The formulation of a New Metropolitan Planning Strategy for Melbourne is central to guiding the growth in Melbourne over the next forty years.
However one of the side effects of growth that is often ignored, is the increased cost pressure on the administration of Victoria’s planning system.
Despite the potential windfall for developers, the gap between money spent to run an efficient planning system and money contributed by applicants is enormous, and leads to a significant cost burden being borne by local government and ultimately ratepayers.
This cost pressure on the system to manage growth and process planning applications leads to under resourcing and time delays.
A submission to the Victorian Planning System Ministerial Advisory Committee charged with reviewing the Planning system in Victoria, illustrated this point.
The submission explained how an extractive industry proposal before Golden Plains Shire had cost the Council close to $30,000 to administer. Yet the application fee under current rules only allowed the Council to charge $855 – leaving an enormous shortfall for the Council to cover.
There has been an international march towards true cost recovery for public services, yet planning application charges have not caught up with this trend.
A case can be made for the cross subsidisation of public services such as health care, roads and education. But where is the public benefit in ratepayers subsidising the planning application process of a major land owner, industry or government agency?
The Baillieu Government has an opportunity to address this issue by implementing a key finding of the Victorian Planning System Ministerial Advisory Committee. Their initial report was released in December 2011 and suggested a review of the current fee schedule and an incentive based approach.
Last year the Victorian Government extended the interim fee regulations pending a review, so it is clear the Government has reform of the antiquated system of application fees within its sights.
A sliding scale that increased fees for larger scale projects and applicants would not only assist in reflecting the true cost of administering applications, but could resource an improvement in the timeliness and efficiency of the system.
Most developers and applicants would be willing to pay a market rate for a speedier decision-making process that would reduce their holding costs.
Such a reform would enable councils to achieve greater efficiencies, and also give them the resources to complete the strategic planning work that should underpin all good planning decisions.
The Baillieu Government has professed its commitment to achieving productivity gains and cutting red tape and will undoubtedly re-look at these issues in the lead up to this year’s State Budget. Herein lies a golden opportunity to apply some of that rhetoric to an area of service delivery that has the capacity to pay for itself.