Technical report

Managing Victoria’s planning system for land use and development

Urban planning Regional planning Strategic planning Decision making Land use Victoria
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apo-nid94361.pdf 5.42 MB

The property industry is the largest sector in the Victorian economy. In 2015– 16, more than 57 000 planning permit applications were approved through the planning system, providing for an estimated 46 000 new dwellings and 62 000 new lots. This created about $25 billion of proposed economic investment in Victoria. With the state welcoming about 100 000 people a year, pressure on jobs, housing, infrastructure and other services will intensify. By its nature, planning is complex. Decisions are multifaceted and demand a holistic, integrated approach by all levels of government to deliver state land use and development priorities. The land use and development planning system is not the only means of achieving government’s planning priorities but it is a centrally important tool used by local and state governments to deliver the state’s priorities for a connected, liveable and sustainable state. If the planning schemes used to manage land use and development across the state are to help achieve this ambition, their focus should be clear and they should be supported by policies that clearly express the state’s planning objectives and priorities. If the community is to have confidence and trust in the planning system, decisions must be transparent and planning schemes must be well implemented and operate as intended.

Planning system objectives and roles In Victoria, the Planning and Environment Act 1987 (the Act) sets out seven broad objectives for planning- directed sustainable outcomes that are beneficial to both current and future generations. It does this by establishing Victoria’s planning system, based on a statewide framework of planning provisions —the Victoria Planning Provisions (VPP) —including policies and controls to be applied through local planning schemes, which guide how different areas can be used and developed. Planning assessments and decisions must support the desired outcomes of state planning policy objectives. They do this by meeting the requirements for integrated decision- making outlined in the Act and the decision guidelines in the VPP. The Department of Environment, Land, Water and Planning (DELWP) is the department currently responsible for the state’s land- use planning system, managing the regulatory framework and providing advice on planning policy, strategic planning and urban design. DELWP works with local councils to help them prepare and amend planning schemes that reflect their community’s needs and expectations for land use and development. Figure A shows that the planning system has been overseen by various state government departments over the last two decades.

Councils propose most of the changes to planning schemes —although these are ultimately approved by the Minister for Planning (the minister) —and make most decisions about what land use and development is allowed. The minister also makes changes to the planning schemes and makes decisions on land use and development in some locations where he or she has the authority to do so. The minister also has the power to intervene in planning matters in any area under defined circumstances. The minister and councillors, as elected representatives, have considerable discretion in making these decisions. Providing reasons for the decisions they make is a fundamental aspect of transparently exercising this discretion, particularly when the decision goes against the applicant’s request .

Past reviews of the planning system

Since 1996, successive governments have sought to reform the planning system. The key objectives of these reforms have been to: • develop performance- based planning schemes through the introduction of the VPP—a template for policies, controls and other planning provisions to be adhered to by all local planning schemes • simplify the planning system, particularly its complex system of controls • improve the efficiency of assessment processes and decisions by streamlining assessment and approval processes and reducing red tape • review the purpose of the state and local planning policy framework s and their content • improve reporting transparency, including the time taken to assess planning proposals.

Our 2008 audit Victoria’s Planning Framework for Land Use and Development found that the planning department at the time—DPCD —needed stronger oversight of the planning system and of the uptake and impact of these reforms. It highlighted also that DPCD and councils needed to improve their administration of the planning permit and planning scheme amendment processes.

The scope of this audit

In this audit, we assessed whether DELWP and councils in their roles as planning and responsible authorities, are managing and implementing the planning system to support the objectives of the Act and the desired outcomes of state planning policies. We also examined: • progress since our 2008 audit in improving oversight of the system and its performance • the impact of reforms since 2008 in improving the effectiveness and efficiency of the land use planning system • barriers to the delivery and implementation of better -practice planning schemes • the approach to measuring the planning system’s performance. We looked specifically at how well DELWP advised the minister through its assessments and how well it managed the planning system. We also examined the activities and assessments of three councils —the City of Yarra, the City of Whittlesea and Moorabool Shire Council. These provide examples respectively of an inner city, an outer metropolitan and a peri -urban or ‘interface’ council (one of the nine municipalities that form a ring around metropolitan Melbourne).


DELWP and the three councils we audited are not being fully effective in their management and implementation of the planning system. Governments, state planning departments and councils have directed significant effort over many years to reform and improve the system. Despite this, they have not prioritised or implemented review and reform recommendations in a timely way, if at all. The assessments DELWP and councils provide to inform decisions are not as comprehensive as required by the Act and the VPP. DELWP and councils have also not measured the success of the system’s contribution to achieving planning policy objectives. As a result, planning schemes remain overly complex. They are difficult to use and apply consistently to meet the intent of state planning objectives, and there is limited assurance that planning decisions deliver the net community benefit and sustainable outcomes that they should. Our examination showed that planning schemes have mixed success in achieving the intent of state policy across the three areas we examined —developing activity centres, increasing housing density, diversity and affordability, and protecting valuable agricultural land. Clearly much more work is required if the system is to realise its intent. A key focus must be simplicity —which can be achieved by clarifying the purpose of the system and eliminating ineffective controls. This should facilitate a shift in mindset away from a controls -based approach toward a more mature, outcomes -based consideration of all relevant, potentially conflicting, risk factors and impacts.  

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