HIA recently undertook an industry survey of new home builders, renovators, manufacturers, suppliers, trade contractors, developers and other industry participants. One of the key questions was around the time and cost involved in obtaining a planning approval.

“On average across the country, planning approvals add over $14,000 to the cost of a new home build and take over five months to obtain. In Victoria, this blows out to almost $20,000 and more than seven months,” added Mr Devitt.

“Moreover, these are just averages. There were a significant number of medium density home builders in New South Wales reporting average delays of 7.5 months, and detached home builders in both New South Wales and Queensland reporting costs in excess of $20,000.

“There are even horror stories across the country of planning processes taking years and costing builders hundreds of thousands of dollars in delays, costs and rework.

“The result is that many builders are simply no longer attempting to build certain dwellings or develop particular parcels of land. For some types of multi-units and land development, both builders and customers are concluding that the subdivision process is too hard, delays are too long, and holding costs are too high.

“This means that beyond the explicit costs of the planning process, there are homes that never get started, further constraining overall home building volumes and making all other housing more expensive.

“The Australian government has organised a national Economic Reform Roundtable aimed at boosting productivity in housing and getting more homes built. Improvements to the planning system must be part of the discussion.

“Builders continue to face significant delays and uncertainty due to complex planning systems, inconsistent implementation of the National Construction Code and burdensome environmental approval processes.

“South Australia provides a good example of how to improve this process, including through the use of an online portal that triages planning applications into those that can be fast-tracked and those that need further assessment.

“The Victorian process, on the other hand, is still bogged down in costs and delays, including required drawings, consultants and experts, reports and permits, heritage and flood overlays, environmental regulations and restrictions, third-party notification and appeal rights, and Council fees, modifications and delays. It can often take weeks to get a simple response from Council.

“There are also the new building regulations, including around energy efficiency and accessibility associated with recent changes to the National Construction Code, requiring specific expertise that costs time and money.

“Survey respondents identified a number of ways in which planning processes could be improved, including private certification.

“Rules based private certification would overcome the subjective interpretations, reversed decisions and numerous unnecessary and often duplicated requests for information from different Town Planners relative to what should be objective town plans.

“When private certification was implemented for building approvals, it sped up the process from months to weeks, with no measurable decline in quality.

“Extending private certification to planning approvals will speed up this process, contributing positively to recent policymaker efforts to improve productivity in the home building industry.

“It would also help address the conflicts of interest that often exist at the local level.

“Councils have disincentives towards approving more housing supply. Councils are beholden to their existing residents, not potential future residents. In many instances, their incentive is to refuse or curtail any development to which their local residents may object, and which may jeopardise their chances at re-election.

“Private certification would bypass these conflicts. It would also ease the burden on Councils, addressing skills shortages and allowing Town Planners to do what they do best – and better than anyone else – write town plans, design cities, not be distracted by the administrative task of assessing compliance with them,” concluded Mr Devitt.

Further information is presented in HIA’s Housing Policy Scoreboard, Planning Blueprint and Omnibus Survey Findings.

For more information please contact: