NSW councils lose development approval powers to independent panels

By Nick Thomas, Tom Dougherty

17 Aug 2017

Independent hearing and assessment panels will determine most development applications with capex above $5 million in the Greater Sydney Region, instead of local councils, under new proposed laws.

On 10 August 2017, the NSW Parliament passed amendments to the Environmental Planning and Assessment Act 1979 (NSW) (Planning Act) in an effort to improve accountability and transparency in the development application (DA) approval process under the NSW planning framework.

A key feature of the Environmental Planning Assessment and Electoral Legislation Amendment (Planning Panels and Enforcement) Bill 2017 is the introduction of local planning panels (formerly known as independent hearing and assessment panels (IHAPs)).

The NSW Government has stated that the new local planning panels will bring greater expertise, transparency and integrity to the development assessment process at a local level. As part of this reform, the Planning Act will be amended to:

  • require all local councils in the Greater Sydney Region and Wollongong to establish local planning panels, and allow other councils to create local planning panels;
  • provide local planning panels with the functions of the relevant local council as consent authority to determine DAs that meet the NSW Government’s criteria for determination by a local planning panel;
  • allow for local planning panels to advise on planning proposals relating to planning instruments (eg. local environmental plans (LEPs) ) where referred to the panel by a local council or at the direction of the NSW Minister for Planning;
  • permit local councils to refer other planning or development matters to local planning panels for advice; and
  • preclude councillors, property developers and real estate agents from becoming a member of a local planning panel.

The Planning Minister said, when announcing the reforms, that the mandatory use of panels "local councils will be able to focus on providing community services, strategic plans and development controls for their local areas".

Criteria for DA assessment by local planning panels

Once a local planning panel has been established, the relevant local council will be required to refer a DA to that panel for determination if the DA meets specific criteria. The NSW Government has stated that local planning panels will decide:

  • DAs for proposed development with a capital investment value (CIV) of more than $5 million and less than $30 million;
  • DAs for which 10 or more different households have submitted objections;
  • DAs where there is a conflict of interest with the local council or a State or Federal member of Parliament;
  • DAs of "strategic importance" that include a proposed voluntary planning agreement;
  • DAs that seek to depart from a development standard in the council's area (usually in the relevant LEP) by more than 10%; and
  • DAs that relate to development types with a perceived higher risk of corruption (eg. the demolition of heritage items, licensed places of public entertainment and designated development).

Modification applications that meet the above criteria also will be determined by a local planning panel.

A new standard model for local planning panels

Some local councils have established IHAPs to assist them with independent advice on DAs. The key difference is that the Bill will require all councils to do so, and will give the panels decision-making functions.

The NSW Government has also adopted a new, uniform model for the structure of local planning panels. The standard model for each local planning panel will:

  • comprise of four members, including three independent persons with relevant expertise (one being the chairperson with experience in law or government and public administration) and a representative of the local community who is not a councillor or mayor; 
  • restrict the term of a member of a local planning panel to no more than three years, and no more than six years in office in total; and
  • require the local planning panel to provide notice to the public of each meeting, conduct each meeting in public and make electronic recordings of each meeting publicly available online.

The "relevant expertise" of an independent person on a local planning panel must be in the fields of planning, architecture, heritage, the environment, urban design, economics, traffic and transport, law, engineering, tourism or government and public administration. The chairperson of the local planning panel must have expertise in law or government and public administration.

The Bill provides that existing IHAPs as at 1 September 2017 will continue until 1 March 2018 and be taken to be local planning panels for the purposes of the Planning Act.

Importantly, the Bill also moves the criteria for determining whether a DA should be referred to a panel from a schedule of the Planning Act to State Environmental Planning Policy (State and Regional Development) 2007, which will make it easier to amend the criteria.

Impact on development

The latest changes to the Planning Act will increase enormously the number of DAs referred by local councils to local planning panels for determination, particularly in Sydney and Wollongong. Proponents may also see local councils make more frequent requests for independent advice from a local planning panel on other planning and development matters.

This should take some of the local politics out of DA and rezoning determinations, and it may help to improve DA determination time frames. However, handing decision-making to a panel of experts and a community member could lead to some surprising outcomes on DAs.

The range of development which local planning panels will consider means that the capex threshold for referral to Sydney planning panels (formerly joint regional planning panels) will increase from $20 million to $30 million. That may increase the uncertainty for development proposals with capex between $20 million and $30 million.

This represents one of the most significant shifts in the allocation of responsibility for development decision-making in many years.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.