Planning Environment Overview

Australian local governments exercise their planning powers within the broader context of state and territorial governments’ legislation and policies. This section describes the supportive legislative and policy environment, the regulatory context, state and regional policies and planning and local planning considerations.

To see examples and principles of best practice of planning mechanisms click on the link below

The resources and guidance in the Affordable Housing National Leading Practice Guide and Tool Kit is not designed to be relied upon. Users of the guide should consider the individual circumstances of each project or policy, use other resources and take independent advice. 

The planning system and affordable housing

While the provision of affordable housing is significantly affected by economic and financial factors outside of the planning system, planning nevertheless has an impact on the market-based system.

The land-use planning process can influence the supply and range of housing produced both in new development and redeveloping areas. Planning Ministers agree that planning and providing for affordable housing using planning mechanisms is an important contributor to sustainable communities based on the ‘triple bottom line’ approach to sustainability, by supporting economic, environmental and social objectives.

In isolation, the planning system is neither the cause of nor the answer to affordable housing problems. Many factors have been associated with the recent rise in house prices in Australia’s cities and regions, including:

• population and household growth leading to the need for more houses
• emphasis on housing as a form of investment
• state and federal government policies supporting first home ownership, such as first home buyer grants and negative gearing taxation provisions
• The increased capacity to pay associated with low interest rates, financial deregulation and easier access to finance, as well as greater participation of women in the workforce and associated shift towards dual income households
• spatial concentration of the population in primary capital cities and some coastal regions, where there are inherent constraints to land and/or housing supply.

In other words, there are a whole range of factors that shape housing outcomes, including planning itself. The planning system does this by regulating the supply, type, size and features of new housing through the development requirements and opportunities created by planning instruments and approval processes. These in turn influence the costs of production. Infrastructure planning, funding and pricing policies affect service levels and the quantum of development contributions.

Strategic planning also plays a vital role in shaping housing outcomes, not only in terms of providing opportunities for future supply, but also in influencing access to transport, jobs and services, and ensuring efficiencies in the provision of supporting infrastructure.

Controlling and influencing housing supply and form has long been a recognised part of planning in Australia. What has changed in recent years, however, is the growing awareness and acceptance of the benefits of using the planning system actively as one way to encourage better housing outcomes for local communities—including the facilitation of a range of appropriate and affordable housing to meet current and future needs.

This shift has come as a result of the combination of two factors. One is mounting concern about deteriorating housing affordability in Australia and the emerging geographic divide between rich and poor, accompanied by worsening disadvantage for lower income groups concentrated in particular locations. The other is the growing awareness of the potential contribution of the planning system that has been gained from looking at overseas practice and the operation of some specific affordable housing initiatives within Australia.

International experience in using planning mechanisms for affordable housing indicates that planning mechanisms do not replace the need for dedicated funding for housing assistance, or for financial incentives to encourage investment in a low-cost housing sector. (Gurran, N., Milligan, V., Baker, D., and Bugg, L.B., unpublished) However, planning levers can maximise the outcomes of government expenditure on housing assistance and complement other financial or subsidies to support affordable housing development. In particular, planning mechanisms for affordable housing have proved crucial in securing and containing the price of land for affordable housing and achieving the broader goal of socially mixed communities.

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A supportive legislative and policy environment

While they differ across jurisdictions, in broad terms planning systems for affordable housing should observe the principles that underpin the National approach.

Supportive legislation and policy at state, regional and local levels is needed to promote affordable housing through the planning system. The National Approach for Use of Planning Mechanisms emphasises that the use of planning instruments to promote affordable housing should be clearly supported in planning legislation, and that any provisions incorporated in such legislation or planning instruments should relate to matters that can reasonably and legitimately be addressed through the planning system.

Leading practice in achieving a supportive legislative and policy environment for affordable housing is outlined below.

Planning objectives establish affordable housing as a key aim

It should be clear that affordable housing is a significant and legitimate planning objective (consistent with the principles outlined above) to be considered when new land use plans are made and when development proposals are assessed. Planning objectives relating to affordable housing also support systemic improvements that seek to remove unnecessary impediments to affordable housing production, like insufficient supply of residential development opportunities in established or new release areas, delays or uncertainty in securing planning approval and excessive development controls, fees or charges.

Planning objectives for affordable housing should be contained in state planning legislation, in relevant state and or regional policies or plans, and in planning instruments applying to specific local government areas or sites. Affordable housing objectives provide the necessary policy framework for interpreting planning legislation and instruments and for implementing specific planning mechanisms.

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Planning legislation enables a range of planning mechanisms

In addition to ensuring that affordable housing objectives are enshrined in state planning legislation and policy, it may also be necessary to explicitly enable the use of specific planning mechanisms to protect existing supplies of affordable housing, encourage new affordable housing provision, or require contribution to or inclusion of affordable housing supply. These mechanisms and the contexts in which they are likely to be effective are discussed further in choosing the right planning mechanism.

A framework is provided for assessing housing need

Assessing the kind and extent of housing need within a particular area is crucial for designing appropriate responses to meeting this need. For instance, this assessment can help to determine the amount of new residential development opportunities that will be required over time, the design and configuration of this housing and the types of planning mechanisms that are likely to be most suited to meeting this need. If the methodology used to assess this need is consistent with that used in at regional, state or national level, it will provide a basis for local governments to collaborate across administrative boundaries. Consistency in needs assessment methodologies validates and justifies key findings.

One of the important principles associated with using planning mechanisms to generate new affordable housing through incentives or requirements for development contributions is the capacity to demonstrate that there is a need for affordable housing in the area where the incentive is given or contribution is sought, or that the development itself contributes to affordable housing requirements. When consistent methods for establishing housing need and determining contribution requirements are in place and used consistently they are much more likely to be supported by developers or in case of legal dispute.

Affordability is promoted across state, regional, and local scales

A hierarchy of state, regional and local planning requirements and objectives exists within most Australian planning jurisdictions. When state planning legislation or policy, or a metropolitan or regional plan, seeks to promote affordable housing, it is usually implemented through local planning instruments or decisions. Clear links between state, regional and local planning objectives for affordable housing will strengthen implementation in local plan making and development assessment.

Increasingly, state planning authorities are assuming responsibility for significant develop¬ment projects or areas. In these cases, it is important to achieve consistency in upholding objectives for affordable housing, for instance, by negotiating for an appropriate level of affordable housing contribution as a condition of planning approval.

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The regulatory context

Each state and territory has their own legislation for land use planning. This legislation establishes the broad scope of planning across the state or territory – from the overarching objectives through to arrangements for plan making and development assessment.

The NAAH National Approach for Use of Planning Mechanisms states that ‘The use of specific planning instruments to promote affordable housing should be clearly supported in the planning legislation of the relevant jurisdiction.’ It notes that:

     "…provisions incorporated in legislation or planning instruments should relate to matters that can reasonably and legitimately be addressed through the planning system."

It may also be necessary to establish clear provisions to enable the use of specific planning mechanisms or tools that protect existing sources of affordable housing or generate new affordable housing stock. This is important if there is legal uncertainty about the use of such mechanisms (for instance, collecting contributions from developers to pay for new affordable housing). Establishing specific provisions for affordable housing in state legislation can also provide a more transparent way of managing approaches beyond the formal planning process itself (for instance, negotiated contributions for affordable housing).

State and regional policies and planning

International practice shows that local affordable housing strategies are most effective when nested within a supportive regional, state or national policy and legislative framework. In Australia, the states and territories identify matters of state or regional significance to be addressed when local planning decisions are made. These matters may be articulated as state or territorial policies, or as state or regional planning requirements. Each of the metropolitan regional plans applying to Australia’s largest cities contains policies relevant to affordable housing. These plans:

• can be specific to types of affordable or low-cost supply
• may identify specific areas suitable for affordable housing
• set out land supply and sequencing/urban containment.

When affordable housing goals are included in policies or plans prepared by state governments for implementation at the lower level, a strong framework for local plan making and development assessment is established

Local planning

Planning instruments or schemes establish the legal rules governing the way land can be used and developed, usually defined in relation to local government boundaries. There are different names, formats and requirements for these planning instruments across states and territories. In Victoria and Queensland ‘planning schemes’ establish the principal development controls for a local government area, while the term ‘development plan’ is used in South Australia, and ‘local environmental plan (LEP)’ is used in NSW.

Although the form, structure, and approaches differ between jurisdictions, planning schemes all typically contain objectives, rules to categorise land according to permissible uses (‘zones’ or ‘localities’) and legally enforceable development controls (such as controls on density, like height, the number of building storeys, or the amount of site coverage)( Gurran, N., 2007).

Often more detailed requirements will be established through other council policies or plans. These subsidiary policies and plans can be more adaptable, as a council may not be legally obligated to enforce them in all circumstances.

In addition, Australian local governments undertake social planning processes to identify and respond to the needs of all sections of their communities.  For instance, Social Plans are a requirement in NSW and include demographic data, information about the needs of target groups (Aboriginal and Torres Strait Islanders, children, people with disabilities, young people, older people, people from culturally and linguistically diverse backgrounds, women), and recommended actions.  Local social planning processes can include an explicit focus on housing needs and affordability. In Western Australia, Council Housing Plans include employment, housing and population targets as well as affordability considerations.

To see examples and principles of best practice of planning mechanisms click on the link below

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