Councils

ABS has today released the June data for housing approvals which shows that in NSW, the planning system approved 12.7% in less in June than was approved in May. The Council shut down for elections has started.

Urban Taskforce has warned the NSW Government that they faced a real risk that Councils would ease off on approvals in the lead up to what was to be the September elections.&nbsp; Today&rsquo;s data shows that the Government&rsquo;s light touch on Councils has resulted in precisely that.&nbsp; Worse, the Council elections have now been postponed till December and unless someone holds a blow-torch to the Councils and approval bodies, approvals will drop off further.&nbsp;

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Even prior to the lockdown, the productivity of the planning system had dropped off. Our economy cannot recover with this drop off in performance.&nbsp; Planning reform and approvals now will deliver a pipeline of work for when vaccinations allow our economy to fully re-open.&nbsp; There is an opportunity to catch up &ndash; but it seems that the planning system has slowed up again.

Urban Taskforce calls on the Government to immediately implement the recommendation of the NSW Productivity Commission White Paper.&nbsp; The GSC has set housing targets.&nbsp; It is up to the NSW Government to ensure that Councils meet them.&nbsp; Targets need to be regularly monitored against performance.&nbsp; There can be no excuse for Councils refusing to accept the targets.&nbsp; LGA Housing Strategies must come with sanctions for those Councils that selfishly refuse to contribute to housing supply, resulting in rising new home prices inflicted on those least able to afford them.

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The data shows that NSW housing approvals reached their peak in 2015/16 2016/17 and 2017/18 at around 73,000 approvals each year. Then, in the lead up to the NSW State election (2018/19) approvals dropped off to 58,000 and stayed low in 2019/20 with only 48,000, despite &ldquo;fast track&rdquo; schemes and a flurry of DPIE activity.

The total approvals have risen across all of NSW to 59,000 and this is welcome &ndash; but it remains well short of what is needed.&nbsp; The data reveals the problem.&nbsp; Apartment approvals across NSW have dropped significantly (most of these in Greater Sydney) while new separated house approvals have remained relatively flat.

<img alt="" height="444" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/screen_shot_2021-08-07_at_2.19.12_am.png" width="1180" />

The table above, based on the ABS data, clearly shows that the price escalation is due to a drop off in housing approvals and this is flowing on to a drop off in housing supply.&nbsp;

Further, the time taken to navigate the NSW planning system, even after an approval has been granted, often takes years, adding to risk for the property development industry and additional costs for new home buyers.

The message went out to Councils in 2018 that the NSW Government was going to go soft on them after the Council amalgamation debacle.&nbsp; But the result has been a massive under supply of housing.&nbsp; This will only get worse unless Government can incentivise Councils to deliver an over-supply of new approvals.

Council elections have now been postponed till December and unless someone holds a blow-torch to the Councils and approval bodies, approvals will drop off further. 

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ABS housing approvals data spells out why housing prices are going through the roof

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVERS
Australia’s local government sector has been undergoing reform in recent decades. The result has been fewer and larger local governments and a reshaped role for elected members or councillors. But do councillors understand what this means for them. 
From the 1990s, the number of councils in Australia has decreased from 826 to 565. Reforms have focused on local councils’ administrative, financial and technical capacities.
These reforms tend to strengthen local government’s service-delivery role. But, so far, they have done little to support local representation and democracy. There are significant concerns that these reforms may have a negative impact on local democracy.
What the changes mean
Local government legislation has changed in many Australian states. The legislation now sets out the roles of the CEO or general manager and the role of councillors. The CEO generally has management responsibility for the organisation while councillors are responsible for strategy and policymaking.
However, what councillors may not necessarily understand is that their role is strategic leadership – not the day-to-day management of the organisation.
As part of the authors' research, we conducted a national survey of councillors on their views of their roles and responsibilities. The preliminary results make it clear they felt they should have more influence over administrative policy and procedures. The difficulty is that legislation says this is the responsibility of the CEO or general manager.
This matters. If councils are larger organisations and councillors represent more residents, it is important that they focus on understanding their communities’ needs and aspirations. For local democracy to be effective, councillors should focus on developing strategic plans to meet residents’ needs, rather than trying to manage day-to-day operations.
State governments argue that the main objective of local government reform is to make councils more efficient. They want to ensure local government’s financial sustainability and its ongoing ability to provide services to the community. This usually leads to fewer and larger local governments. 
A new role?
Australia’s 5,060 councillors represent a wide diversity of communities and govern very different kinds of organisations.
The 565 councils in Australia range greatly in size. The largest, Brisbane City Council in Queensland, has an annual operating budget of A$2.9 billion and serves a community of just over a million people. It covers an area of 133,809 hectares.
The smallest, Sandstone Shire Council in Western Australia, comprises a population of 116 and covers a land area of 3,266,650 ha. This is comparable to the size of Belgium. It had an annual operating budget in 2014 of $3.4 million.
Local government reforms include a stronger emphasis on councillors’ strategic, long-term decision-making role. In New South Wales, councils also have to establish community-engagement strategies.
These changes were intended to shift a previously widespread perception of local councils as simply managers of local services and local infrastructure to one where their role, as democratically representative bodies, gained in significance.
This defining of roles between strategic decision-making and involvement in day-to-day administration is problematic. Some councillors have expressed frustration and confusion when, following changes in the legislation, they are no longer able nor permitted to deal directly with staff.
The preliminary results of our study show that what councillors think is their role may not be the same as the intent of local government reform. Larger local governments also means councillors must represent more people.
Roberta Ryan is director, UTS Centre for Local Government and Australian Centre of Excellence for Local Government, and can be contacted <a href="https://theconversation.com/profiles/roberta-ryan-172068" target="_blank">here</a>.
Su Fei Tan is lecturer, lnstitute for Public Policy and Governance and senior research officer, Centre for Local Government,University of Technology Sydney and can be contacted <a href="https://theconversation.com/profiles/su-fei-tan-237627" target="_blank">here</a>.
Both are authors for The Conversation.
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How council mergers and reforms imperil local government democracy

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GUEST OBSERVER
The management of growth across Sydney should be helped by the NSW government announcement of 17 new councils through amalgamations.
The NSW government has needed to take on a reform agenda for local government for decades and is now delivering.
The announcement that the government is proceeding with the formation of 17 new councils including 7 in metropolitan Sydney should finalise debate and lead to more effective councils. 
The government is also supporting in principle 9 more new councils including 6 in metropolitan Sydney subject to court decisions and this is likely to also lead to more effective councils.
The most important thing is to finalise the transition quickly so strategic planning and development assessments are not disrupted.
The Urban Taskforce has seen delays to planning decisions for large projects that have been caught up in the proposed amalgamations and a clear decision on the final structure of council boundaries should give clarity to responsibilities for planning decisions. We urge the government to ensure that planning determinations have clear processes for decision making during the transition phase to the new councils.
There would appear to be a role for the Greater Sydney Commission to take over some planning decisions in Sydney during the transition to the new councils through their two planning panels. Now that the 6 District Commissioners are appointed the new panels should be able to get underway soon.
The amalgamation of rural councils should lead to more effective servicing of communities but towns that are a long distance apart will need local service centres for their communities.
The Urban Taskforce is keen to work with the state government on ensuring planning services, particularly for approvals, are not disrupted during the transition to the new council structures.
 
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">here</a>.
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Stronger councils good for a growing city and state: Chris Johnson

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GUEST OBSERVER
Hard-pressed ratepayers in New South Wales and Queensland need no reminding of the perils of municipal amalgamation. 
NSW experienced a sharp dose of forced mergers in 2004. Queenslanders underwent draconian council consolidation under the Beattie government in 2008.
NSW is now on the cusp of a further round of mergers being inflicted on unwilling councils.
In all three cases, the architects of compulsory amalgamation have been under the sway of the dogma that “bigger is better” in local government. Ratepayers are told amalgamation will herald a new dawn of lower rates, cheaper services, improved service quality, enhanced financial viability and superior administration and planning.
In NSW, the Baird government has especially emphasised the financial advantages of municipal amalgamation. These claims are typically presented as the outcome of careful research and deliberation.
Mergers tested in a real-world experiment
Are these claims consistent with the empirical evidence? My colleagues Brian Bell and Joseph Drew and I investigated this question for NSW’s 2004 forced amalgamations.
We took advantage of being able to use 2014 data to compare the performance of merged councils with their unmerged counterparts over ten years.
We compared amalgamated “general purpose” councils with their un-amalgamated peer councils in the same local government classification. We thus had the benefit of a “natural experiment”, being able to compare the two groups of “like” councils against a common set of performance indicators.
Our peer-reviewed research paper will be published shortl<a href="https://www.propertyobserver.com.au/https://esa.snapdev.com.au/news/15991">y</a>.
The criteria we used for this comparison included four the Baird government is using under its “Fit for the Future” program – operating performance, own-source revenue, building and infrastructure renewal, and asset maintenance ratios – as well as council employees per capita.
We found no statistically significant differences in the performance of the two groups of councils against these criteria. This falsifies past claims by the Carr Labor government that its forced amalgamations would substantially improve NSW local government financial performance. It also undermines the Baird Coalition government’s claims for its proposed mergers.
Evidence mounts against ‘bigger is better’
Other research provides additional damning evidence. For example, Joseph Drew, Mike Kortt and I examined the outcomes of forced amalgamations in Queensland in 2008. These reduced the number of councils from 157 to just 73.
Our research demonstrated that this resulted in a greater proportion of councils exhibiting diseconomies of scale. That is, mergers created entities that were simply too large to be run efficiently.
Furthermore, of the 31 new councils the mergers created, 58% exhibit decreasing returns to scale. Comparing their efficiency through time, we found merged councils performed worse than unmerged councils.
Finally, Elizabeth Sinnewe, Mike Kortt and I recently tested the claim that “bigger is better” by examining the financial performance of Australia’s largest council by population, Brisbane City. In our recently published analysis, we compared Brisbane City Council to Sydney City Council, the average of six southeast Queensland councils and the average of ten metropolitan NSW councils.
We did so using four measures of financial performance – financial flexibility, liquidity, debt service capacity and asset management. Between 2008 and 2011, the three comparator groups outperformed Brisbane Council in financial flexibility, liquidity and debt-servicing ability.
Taken together, these three papers cast doubt over the continuing dogma that “bigger is better”. They also add to the empirical literature on municipal mergers by demonstrating that “biggest is not best” either.
In particular, the financial performance of local authorities does not improve as advocates of amalgamation contend. On the contrary, amalgamated municipalities often perform worse than their unmerged counterparts.
Amid the controversy over the Baird government’s compulsory council consolidation program, our findings underline the foolishness of making public policy in an “evidence-free” manner.
If forced amalgamations proceed, we may well see hundreds of millions of dollars in taxpayer and ratepayer funds squandered simply because policymakers preferred dogma to empirical evidence.
Brian Dollery is professor of economics and director of the Centre for Local Government, University of New England and author for The Conversation. He can be <a href="https://theconversation.com/profiles/brian-dollery-162945" target="_blank">contacted here</a>.
 
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Do mergers make for better councils? The evidence is against ‘bigger is better’ for local government

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVERS
The selection of Melbourne to participate in the international 100 Resilient Cities program sponsored by the New York-based Rockefeller Foundation generated a mix of hopes, expectations and concerns.
In a report released today, researchers assessing the program found a surprising degree of co-operation among the city’s many local councils. The result is the Resilient Melbourne Strategy, adopted this month, which marks a shift towards “whole-of-city” thinking.
In 2013, at the time of Melbourne’s selection, its fragmented governance was a concern. How could a framework for urban resilience emanating from the US be adapted to very different city governance structures operating in Melbourne? What could a single chief resilience officer (CRO) hope to accomplish in just two years across a metropolitan region with more than 30 local government authorities?
The Melbourne project began in earnest with the appointment of the CRO, housed at the City of Melbourne, in November 2014. A year later an RMIT University research team interviewed a wide range of people who were either closely involved with or clearly interested in the project implementation. Interviewees include those serving on the project steering committee, some who had attended a project briefing and some who had only been told about it.
<h2>Overcoming fragmented governance</h2>
It is fair to say the researchers were sceptical about what could be achieved in just two years to foster a city-wide approach to urban resilience. In Australia’s rather cumbersome, three-tiered structure of government it is hard to focus on metropolitan regions that fall somewhere between the responsibilities of state and local governments. Thinking about cities as a whole has only just entered the strategic thinking of our national governments.
Yet the researchers were pleased to find the project had generated unprecedented levels of co-operation involving 29 local government authorities in metropolitan Melbourne. The implementation process had met with widespread approval.
Each of the 100 cities now participating in the Resilient Cities Challenge is provided with a “City Resilience Framework”. This guides development of a specific strategy for the city.
<h2>Adapting to local conditions</h2>
The framework draws heavily on US experiences – especially that of New Orleans since the devastation of Hurricane Katrina in 2005. The Melbourne steering committee realised it would have to adapt the framework considerably to work in a city with 32 local councils.
In Toby Kent, the project initiators selected a CRO who had evident skills in motivation and negotiation. The researchers were told that the patient work involved in building collaboration across so many local government areas made the project stronger than it would have been otherwise.
The concept of urban resilience promoted by the Rockefeller Foundation urges cities to consider a wide range of potential “shocks” and accumulating “stresses”. The research found this approach promoted boundary-crossing dialogues. These exchanges involved people concerned with infrastructure planning, economic development, social care, community development and environmental protection.
Some of the interviewees expressed misgivings about the growing popularity of the concept of resilience in policy discourses. Despite this, the research findings suggest it does have a capacity to get people thinking beyond the normal boundaries of policy and practice.
<h2>Towards a more holistic view</h2>
In Australia, the concept of resilience has largely been associated with emergency management. However, the semi-structured research interviews tended to focus more on accumulating social, economic and physical stresses. These make the city as a whole more vulnerable, but are often neglected.
It was noted, for example, that urban planning can leave many people feeling socially isolated. One council has now applied “a lens of preventing family violence” into all areas of its work, ranging from infrastructure planning and economic development through to health promotion and community development.
The Resilient Melbourne project released a preliminary resilience assessment in June 2015. This was developed into the newly launched Resilient Melbourne Strategy.
Much of this strategy aims to “scale up” existing projects or initiatives. The aim is to demonstrate that these can be more effective on a metropolitan rather than localised scale.
Follow-up research will be needed to find out which elements of the strategy become embedded in the policies and practices of Melbourne’s local government authorities and the multitude or public and private sector organisations trying to ensure that vulnerabilities are addressed long before they become full-blown crises.
Importantly, the research found that the project was able to generate some innovative policy and practice dialogues and demonstrate the benefits of whole-of-city thinking.
Martin Mulligan is senior researcher, Globalism Research Centre, RMIT University and can be contacted <a href="https://theconversation.com/profiles/martin-mulligan-108697" target="_blank">here</a>.
Blythe McLennan is research fellow - Emergency Management, RMIT University and can be contacted <a href="https://theconversation.com/profiles/blythe-mclennan-8288" target="_blank">here</a>.
Tarnya Kruger is research assistant, Landscape and Environmental Sociology, University of Melbourne and can be contacted <a href="https://theconversation.com/profiles/tarnya-kruger-271311" target="_blank">here</a>.
All are authors for The Conversation.
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Has the 100 Resilient Cities Challenge benefited Melbourne?

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GUEST OBSERVER
The Premier, Gladys Berejiklian’s reason for continuing with Sydney council mergers is to increase housing supply but approvals are dropping partly due to the confusion of the merger process.
The NSW Government decision to continue with council mergers will be good in the longer term for more effective planning processes but the transition phase is likely to slow down housing approvals.
The Premier has stated the advantage of council mergers is to increase housing supply and improve planning but over the next two years the amalgamation process is likely to make planning more complex.
The Government must take a stronger role in driving housing supply during the transition to larger more efficient councils by unlocking large housing projects caught up in the planning system. The Urban Taskforce is aware of over 30 large housing projects caught up in the planning process that could be turned into real projects. Some of these projects have holding costs of hundreds of thousands of dollars a month.
The continuation of the merger process needs to be accompanied by a fast track approach to large housing projects during the transition process. The Minister for Housing, Anthony Roberts, should establish an action team under a Commissioner for Housing Supply for a two year period to lift housing approvals.
While the increase in housing completions to 33,000 for Greater Sydney is good news this needs to be balanced by falling housing approvals. The Australian Bureau of Statistics data shows the housing approvals in NSW dropped by 25 percent between July and December 2016.
The Urban Taskforce is keen to work with Housing Minister Anthony Roberts to suggest ways to increase housing supply and housing affordability.
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.WKTDGTt942x" target="_blank">here</a>.
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Premier needs to take a stronger role with housing supply during the transition to merged councils: Chris Johnson

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Sydney councils are sitting on more than $1 billion in unspent infrastructure funds, according to the latest research by the Property Council of Australia.
The figure of $1,091,078,000 in unspent funds across 27 councils was revealed in the Property Council’s latest audit of infrastructure levies. The calculation was based on local government financial statements for 2015-16. 
“Councils are sitting on a billion dollars in unspent funds, funds that should be spent on providing services for the local community – funding libraries, local parks, sporting grounds,” said a media release from the PCA. 
“This money is sitting in the bank earning interest, $30 million in interest over 2015/16, instead of being used for the local community. This money is provided to councils to boost local facilities but instead they are hoarding it,” said Jane Fitzgerald – NSW executive director of the PCA.
She said the research confirms the need for tighter controls that require councils to spend the funds swiftly on infrastructure rather than just leaving them in the bank.
<ul>
<li>The amount of unspent funds increased by just under $115 million over the past year, a rise of 11.7 per cent.</li>
<li>$594,527,000 was collected through levies in 2015-16, but only $510,052,000 was spent</li>
<li>$30,084,000 was earned in interest over 2015/16</li>
</ul>
“With a booming population and big new growth centres across Sydney, it is vital that this money is used to ease the pressure on our community, the money is no good to the community sitting in the bank, but it is good for the Council’s balance sheet,” said Fitzgerald.
“Those Councils fighting amalgamations using rate payers’ money should start focussing more on spending the levies collected for vital local infrastructure rather than political grandstanding in court.”
<a href="https://www.propertyobserver.com.au/images/2017/05/16/Councils.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/16/Councils.png" alt="">
PCA said audit is sourced directly from the financial statements of councils across metropolitan Sydney for 2015-16 so the data is supplied by councils. 
Data was available for 27 councils with some amalgamated councils not providing data and other councils simply not making the data public
Over the past four years, the amount of unspent levies has increased by over 40 per cent, the PCA said. 
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Sydney councils sitting on unspent $1 billion stockpile: PCA 

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GUEST OBSERVATION
Tasmania is in the grip of a rental housing affordability crisis. What do local governments do to help?
Rural areas in particular lack rental options. To find housing, older people living in rural areas may often face a heartbreaking decision to leave their community.
We wanted to know whether local governments recognised this issue and actively helped seniors to continue living in their communities. We found much more. Local governments have not traditionally been recognised as housing providers, yet many of Tasmania’s 29 local councils do provide subsidised accommodation.
How bad is the problem?
Local councils have been forced to intervene because the state is in the grip of an affordable housing crisis. In Hobart, rental vacancy rates are as low as 0.3%, the lowest of any Australian capital city. The average weekly rent of A$440 is 30% of median weekly household income. That’s the rental equivalent of being in mortgage stress.
Lack of other options has meant that some families resort to camping out and living in caravan parks while they try to secure rental accommodation. Tasmania’s extremely low vacancy rates combined with high rents, lower socioeconomic status, and highly decentralised population means that finding accommodation can be exceptionally difficult.
There are just over 54,000 rental properties throughout Tasmania. Housing Tasmania, the public housing provider, owns about 13,000 of these. Roughly 20,000 are owned and rented privately, as opposed to through a real estate agency.
The estimated shortfall of rental housing is about 5,000 households for Hobart and 29,200 households across the state.
Impacts on older people
The rental housing crisis has particular repercussions for older people who rent. Rising numbers are facing homelessness for the first time. Current health policies aimed at older people remaining in the community rather than in aged care may make matters worse.
Half of the Tasmanian population is 42 or older, the highest median age of any Australian state. Recent research has found that someone renting privately at age 45 is likely to be “highly impoverished” in retirement.
With housing need increasing, pressure is growing on all levels of government to help resolve the crisis.
What local councils do and why
We invited all of Tasmania’s 29 local governments to participate in an online survey. We received responses from 19 local government areas, 12 of which were complete.
Of those that responded, three councils provided local rental accommodation for older people. Two provided this at below-market rent specifically for those on low or fixed incomes. For example, in June 2017, Central Highlands Council advertised residential units for lease to low-income, local retirees.
Asset tests were not always applied. This meant older farmers who needed to be more centrally located for health reasons were able to apply.
Where councils identified that they leased properties targeted at seniors, most of these were bought or built in the 1980s with state and federal funding support. These grant programs no longer exist.
Only one local council indicated it was actively building more accommodation for seniors. When complete, this would provide 60 rental properties. This council had a higher proportion of people approaching retirement combined with a highly decentralised population.
In contrast, another council stated that it believed interest in council-supplied rental accommodation was declining.
This comment tallies with state government statements gathered as part of a 2016 study. The researchers stated that the number of applicants for state-owned seniors housing in the northern region was declining. Consequently, age restrictions were in some cases “relaxed” to fill vacancies.
Our study also identified regional differences in council approaches. Larger urban-based municipalities were less likely than their rural counterparts to own property targeted at the seniors group. But they were more likely to provide assistance in other ways.
The importance of our findings
Given Tasmania’s ageing population, tight rental market and increasing numbers of older women falling into homelessness, these responses require further investigation.
Local governments in Tasmania actually used a surprisingly diverse range of approaches to support local housing of older people. Some provided council land to third parties for building seniors accommodation. Others hosted public forums to highlight sale and rental accommodation suitable for seniors in their council areas.
Less popular forms of financial assistance were rates remissions and fee waivers for planning and building approval fees on applications for seniors and aged care facilities.
Councils also identified that they provided rental accommodation and accommodation support to a range of other cohorts, not just older people.
These findings highlight the importance of better understanding the diverse ways in which local councils can support housing in their communities. The roles of rural councils are particularly important to explore, given the socioeconomic disadvantages entrenched in these communities.
Better understanding the community benefits of such activities may encourage more councils to provide housing. It may also encourage state and federal governments to consider again supporting local governments in providing accommodation, particularly for older people.
Erika Altmann, Property and Housing Management Researcher, University of Tasmania
Lea Coates, Adjunct Researcher, University of Tasmania
Megan Woods, Senior Lecturer in Management, Tasmanian School of Business and Economics, University of Tasmania
<img src="https://counter.theconversation.com/content/94739/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">The authors acknowledge the contribution of Jen Newman, of Regional Development Australia – Tasmania, to the research and this article.
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/councils-help-with-affordable-housing-shows-how-local-government-can-make-a-difference-94739" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Tasmanian councils' help with affordable housing shows how local government can make a difference

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Councils are taking over the NSW Planning system with the latest being North Sydney Council’s request to be excluded from planning proposal policy.
At its meeting on 30 July North Sydney Council voted to put all planning proposals on hold until 1 July 2020 as this would be consistent with what the government allowed Ryde Council to do.
The impact of this resolution, if accepted by the NSW Government, will be to put a hold on all major projects in North Sydney for the next 2 years.
Ryde Council seems to be now driving the planning system in Sydney as it is able to bypass Department of Planning policies with the support of the NSW Government.
Now the rest of Sydney’s councils are following the Ryde approach so they can also be exempt from NSW Government policy.
Northern Beaches Council recently requested the Minister for Planning to exempt them from planning policies related to affordable rental housing, seniors housing and disabled housing.
Now North Sydney Council wants to be exempt from having to consider planning proposals from the private sector for a two year period.
The NSW Government must exert its authority as the responsible agency for the Environmental Planning and Assessment Act and not allow a feeding frenzy driven by small councils that are keen to undermine the state government’s authority.
We have seen the NSW Government allow 50 councils across NSW to be allowed to delay the introduction of the ‘Missing Middle’ code for terrace houses for a year and then the NSW Government delegated planning along the Sydenham to Bankstown corridor back to the local councils who had been fighting the extent of development.
Private sector developers are finding that there is major confusion about who is running the planning system and that is leading to a Sovereign Risk issue that is undermining investments that assumed state government policies gave some certainty to outcomes.
It is looking like NSW is going into a lock down mode for two years to appease a noisy minority who are concerned about change.
The losers will be the young couples and families looking for somewhere to live.
Chris Johnson is the Urban Taskforce CEO 
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North Sydney Council latest to reject the government's planning process: Chris Johnson 

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GUEST OBSERVATION
Housing in Australia is broken. Across the country, <a href="https://anglicare-ras.com/" target="_blank">only 2% of private rentals are affordable for a person on the minimum wage</a>. Less than 1% are affordable for a single person on the pension. There are 650,000 households who can’t afford housing at market rates in Australia right now and this figure is projected to reach <a href="https://cityfutures.be.unsw.edu.au/documents/522/Modelling_costs_of_housing_provision_FINAL.pdf" target="_blank">over a million by 2036</a>.
The abject failure to meet the housing needs of lower-income households is partially due to <a href="https://theconversation.com/australia-needs-to-reboot-affordable-housing-funding-not-scrap-it-72861" target="_blank">decades of underfunded social housing</a> by government. Since the 1960s, the proportion of public housing in Australia has almost <a href="https://www.propertyobserver.com.au/https://www.tandfonline.com/doi/abs/10.1080/08111149608551610" target="_blank">halved from 8% </a><a href="https://www.aihw.gov.au/reports/housing-assistance/housing-assistance-in-australia-2018/contents/social-housing-dwellings">to 4.6%</a> of total housing stock.
Scott Morrison’s newly re-elected government made no election statements relevant to social housing. That suggests this situation is unlikely to change soon.
Leaving it to the private sector
As governments have stepped away from directly delivering affordable housing, more emphasis has been placed on the private sector and market forces to deliver this social good. Internationally, policies like <a href="https://www.ahuri.edu.au/policy/ahuri-briefs/Understanding-inclusionary-zoning" target="_blank">inclusionary zoning</a> require developers to provide a portion of affordable housing in return for planning permission.
For example, in San Francisco inclusionary zoning has been in place since 1992. This policy has <a href="http://default.sfplanning.org/legislative_changes/inclusionary_affordable_requirements/Section_415_amendments_Case_Repost_adoption-042717_FINAL.pdf" target="_blank">generated 4,600 permanently affordable units since 2002</a>. Developers received no incentives in return for being required to deliver this housing.
<a href="https://www.churchilltrust.com.au/media/fellows/Hodyl_L_2014_Social_outcomes_in_hyper-dense_high-rise_residential_environments_1.pdf" target="_blank">In Vancouver</a>, developers wishing to build above a 3:1 plot ratio (for example, three storeys on 100% of the site, or six storeys on 50% of the site) in the CBD must provide social housing or other community amenities.
In contrast, the state of Victoria has very few regulations that encourage or enforce affordable housing or other community benefits in return for development permissions. The rezoning of Fisherman’s Bend for development is <a href="https://www.theage.com.au/national/victoria/lowend-buyers-shut-out-of-fishermans-bend-20141101-11fh5p" target="_blank">one particularly egregious example</a> in Melbourne.
Victoria’s plan for negotiations
In 2018, the Victorian government took some initial steps towards involving private developers in providing affordable housing. It <a href="https://www.planning.vic.gov.au/policy-and-strategy/affordable-housing" target="_blank">changed the Planning and Environment Act 1987</a> to designate affordable housing as a valid planning objective and created a mechanism for negotiated affordable housing agreements.
Local councils can now ask for affordable housing as part of planning approval processes. While these negotiations will inevitably generate a wide range of outcomes through a variety of arrangements, one likely permutation is shown below.
The local council and developer will enter into a negotiation and decide on a “reasonable” affordable housing contribution. In this instance, the developer will sell, “gift” or lease a number of units to a not-for-profit housing provider, which will manage the units and ensure eligible, low-income households occupy the home.
<a href="https://images.theconversation.com/files/274240/original/file-20190514-60560-1xpbo4n.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/274240/original/file-20190514-60560-1xpbo4n.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
A negotiated path to delivering affordable housing. Author provided
The difference between many international examples and Victoria is that these negotiations are voluntary. The argument is that voluntary negotiations avoid a one-size-fits-all solution and allows for flexibility and creativity in negotiations.
On the other hand, <a href="https://rsa.tandfonline.com/doi/abs/10.1080/02697459.2015.1008793#.XOd5qogzaUk" target="_blank">international research</a> suggests voluntary programs often generate uncertainty and inequitable outcomes. They tend to generate less affordable housing than mandated systems. And they do so in <a href="https://www.lincolninst.edu/sites/default/files/pubfiles/thaden_wp17et1_0.pdf" target="_blank">more opaque ways</a>.
Think about it: why would a developer voluntarily give up potential profit by selling or renting a property at a below-market rate? Such contributions would need to be enforced and/or incentivised.
What can negotiation theory tell us?
<a href="https://journals.sagepub.com/doi/abs/10.1177/0739456X07311074" target="_blank">Negotiation research</a> can help us to understand the likely outcomes of these arrangements. It offers insights into stakeholder interests, the potential for mutual gains, and access to knowledge.
Stakeholder interests
Interests are the underlying values and priorities that motivate stakeholders’ demands or positions in negotiations. Interests in this context relate to the degree to which state government, local councils, or developers feel it is their responsibility to provide affordable housing. It relates to views on “valid” profit margins for developers and concerns about reputation.
It also relates to the priorities and strategies of the community housing providers, who are most likely to own and manage the housing delivered through these negotiations.
We know most developers don’t feel it is their responsibility to deliver affordable housing. Similarly, while some councils have <a href="http://www.portphillip.vic.gov.au/councils-role-affordable-housing.htm" target="_blank">explicit statements on affordability</a>, this is not the case across Victoria.
Mutual gains
In places like San Francisco where affordable housing is required in all developments over a certain size, these requirements are built into feasibility calculations from the outset. Therefore, no incentives are included.
This also creates an even playing field for all developers in the consideration of land and development. As there is no negotiation or incentive that could shift the profit margin, the required approach places everyone on the same starting line. Further, the cost considerations are the same for all, when considering the purchase of a site and undertaking an analysis of the feasibility of a proposed project.
Voluntary negotiations only work when the parties at the negotiating table are interdependent – they must have something to gain and something to contribute in the negotiation or they wouldn’t be there. In places where negotiations are voluntary, incentives are often “bundled together” as sweeteners to offer to developers in the negotiation process. Possible incentives include car park waivers, increases in permissible developable area (i.e height or density bonuses) and fee reductions or waivers.
In Victoria, key incentives like allowing an increase in the floor area of a development – so-called <a href="https://www.urban.com.au/property-observer" target="_blank">floor area uplift</a> – are difficult to implement in most local government areas. And expedited planning approvals are politically contentious and have limited impact on developers.
Inconsistency between councils may also allow developers to “shop around”. They are likely to avoid local government areas with a reputation for pursuing contributions.
As negotiations take place across Victoria the capacity for mutual gains for local communities and developers will be a key component in deciding how much affordable housing is provided and at what cost.
Access to knowledge
In negotiations, money and knowledge is power. Stakeholders are likely to hide or manipulate information in negotiations to support their own arguments and interests. This is particularly likely when there is little established trust between parties. Not only does this lead to undemocratic decisions made in a “black box”, it also creates opportunity for exploitation.
Negotiations will centre on trade-offs to achieve economically feasible developments that also include affordable housing. To engage in such discussions, a high degree of knowledge about development economics is required to allow for informed debate. While this is the bread and butter for developers, local councils are often far less resourced to engage in these discussions. There is work to be done in building the capacity of local councils in this area.
Acknowledging this, the authors of this article have <a href="https://msd.unimelb.edu.au/research/projects/current/transforming-housing/affordable-housing-tools/affordable-housing-calculator" target="_blank">built a calculator </a> to help communicate many of the basic premises behind development economics and affordable housing trade-offs.
Have your say on affordable housing
We don’t know yet enough about interests, mutual gains or access to knowledge to fully understand the landscape of this change to Victorian housing policy. And that is why we are surveying the affordable housing industry to gather this feedback.
If you are a private developer, local or state government representative with involvement in residential development or affordable housing policy, a not-for-profit housing provider, or consultant to the housing industry, then we want to hear from you.
Please <a href="https://melbourneuni.au1.qualtrics.com/jfe/form/SV_br4iiTkcQ0CYCnr" target="_blank">click here</a> to take the survey.<img src="https://counter.theconversation.com/content/116829/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
Katrina Raynor, Postdoctoral Research Fellow, Transforming Housing Project, University of Melbourne
Georgia Warren-Myers, Senior Lecturer in Property
Matthew Palm, Postdoctoral Research Fellow, University of Toronto
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/if-its-voluntary-for-developers-to-make-affordable-housing-deals-with-councils-what-can-you-expect-116829" target="_blank">original article</a>.
Main photo: The City of Port Phillip is unusual in having an explicit position on the council’s role in providing affordable housing. City of Port Phillip
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