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.

“Victoria’s planning approvals process was the most expensive and time consuming of all the large states, far worse than the national average of $14,100 and 5.4 months,” added Mr Devitt.

“Moreover, these are just averages. There are many cases where planning approval for one dwelling on residentially zoned land takes a minimum of 6-12 months.

“There are even horror stories across the state 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, 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.

“The Victorian process is bogged down in costs, delays and uncertainties, 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 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, including around neighbourhood character, relative to what should be objective town plans. It should also reduce the occurrence of numerous unnecessary and often duplicated requests for information and reversed decisions from different Town Planners.

“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 the 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, including other solutions to planning costs and delays, is presented in HIA’s Housing Policy Scoreboard, Planning Blueprint and Omnibus Survey Findings.

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