologies, it is vital that we continue to look at ways that the building and construction workforce can evolve to work with and adapt to them. Page 5

36 Master Builders Priorities Contents Page Building for Growth 1 Summary of Recommendations 7 PRIORITY 1: Establish a Clear Strategy for Planning 9 PRIORITY 2: Address Housing Affordability 12 PRIORITY 3: Introduce Mandatory Trades Registration 15 PRIORITY 4: Reform Victorian Domestic Building Insurance 19 PRIORITY 5: Invest in Infrastructure 21 PRIORITY 6: Create a Sustainable Industrial Relations Environment 24 PRIORITY 7: Invest in Industry Skills and Training 26 PRIORITY 8: Invest in Construction Technology 29 Master Builders overview 31 References 32 Page 6

37 Master Builders Priorities Summary of Recommendations 1. Establish a Clear Strategy for Planning RECOMMENDATION 1.1 Master Builders calls on the government to create a more detailed Housing Strategy. This would preferably involve targets on housing mix and affordable housing needs and information on land supply locations to meet those needs. Local councils would be held to account for this. RECOMMENDATION 1.2 RECOMMENDATION 1.3 Master Builders recommends that the government set up or allocate responsibility for monitoring the implementation of a strategic plan and for planning development assessment, to a specific agency and/or planning assessment hubs. Master Builders calls on the government to create responsible as-of-right codified processes. This might occur in development zones around principal activity centres and major public transport networks and, more generally, in Neighbourhood Residential & General Residential Zones. Depending on the zone, it could include secondary dwellings, dual occupancy, low-rise townhouses, apartments and other forms of medium - high density housing. 2. Address Housing Affordability RECOMMENDATION 2.1 Master Builders recommends that the government publicly articulates the work and time frames of the National Taskforce into Housing Affordability being chaired by the Treasurer, Tim Pallas. As a matter of urgency, identify the causes of unaffordable housing and encourage public dialogue to develop a comprehensive set of potential solutions to help address the issue. RECOMMENDATION 2.2 RECOMMENDATION 2.3 RECOMMENDATION 2.4 Master Builders calls on the government to reform the Victorian Planning system as a matter of priority, consistent with Priority 1. Master Builders recommends that the government balance decisions of the regulatory proposals, like the Better Apartments review, in the context of housing affordability to avoid further costs to the community. Master Builders recommends that the government develop and implement a Housing Affordability Impact Assessment tool to be included in the assessments of regulatory proposals, for example this could be incorporated as a benchmark in the RIS cost/benefit assessment process. 3. Introduce mandatory trades registration RECOMMENDATION 3.1 Master Builders calls on the government to introduce mandatory registration of trades as a matter of priority. 4. Reform Victorian Domestic Building Insurance (DBI) RECOMMENDATION 4.1 Master Builders recommends that the government moves towards the proposed Master Builders model for the Victorian DBI scheme, which is a low risk option and retains DBI Advisers (formally known as Brokers ) as an essential element of the scheme. RECOMMENDATION 4.2 Master Builders recommends that the government consider further initiatives that could reduce costs of the DBI scheme such as moving to a completions based underwriting model, review by exception and two tiered cover options. Page 7

38 Master Builders Priorities RECOMMENDATION Invest in infrastructure RECOMMENDATION 5.1 RECOMMENDATION 5.2 RECOMMENDATION 5.3 RECOMMENDATION 5.4 Master Builders recommends some of the savings in administration costs from the Master Builders model of the DBI scheme could be used to build effective consumer awareness campaigns. Master Builders recommends that the State Government establish a strong pipeline of commercial and engineering investment as a matter of priority. Master Builders recommends that the government consider innovative funding arrangements for increased investment in commercial and infrastructure opportunities. Master Builders recommends that in taking action to invest, the State Government ensure that Victoria s debt profile allows the state to retain its AAA credit rating. Master Builders recommends that the government pursue increased GST funding to help fund crucial infrastructure projects. 6. Create a sustainable industrial relations environment RECOMMENDATION 6.1 Master Builders calls on the State Government to uphold the rule of law in the building and construction industry by reintroducing a strong code of practice and government agency to enforce this. RECOMMENDATION 6.2 Master Builders recommends that all interested stakeholders, including the State Government, community, employers, unions and employees support the creation of an industry EBA agreement that is sustainable and in the best interests of the future of the Victorian community. 7. Invest in industry training and skills RECOMMENDATION 7.1 Master Builders recommends that the Government consider ways to provide greater financial support to the VET sector, including support for industry RTOs. RECOMMENDATION 7.2 RECOMMENDATION 7.3 Master Builders call on the release of the Victorian Skills Commissioner s a detailed work program as a matter of priority and that it include ways to ensure that young people can be encouraged into the building and construction sector as a career path, including by training in industry RTOs that deliver quality learning outcomes. Master Builders calls on the Victorian Skills Commissioner to examine the building and construction industry as a matter of importance. 8. Invest in construction technology RECOMMENDATION 8.1 Master Builders urges the State Government to prioritise investment in BIM technology. RECOMMENDATION 8.2 RECOMMENDATION 8.3 Master Builders calls on the State Government to consider ways to support new technologies including modular and pre-fabrication techniques. Master Builders recommends that the government consider ways to engage more people in training to use emerging technologies in the building and construction workforce. Page 8

39 Master Builders Priorities Priority 1: Establish a Clear Strategy for Planning The Victorian planning system needs to evolve if it is to accommodate the rapid population growth forecast for Victoria, while still ensuring the continued viability of the building and construction sector and strengthen Victoria s reputation as a place for investment and prosperity. As outlined, Melbourne s population is forecast to grow which will necessitate the construction of up to 1.6 million new homes 9 over the next 35 years. All agencies of government and industry need to work together to ensure that growing communities, both new and existing, have access to the appropriate living standards, services and amenities. Master Builders welcomes the State Government s recognition that there needs to be substantial changes made to the planning system, as demonstrated through the Plan Melbourne Refresh: Discussion Paper, October 2015 (Plan Melbourne Refresh). In its submission to Plan Melbourne Refresh, Master Builders outlined our four key objectives for reform of the planning system, which are seen as necessary to meet our housing and infrastructure objectives for Victoria s future. Objective 1: Create a clear planning scheme and strategic plan As the underlying basis for decisions that affect the way Victoria s land can be used or developed, our planning scheme must be able to be applied by all levels of government in a consistent and transparent manner. This means ensuring a clear and transparent development and application of land and zoning requirements; ensuring planning policies are not contradictory; and ensuring that the planning scheme deals only with planning issues and is not broadened beyond its scope to take into account other areas, such as building requirements. A clear strategic plan that is consistent with the broad-scope planning policies is vital. In Plan Melbourne Refresh, the Government indicated a desire to lock down the urban growth boundary (UGB). However, this will reduce the land that is available to develop new housing to accommodate population growth, which in turn has the potential to drive up the price of housing. Plan Melbourne Refresh also suggested that established areas provide 70 per cent of Melbourne s new housing supply and greenfield areas provide 30 per cent. However, locking down the UGB and emphasising higher densities in existing suburbs requires a realistic look at how land supply and appropriate mixes of housing can be delivered. Master Builders believes that land release in the existing boundaries must be guaranteed. This will provide some level of certainty for investment and ensure that we will continue to be able to build new housing to accommodate the growth. Further, to ensure that we can accommodate the growth while still locking down the UGB, Master Builders supports the provision of a detailed Housing Strategy that incorporates a Housing Plan, which would include information about housing mix, size and affordable housing needs as well as land supply locations to meet those needs. 9 Page 9

40 Master Builders Priorities Objective 2: Planning scheme structures are capable of delivering on state planning policy objectives Given the range of stakeholders affected, the planning scheme must have clear lines of responsibility and accountability so that it is capable of delivering on the State s planning policy objectives and strategy. It makes sense to clarify the roles and responsibilities of State and Local Governments, in terms of developing planning policy and ensuring there are appropriate organisations capable of having oversight for the implementation of planning strategy. Planning can be divided into two components: (a) strategic planning (eg Plan Melbourne, Infrastructure Victoria 30 year plan); and (b) development assessment. 10 There are a number of strategic plans being developed that require implementation, including Plan Melbourne Refresh and Infrastructure Victoria s plans. At present, development assessment is conducted at a local council level and while this ought to take into account the overarching strategic goals or policies eg. those created in Plan Melbourne Refresh, it is difficult to hold councils to account for their decisions that do not deliver on the strategic plans. Therefore, there needs to be a way that council s adherence to a broader strategy can be monitored and regulated. This could involve taking the development assessment out of the hands of councils, or creating agencies to hold the councils to account for their decision making. This concept is timely in the context of the current Local Government Act review, which could incorporate consideration of delegation of authority for planning and development assessment outside of local councils. Objective 3: Consistency of interpretation and application of requirements in planning schemes Master Builders believes that reforms are urgently needed at local level to reduce costs and inefficiencies in our planning system. This not only includes reforms to reduce planning delays and to introduce greater accountability to local government, but also to create as of right development processes to speed up the planning system and ensure that growth objectives can be achieved efficiently. Planning delays cost Victorian builders and consumers a great deal. As stated, the VCEC 2010 inquiry found that the total costs to business of complying with land-use planning and building regulations are between $500 million and $875 million per year, including around $180 million each year due to unexpected delays in planning decisions. 11 Data from the Department of Transport, Planning and Local Infrastructure s Planning Permit Activity in Victoria Annual Report 2013/14 confirms that only 67 per cent of the total 56,411 planning permit applications received were decided within the 60 day statutory time frame. Master Builders believes that one of the most efficient ways to ensure the delivery of Victoria s housing needs is to remove red tape in the planning system, and reduce permit waiting times by 10 As discussed in Gareth Griffith, The Greater Sydney Commission, NSW Parliamentary Research Service, October 2015, e-brief 20/2015, page 2 11 Victorian Competition and Efficiency Commission report Local Government for a Better Victoria: An Inquiry into Streamlining Local Government Regulation (2010) Page 10

41 Master Builders Priorities creating responsible as-of-right codified processes. This might occur in development zones around principal activity centres and major public transport networks and in Neighbourhood Residential & General Residential Zones. This could apply to secondary dwellings, dual occupancy, low-rise townhouses, apartments and other forms of medium - high density housing. Objective 4: Scope of objections to planning scheme amendments and permit applications limited to effective and efficient outcomes At present, the scope of objections people can lodge in relation to planning permits is very broad, and when objections proceed to VCAT significant costs and delays can be incurred. In fact, the delays to planning and delivery of strategic plans are particularly problematic in Victoria. Indeed, the Grattan Institute 12 stated: The greatest area of concern for developers is Melbourne s wide ranging third party appeals. As one said: anyone can appeal and take the decision to VCAT, creating significant uncertainty. In Victoria, 1 in 10 applications are appealed, compared to 1 in 83 in NSW and 1 in 1000 in Queensland. The median length of the Victorian appeals process is 21 weeks. VCAT also decides on a range of consumer related disputes and applications, making it less clear whether there are technical experts for deciding on issues in the building industry. The expertise of a decision-making body such as VCAT must be assured, in order to achieve efficient and effective outcomes for the industry. The long delays experienced at VCAT could be alleviated somewhat by the delivery of the codeassessed approach, which could limit the degree to which objections could be made towards proposed planning development. Recommendations 1.1 Master Builders calls on the government to create a more detailed Housing Strategy. This would preferably involve targets on housing mix and affordable housing needs and information on land supply locations to meet those needs. Local councils would be held to account for this. 1.2 Master Builders recommends that the government set up or allocate responsibility for monitoring the implementation of a strategic plan and for planning development assessment, to a specific agency or planning assessment hubs. 1.3 Master Builders calls on the government to create responsible as-of-right codified processes. This might occur in development zones around principal activity centres and major public transport networks and, more generally, in Neighbourhood Residential & General Residential Zones. Depending on the zone, it could include secondary dwellings, dual occupancy, low-rise townhouses, apartments and other forms of medium - high density housing. 12 Jane-Frances Kelly, The housing we d choose Page 11

42 Master Builders Priorities Priority 2: Address Housing Affordability The Victorian housing affordability crisis impacts our economy, the building and construction industry and society as a whole. Lack of housing affordability prevents home ownership, locks out first home buyers and leads to high rental prices. It presents a significant constraint on new building activity and ongoing work, and also impacts the availability of social or affordable housing. As the cost of housing in Victoria soars, Master Builders urges the State Government to take steps to improve housing affordability. Master Builders figures show that in January 2016 the median dwelling price for Melbourne was $563,000; 11% higher than it was a year earlier. Similarly in Sydney, the median dwelling price in Jan was $727,500; 10.5% higher than a year earlier. $' % Median Unit Prices, Australian Capital Cities and percentage change on a year ago % 4.6% -3.9% -0.4% 13.3% 0.7% -3.3% 6.8% Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra Five Capitals Source: CoreLogic RP Data The surge in house prices is being accompanied by rapid population growth. The Bureau projects that by 2056 Melbourne s population could double to nearly 8.2 million people, meaning that the government s planning strategy has to guarantee sufficient space to accommodate this substantial growth rate, including giving ample consideration to the availability of housing, jobs and services to support the growth. Master Builders calls on the State Government to accelerate the comprehensive review of housing affordability as a matter of urgency, in line with work being conducted by the National Taskforce into Housing Affordability, chaired by the Victorian Treasurer Tim Pallas. This would provide policy and decision makers, industry and the broader community with an opportunity for public dialogue and offer potential solutions to help address it. Page 12

43 Master Builders Priorities The existing planning system and its delays contribute to the cost of housing and construction, which is why Master Builders encourages the State Government to explore a reform of the planning system (discussed in further detail in Priority 1). The increase in house prices in Victoria mean that higher income households who would previously have entered the home ownership market are now renting. This competition in the private rental market drives up rental prices and places additional stress on lower income households wishing to rent. Following on from this is additional pressure placed on the public housing system. Between March and September 2015 the public housing wait list has increased by over 2,000 applicants to almost 35,000 applications 13, which, according to the Victorian Public Tenants Association, represents more than 60,000 people. As well as policies that have a direct impact on housing affordability, many can indirectly affect it. The policy agenda the government is pursuing is exciting and ambitious: over the next year we are expecting to see the release of Plan Melbourne Refresh, Better Apartments, Residential Zones State of Play reports, review of the Local Government Act to name a few. The broad scope of factors that influence housing affordability mean that these and other policies will indirectly influence affordability. For example, proposals to introduce minimum apartment sizes or ceiling heights as part of Better Apartments will impact the cost of building and housing. According to the Property Council of Australia every extra square metre of space would cost $ While Better Apartments is primarily intended to improve living spaces, the impact it will have on housing affordability should not be ignored. That is why Master Builders suggests consideration is given to developing a housing affordability impact assessment tool for consideration of all policy proposals. This could be incorporated, for example, in the regulatory impact statement (RIS) cost/benefit assessment process and be applied to government housing and planning policies in the future. This indicator would encourage policy makers to consider what impact a policy such as Better Apartments - will have on housing affordability. Master Builders is hopeful that strong leadership from the State Government will reduce the severity of the housing affordability crisis. We have considered a range of options that the Government could employ to address the issue, and are willing to work closely with the government in designing an appropriate response to this issue that will accommodate the needs of a broad section of the Victorian population. Recommendations 2.1 Master Builders recommends that the government publicly articulates the work and time frames of the National Taskforce into Housing Affordability being chaired by the Treasurer, Tim Pallas. As a matter of urgency, identify the causes of unaffordable housing and encourage public dialogue to develop a comprehensive set of potential solutions to help address the issue. 2.2 Master Builders calls on the government to reform the Victorian Planning system as a matter of priority, consistent with Priority Public Housing Waiting and Transfer List, Department of Human Services, September Property Council of Australia, quoted in The Age, 8 January 2016 Page 13

44 Master Builders Priorities Master Builders recommends that the government balance decisions of the regulatory proposals, like the Better Apartments review, in the context of housing affordability to avoid further costs to the community. 2.4 Master Builders recommends that the government develop and implement a Housing Affordability Impact Assessment tool to be included in the assessments of regulatory proposals, for example this could be incorporated as a benchmark in the RIS cost/benefit assessment process. Page 14

45 Master Builders Priorities Priority 3: Introduce Mandatory Trades Registration As the pace of building works to keep up with Victoria s rapidly expanding population, it is essential that tradespeople like carpenters, concreters, waterproofers and bricklayers are appropriately skilled and registered, to protect consumers and the industry from poor workmanship. Only 2000 trades people are registered in Victoria, compared to 40,000 in NSW and 46,000 in Queensland. It is alarming that Victoria is so far behind. NSW and QLD both require trades to be registered if the tradespeople are undergoing work that is above a prescribed monetary threshold. However in Victoria, tradespeople are exempt from registration if they are contracting to a registered builder. This means that a lot of the building work in Victoria is being done by people who may have neither the training nor skills to do the job, and because they are not registered, cannot be held accountable for the shortcomings of their work. Trades registration is a priority issue for Victorians. Over 1250 people signed the Master Builders petition calling on the government to Introduce Mandatory Registration of Trades in Victoria. Comments left by more than 1200 signatories to our petition, provide evidence that the Victorian building industry and its consumers are faced with a series of problems that would be resolved through mandatory trades registration, and they are calling for the government to make trades registration mandatory in Victoria. Lack of accountability The lack of mandatory registration in Victoria means that there is no formal way of connecting poor workmanship to subcontractors, so unregistered tradespeople can go unaccountable for their work. Quotes from petition: Trades should be held accountable for their work Trades should be accountable for the work they produce Consumer protection The lack of registration means that it is difficult for consumers to make informed decisions about who to employ. In the current system, consumers rely heavily on the word of a tradesperson to understand their work experience, which is not always reliable. This can lead to consumers being taken advantage of by unskilled trades people. Quotes from petition: I m sick of fixing shonky work done by unqualified people who charge clients trade rates. All care and no responsibility Page 15

46 Master Builders Priorities Unsuspecting builders and customers should not have to risk their work with unqualified and unsuitable persons claiming to be a qualified painter, tiler etc... The cowboys make money off unsuspecting consumers, who end up with dodgy workmanship. Ability to monitor licenses A system of registration would provide consumers with the ability to search the names and verify the qualification of potential subcontractors. This would also encourage a system of accountability by allowing consumers to see any substantiated complaints against the tradesperson. Reducing poor quality outcomes The May 2015 VAGO report Victoria s Consumer Protection Framework for Building Construction found that nearly one third (28 per cent) of people in the course of their building or renovating projects have experienced problems, and that a high percentage of those incidents involved poor workmanship. Quotes from petition: I m a qualified carpenter and see poor workmanship and unsafe practices everyday! Poor quality tradesmen undercut professionals with poor quality work and materials I am concerned about the quality and credibility of unqualified trades entering the worksite A trades registration system protects consumers by requiring tradespeople to obtain a minimum level of competency. In addition to demonstrating the ability to complete hands-on work in an effective, safe and skilful way, tradespeople should also have basic business management skills, a basic understanding of contracts and legal obligation, and a sound understanding of OHS requirements. Quote from petition: A house is the most expensive item that most Australians will ever own; it should be built by competent trades people! Minimum skills and training standards The current system does not require tradespeople to provide evidence of their qualifications or training, which means that it is incredibly difficult to know whether tradespeople are aware of best practice and occupational health and safety practices. Requiring a license ensures that practitioners will proactively keep up to date with their skills and training. Quote from petition: If you gave trades a registration, then they have something to lose. Page 16

47 Master Builders Priorities Government oversight and industry trends A system of mandatory trades registration would allow the regulator to understand trends of poor quality work, or issues in the industry; and to enforce the laws and stop unskilled workers from conducting business. Skills and career path for tradespeople The current workforce is facing challenges to keep up with demand. As reported in The Australian newspaper on 14 September 2015, the residential construction boom is being plagued by a tradie crisis, with a shortage of skilled labour increasing the cost and time involved in building a house and adding to already high property prices in Melbourne 15. This is compounded by an increasing rate of trades students withdrawing from training in Victoria, compared with NSW. As the demand continues to grow, the government must look at policies that will increase the number of people entering and staying in the industry. As demonstrated in the graph below, the quarter to December 2015 Master Builders survey of members in Victoria highlighted that over the year it became increasingly difficult to source labourers, carpenters and bricklayers. Difficulty finding tradespeople in Victoria Labourers Mar-15 Jun-15 Sep-15 Dec-15 Carpenters Bricklayers Index of difficulty Source: Master Builders December 2015 National Survey Results Reforms are needed to attract people into the building and construction industry and for it to be treated as an attractive and viable career. Requiring people to obtain specific training and/or qualifications gives legitimacy and reputation to the trades qualification and makes a trade more attractive as a career path. 15 Brown, G 2015 Tradie shortage pushes home prices up as skills lost to mining, The Australian, 14 September 2015, p.5 Page 17

48 Master Builders Priorities Interstate competition Builders who work across Victorian borders can see the difference between the states that have mandatory trades registration and those that do not. To attract business and investment opportunities, and underpin a strong building and construction sector, we must ensure the Victorian industry is a viable competitor. Quotes from petition: My company works in other states that have trade registration and I do believe the quality of trades is much better [in the other states] and we are able to build homes more consistently and quicker. [Trades registration] will bring Victoria into line with other states and better control over all trades The benefits of reforming trades registration in Victoria are numerous. A registration system will protect consumers by improving the accountability and quality in the industry; improve the industry by ensuring that quality is achieved and minimum skills are obtained; and allow trends in work and complaints to be dealt with. It is also highly likely to enhance the careers of tradespeople by strengthening the reputation and skill level of the industry; and will equip Victorian trades people with the skills and qualifications to match the jobs for a strong and robust future industry. There are a number of ways a system of registration can be established in Victoria. This includes establishing categories for registration and making minor legislative amendments to the Building Regulations 2006 and the Domestic Building Contracts Act The government made a good start in introducing Building Legislation Amendment (Consumer Protection) Bill 2015 to Parliament in December 2015 to crack down on owner builders in Victoria reforming trades registration is the next logical step. Recommendation 3.1 Master Builders calls on the government to introduce mandatory registration of trades as a matter of priority. Page 18

49 Master Builders Priorities Priority 4: Reform Victorian Domestic Building Insurance Some of the key challenges of the current Domestic Building Insurance (DBI) scheme in Victoria were recently highlighted in the May 2015 Victorian Auditor-General s Report, Victoria s Consumer Protection Framework for Building Construction (VAGO Report). These were (1) the costs of administering the scheme; (2) possible reduced premiums from alternative policy options; and (3) consumer awareness about what their certificate entitles them to. Master Builders considers that the costs of administering the DBI scheme can be significantly reduced by creating a new scheme that retains DBI Advisers (formally known as Brokers ) as an essential element of the scheme and saves in administration costs. This saving could be used to tackle other issues of concern raised in the VAGO Report, such as reducing premiums for consumers and spending on consumer awareness programs. The alternative model would be for the VMIA to take all of the various functions in house. Master Builders does not consider this to be appropriate as DBI Advisers should be retained as they are already well trained and expert in DBI and provide an important function in the scheme. We also believe that retaining DBI Advisers is a lower risk option, when you consider the risks associated with the VMIA having to recruit, train and build an entirely new customer service team of approximately 60 FTE s. Not only would the in house model be more costly for the VMIA, it would potentially slow the entire residential building industry down. An example of the upheaval that can be caused by changing schemes was never more evident than during the HIH collapse in 2001 and the withdrawal of Dexta in 2002, when building activity nearly came to a standstill. We recommend that the government consider further initiatives that could reduce costs of the DBI scheme. By way of some examples, consideration could be had towards: moving to a completions based underwriting model (as recently introduced in NSW) 16 by better tracking contingent liabilities and thereby having greater control over portfolio exposure, the VMIA could significantly reduce claims cost, and hence reinsurance costs; amending the VMIA s current underwriting review guidelines, whereby builders with turnovers of less than $3m, would only require review by exception. This occurs in other jurisdictions such as NSW, thus lowering total administrative underwriting expenses significantly; and developing a two tiered cover option which could be cheaper for the consumer than the current compulsory option, but would have slightly lower indemnity periods. Consumers 16 As builders hand in completions certificates, the VMIA can monitor build periods and develop processes which can also highlight builders at risk of insolvency or who are running poor businesses. Page 19

50 Master Builders Priorities could choose to purchase an extended cover option if they wished to increase the length of coverage. Greater awareness and consumer education Master Builders supports greater consumer awareness of the DBI product through education, in order to help manage consumer expectations. Consumers should understand exactly what cover they receive from a DBI certificate. Some of the savings in administration costs could be used to build effective consumer awareness campaigns. Other initiatives that will improve the consumer protection framework In addition to focusing on fixing the DBI scheme, fixing the causes of poor quality workmanship in the industry should also be a matter of priority. We believe that trades registration, in addition to improvements to the builder registration system, would assist in the reduction of disputes and poor workmanship in the building industry. Proposed changes to dispute resolution processes under the Building Legislation Amendment (Consumer Protection) Bill 2015 should go some way towards enabling a more efficient process protecting builders and consumers. In addition, proposed reforms in the bill to the requirements of owner-builders should reduce the incidence of poor workmanship in the industry. Recommendations 4.1 Master Builders recommends that the government moves towards the proposed Master Builders model for the Victorian DBI scheme, which is a low risk option and retains DBI Advisers (formally known as Brokers ) as an essential element of the scheme. 4.2 Master Builders recommends that the government consider further initiatives that could reduce costs of the DBI scheme such as moving to a completions based underwriting model, review by exception and two tiered cover options. 4.3 Master Builders recommends some of the savings in administration costs from the Master Builders model of the DBI scheme could be used to build effective consumer awareness campaigns. Page 20

51 Master Builders Priorities Priority 5: Invest in infrastructure Melbourne has consistently transformed itself: over the past 40 years, the city has nearly doubled in size, growing by 1.5 million people to over 4.4 million 17 and for the last five years it has been named the world s most liveable city 18. Victoria should embrace, and adequately prepare to accommodate, this growth to be able to continue to be a great place to live. The state will need more schools, public transport and road networks, services and jobs by The Government has to give ample consideration to funding infrastructure to support this growth. In the face of growth, some of Victoria s key infrastructure has been in decline. An audit by Infrastructure Australia found that the annual cost of delays on Melbourne s roads will triple to more than $9 billion in the next 15 years if the problem is not fixed 19. Of concern, the level of work in the non-residential and engineering construction markets are not forecast to grow in coming years. Work Done on All Building & Construction, Victoria $ billion Value of work done, at constant 2013/14 prices Source: ABS , , , MBAV forecasts forecast 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Residential Non-residential Engineering construction In particular, construction work in health and aged care, and recreation and entertainment are forecast to decline in coming years Australian demographic statistics March 2015, ABS Historical Population Data, The Economist Intelligence Unit Global Liveability Report Infrastructure Australia, Australian Infrastructure Audit Report 2015 Page 21

52 Master Builders Priorities $ billion Other commercial 1 0 Offices 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Source: ABS , MBAV forecast We commend the government for establishing Infrastructure Victoria, making steps towards removing 50 level crossings, and for releasing the Western Distributor business case. But for the State to continue to prosper and strengthen, we would like to see a strong pipeline of commercial and engineering investments established. Master Builders believes the State Government should consider increasing Victoria s overall infrastructure expenditure. We are in a strong position to do so: Standard and Poor s August 2015 report reaffirmed Victoria s AAA credit rating, but noted that our capital expenditure ratio was per cent, in 2015/16, down from per cent in 2014/ Master Builders welcomed Treasurer Tim Pallas reaffirmation of Victoria s triple-a credit rating on 23 February In order to facilitate increased investment in infrastructure in Victoria, Master Builders notes that it is important for Victoria to receive a fairer share of the Goods and Services Tax (GST) allocation. Despite accounting for 25 per cent of Australia s population, in 2014/15 Victoria only received 22.1 per cent of GST revenue 21, down from 22.6 per cent in 2013/14. These additional funds could be used for critical investment in new transport, hospitals, roads and school projects for Victoria. The current low interest rate environment offers the government many opportunities to consider financing of investment in infrastructure. Recommendations Work Done on Non-residential Building, Victoria Value of work done, at constant 2013/14 prices forecast Miscellaneous Accommodation Entertainment & recreation Health & aged care Education Industrial 5.1 Master Builders recommends that the State Government establish a strong pipeline of commercial and engineering investment as a matter of priority. 5.2 Master Builders recommends that the government consider innovative funding arrangements for increased investment in commercial and infrastructure opportunities. 20 Standard & Poor s ratings services, McGraw Hill Financial Ratings on Australian State of Victoria Affirmed at AAA/A-1+ ; Outlook remains stable August 27, Commonwealth Department of Treasury Midyear Fiscal and Economic Update December 2015, page 84 Page 22

53 Master Builders Priorities Master Builders recommends that in taking action to invest, the State Government ensure that Victoria s debt profile allows the state to retain its AAA credit rating. 5.4 Master Builders recommends that the government pursue increased GST funding to help fund crucial infrastructure projects. Page 23

54 Master Builders Priorities Priority 6: Create a sustainable industrial relations environment Uphold the rule of law in our industry The numerous accounts of lawlessness and thuggery that have been recorded in our worksites have been highlighted during the Royal Commission hearings into Trade Union Governance and Corruption (Heydon Royal Commission). The Heydon Royal Commission report released in December 2015 highlighted that: The conduct that has emerged discloses systemic corruption and unlawful conduct, including corrupt payments, physical and verbal violence, threats, intimidation, abuse of right of entry permits, secondary boycotts, breaches of fiduciary duty and contempt of court. This behaviour has unjustifiable social consequences including detrimental emotional and physical turmoil imposed upon individuals and their families. The behaviour undermines the reputation and professionalism of the people working in the sector and of the industry overall. As a central economic pillar of the state delivering more than 200,000 jobs, it is vitally important that a pipeline of skills for Victoria s building and construction sector is developed and maintained. Young people suffer too; when bad behaviour is allowed to create a negative impression of the industry, they see fewer options for a rewarding career, and the sector misses out on great candidates. Every single Victorian should be concerned about this problem. Intimidation and bullying tactics drain critical construction projects of time and money required for the roads, hospitals, aged care facilities and schools on which our community depends. Every single Victorian loses. That is why it is essential that the reforms proposed by the Heydon Royal Commission, particularly the re-introduction of the Australian Building and Construction Commission (ABCC), are implemented for the benefit of our industry. We welcome the commitment by the Federal Government to reintroduce the ABCC and we urge support by all stakeholders for the Bill at the next opportunity. But equally - coercion, thuggery and intimidation across our industry also needs to be weeded out by the State Government upholding the rule of law in our sector. Otherwise the competitiveness of our industry will suffer. We need government agencies, such as WorkSafe to act swiftly against those who disregard laws such as right of entry provisions. Master Builders was also disappointed by the State Government s decision to abolish the Construction Code Compliance Unit and the Construction Code of Practice. A strong code of practice for our industry is vital in preventing unproductive and costly work practices dictated to contractors by unions, which drive up the costs of construction. Page 24

55 Master Builders Priorities EBA negotiations In August last year we released a report by Deloitte Access Economics Victorian Construction Labour Costs and Productivity which highlighted that construction industry EBA wages have been growing at unsustainably high rates and costing Victorians jobs and much needed infrastructure. Victoria has the country s fastest growing population and therefore faces a dire imperative to produce social infrastructure including roads, rail, schools and hospitals to accommodate these new arrivals. In light of government efforts to increase spending on much-needed social infrastructure to accommodate a burgeoning population, further wage increases for EBA employees, cannot be justified without productivity offsets. The Deloitte report highlighted that EBA real unit labour costs have grown by 2.4 per cent per annum more than can be justified by productivity increases. The Deloitte report revealed that if EBA wages continue to increase at the same rate of 5 per cent over the next four years, the Victorian government (using taxpayer funds) will have to spend more than $700 million just to meet current commitments made. That is the equivalent of 40 new secondary schools, which would be lost to Victorians in a windfall gain for already highly paid EBA workers. Union EBA carpenters and entry level labourers already earn far more than nurses, defence force members, fire fighters, police or teachers. A responsible construction EBA agreement needs to provide a sustainable wage increase justified by meaningful flexibility and productivity improvements. Master Builders hopes that as the EBA negotiations approach, the CFMEU will consider the urgency of the economic circumstances in the State and in particular the needs of the industry they represent. Recommendations 6.1 Master Builders calls on the State Government to uphold the rule of law in the building and construction industry by reintroducing a strong code of practice and government agency to enforce this. 6.2 Master Builders recommends that all interested stakeholders, including the State Government, community, employers, unions and employees support the creation of an industry EBA agreement that is sustainable and in the best interests of the future of the Victorian community. Page 25

56 Master Builders Priorities Priority 7: Invest in industry skills and training development Vocational Education and Training (VET) is an integral part of Victoria s education system, economy and social fabric 22. VET is provided by Technical And Further Education (TAFE) institutes, adult and community education providers as well as private Registered Training Organisations (RTOs), which includes industry RTOs, community organisations, private colleges and commercial and enterprise training providers. Additionally, some schools and universities provide VET. VET enables students to gain qualifications for all types of employment, and specific skills to help them in the work place. The sector is crucial to the Australian economy, both for the development of the national workforce and as a major export industry 23. Despite the important role VET plays, a report released in August 2015 by the Mitchell Institute for Health and Education Policy found that funding across Australia for vocational education has lagged behind that for universities and schools. VET funding has increased just 5 per cent over the past decade compared to 40 per cent for higher education and 25 per cent for schools. Two reviews have recently been conducted in the Victorian sector: the VET Quality Assurance Review, and the VET Funding Review. These reviews discuss a range of issues within the system, amongst which the Funding Review highlighted that a succession of policy changes in recent years has resulted in lower quality training, students having qualifications withdrawn, and a mismatch between training and labour market needs 24. The Funding Review included three overarching objectives for the sector: 22 VET Funding Review: Final Report, Bruce MacKenzie, Neil Coulson Australian Skills Quality Authority (ASQA) 24 VET Funding Review, page 5 Page 26

57 Master Builders Priorities delivering quality training that meets current and future industry needs; growing employment and further education outcomes; and promoting equity and addressing disadvantage. In addition, the Funding Review s recommendations advocate strongly for better support for TAFES, which is an excellent start. However, Master Builders hopes that this will not detract from support for the important work that other providers such as industry RTOs - deliver. Role of industry RTOs in the VET sector Industry RTOs are important training providers in the VET system. In Melbourne and in our regional offices, Master Builders provides training courses in business management, leadership, sustainability, safety, building and compliance, industrial relations and legal requirements. In 2014/15 Master Builders trained over 6500 people, providing more than 140,000 training hours. Training courses cross areas such as IR, OHS, legal, building and construction, human resource management, sales and customer service. Industry RTOs like Master Builders provide specialised training services that are tailored towards the students working in the industry workplace. In addition, the Master Builders Building Leadership Simulation Centre (BLSC) is the only training provider in Australia to offer experiential learning in the form of simulation modules as part of construction and project management qualifications at certificate and diploma level. The success of the BLSC is evident in the growth it s experienced: it achieved a 72 per cent growth on the last financial year. As well as providing tailored industry content, industry RTOs like Master Builders provide students with expert support and guidance. Of particular note, Master Builders has a specialised Learning Enrolment Team consisting of dedicated administrators and expert learning consultants who: conduct pre-enrolment testing and interviewing, training and careers advice, literacy and numeracy testing, targeted learning and literacy support, individualised attention from a learning enrolment officer throughout the student s course of study, and extra tutorials for students if required. In the longer qualifications, Master Builders allocates each unit to trainers who have expert knowledge on that precise topic, rather than allocating the full course to just one trainer who may not have the same level of specific knowledge. With access to industry experts, students are also exposed to strong links in the industry, which can help in work experience placements and career paths. When the building and construction sector delivers substantial employment for the state, then the importance of building and construction RTOs are magnified. Master Builders is proud of our training outcomes, and our strong record at engaging and training students. Government support is important to providing quality and consistent VET courses. We note the recent $9.3million State Government commitment to Group Training Organisations. In addition, in response to the VET Funding Review, the State Government indicated that the market will remain Page 27

58 Master Builders Priorities contestable but that funding will be prioritised for quality training that leads to jobs. In addition to supporting TAFEs, Master Builders is hopeful that the Government recognises the work of industry RTOs in delivering specialised and quality courses with excellent employment outcomes. New Victorian Skills Commissioner Master Builders welcomes the appointment of Neil Coulson as the Victorian Skills Commissioner (VSC), and the government s recognition of the important role industry plays in the training sector 25. We hope that this new Office will play a productive role in monitoring the sector, and will identify the strengths in delivering training, particularly by industry. Master Builders understands that the VSC will be identifying programs to ensure students obtain training for real jobs, exploring ways to enhance industry output so that training is strategic and targeted, and seeking to understand the training needs of existing and emerging businesses, new skills requirements for new technologies. By aiming to better align training needs to Victorian industry and the economy, we encourage the VSC to recognise that the building and construction industry is a crucial sector which needs to be focused on in this regard. In addition to what we understand the broad direction of the VSC to be, some of the key issues Master Builders hopes will also be examined include: Identifying and acting upon ways to engage more young people into VET courses in the building and construction industry. Identifying ways to better engage schools and promote building and construction industry VET as a viable post school option. Identifying the outcomes for building and construction industry students that train in industry RTOs and TAFEs. Identifying the future workforce skills and funding appropriate training organisations to deliver the training in the building and construction industry. Recommendations 7.1 Master Builders recommends that the Government consider ways to provide greater financial support to the VET sector, including support for industry RTOs. 7.2 Master Builders call on the release of the Victorian Skills Commissioner s a detailed work program as a matter of priority and that it include ways to ensure that young people can be encouraged into the building and construction sector as a career path, including by training in industry RTOs that deliver quality learning outcomes. 7.3 Master Builders calls on the Victorian Skills Commissioner to examine the building and construction industry as a matter of importance. 25 Victoria s First Skills Commission Appointed Media Release, the Hon Steve Herbert, 14 December 2015 Page 28

59 Master Builders Priorities Priority 8: Invest in building and construction technology As well as the 1.6 million new homes 26 that the ABS forecasts will be needed in Melbourne by 2051, there must be considerable investment in public infrastructure. Some of projects that are planned to occur include Fishermans Bend, the Ballarat West Employment Zone, E-Gate and the Queen Victorian Market Precinct. Other large scale construction projects include the Western Distributor Project, Melbourne Metro Link and the ongoing $250m Children s Hospital Redevelopment. As summed up in Super Connected Jobs: Understanding Australia s Future Workforce (2015), there will be demand in the future for skills to build houses and infrastructure to accommodate the bigger population. This poses three interesting challenges for Victoria: 1. To ensure the construction workforce grows so that it can keep up with demand and that people have the desire to enter the building and construction industry as a career path; 2. To embrace new technologies to improve productivity; and 3. To ensure the workforce has the skills required to use new technologies to deliver new housing and infrastructure. Future workforce size The Victorian construction sector experienced the third largest growth of jobs between , now accounting for 238,000 jobs (as at December 2014), or 8.2 per cent of the workforce 27, making it the second largest full time employer. As already discussed, the current workforce is facing challenges to keep up with demand. In Priority 7, Master Builders suggests that Industry RTOs delivering training would go some way in resolving this. As the demand continues to grow, the government must look at ways to increase the number of people entering and staying in the industry. BIM Technology and the future of construction Technology in the building and construction industry must be embraced to accommodate growth and to improve productivity and quality of outputs. The Productivity Commission s Inquiry into Public Infrastructure suggested that innovative approaches to design and planning and expanding the use of prefabrication or pre-cast elements offered the greatest opportunities for productivity growth 28. This was supported by the US National Research Council that reported on five areas as having the potential for breakthrough productivity improvements. The findings included the widespread take up of Building Information Modelling (BIM) and greater use of off-site pre-fabrication. BIM provides a common platform for data across all construction projects and for facilities management. Allen Consulting Group estimates more widespread uptake of BIM could deliver an Commonwealth Department of Employment Productivity Commission, 2014 Page 29

60 Master Builders Priorities immediate boost to Australia s economic output by at least 0.2 basis points, and as much as 0.5 basis points by Master Builders is hopeful that the Victorian Government will support the use of BIM to improve efficiency and outcomes, noting that the increased use of BIM will require new skills, processes and capabilities across the workforce. Off site construction, or use of pre-fabrication and/or modular building components is another important advance in construction technology. While previously everything was constructed on site, off-site production involves producing complete buildings or sections of buildings including toilets and kitchens. This form of construction can offer reduced construction times, costs, project payback times and waste, while improving workplace safety. In the interests of the consumer, pre-fabrication can contribute to improved productivity by reducing time lost due to bad weather; it reduces traffic congestion and general disruption to those around worksites. Future workforce skills The skills in the construction industry must evolve with technology to meet demand and productivity. Advances in other areas of technology, such as robotics and autonomous vehicles, has led to discussion about future worksites that are:...managed by a small team of programmers who spend their day using touch screen technology or even giving verbal instructions to direct a team of robots...to undertake tasks in an environment where waste and re-work is minimised and where accidents are almost unheard of. 30 As investments continue into developing new technologies, it is vital that we continue to look at ways that the building and construction workforce can evolve to work with and adapt to them. According to the Victorian government Department of Economic Development, Jobs, Transport and Resources, one of the key challenges to engaging new technologies such as pre-fabrication is the lack of training from education institutions in modular and prefabrication techniques 31. Through Offices such as the new Skills Commissioner, Master Builders is hopeful that the Government will examine ways to engage more people in the workforce and provide opportunities for these new skills to be learnt. Recommendations 8.1 Master Builders urges the State Government to prioritise investment in BIM technology. 8.2 Master Builders calls on the State Government to consider ways to support new technologies including modular and pre-fabrication techniques. 8.3 Master Builders recommends that the government consider ways to engage more people in training to use emerging technologies in the building and construction workforce. 29 Allen Consulting Group Martin Loosemore, Is the Future of Construction On-site of Off-site? 31 State Government of Victoria, 2015 Page 30

61 Master Builders Priorities Master Builders Overview Master Builders Association of Victoria (Master Builders) is the peak body representing employers in Victoria s building and construction industry. Our membership consists of more than 9,000 builders, subcontractors, manufacturers/suppliers and students. More than 80 per cent of our professional members are small businesses with an annual turnover of $2 million or less. We are a leading provider of products and services to the building and construction industry not just our members but all builders across the industry, students, apprentices and consumers. This year is our 140th year of operations, demonstrating our long-running influence and support of Victoria s building and construction industry. Member Services We assist our members, whether they are a large or small business, to win work and perform their work. We provide a range of free services such as legal, OHS, industrial relations and builder registration advice. Training We deliver the best training for the industry members and non-members by offering a range of courses including OHS, IR, leadership and Certificate IV in building and construction (Building). Simulation Training We have the only simulation training centre in Australia, which can provide unique simulated training experiences, using actors and filming and recording technology, to provide realistic scenarios. The courses provided at the Building Leadership Simulation Centre (BLSC) include leadership and management skills, onsite industrial relations and managing site safety. Merchandise We provide products for builders, like contracts, signage, diaries and work clothing. Advocacy & Policy We provide advocacy support for our members to Federal and State Governments and industry stakeholders like the media and the Victorian Building Authority (VBA), to ensure that the views and needs of our members are represented. Insurance Services Builders can also access insurance services through MBA Insurance Services, a subsidiary of Master Builders. Assist Our call centre Master Builders Assist team provides responsive and helpful advice to members, consumers and the community who call on a range of issues pertaining to the building and construction industry. Page 31

62 Master Builders Priorities References Master Builders Publications Bills, G January Economic Profile 2016 Victorian Government publications Department of Human Services, Public Housing Waiting and Transfer List, September 2015 Victoria s Future Industries: Construction Technologies Discussion Paper 2015 Victoria s First Skills Commission Appointed Media Release, the Hon Steve Herbert, 14 December 2015 Victorian Competition and Efficiency Commission Local Government for a Better Victoria: An Inquiry into Streamlining Local Government Regulation 2010 Australian Government Reports Commonwealth Department of Treasury Midyear Fiscal and Economic Update December 2015 MacKenzie, B, and N Coulson VET Funding Review: Final Report 2015 Infrastructure Australia, Australian Infrastructure Audit Report 2015 Media articles Brown, G 2015 Tradie shortage pushes home prices up as skills lost to mining, The Australian, 14 September 2015, p.5 Dow, A Lack of storage space for high-rise dwellers prompts call for minimum apartment size The Age 8 January 2016 Loosemore, M. Is the Future of Construction On-site of Off-site? accessed 14 January 2016 Other Reports Allen Consulting Group 2010 Productivity in the Building Network: Assessing the Impacts of Building Information Models Griffith, G The Greater Sydney Commission, NSW Parliamentary Research Service, October 2015 Kelly, J, The Houses We d Choose Grattan Institute, 2011 page 32 The Economist Intelligence Unit Global Liveability Report 2015 Standard & Poor s ratings services, McGraw Hill Financial Ratings on Australian State of Victoria Affirmed at AAA/A-1+ ; Outlook remains stable 27 August 2015 Page 32

63 Master Builders Priorities Websites Australian Bureau of Statistics Australian Skills Quality Authority (ASQA) Metropolitan Planning Authority Commonwealth Department of Employment website 12 month average to February 2015 Page 33

64 Attachment 4: Residential Zones Review Residential Zones State of Play In response to the series of Residential Zones State of Play reports 1 prepared by the Department of Environment, Land, Water and Planning, Master Builders Association of Victoria (Master Builders) welcomes the opportunity to comment on the process and application of the residential zones that were introduced in This submission provides an overview of the three new zones and then establishes the context within which the impact of these zones should be analysed: Melbourne s (and Victoria s) forecast population growth; and the housing affordability crisis. To be consistent with the terms of the reference of the Managing Residential Development Advisory Committee (MRDAC), the submission is divided into three sections: 1. the process by which the new residential zones were implemented; 2. the current application of zones that allow for residential development; 3. the level of evidence and justification needed when preparing relevant planning scheme amendments; and 4. improvements to the residential zones: minimum building heights and as of right permitted uses. This submission also codified as-of-right processes as a broader improvement to the zoning system which we believe could ease pressure from the system, streamline the planning application process and ultimately reduce costs associated with the planning and building process. The submission focuses mostly on Melbourne s residential growth, because from Master Builders members perspective that is where the zones are considered to be having the most concerning impact. The challenge: the balance between sustainable housing growth and housing affordability Planning so that Melbourne s (and Victoria s) residential growth can be managed in a sustainable manner- that does not make the cost of housing worse- is a substantial challenge. To address this, our planning system and as part of that, our zoning arrangement, has to be critically analysed. Master Builders welcomed the appointment of the Managing Residential Development Advisory Committee (MRDAC) to report on the application of zones that provide for residential development in metropolitan Melbourne and the four regional cities of Bendigo, Ballarat, Geelong and La Trobe. The taskforce s Residential Zones State of Play reports for each Plan Melbourne Subregion are a clearly written and useful tool for understanding how the zones have been applied since their introduction in July Managing Residential Development Taskforce Reports, including Overarching Report: Residential Zones State of Play; Northern Subregion; Eastern Subregion; Western Subregion; Central Subregion; Regional Cities 29 January 2016 Policy & Communications Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03)

65 Residential Zones Review In preparing our response, Master Builders has commented on: the process by which the new zones were implemented; the application of the zones; and improvements to residential zones. In this submission Master Builders also considers an improved codified as-of-right processes as a broader improvement to the zoning system. KEY RECOMMENDATIONS: 1. The process of implementing the zones allowed Councils too much control to apply restrictive zoning resulting in inconsistent application of the zones, which will hinder the ability for increasing density in established areas to cope with population growth. In our submission to Plan Melbourne Refresh, we called for the State Government to design a housing strategy that identified where housing should be located to accommodate the future growth. We believe this should happen strategically at a state level, allowing Councils to then determine how they will provide the specified amount of housing in their own municipalities. 2. The current application of zones that allow for residential development is far too restrictive and many of the Councils with established transport, infrastructure, amenities and services that are capable of accommodating growth have very restrictive zoning application (such as Boroondara, Glen Eira, Whitehorse and Manningham Councils). A review and a realignment of zoning in needed as a matter of urgency. 3. The planning scheme amendment process should be reviewed so that it becomes more rigorous and objective. Master Builders has specific concern with the ability for Councils to create their own documents to use as strategic justification for zoning amendment decisions. 4. Specific changes to new zones should include minimum building heights to allow for greater growth and diversity in housing development, and to make further inroads into addressing housing affordability over the long-term period. Consideration should also be given the as-ofright codified process for planning decisions in zones, such as reviewing some permitted uses in the residential zones. Page 2 of 21

66 Residential Zones Review SUMMARY OF RECOMMENDATIONS 1. The process of implementing the new zones Recommendation 1.1 Master Builders urges the State Government to consider a reformed process for implementing new zones that requires more coordinated strategic oversight. Recommendation 1.2 Recommendation 1.3 Master Builders calls on the State Government to determine a housing strategy that provides specific targets and locations for housing. It would then be the responsibility of each council to determine where and how they achieve the designated housing targets in their own municipality. Master Builders calls on the Planning Minister to set up/allocate responsibility for monitoring the implementation of a strategic plan, and for planning development assessment, to a specific agency or planning assessment hubs. 2. Current application of the zones Residential Growth Zone Recommendation 2.1 Master Builders recommends that a review is conducted into the limited application of the RGZ (and in particular those suburbs that were earmarked for growth and have very restrictive zoning application). Recommendation 2.2 Recommendation 2.3 Master Builders recommends that based on the review, additional appropriate locations be rezoned RGZ. Master Builders recommends that the MRDAC undertakes a yield study to identify the impact of the three residential zones on a specific site, in terms of building and construction jobs, how many people/households could be housed and how much revenue would be generated in each scenario. Neighbourhood Residential Zone Recommendation 2.4 Master Builders recommends that the State Government examine the application of the NRZ, especially in areas with high application such as Boroondara, to examine whether it is the most suitable zone and to change the zones where it is not suitable. Recommendation 2.5 General Residential Zone Recommendation 2.6 Master Builders recommends that the State Government review and update the principles in Practice note 78 to be more specific and less able to be subjectively applied by councils. Master Builders recommends that the housing strategies that guides amendments should be developed by government (see recommendation 1.2) rather than allowing Councils to do this themselves. Page 3 of 21

67 Residential Zones Review 3. Planning scheme amendments Recommendation 3.1 Master Builders recommends that the process for making planning scheme amendments be reviewed so that it becomes more rigorous and objective. Master Builders has specific concern with the ability for Councils to create their own documents to use as strategic justification for zoning change decisions. Recommendation 3.2 Master Builders recommends that the State Government consider restricting the use of schedules and/or designing a template for schedules, so that they are consistently applied throughout planning schemes and development is not unfairly restricted as a result of stringent development standards with regards to setback, site coverage, private open space provision etc. 4. Specific recommendations to zones Minimum building heights Recommendation 4.1 Master Builder calls for a minimum height limit of 12.5 metres in the General Residential Zone. Recommendation 4.2 Recommendation 4.3 Master Builder calls for a minimum height limit of 16.5 metres in the Residential Growth Zone. Master Builder calls for efforts to mandate minimum height limits across municipal boundaries so that the planning system encompasses greater consistency. Options for as of right code assessment Recommendation 4.4 Master Builders seeks action to remove limited restrictions on land uses in the RGZ. Recommendation 4.5 Recommendation 4.6 Recommendation 4.7 Master Builders seeks action to remove restrictions such as medical centres in the NRZ. Master Builders seeks action to remove restrictions such as medical centres, places of worship and convenience shops in the GRZ. Master Builders strongly recommends the creation of responsible as-of-right codified processes and relevant amendments to zone restrictions. This might occur in development zones around principal activity centres and major public transport networks and, more generally, in Neighbourhood Residential & General Residential Zones, it could include secondary dwellings, dual occupancy, low-rise townhouses, apartments and other forms of medium - high density housing. Page 4 of 21

68 Residential Zones Review New Residential Zones Victoria In July 2013 new residential zones were introduced into the Victorian planning system. The Residential Growth Zone (RGZ) was intended to enable new housing growth and diversity, the General Residential Zone (GRZ) was intended to respect and preserve urban character while enabling moderate housing growth and diversity, and the Neighbourhood Residential Zone (NRZ) was intended to restrict housing growth in areas identified for urban preservation 2. Councils were given 12 months from July 2013 to amend their planning schemes to implement the new zones. The degree of readiness for new zoning varied between Councils, and, as outlined in the Overarching Report, the way in which Councils implemented the new residential zones can be broadly grouped into: councils with existing housing policies; councils with draft housing policies; councils with no relevant policy work opted for a translation of the former zones to the GRZ; and councils that opted-in to the Residential Zones Standing Advisory Committee (RZSAC) process, which included notice and a public hearing process, as per the RZSAC Terms of Reference. Now, more than two and a half years since the zones introduction, in the context of rapid population growth and a housing affordability crisis, we are in a good position to consider the impact of the new zoning process, the way in which the zones were applied and what needs to be changed. Victoria is growing Victoria s population, particularly Melbourne, is growing at a rapid rate. New figures from the Bureau show Victoria gained an extra 101,500 residents in the year to December 2015, and Melbourne an extra 95, Melbourne is now Australia s fastest growing city and is expected to grow from its current 4.5 million to 7.8 million by 2051, which will make the country s biggest city, according to Australian Bureau of Statistics projections. This will require the construction of up to 1.6 million new homes, including 480,000 apartments 4. 2 Planning Practice Note 78 3 Australian Bureau of Statistics Page 5 of 21

69 Residential Zones Review Source: Residential Zones State of Play Report Overarching Report Beyond Melbourne, the population of Victoria s regional centres are also growing. As a whole, regional Victoria s population is projected to grow by nearly 60 per cent over the next 35 years to Housing needs are changing It is important to consider what the future households will look like so that we can better understand why type of dwellings will be needed and where they should be located. As the population grows the demand for housing increases. Since 2009 Victoria has averaged over 54,000 dwelling approvals per annum, reaching a peak of 66,000 approvals in year. The size and type of households will also change with the population growth: the average household size is expected to decline as growth in new households increases faster than the rate of population growth. Victoria is forecast to become older, with the proportion of people aged 65+ years increasing from 14 per cent in 2011 to 22 per cent in As demonstrated in the graph below, older people tend to form smaller households, which means that single person and couple only households are expected to become a much larger proportion of the population by These types of households are extremely well suited to smaller, more manageable dwellings like apartments that are located near public transport, community and medical services and retail precincts. 5 Residential Zones State of Play overarching Report, page 5 6 Ibid, page 6 Page 6 of 21

70 Residential Zones Review Apartments are taking up a greater share of the Melbourne residential housing stock. In there were 4,200 apartment approvals, which grew by more than fivefold ten years later, to 23,000 approvals. The recent boom in apartment approvals, especially strong in Victoria, peaked in the March quarter of 2015 and has since fallen by 30 per cent, and it is forecast that starts and construction activity will follow. For a range of reasons not excluding the current zoning arrangements which restricts apartment approvals to certain areas - the market for apartments is likely to peak soon, slowing increases in prices and rents. Interestingly, while the proportion of couple with children households will decrease, the overall number is expected to increase significantly (from 540,000 to 950,000), and will remain the largest household type. This suggests that medium density housing will continue to be in strong demand. The main forms of housing supply in Melbourne that will support this growth are: Urban renewal - currently accounts for approximately 42 per cent of Melbourne s housing supply, it involves the redevelopment and renewal of existing commercial, mixed use and former industrial land for housing. Broad hectare development - currently accounts for approximately 31 per cent of Melbourne s housing supply, it involves broad hectare housing development on former rural land. Residential infill - currently accounts for approximately 25 per cent of Melbourne s housing supply, it involves the demolition and replacement of existing residential land for units and townhouses in established residential streets. Page 7 of 21

71 Residential Zones Review This means that Melbourne and greater Victoria have to be zoned appropriately to enable the growth of the right type of housing to occur in the right areas. Page 8 of 21

72 Residential Zones Review Victoria s housing affordability crisis In November 2015 Moody s Investor Service announced that housing affordability in Australia has deteriorated significantly over the 12 months to October 2015, which has increased the risk of defaults on mortgage loans in residential mortgage back securities. Nationally, Australian households with two income earners spent an average of 29.3 per cent of their monthly income on monthly mortgage repayments as of 30 October 2015, up from 28.3 per cent one year earlier. 7 For Melbourne it is even more severe, with 32.1 per cent of income being spent on monthly repayments. This is coupled with an increase of 15.4 per cent in housing prices over the 12 months to 30 October Master Builders figures show that in January 2016 the median dwelling price for Melbourne was $563,000; 11% higher than it was a year earlier. Similarly in Sydney, the median dwelling price in Jan was $727,500; 10.5% higher than a year earlier. $' % Median Unit Prices, Australian Capital Cities and percentage change on a year ago % 4.6% -3.9% -0.4% 13.3% 0.7% -3.3% 6.8% Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra Five Capitals Source: CoreLogic RP Data The contributing factors to house price growth In a recent paper on Housing Affordability, Master Builders argues that there are a range of factors contributing to the price of housing in Australia. They include: supply-side restrictions (zoning, the availability of land); proposed housing developments experiencing long planning delays and multiple fees, levies and charges adding cost to the process; tax arrangements that are encouraging investment in housing, such as negative gearing and the capital gains tax discount; strong population growth (fuelled by natural increases and immigration); record low interest rates and share market downturn encouraging housing as an investment proposition; and record domestic and foreign investment in the market. These issues are not exhaustive and, indeed, are interrelated. However, as a primary driver of housing availability for development, zoning is an important lever in addressing housing affordability. 7 Moody s investor services, Global Credit Research 23 November 2015 Page 9 of 21

73 Residential Zones Review 1. The process of implementing the new zones The implementation process lacked strategic oversight The process of implementing the new zones was heavily weighted in favour of the individual Councils, rather than as part of an overarching strategic plan for Melbourne and Victoria. Councils were given 12 months from July 2013 to amend their planning schemes to implement the new residential zones. This meant that as long as a Council could justify their proposed application of zones- be it through existing housing strategies or a combination of character, heritage and activity centre policy- they ultimately were able to decide their own zoning. As stated in the Overarching Report: the mandatory nature of the new residential zones also addresses longstanding concerns by local government about the need for local policy to have more influence over planning decisions. The new residential zones fundamentally increase the statutory weight of local policy and strategies. (emphasis added) Page 32 This process lent itself to ad hoc application of zoning across Councils. For example, consider the Eastern Region. In Monash nearly all (96 per cent) of residential land is zoned GRZ and is spread widely across the municipality. This contrasts to Manningham, a neighbouring municipality, which just under 50 per cent is GRZ. Considering the most restrictive zone, the NRZ, some Councils such as Knox do not apply it at all, where Boroondara applies it to 75.7 per cent of residential land. This signifies that housing growth will be occurring much more in places like Monash than Boroondara, despite the fact that Boroondara is: served by the Alamein, Belgrave and Lilydale railway line, numerous tram and bus routes as well as access to CityLink and the Monash Freeway...key trail strips and parklands...as a centre for education, with many public and private schools located in the municipality. Swinburne and the University of Melbourne also have campuses in Hawthorn. Given the evident benefits of an established area such as Boroondara, strategically it would be a good place to accommodate substantial growth. Victorian governments have recognised and tried to implement long term strategic visions for the state, be it through 5 Million, Melbourne 2030, Plan Melbourne, Plan Melbourne Refresh and through the recent creation of Infrastructure Victoria. It seems remiss that an opportunity such as the implementation of new residential zones be excluded from a similarly strategic process. This lack of a coordinated approach is particularly concerning given the Plan Melbourne Refresh review which considers locking down the Urban Growth Boundary (UGB) and accommodating population growth through a policy of a 70/30 split, requiring 70 per cent of new housing to be built in existing suburbs. The application of such restrictive zones broadly means that it is unlikely that these overarching policies for Melbourne s growth can be achieved. Page 10 of 21

74 Residential Zones Review The continuing impact on housing affordability of restricted supply is a significant concern for the liveability and future of Melbourne, and indeed Victoria. Therefore, just as Master Builders recommended in our submission to Plan Melbourne Refresh, decisions for overarching plans and visions for our State should fall to planning hubs or a regulatory body. Master Builders also supports the State Government determining a housing strategy that provides specific targets and locations for housing. Following on from this strategy, it would then be the responsibility of each council to determine where and how they achieve the designated housing targets, and this would potentially lessen the discretion Councils have to allocate restrictive zoning throughout their area. More detail on this can be found in our Planning for Growth submission to the Plan Melbourne Refresh. Recommendations 1.1 Master Builders urges the State Government to consider a reformed process for implementing new zones that requires more coordinated strategic oversight. 1.2 Master Builders calls on the State Government to determine a housing strategy that provides specific targets and locations for housing. It would then be the responsibility of each council to determine where and how they achieve the designated housing targets in their own municipality. 1.3 Master Builders calls on the Planning Minister to set up/allocate responsibility for monitoring the implementation of a strategic plan, and for planning development assessment, to a specific agency or planning assessment hubs. Page 11 of 21

75 Residential Zones Review 2. Current application of the zones Residential Growth Zone (RGZ) The RGZ was intended to enable high density dwelling development in and around activity centres, shopping strips, stand-alone shopping centres, railway stations, major transport corridors and within major redevelopment and urban renewal sites. This makes it an important tool in facilitating growth in areas that are well serviced and able to accommodate growth. Given it has been widely established that Melbourne will be experiencing significant population growth for at least the next thirty years and will need housing to match this, it is concerning that less than one per cent (0.9 per cent) of Melbourne s residential land is zoned RGZ. The height provisions and development objectives of the RGZ provide developers with the ability to build multiple dwellings on single lots, which makes it an important tool for accommodating growth, taking pressure off the demand for housing, and consequently, improving housing affordability. Absence of RGZ in and around areas with Activity Centres Some municipalities chose to not have any land zoned RGZ, despite being in locations that match the description of the zone s intended use. Hume, for example, is served by the Craigieburn, Sunbury and Upfield metropolitan train lines and has numerous bus routes, as well as the Western Ring Road, Calder Freeway, Hume Freeway, Tullamarine Freeways and access to the Melbourne airport. There are well established residential areas, and also have a number of identified important areas for growth such as Broadmeadows, Craigieburn and Sunbury- all of which are also identified activity centres. Despite this none of the residential land in Hume is zoned RGZ. Master Builders is of the view that this is a missed opportunity for strategic placement of affordable housing. Economic benefits of RGZ Land zoned RGZ presents substantial benefits for the Victorian economy. The zone s provisions give developers significant certainty that applications will achieve high yields. This has made land in RGZ now highly attractive and this has been widely reported with media outlets such as the Australian Financial Review and the Herald Sun reporting that groups of owners in RGZ areas joining together to sell their sites to developers for major redevelopment 8. In terms of having an even better understanding of what land zoned RGZ means for our economy, it would be very useful for MRDAC to undertake an analysis of the yield potential for a specific site in three different scenarios: zoned as RGZ, as GRZ and as NRZ. A useful analysis would consider how many building and construction jobs would be created as part of the development, how many people/households could be housed and how much revenue 8 Overarching report, page 28 Page 12 of 21

76 Residential Zones Review would be generated in each scenario. This work would give the industry and decision makers a good understanding of the different impact the zones have. Current application of the RGZ: the status quo It is concerning that the small percentage of land that has been rezoned for this growth were previously either identified for substantial change within local planning policies or earmarked as major redevelopment sites 9. As identified in the Overarching Report, the Whitehorse Planning Scheme, Greater Dandenong and Manningham all zoned land in the RGZ that was previously identified for substantial change in local policy. This suggests that the application of the RGZ is essentially status quo: that the introduction of the new zones has not encouraged Councils to consider increasing housing development and growth in their areas. Recommendations 2.1 Master Builders recommends that a review is conducted into the limited application of the RGZ (and in particular those suburbs that were earmarked for growth and/or have transport, infrastructure, services and amenities that would allow for growth but have very restrictive zoning application). 2.2 Master Builders recommends that based on the review as outlined in Recommendation 2.1, that additional appropriate locations be rezoned RGZ. 2.3 Master Builders recommends that the MRDAC undertakes a yield study to identify the impact of the three residential zones on a specific site in terms of building and construction jobs, how many people/households could be housed and how much revenue would be generated in each scenario. Neighbourhood Residential Zone The NRZ is intended to restrict housing growth, and has been mainly applied to residential areas that are argued to have high environmental, heritage and/or built form value. This has been applied to varying degrees across municipalities, with 29.2 per cent of residential land in the Eastern Subregion zoned NRZ, compared to 11 per cent in the Northern Subregion and 10 per cent in the Southern Subregion. An example of a municipality that has very broad application of this restrictive zone is Glen Eira, where 80.8 per cent of the residential land has been zoned NRZ. This municipality is close to the Melbourne CBD 7 to 17 km away and is well serviced by buses, trams and trains lines, including the Cranbourne, Frankston, Glen Waverly, Pakenham and Sandringham lines, as well as the Princess Highways and Nepean Highway. It also hosts a number of good retail precincts, Monash University and Caulfield Racecourse. Despite it seeming to be an excellent area for GRZ, or even RGZ, more than three quarters of residential land is zoned the most restrictive zone. 9 Overarching report, page 28 Page 13 of 21

77 Residential Zones Review In reality, the NRZ locks down areas from development. In considering the impact of the zones, the Overarching Report uses the number of building approvals in an area before and after the introduction of the NRZ as an impact indicator. The report concludes that NRZ areas have not experienced a shortage in dwellings or a decline in approvals (as demonstrated by the graph of approvals in Glen Eira below) 10. However, this conclusion is qualified by the acknowledgement that the spike in approvals early in 2014 has been influenced by planning permits granted under the former zones and/ or the ongoing influence of Glen Eira s minimal change policy (CI.22.08) which has sought to limit change in areas now within the NRZ since the early 2000s. In more recent times this graph may indicate a lagged effect of a decline in approvals, which we consider could be particularly concerning and would need to be monitored over time. Melbourne s population is set to nearly double in the next thirty years to 7.8 million people. If these areas continue to approve dwellings at the same pace, they may not be able to accommodate the additional households and placing pressure on areas in the outskirts of Melbourne, which may not have the established infrastructure or land supply to accommodate the growth. This is particularly problematic in light of the potential locking down of the UGB and 70/30 split being considered under Plan Melbourne Refresh. Therefore, Master Builders is of the view that the broad application of NRZ in certain areas, such as Boroondara and Glen Eira, should be examined and determined whether parts of the areas are more suitable to less restrictive zoning. Impact on housing affordability The application of the NRZ also impacts on housing affordability. Relative house price increases are a matter of basic economics: the price of a good or service is likely to increase where supply is limited. In housing, the problem is restrictions on land supply which reduces 10 Overarching report, page 30 Page 14 of 21

78 Residential Zones Review the land available for development, destroying the competitive market for land. This drives up house prices 11. Housing diversity, choice and price are likely to impact by the NRZ, especially in local housing markets where there is extensive land in the NRZ such as Boroondara, Glen Eira and Bayside. As identified in the Overarching Report, it is possible that the supply of new medium density dwellings in these areas will decline in response to the NRZ and, while this is unlikely to generate supply impacts of metro significance, at a local level, this might add to issues of housing diversity, choice and price 12. If development in these areas continues to be restricted, it may worsen the housing affordability crisis. Practice Note 78 The Planning Practice Note 78 plays a significant role in enabling councils to zone areas as NRZ without rigorous justification. In applying the NRZ, the Practice Note provides a list of principles, which include but are not limited to: areas with a neighbourhood character that is sought to be retained; areas with Neighbourhood Character Overlay; and residential areas with Heritage Overlays. These principles can be applied subjectively. Firstly, Councils are able to create and determine their own Heritage and Character overlays. Secondly, Councils are subjectively able to identify that an area has character that is sought to be retained. One of the most reasonable principles listed in Practice Note 78 about applying the NRZ is: An area which may not have good supporting transport infrastructure and other facilities and services and are not likely to be improved in the medium to longer term. The impact of this principle is questionable, when considering that well serviced areas such as Glen Eira apply the NRZ to the majority of the municipality. More specific principles would capture areas that reasonably should be protected from development and make available land that could be appropriate for development made available. Recommendations 2.4 Master Builders recommends that the State Government examine the application of the NRZ, especially in areas with high application such as Boroondara, to examine whether it is the most suitable zone and to change the zones where it is not suitable th Annual Demographia International Housing Affordability Survey: Overarching Report page 38 Page 15 of 21

79 Residential Zones Review 2.5 Master Builders recommends that the State Government review and update the principles in Practice note 78 to be more specific and less able to be subjectively applied by councils. General Residential Zone The GRZ is intended to allow moderate housing growth and diversity, while protecting and preserving neighbourhood character. The GRZ has been applied the most broadly across metropolitan Melbourne, making up approximately 44 per cent of residential land, spread mostly throughout Melbourne s middle and outer ring suburbs. As this was the default zone for councils that were unable/ unprepared to establish a residential framework/ housing strategy to translate the new zones, 54 councils defaulted to GRZ. This represents 68% of Victoria s Councils- it should also be noted that this is the most common zone in regional areas. As discussed in the Planning Scheme Amendments section 3 of this paper, a concern with the GRZ is that excessive schedules are being applied, so that it becomes restrictive to the point of delivering the same outcomes as the NRZ. The application of schedules to GRZ should be reviewed in line with the planning scheme amendment process to ensure it is a robust and objective process. Recommendation 2.6 Master Builders recommends that the housing strategies that guide amendments should be developed by government (see recommendation 1.2) rather than allowing Councils to do this themselves. Page 16 of 21

80 Residential Zones Review 3. Planning scheme amendments The level of evidence and justification for making planning scheme amendments is of concern to Master Builders. Subjective strategic policies forming basis of planning scheme amendments Master Builders considers the planning scheme amendment process problematic, whereby Councils design their own strategic policies to justify amendments to their own planning schemes. For example, a council may use its detailed housing plan to justify applying restrictive changes via schedules to the GRZ. However, there is an inherent problem in allowing this in-house strategic document form the basis of a change to a zone, as it will be designed to produce their internally preferred outcome. Master Builders is of the view that the process for making planning scheme amendments should be far more rigorous and objective. Excessive use of schedules dilutes the purpose of the zones Master Builders is also concerned that the ability for Councils to make planning scheme amendments can dilute the purpose of the zones. For example, while there is a maximum height of 9 metres outlined for the GRZ in Practice Note 78, it also specifies that a higher or lower building height can be set by a Council. Further, it states that a permit can be granted to exceed the maximum height limit except when a higher or lower maximum building height has been set which cannot be exceeded. These concessions make the GRZ confusing and potentially contradictory - GRZ allocation does not guarantee planning outcomes. In this case, it can t be known for sure that permits can be granted higher than the maximum limit, or that 9 metres is the height limit. Developers may purchase land for particular use and then find that amendments restrict their investment returns and impact their business viability. These schedule changes can impose unfair restrictions on development, by placing stringent development standards on setbacks, site coverage, permeability, private open space provision, walls on boundaries etc. This does not create certainty for developers or potential investors in GRZ areas. In order to manage the demand for housing that will come with the growth Melbourne is forecast to experience, developers need certainty of what can be done with certain tracts of land. That is why Master Builders recommends MRDAC examine the application of schedules, and restrict their use or consider designing a template for schedules so that they are applied more consistently and with more rigorous justification across Councils. Recommendations 3.1 Master Builders recommends that the process for making planning scheme amendments be reviewed so that it becomes more rigorous and objective. Master Page 17 of 21

81 Residential Zones Review Builders has specific concern with the ability for Councils to create their own documents to use as strategic justification for decisions. 3.2 Master Builders recommends that the State Government consider restricting the use of schedules and/or designing a template for schedules, so that they are consistently applied throughout planning schemes and development is not unfairly restricted as a result of stringent development standards with regards to setback, site coverage, private open space provision etc. Page 18 of 21

82 Residential Zones Review 4. Specific recommendations to zones Minimum Building Heights The current zones have maximum heights, but no minimum heights. Master Builders is concerned that this works against the overall framework of zone reforms to encourage greater consistency across the planning system. We also believe the proposed height limits do not go far enough to encourage the development of a more diverse housing stock and make further inroads into addressing housing affordability over a long-term period. The proposed reforms highlight the following building heights for each residential zone: Residential Growth Zone metres; General Residential Zone 9 metres; Neighbourhood Residential Zone 9 metres. Recommendations 4.1 Master Builder calls for a minimum height limit of 12.5 metres in the General Residential Zone. 4.2 Master Builder calls for a minimum height limit of 16.5 metres in the Residential Growth Zone. 4.3 Master Builder calls for efforts to mandate minimum height limits across municipal boundaries so that the planning system encompasses greater consistency. As-of-right code assessment Code-assessment Master Builders also believes one of the most efficient ways to ensure the delivery of Victoria s housing needs is to remove red tape in the planning system and reduce permit waiting times and third party objections by creating responsible as-of-right codified processes. As outlined in the preceding recommendations, this might occur more generally in Neighbourhood Residential & General Residential Zones as well as in development zones around principal activity centres and major public transport networks. Depending on the zone, it could include secondary dwellings, dual occupancy, low-rise townhouses, apartments and other forms of medium - high density housing. Master Builders strongly supports reform outlined in Plan Melbourne Refresh to introduce planning reforms and new tools to support the ongoing renewal of established areas. This could include codified planning processes. 13 Under this proposal, if developments meet the standards of the planning codes guidelines, local governments cannot refuse the developments; and people will be notified for their information, rather than for allowing submissions or objections. 13 Victoria State Government, Plan Melbourne Refresh: Discussion Paper, October 2015, page 48 Page 19 of 21

83 Residential Zones Review Third party appeal rights can have a disincentive effect towards higher-density development. As demonstrated by the Grattan Institute: Third party appeal rights also disproportionately affect multi-unit developments. Recent research shows than in , 42% of all applications for multi-dwelling developments in Melbourne are referred to VCAT, compared to 23% of single dwelling applications...constituting a significant disincentive to the development of semi-detached housing, and apartments up to 3 storeys. 14 Introduce code-assessed as-of-right approval for smaller secondary dwellings One example of a codified as-of-right process that could be introduced is for the construction of smaller secondary dwellings to be built behind or beside existing dwellings. This would include the removal of the requirement to apply for a planning permit and the removal of restrictions on who can reside in the secondary dwelling. Currently, to construct a second dwelling on a property one must comply with the requirements of Rescode 55 Two or more dwellings on a lot. This would require a full planning application, advertising/notification with the potential for objections to go to VCAT. Importantly, required standards are designed to reflect that these applications are submitted on the basis that separate lots will be formed. This means that there is no option for owners to simply build a secondary dwelling without subdividing the land. There are a number of scenarios when an owner may wish to build a small secondary dwelling (40m²-80m²) mainly for a single person household, but may not wish to subdivide the land. For example, a young person who cannot afford to buy a house with land could construct a house in their parents backyard. Older retired home owners living alone in the family home who do not want to leave their community or garden could build a smaller unit on site to live in. Alternatively, established middle aged home owners could construct a unit on their land to rent to an aging parent or friend. Secondary dwellings are an affordable option for single person households. Because the cost of land is removed, it is likely that smaller secondary dwellings could be built for around $80,000-$150,000 and given the structures will be built on a slab on ground, it is expected they will have good thermal performance. In addition to facilitating a sensible solution to problems faced by young people, empty nesters and elderly people changing the rules so that it is faster, cheaper and easier to construct secondary dwellings will help the government achieve the Plan Melbourne Refresh 70/30 target. Changing rules to supports smaller secondary dwellings in residential zones, particularly NRZ, would allow a gentle approach that would appeal to many existing residents. This solution supports small, low impact dwellings that are in keeping with the local development, and because it does not require the subdivision of land, titles are preserved with lot boundaries and services unchanged. 14 Jane-Frances Kelly, The housing we d choose, Grattan Institute, June 2011, page 32 Page 20 of 21

84 Residential Zones Review It should be noted that affordable rental accommodation is overtly encouraged in NSW, ACT, WA and QLD. A secondary dwelling is facilitated as as or right with quick approval in each of these jurisdictions, which is designed so that the private market can respond to affordability and changing demographic issues. The extension of VicSmart to deliver CodeAssess The VicSmart website is a step towards reducing the complexity and time associated with planning applications. Given this has already been developed; consideration could be had towards extending this to cater for more streamlined applications and greater building activity under the code-assessed processes outlined above. Potential commercial and other uses Another example of codified as-of-right process that could be considered is for nonresidential land uses such as medical, offices, shops, and food / drink premises. For example, the RGZ places limited restrictions on non-residential uses, however if these became as of right it would facilitate growth of certain non controversial uses. Recommendations 4.4 Master Builders seeks action to remove limited restrictions on land uses in the RGZ. 4.5 Master Builders seeks action to remove restrictions such as medical centres in the NRZ. 4.6 Master Builders seeks action to remove restrictions such as medical centres, places of worship and convenience shops in the GRZ. 4.7 Master Builders strongly recommends the creation of responsible as-of-right codified processes and relevant amendments to zone restrictions. This might occur in development zones around principal activity centres and major public transport networks and, more generally, in Neighbourhood Residential & General Residential Zones, it could include secondary dwellings, dual occupancy, low-rise townhouses, apartments and other forms of medium - high density housing. Page 21 of 21

85 Attachment 5: Planning for growth The importance of planning reform Master Builders Association of Victoria (Master Builders) is the peak body representing employers in the Victorian building and construction industry. Our membership consists of around 9000 builders, subcontractors, manufacturers, suppliers and students. In a post mining boom economy, and with declining investment in infrastructure and commercial construction in Victoria, we need to act now to boost commercial opportunities in the sector. Victoria s building and construction industry is a central economic pillar of the state, as Victoria s second largest source of full time jobs and generating considerable taxes and output for the economy. The quality of living standards in Victoria is an important issue for the community. With the population of Melbourne predicted to grow to 7.7 million by 2051, requiring construction of up to 1.6 million new homes 1 (incl 480,000 apartments). We should not be afraid of embracing population increases, but we do need to ensure all agencies of government are, and the industry is, working together to ensure growing communities, both new and existing, have access to the appropriate living standards, services and amenities they need as the population grows. Master Builders has close daily contact with building businesses from large to small, that deliver building and construction activity across Victoria. We are therefore in uniquely placed to comment on the issues faced and possible solutions in the planning system. We believe that it is important that any reform proposals to the planning system ensure the continued viability of the building and construction sector and encourages Victoria as a place for investment, growth and prosperity. In framing our response to the Plan Melbourne Refresh: Discussion Paper, October 2015 (Plan Melbourne Refresh) this paper more broadly outlines the four key objectives for reform of the planning system which Master Builders sees as necessary to meet our housing and infrastructure objectives for Victoria s future. 1. Creating a clear planning scheme and strategic plan 2. Planning scheme structures are capable of delivering State planning policy objectives 3. Consistency of interpretation and application of requirements in planning schemes 4. Scope of objections to planning scheme amendments and permit applications limited to effective and efficient outcomes 1 Policy & Communications Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 3002 (03)

86 Planning for growth With this in mind, our key recommendations for reform of the planning system are to: Create a more detailed Housing Strategy which would preferably include targets for clarity, which would include information on housing mix and affordable housing needs and land supply locations to meet those needs. Local councils would be held to account for this. Set up/allocate responsibility for monitoring the implementation of a strategic plan and for planning development assessment, to a specific agency or planning assessment hubs. Create responsible as-of-right codified processes. This might occur in development zones around principal activity centres and major public transport networks and, more generally, in Neighbourhood Residential & General Residential Zones, to better support the 70/30 target. Depending on the zone, it could include secondary dwellings, dual occupancy, low-rise townhouses, apartments and other forms of medium - high density housing. Page 2 of 27

87 Planning for growth Executive summary This paper discusses the reforms needed to our Planning System (many of which are interdependent reforms). We highlight in this paper, some of the key recommendations under each of those four objectives. The recommendations are extracted for convenience below. 1. Creating a clear planning scheme and strategic plan A planning scheme must be developed which can be applied by all levels of government in a consistent and transparent manner. 1.1 Regulation of residential land supply Recommendation 1: If State Government locks down the Urban Growth Boundary (UGB) land supply for dwellings needs to be ensured, in a timely and transparent manner and the impact on land prices needs to be minimised (Plan Melbourne Refresh, Option 7). Recommendation 2: The impacts of locking-down the UGB should be monitored (including importantly on land costs and Housing Affordability) 2 yearly reviews should be conducted and whether variations of the UGB are required over time. Recommendation 3: Master Builders supports the provision of a more detailed Housing Strategy which would preferably include targets for clarity (Option 37A), which would include information on housing mix and affordable housing needs and land supply locations to meet those needs. Local councils would be held to account for this. 1.2 Unlocking land supply in established areas and the 70/30 split Recommendation 4: Consideration of the appropriateness of the 70/30 split in Plan Melbourne Refresh (Option 36A) as well as housing diversity requirements needs to be undertaken, (including demographic requirements, housing affordability, liveability standards and infrastructure provision) in order to ensure the unlocking of housing supply in existing areas. Recommendation 5: Master Builders supports the option to delete the action to apply the NRZ to at least 50 per cent of residential land (Option 40A) Recommendation 6: Master Builders supports Option 40A to clarify how the residential zones should be applied (and considers that this should be consistent with the Managing Residential Development Advisory Committee review of residential zones). Page 3 of 27

88 Planning for growth Recommendation 7: Clarification over competing requirements of policy objectives like 70/30 split (Option 36A), unlocking housing supply in existing areas (Option 36C) protect the suburbs (Option 39) and residential zoning (Option 40) is needed to clearly articulate how housing needs will be met. Recommendation 8: Master Builders considers it is important that current infrastructure contributions schemes are considered in light of the proposed strategic housing plan (Recommendation 3), so that they are fair to all parties and act to ensure that the new housing development needed, will be able to be achieved and adequately serviced. 1.3 Ensuring planning scheme is clear and focused Recommendation 9: Consider the red tape, housing affordability, economic and duplication implications of new proposals (such as the considerations in the Better Apartments Discussion Paper and Plan Melbourne Refresh Options) and ensure that additional planning scope is avoided where possible; additional planning scope is not given to local councils; and additional costs, inconsistencies, planning delays or investment or innovation disincentives are not imposed by any new proposals. Recommendation 10: Consideration of alternatives to encourage quality design features, such as the development of a Star Rating system that can be adopted by choice and will help inform consumers of how a dwelling stacks up. 1.4 Housing Affordability Recommendation 11: Housing affordability should remain at the heart of government policy making, including through Plan Melbourne Refresh decision-making and the scope of this consideration should not be limited to social and affordable housing. 2. Planning scheme structures are capable of delivering on State planning policy objectives The planning scheme must have clear lines of responsibility and accountability so that it is capable of delivering on the State s planning policy objectives and strategy. This means clarifying the roles and responsibilities of State and Local Governments in terms of developing planning policy as well as ensuring there are appropriate organisations such as a central planning authority or development assessment hubs capable of having oversight for the implementation of planning strategy. 2.1 Central authority or planning assessment hubs Recommendation 12: Master Builders calls on the Planning Minister to set up/allocate responsibility for monitoring the implementation of a strategic plan, and for planning development assessment, to a specific agency or planning assessment hubs. Page 4 of 27

89 Planning for growth 3. Consistency of interpretation and application of requirements in planning schemes Reforms are urgently needed at a local government level to reduce costs and inefficiencies in our planning system. This not only includes reforms to reduce planning delays and to introduce greater accountability to the local governments, but also to create as of right development processes to speed up the planning system and ensure that growth objectives can be achieved efficiently. 3.1 Local councils and planning delays Recommendation 13: State Government reduces planning delays (for example via appropriate training and resourcing for local governments) and sets a planning application timeframe target to lower costs of development for all housing stock. Recommendation 14: Consideration to take development assessment out of the hands of councils such as the central agency or development assessment hubs. 3.2 As-of-right code assessment 3.3 Competition policy principles applied to planning and zoning rules Recommendation 15: Master Builders strongly recommends creation of responsible as-of-right codified processes. This might occur in development zones around principal activity centres and major public transport networks and, more generally, in Neighbourhood Residential & General Residential Zones, to better support the 70/30 target. Depending on the zone, it could include secondary dwellings, dual occupancy, low-rise townhouses, apartments and other forms of medium - high density housing. Recommendation 16: Consider the incorporation of the competition policy principles in the objectives of planning and zoning rules, along the lines of the Federal Governments response to the Competition Policy Review (Harper Review) recommendation Red-tape Recommendation 17: Harmonise and reduce unnecessary building and planning laws across Victoria. 4. Scope of objections to planning scheme amendments and permit applications limited to effective and efficient outcomes In relation to planning permits, the scope of people able to lodge objections is very broad and when objections proceed to VCAT significant costs and delays can be incurred. 4.1 Reforming VCAT processes Recommendation 18: Consideration of the reform of VCAT processes to make them more efficient, effective and affordable. Page 5 of 27

90 Planning for growth 1. Creating a clear planning scheme and strategic plan A planning scheme must be developed which can be applied by all levels of government in a consistent and transparent manner. This means ensuring a clear and transparent development and application of land and zoning requirements. It also means ensuring that the planning scheme only deals with planning issues, and is not broadened beyond its scope to take into account other areas such as building requirements (as discussed below the Better Apartments discussion paper threatens to blur the distinctions between planning and building schemes and therefore create inconsistency and inefficiency in our planning system). 1.1 Regulation of residential land supply and the Urban Growth Boundary Plan Melbourne Refresh: Discussion Paper, October 2015 (Plan Melbourne Refresh), Option 7, considers whether to lock down the existing urban growth boundary and modify the action to reflect this. 2 Locking down the UGB and impact on housing affordability Relative house price increases are a matter of basic economics: the price of a good or service is likely to increase where supply is limited. In housing, the problem is restrictions on land supply which reduces the land available for development, destroying the competitive market for land. This drives up house prices 3. Without exception, severely unaffordable markets have severe land use restrictions (usually urban containment regulation) that have been associated with higher land prices and, in consequence, higher house prices. 4 There are a number of worthy arguments in favour of retaining an urban growth boundary: in particular, preventing the negative social outcomes that are known to accompany urban sprawl. This includes an overreliance on cars as transport, minimal availability of social infrastructure and, where available, poor quality social infrastructure. In addition, it is also argued that urban containment protects agricultural land and reduces greenhouse gas emissions. 2 Plan Melbourne Refresh, page 18, Option th Annual Demographia International Housing Affordability Survey: th Annual Demographia International Housing Affordability Survey: 2015 page 8 Page 6 of 27

91 Planning for growth These were points that were highlighted in Plan Melbourne Refresh, including: The UGB promotes sustainable development in areas that can best be provided with infrastructure and services and it protects land in designated green wedges on the fringe of Melbourne from inappropriate development. 5 It is vital that the State Government engages in a sensible and comprehensive approach to land supply particularly in light of the objective to consider Housing Affordability in Plan Melbourne Refresh. If the UGB is locked down, land release in the existing boundaries must be guaranteed Experience and research demonstrates that locking down land supply, has the potential to increase land costs unless the release of land supply within the UGB is guaranteed and efficient. To be able to keep up with demand and ease housing affordability pressures, land supply for dwellings needs to be ensured in a timely and transparent manner. This means ensuring availability in Melbourne s established middle and outer regions. Master Builders agrees with the Plan Melbourne Discussion Paper that there is a need for government in: Exercising greater control on the timing and sequencing of Greenfield land release. This would involve establishing a mechanism to identify the appropriate timing for the approval and development of the 31 remaining Precinct Structure Plans (PSPs) that are yet to be approved... Focusing Metropolitan planning efforts towards unlocking housing supply in established areas... 6 If the government cannot implement reforms that will achieve these aims, then there is a risk that locking down the UGB will increase land prices. Recommendation 1: If State Government locks down the Urban Growth Boundary (UGB) land supply for dwellings needs to be ensured, in a timely and transparent manner and the impact on land prices needs to be minimised (Plan Melbourne Refresh, Option 7). Recommendation 2: The impacts of locking-down the UGB should be monitored (including importantly on land costs and Housing Affordability) 2 yearly reviews should be conducted and whether variations of the UGB are required over time. 5 Victoria State Government, Plan Melbourne Refresh: Discussion Paper, October 2015, page 20 6 Victoria State Government, Plan Melbourne Refresh: Discussion Paper, October 2015, page 48 Page 7 of 27

92 Planning for growth Housing supply objectives and unlocking land supply Locking down the UGB and emphasising higher densities in existing suburbs requires a realistic look at how land supply and appropriate mixes of housing can be delivered. Discussed later are zoning and policy objectives that can act as an impediment to unlocking existing suburbs. In the report Melbourne at 8 Million: Matching Land Supply to Dwelling Demand in October 2015, Buxton et al. criticised Australian governments for having avoided classifying land appropriate for development in cities and identifying the types of preferred residential housing for suitable sites 7. The report highlighted that while governments espouse population projections, they have relied on the private sector to find sources of supply to satisfy the projected demand. The strategies delivered by governments have allocated proportions of demand to sub regions, but have not demonstrated how these special allocations will be met. 8 Master Builders supports the provision of a more detailed Housing Strategy and incorporating a Housing Plan, which would include information on housing mix, size and affordable housing needs. 9 Local councils should be held to account for delivery on those requirements. To that end, strong leadership is required. Buxton asserts that: Clear roles should be delineated for state and local government. A strategic plan is needed which all political parties, levels of government, business, community and other interests groups accept. This plan should be progressively implemented over a long time period through integrated statutory, funding and other mechanisms based around the principles of a high amenity, productive, functional and socially equitable city. 10 Without this level of commitment and organisation, the alternative is incremental poorly designed high rise inadequately matched to housing needs, substantial ad-hoc medium density development in residential areas, and some of the worlds worst outer urban subdivision design inadequately served by public transport and other services. 11 Accordingly, we need greater clarity in a single plan about where the dwellings will be built and the timing and release of such land. Plan Melbourne Refresh asks whether housing targets should be set (Option 37), with each sub-region relating to housing diversity, supply and affordability. 12 The MAC (2015) recommends replacing the sub-region plans from Plan Melbourne 2014 with more specific housing targets set by the Victorian Government in consultation with local governments (Recommendation 17). 13 Plan Melbourne Refresh highlights that: 7 Buxton, Melbourne at 8 Million 2015 page 1 8 Buxton 9 Plan Melbourne Refresh, Page Buxton, page 5 11 Ibid, page 5 12 Plan Melbourne Refresh, page Plan Melbourne Refresh, page 50 Page 8 of 27

93 Planning for growth To-date, the sub-region planning groups have met several times with a primary focus on regional infrastructure needs. Establishing housing targets would significantly expand their scope to consider issues of land supply, internal migration, demography and population growth. 14 Plan Melbourne Refresh asks whether housing targets should be set (Option 37). Master Builders supports the provision of a more detailed Housing Strategy which would preferably include targets for clarity, and which would include information on housing mix and affordable housing needs and land supply locations to meet those needs. This will be particularly important to unlock land supply in established areas (discussed below). Recommendation 3: Master Builders supports the provision of a more detailed Housing Strategy which would preferably include targets for clarity (Option 37A), which would include information on housing mix and affordable housing needs and land supply locations to meet those needs. Local councils would be held to account for this. 1.2 Unlocking land supply in established areas and the 70/30 split Establishing a 70/30 target (Option 36A) Plan Melbourne Refresh highlights a possible 70/30 target, where established areas provide 70 percent of Melbourne s new housing supply and Greenfield growth areas provide 30 per cent (Option 36A). Master Builders agrees with the Plan Melbourne Discussion Paper that there will be a need for government in Focusing Metropolitan planning efforts towards unlocking housing supply in established areas if a 70/30 split is to be achieved. In particular, the existing control exercised by local councils in planning decisions make efforts to unlock these areas problematic. Master Builders considers that planning scheme structures (eg roles and responsibilities of local councils as well as the planning scheme applications processes etc) will be essential parallel reforms if the UGB is locked-down and a 70/30 split applied. Consideration of the needs of the growing population is needed before the 70/30 split can be finalised; and also an understanding of the key mix of dwellings that will be required. As the demographics of our community continue to change, so too must our housing options so that Melbournians can upsize, downsize and move homes throughout their lives without leaving their own community. The 2011 Census showed that 73 per cent of Melbourne s 1.43 million occupied dwellings were houses. Victoria in Future 2015: Population and Household Projections to 2051 (VIF), shows that 61% of new dwellings to 2051 will potentially be from established areas with a higher housing supply in Greenfields growth areas. Plan Melbourne Refresh suggests that a 70/30 split is a 14 Plan Melbourne Refresh, Page Victoria State Government, Plan Melbourne Refresh: Discussion Paper, October 2015, page 48 Page 9 of 27

94 Planning for growth preferred outcome, whilst VIF is a likely outcome. 16 Master Builders considers that more information is needed before it can be concluded that a 70/30 split is a preferred outcome. Whilst the city is currently achieving a 70/30 target (as at May 2015) 17 this may be likely because of the particular focus on multi-story apartment building that has been recently experienced. Recommendation 4: Consideration of the appropriateness of the 70/30 split in Plan Melbourne Refresh (Option 36A) as well as housing diversity requirements needs to be undertaken, (including demographic requirements, housing affordability, liveability standards and infrastructure provision) in order to ensure the unlocking of housing supply in existing areas. Local council impediments zoning restrictions Experience with local council application of objections/zoning requirements in existing residential suburbs makes us wary that a reliance on land supply from the existing suburbs could mean that the Plan Melbourne Refresh objectives may not be met. Zoning is a tool that government can use to control density and mix of housing supply in certain areas, and by doing so, encouraging growth and investment. Too often this has become a highly politicised issue, with governments becoming reluctant to encourage growth in certain suburbs where the residents are perceived to be against neighbourhood development. Adding to supply side problems are planning controls that impede higher density development in middle ring suburbs, as insider home owners understandably seek to protect the leafy character of their communities. 18 Plan Melbourne 2014 includes the short-term action to deliver the Neighbourhood Residential Zone across at least 50 per cent of Melbourne s residential-zoned land. Plan Melbourne Refresh highlights that the MAC (2015) report recommends deleting the Neighbourhood Residential Zone initiative (MAC Recommendation 34) as it has the effect of potentially locking up infrastructure-rich and job rich suburbs from further major growth and development. 19 The Buxton October 2015 Report found that one million homes could be built in Melbourne s current boundaries by 2050, while preserving the existing historic fabric and maintaining lifestyle amenity. This report finds that Melbourne can accommodate the projected population growth within the existing boundaries with the existing residential zones (where currently NRZ applies to 12% of all zoned land) and the potential for redevelopment of commercial and mixed use zones to contribute to future housing needs. The report also assumes the continuation of development on 16 Plan Melbourne Refresh, page Plan Melbourne Refresh, page The Facts on Australian Housing Affordability, Gavin Wood and Rachel Ong 19 Plan Melbourne Refresh, Page 56 Page 10 of 27

95 Planning for growth large suitable brownfield and other large development sites and a reduced contribution to dwelling supply in growth corridors. 20 Recommendation 5: Master Builders supports the option to delete the action to apply the NRZ to at least 50 per cent of residential land (Option 40A) Practice Note 78 on how to apply the residential zones provides that for the NRZ - areas that are worthy of protection should be of recognised neighbourhood character, or environmental or landscape significance. This provides a means for councils to apply the NRZ to restrict building. A review of the residential zones should be undertaken to determine how councils or decision makers should apply zone requirements. In particular, the NRZ should only be able to be applied in truly heritage, significant or areas of that unquestionably deserve special consideration. A direction that clarifies how the residential zones should be applied to respect valued character and deliver housing diversity is therefore supported (Option 40A) 21. This clarification could be included in the Strategic Housing Plan. Importantly, the government must clearly guide the public on the rationale for the decision making. This is also timely in the context of the Managing Residential Development Advisory Committee review of residential zones, to ensure consistency and streamlined approaches between those outcomes and Plan Melbourne Refresh. Recommendation 6: Master Builders supports Option 40A to clarify how the residential zones should be applied (and considers that this should be consistent with the Managing Residential Development Advisory Committee review of residential zones). Contradictory policy objectives Master Builders supports the comments in Plan Melbourne Refresh that because there are different requirements in Plan Melbourne for the suburbs, many defined locations are also suburban locations and therefore may be subject to contradictory directions. 22 In particular, the policy to protect the suburbs and the current NRZ application seems to be contradictory to the 70/30 split and the move towards increasing housing densities. Master Builders supports the government to clarify development expectations by: Confirming that population, housing and employment densities in defined locations will increase and that the balance of planning controls should generally favour change and increased densities in these locations; and 20 Buxton, Hurley, Phelan, Melbourne at 8 Million: Matching Land Supply to Dwelling Demand RMIT, October 2015 page 5 21 Plan Melbourne Refresh, page 56, Option Plan Melbourne Refresh, Page 52 Page 11 of 27

96 Planning for growth Clarifying the direction to protect the suburbs. 23 Recommendation 7: Clarification over competing requirements of policy objectives like 70/30 split (Option 36A), unlocking housing supply in existing areas (Option 36C) protect the suburbs (Option 39) and residential zoning (Option 40) is needed to clearly articulate how housing needs will be met. Infrastructure financing Master Builders is concerned that Plan Melbourne Refresh might not adequately consider the costs of development of infrastructure required in established areas, or how the extra infrastructure needs will be met. More detail around the costs of infrastructure provision in Greenfields areas and in existing areas is needed. Increasing the density of people in existing areas, necessarily requires additional infrastructure like schools, child care and aged care facilities as well as increased sewerage, drainage and water (amongst many other things). This can have an impact on housing affordability (because of the costs associated with delivering these) as well as liveability and mental health. Dr. Gideon Aschwanden, Lecturer in Urban Analytics at the University of Melbourne s School of Design advocates for a state planning authority to have the control over infrastructure development. This could be undertaken by the central authority as discussed previously or outlined in the proposed strategic Housing Plan. There should be a planning authority that is not bound by politics at the state level Victoria is big enough. It s a bit of a mess right now, and it s hard to envisage any planning scheme going through without multiple interventions over time. 24 Infrastructure is a long-term investment, and the benefits are long-term as well. So have to think about this in much longer timeframe perhaps 50 years or 100 years. In just 20 years however, you will likely see four different governments assume office. A state-level planning authority would provide consistency, as well as give developers the planning security that they need to build high-rises over a five to 10-year period. Master Builders notes the work done by the Standard Development Contributions Advisory Committee, and its recommendations around standardised levies for infill developments. This work aims to standardise levies so that they are applied consistently across developments and reduces the incidence of blockages to developments. Accordingly, it is important that current infrastructure contributions schemes are considered in light of the proposed strategic housing plan, so that they 23 Plan Melbourne Refresh, Page Gordon Lane, Fishermans Bend Folly Holds Lessons for Urban Planning, Sourceable online publication, 25 November 2015, (accessed 25 November 2015) Page 12 of 27

97 Planning for growth are fair to all parties and act to ensure that the new housing development needed, will be able to be achieved and adequately serviced. Recommendation 8: Master Builders considers it is important that current infrastructure contributions schemes are considered in light of the proposed strategic housing plan (Recommendation 3), so that they are fair to all parties and act to ensure that the new housing development needed, will be able to be achieved and adequately serviced. 1.3 Ensuring planning scheme is clear and focused A new planning scheme or plan should seek to be clear and only apply where planning issues exist. If issues can be dealt with more readily by other areas of building and construction, then this should be considered. Incorporating only the appropriate areas in the planning scheme Minister Wynne released Better Apartments Discussion Paper in May 2015, which raised the question of mandating minimum standards for a range of design features for apartments. In its submission dated 31 July 2015, Master Builders argued there is no clear evidence of a problem with the existing arrangements for internal design features. It was argued that until such evidence is provided, it is difficult to see how, as proposed, imposing additional design features within the planning scheme is an appropriate solution. It is especially important to understand the problem and the causes before imposing regulatory or guidance solutions because of the substantial costs that can associated with the new policies. In the instance of Better Apartments, the proposed standards could incur significant costs in the physical design and build process, as well as from the additional red-tape and decision making delays that can occur with flow on effects towards Housing Affordability. Master Builders also questioned whether local councils should be given the responsibility to review many of the features listed as issues in the Discussion Paper. In looking at reforms, the important distinction between planning and build should be maintained and those with appropriate expertise are assessing the issues. Most of the design features discussed in the Better Apartment Discussion Paper are dealt with by the National Construction Code. For example, the surveyor at the Building Permit stage will assess designs to ensure that they meet NCC requirements. It is not necessary to duplicate that review by requiring submission of plans and receipt of approvals for those design features to local councils as part of the planning system prior to the building permit process. This is likely to create duplication, overlap, inconsistency with the NCC and considerable costs and delays. As highlighted by the Building Design Association of Victoria (BDAV) in their submission to the Better Apartments Discussion Paper, the Agreement between the Governments of the Commonwealth of Page 13 of 27

98 Planning for growth Australia, the States and the Territories to continue in existence and provide for the operation of the ABCB 25 states: on the part of the Commonwealth, States and Territories, seeking commitments similar to those in this Recital, from their local governments and other local government-like bodies where they have any administrative responsibility for regulating the building and plumbing industry, and as far as practicable implementing a 'gateway' model which prevents local governments and other local government-like bodies from setting prescriptive standards for buildings that override performance requirements in the NCC Like the BDAV in their submission to the Better Apartments Discussion Paper, we consider, this is an acknowledgement by the jurisdictions (although an informal one) that deviations from the NCC at a local level should be treated with caution. The inconsistency with the NCC is not only an issue, but also the local councils will apply any guidance in this area inconsistently and this will cause additional uncertainty and cost in the planning process in Victoria. Plan Melbourne Refresh considers code assessment for multi-unit developments (Option 59). This means replacing the ResCode with a codified process or identifying ResCode standards that can be codified (Options 59 A & B). 27 As with the Better Apartments Discussion Paper, if there were to be any changes to the ResCode, these would have to be made with caution and in the context of housing affordability consequences and options for flexibility of design and innovation. Additionally, Plan Melbourne Refresh considers whether Plan Melbourne 2016 needs to investigate how the planning and building system can facilitate design outcomes (Option 42) 28. Such considerations should also be considered in light of the previous discussion we have outlined in this paper. Recommendation 9: Consider the red tape, housing affordability, economic and duplication implications of new proposals (such as the considerations in the Better Apartments Discussion Paper and Plan Melbourne Refresh Options) and ensure that additional planning scope is avoided where possible; additional planning scope is not given to local councils; and additional costs, inconsistencies, planning delays or investment or innovation disincentives are not imposed by any new proposals. 25 An Agreement between the Governments of the Commonwealth of Australia, the States and Territories to continue in existence and provide for the operation of the Australian Building Code Board Documents/ABCB docs/abcb-2012-iga.ashx 26 page 2, item C (vi) 27 Plan Melbourne Refresh, page Plan Melbourne Refresh, page 58, Option 42 Page 14 of 27

99 Planning for growth A star rating system to inform consumers decisions Master Builders recognises the need to provide quality apartments for consumers but not at the cost of restricting choice and affordable housing. With this in mind, Master Builders recommends consideration of a star rating system that would assess design standards. The star rating, which may be designed by the government but used voluntarily by those selling dwellings, could be assessed against a best practice guide. This rating would let consumers know how it rates compared to others in terms of internal design features like access to daylight, room size, air flow and ceiling height. This might allow consumers to understand how a potential property stacks up against others so that they can make an informed decision, but does not place design restrictions that would impact the cost of housing. The energy efficiency rating system is an example of a similar scheme that began as a voluntary process. Recommendation 10: Consideration of alternatives to encourage quality design features, such as the development of a Star Rating system that can be adopted by choice and will help inform consumers of how a dwelling stacks up. 1.4 Housing Affordability As identified in several sections of this paper, decisions such as whether the UGB should be locked down (Section 1.1), the 70/30 split (Section 1.2) and the planning red-tape proposals like the Better Apartment Discussion Paper (Section 1.3), cannot be made in isolation from the impact those decisions will have on housing affordability. Plan Melbourne Refresh does not appear to cost the policies. It is therefore important that these sorts of costs are factored into strategic planning decision-making. Whilst the Plan Melbourne Refresh states that a key focus is to address housing affordability through strategic planning, it then goes on to say a particular focus might be on how the planning system might facilitate the supply of social and affordable housing. 29 Whilst we support a focus on the supply of social and affordable housing, we consider that housing affordability issues are a concern for all Victorians and that the impacts of the planning system on housing affordability across the spectrum of housing, needs to be a priority consideration in the planning system. Social/affordable housing Master Builders notes that Plan Melbourne Refresh considers a number of policy options for encouraging the provision of affordable housing. These considerations include planning tools that mandate or facilitate incentives to increase social and affordable housing (eg percentage requirements of social housing in developments) 30. Such mandated tools should be considered in the context of the broader housing affordability problem, and whether they might have unintended consequences for housing prices in the broader housing industry. 29 Victoria State Government, Plan Melbourne Refresh: Discussion Paper, October 2015, page Plan Melbourne Refresh, page 58, Option 45A Page 15 of 27

100 Planning for growth The considerations for social housing in Plan Melbourne Refresh also include expedited planning approvals processes for selected social housing projects, including modified third-party appeal rights (Option 44). Such proposals are important mechanisms for lowering the cost of housing and therefore should be considered not only for affordable housing but also in the broader residential construction in Victoria. 31 (We discuss codified as-of-right recommendations in Section 3.2. Recommendation 11: Housing affordability should remain at the heart of government policy making, including through Plan Melbourne Refresh decision-making and the scope of this consideration should not be limited to social and affordable housing. 2. Planning scheme structures are capable of delivering on State planning policy objectives The planning scheme must have clear lines of responsibility and accountability so that it is capable of delivering on the State s planning policy objectives and strategy. This means clarifying the roles and responsibilities of State and Local Governments in terms of developing planning policy as well as ensuring there are appropriate organisations such as a central planning authority or development assessment hubs capable of having oversight for the implementation of planning strategy. 2.1 Central authority or planning assessment hubs for metropolitan Melbourne planning The continued problems with planning delays and inconsistency of decision making suggests that something significant needs to be done to fix the problem. There are a number of plans being developed and requiring implementation including Plan Melbourne refresh and plans arising from the newly established Infrastructure Victoria. It can be said that planning can be divided into two components: (a) strategic planning (eg Plan Melbourne, Infrastructure Victoria 30 year plan); and (b) development assessment. 32 The question is whether there is an opportunity to create a more robust independent centralised planning agency or development assessment hubs that could be responsible for, amongst other things, ensuring that strategic plans are implemented in an appropriate way and also monitoring and regulating state and local government activity to ensure that planning objectives are being met and approval timeframes are being adhered to. At present development assessment is conducted at a local council level, and while this ought to take into account the overarching strategic goals or policies eg those created in Plan Melbourne, it is 31 Plan Melbourne Refresh, page 58, Option As discussed in Gareth Griffith, The Greater Sydney Commission, NSW Parliamentary Research Service, October 2015, e-brief 20/2015, page 2 Page 16 of 27

101 Planning for growth difficult to hold councils to account for their decisions that do not deliver on the strategic plans. Therefore, there needs to be a way that council s adherence to a broader strategy can be monitored and regulated. This could involve taking the development assessment out of the hands of councils, or creating agencies to hold the councils to account for their decision making. This concept is timely in the context of the current Local Government Act review, which could incorporate consideration of delegation of authority for planning and development assessment outside of local council. We outline below a couple of options that could be considered, as examples of potential mechanisms that could be used to create such oversight. Of course, there are many options and possible structures, and these will need to be considered and developed in consultation with stakeholders. Option 1 A Central Planning Authority One example occurring in NSW is the establishment of the formal structure for the Greater Sydney Commission announced by Planning Minister Rob Stokes in September 2015 directed to streamline the way the NSW Government s infrastructure and urban planning priorities are delivered 33 and tasked with the responsibility to drive the implementation of A Plan for Growing Sydney. 34 The Greater Sydney Commission includes representative from State and local government, along with independent experts. The Planning Minister stated: The authority will consist of 13 board members, including six district commissioners chosen by elected officials from Sydney s local councils. This partnership model will give councils the opportunity to play a major role in the decisions that shape their broader districts. For the first time, an authority will be established that effectively brings together State Government, local government and independent experts to deliver, drive, develop and decide on the strategic planning priorities for greater Sydney. In doing so the Greater Sydney Commission will ensure that as Sydney grows it will become a more liveable, more productive and more just city. 35 The role of the Commission will be to increase efficiency such as resolving disputes between state and councils over issues and building infrastructure and faster housing approvals specifically 33 As discussed in Gareth Griffith, The Greater Sydney Commission, NSW Parliamentary Research Service, October 2015, e-brief 20/2015, page 1 citing NSW Government, Greater Sydney Commission to transform our city, Media Release, 3 June As discussed in Gareth Griffith, The Greater Sydney Commission, NSW Parliamentary Research Service, October 2015, e-brief 20/2015, page 4 35 As discussed in Gareth Griffith, The Greater Sydney Commission, NSW Parliamentary Research Service, October 2015, e-brief 20/2015, page 1 citing NSWPD 8 September 2015 (Rob Stokes) Page 17 of 27

102 Planning for growth determining 90 per cent of housing development applications within a 40 day timeline. 36 The Commission effectively has three main functions: Monitoring, evaluation and oversight; Strategic planning, including decision-making on re-zoning; and Development assessment. 37 Legislation to establish the Commission has not been introduced. There has been mixed views about the role and structure of the proposed Commission some stakeholder comments in favour have been because they perceive the politics might be removed from planning decisions. Those against the Commission consider that it might be undemocratic or create unnecessary bureaucracy. With a central agency Metropolitan Planning Authority (MPA) having already been established, there is an opportunity to potentially expand the remit of the agency to either be given broader powers to conduct development assessment or alternatively to monitor local council activity especially in terms of approvals timelines and adherence to overarching strategy. At present the MPA s role is a statutory body reporting directly to the Minister for Planning and co-ordinating the regional planning and infrastructure strategies as set out in Plan Melbourne. MPA does not regulate local councils. While the MPA s role is still evolving, at present the focus of its activity is very much on strategic planning, coupled with reviewing and assessing ongoing schemes. It does not engage in development assessment As discussed in Gareth Griffith, The Greater Sydney Commission, NSW Parliamentary Research Service, October 2015, e-brief 20/2015, page 2 citing NSW: Making it Happen, 14 September 2015, released by the Premier 37 As described by Gareth Griffith, The Greater Sydney Commission, NSW Parliamentary Research Service, October 2015, e-brief 20/2015, page 6 38 As described by Gareth Griffith, The Greater Sydney Commission, NSW Parliamentary Research Service, October 2015, e-brief 20/2015, page 16 Page 18 of 27

103 Planning for growth Option 2 Development Assessment Hubs Alternatively, consideration of development assessment hubs for ensuring that local council decisions are made that will deliver on planning strategy and within planning assessment timeframes. In South Australia a system of local Council Development Assessment Panels (CDAP) have been established, making it compulsory for Councils to delegate all development assessment decisions to a delegated officer, a local CDAP or a regional DAP. The composition of CDAPs include a presiding member who is not from Council and has planning experience, half of the members being independent/specialists and up to half the remaining staff can be from Council. Recently, Property Council Australia has recommended that elected officials are removed from the CDAPs. Accordingly, the structure and make-up of development assessment hubs would need to be considered in light of experiences in other jurisdictions. Page 19 of 27

104 Planning for growth Recommendation 12: Master Builders calls on the Planning Minister to set up/allocate responsibility for monitoring the implementation of a strategic plan, and for planning development assessment, to a specific agency or planning assessment hubs. Page 20 of 27