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«December 2011 Victorian Planning System Ministerial Advisory Committee Initial Report. Geoff Underwood, Chair. Catherine Heggen, Member. David ...»

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Even in a scenario where a council has had the opportunity to spend significant amounts of funds on the development of strategic information, it should be noted that many of the councils that presented to the Committee are unsure how funds will be secured to evaluate the success or otherwise of policies after they have been developed. In most situations the cost of review has not been forecast into future expenditure or resource allocation.

Initial Report - December 2011 90 Victorian Planning System Ministerial Advisory Committee Costs also have a significant impact on proponents. The submission by Lascorp Development Group Pty Ltd (Submission No. 487) summarises the cost impacts

from the proponent’s perspective:

“The inherent uncertainty in the current amendment process invariably impacts on project viability, potentially resulting in significant cost implications to developers through holding costs, accrued interest, land tax, and rates.” A proponent seeking to undertake a planning scheme amendment is required to prepare significant expert reports to validate an amendment. It is not uncommon that a proponent may spend in the order of $150,000 to $200,000 on documentation to support a planning scheme amendment.

The financial risks associated with planning scheme amendments including unspecified holding costs are significant. Submittors including industry groups are critical of the costs of an open ended process.

The costs and inconvenience to submittors is also raised as an issue for instance, the Nillumbik Ratepayers Association (Submission No.306) states that while there is no submittor charge to participate in a panel process compared to VCAT, the costs from a human resources point of view still remain. The group argues it is difficult for a member of the community to have the financial or human resources to adequately prepare for a panel hearing.

Submittors argue that the panel process is time consuming from the perspective that the submittors must attend a number of council meetings as well as panel hearings, with panel hearings being held during work days and no financial recompense being available for those who choose to attend.

Presentations to the Committee from a number of groups, including the Environmental Defenders Office, indicate that more submittors are seeking to engage either legal representation or expert witnesses for a panel in order to participate equivalently, in a ‘fight fire with fire’ scenario, against representation used by professional participants.

Though there is no charge to make a submission to a panel or to appear at a panel hearing, there are potential costs should a submittor seek to have representation or utilise expert witnesses.

From the council perspective, where PPV recoup their costs from a planning authority, the expense of a hearing over many days and weeks costing upwards of $50,000 or $60,000 can be a drain on a council. Further indirect costs associated with council staff involvement hide the true costs of planning scheme amendments to councils.

Initial Report - December 2011 91 Victorian Planning System Ministerial Advisory Committee Some councils have adopted a practice for proponent led planning scheme amendments; such that where an amendment is requested by a third party, before agreeing to place an amendment on exhibition, the third party must agree to pay all of the council's planning panel expenses which may be considerable.

The amount of human and financial resources that are involved in the planning scheme amendment process are significant. It is in the interests of all parties that the processes be reviewed.

KEY FINDING Planning Scheme Amendment Fees and Costs The Committee recommends a review of all stages in the amendment process to help reduce costs for all parties.

9.1.4 Enforcement Costs The lack of resources and financial constraints are not only limited to strategic planning, but also to enforcement. Examples given to the Committee by the various organisations such as Loddon Shire, Swan Hill Rural City and Benalla Rural City councils indicate that enforcement is a significant issue.

The Committee was provided with a number of examples of enforcement process outcomes that exasperated enforcement officers. For example, in the Shire of Loddon a successful enforcement action that cost the council a significant amount of money in legal fees, resulted in the defendant paying a small amount off per week over a period of 20 years.

Benalla Rural City Council gave the example of a planning enforcement matter for which a $5,000 Penalty Infringement Notice was served on a local property owner when the enforcement action cost the council $30,000.

It is important not to react to the worst examples of any process. But for less well resourced councils to undertake enforcement action that may impose significant cost to the community makes enforcement less likely the next time action is necessary.

KEY FINDING Enforcement Costs The Committee recommends consideration be given to resourcing and authorisation of enforcement officers enabling them to work across municipal boundaries.

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9.2 Infrastructure Charges by Permit Conditions As well as the cost of processing applications and amendments in the planning system, other costs involve the provision of infrastructure for development facilitated by the planning system.

This is done at one of three levels: state infrastructure charges such as the Growth Areas Infrastructure Contribution, local level through a formalised Development Contribution Plan or on a one off basis under planning permits.

The Committee acknowledges that a separate reference group is considering the issue of development contributions. The Committee does not propose to comment on the work in relation to development contribution plans.

The Committee does however, note comments made in relation to the current inability to impose requirements to contribute to the cost of infrastructure where the requirement arises under a planning permit application.

Sections 62(5) and 62(6) of the Act are the key provisions:

“(5) In deciding to grant a permit, the responsible authority may (a) include a condition required to implement an approved development contributions plan; or (b) include a condition requiring specified works, services or facilities to be provided or paid for in accordance with an agreement under section 173; or (c) include a condition that specified works, services or facilities that the responsible authority considers necessary to be provided on or to the land or other land as a result of the grant of the permit be (i) provided by the applicant; or (ii) paid for wholly by the applicant; or (iii) provided or paid for partly by the applicant where the remaining cost is to be met by any Minister, public authority or municipal council providing the works, services or facilities.

(6) The responsible authority must not include in a permit a condition requiring a person to pay an amount for or provide works, services or facilities except (a) in accordance with subsection (5) or section 46N; or (b) a condition that a planning scheme requires to be included as referred to in subsection (1)(a); or

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(c) a condition that a referral authority requires to be included as referred to in subsection (1)(a).” When only one person paying for infrastructure, a responsible authority can ask them to pay the full cost of that infrastructure. But where more than one person is being asked to pay, the same requirement would be unlawful.

For example, this prevents council sharing and allocating the cost of an infrastructure project to two or three land owners. The current need to prepare a development contribution plan for this scenario seems to require the council to first forecast the development (which is extremely difficult, if not unreasonable) and then, assuming it is possible to do so in the timeframe of a planning permit, prepare a development contribution plan. This is not possible.

KEY FINDING Infrastructure Charges by Permit Conditions The Committee considers that the practice to secure infrastructure funding via permit condition needs further consideration. Specifically, should there be a return to the ability for a council to seek a contribution from a landowner for the cost of infrastructure where the cost of that infrastructure is to be shared by more than one developer without the need for a development contribution plan.

9.3 Restrictive Covenants Numerous submissions from individuals, organisations and councils raised a concern relating to the role of restrictive covenants in the planning system, or a concern about how restrictive covenants could be thwarted by planning permits.

Section 61(4) of the Act provides:

“(4) If the grant of a permit would authorise anything which would result in a breach of a registered restrictive covenant, the responsible authority must refuse to grant the permit unless a permit has been issued, or a decision made to grant a permit, to allow the removal or variation of the covenant.” This provision prevents a responsible authority from issuing a permit for a development which would be in breach of a restrictive covenant. The remedy for the applicant is to apply to vary or remove the restrictive covenant first and then apply for a planning permit. Consequently, a number of planning applications that are lodged with council arrive at a point where they are unable to be considered further.

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But to reach this point, it is sometimes necessary for the council to seek legal advice on whether a proposed permit would result in a breach of a restrictive covenant. This is often a time consuming and expensive process and diverts resources from other applications.

Before the introduction of section 61(4), planning permits were being issued and developments were occurring in some cases in breach of a restrictive covenant. This caused considerable community angst at the time and the policy response of the Government was to amend the Act by introducing section 61(4).

In the recent report of the Victorian Law Reform Commission (VLRC) Easements and Covenants: Final Report 22, the VLRC recommends there be substantial changes made to the Act to end the relationship between

restrictive covenants and the planning law. The VLRC recommends:

“38. We propose the following set of reforms to planning legislation and recommend further public consultation regarding their


a. It should no longer be possible to remove a restrictive covenant by registration of a plan under section 23 of the Subdivision Act 1988 (Vic). Consequential amendments should be made to the Planning and Environment Act 1987 (Vic) and the Subdivision Act 1988 (Vic) to omit provisions that enable restrictive covenants to be removed or varied by or under a planning scheme.

b. In determining an application for a planning permit, a responsible authority should not be expressly required to have regard to any restrictive covenant.

c. The Planning and Environment Act 1987 (Vic) should provide


i) The Victorian Planning Provisions may specify forms of use or development of land that cannot be prevented or restricted by a restrictive covenant.

ii) A planning scheme may, in respect of a zone or a planning scheme area, specify forms of permitted use or development of land that cannot be prevented or restricted by a restrictive covenant.

iii) A restrictive covenant is unenforceable to the extent it is inconsistent with such a specification.

39. The Property Law Act 1958 (Vic) should be amended to clarify that a restrictive covenant that is inconsistent with any law is unenforceable to the extent that it is inconsistent.” Initial Report - December 2011 95 Victorian Planning System Ministerial Advisory Committee The series of reforms that the VLRC outlined would result in part, to a reversion back to the system which operated prior to the 2000 amendments to the Act. In fact the proposals would, if they were given effect, result in the planning schemes being able to ‘neutralise’ restrictive covenants without removing them or varying them.

The ability to have a say at a public process for landowners potentially affected would be by making a submission to the planning scheme amendment process and at a planning panel. The Committee is concerned about this, to the extent that planning panels generally do not comprise legal members. The adequacy of the forum is questionable.

Another suggestion put to the VLRC was that it should be possible to deal with the issue in another way which might include allowing a planning permit to be granted but not come into operation until the restrictive covenant is varied.

This would merely require the repeal of section 61(4).

KEY FINDINGS Restrictive Covenants

The Committee considers that:

As a first step, the legislative block (section 61(4) of the Act) to the grant of a planning permit until a restrictive covenant is varied should be removed;

and It should further examine the recommendations of the Victorian Law Reform Commission in its report on easements and covenants (Final Report 22).

9.4 Section 173 Agreements Section 173 agreements have been the subject of considerable discussion

through submissions and previous reports. The Modernising Report noted:

“10.1 Section 173 agreements Section 173 of the Act allows a responsible authority to enter into an agreement with an owner of land. These agreements are commonly known as section 173 agreements. A section 173 agreement may set out conditions or restrictions on the use or development of land, or seek to achieve other planning objectives in relation to land.

These agreements are a very useful planning tool, but can be complex to administer, costly to prepare, and difficult to amend or end. There is also a growing perception that section 173 agreements are over used and that, when linked to a development approval, they can be imposed rather than negotiated.

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