Begging for Reason: My Submission to the Victorian Zone Review

This is a very slightly edited version of my submission, lodged last Friday, to the review of Victorian zones. The period for comment has just been extended until 28 September 2012; I urge everyone to make a submission.

The changes currently proposed to the zones are extensive, covering all major categories of zone (residential, business / commercial, industrial, and rural) and involving multiple significant changes to each zone. The proposed reforms mix together changes that were contemplated under the previous government and the subject of considerable work (the “three-speed” residential zones) with others that have appeared with little foreshadowing (most of the others). Very little information or strategic justification has been provided with this package.

I am a keen proponent of planning system reform and in previous submissions to reviews and writing on system reform have prided myself on providing constructive criticism. Unfortunately the paucity of information makes it difficult to be positive or constructive about this review as the information provided gives a striking sense that these reforms have been rushed and poorly thought through. They also appear to involve policy shifts – notably a weakening of activity centre policy – that are inappropriate ahead of the completion of the Metropolitan Strategy.

Given the general lack of detail, my comments for the most part remain relatively “high-level.”

Strategic Justification and Adequacy of Material

This is the most significant change to the VPPs since their introduction in the late 1990s. Given that, the material that has been released is shockingly deficient. While it may seem unhelpful to harp on this point, it needs to be made as it sets an appalling precedent for future work and calls the legitimacy of the current review into question.

The zones are supported by a ten page discussion paper and four double-sided single page fact sheets. The print is large and there is a lot of white space. Much of the material that is provided is procedural information or simple descriptions of the changes, leaving almost no actual analysis or justification. The crucial industrial zones changes, for example, are supported by a short passage on page 8 of the discussion paper and a single sentence on the associated fact sheet.

There is, quite simply, not enough detail to understand or evaluate the thinking or research that underpins the changes. These changes are too important, with crucial ramifications for activity centres in particular, to be allowed to proceed on the basis of this work.

I would therefore encourage the Advisory Committee to make this point strongly in its report and send DPCD back to the drawing board. While the Advisory Committee may be reluctant to make such a finding, I would encourage it to consider the widespread implications of this review, and the implications for future strategic and system reviews if this approach is allowed to recur.

Planning Panels are, rightly, not reluctant to tell Councils when their strategic work has not adequately supported a change, and recommend that they abandon amendments. That principle should apply even more strongly to the DPCD, and where amendments have enormous state-wide implications. The material accompanying this review does not begin to approach the levels of strategic justification that should underpin such widespread changes.

I therefore urge the Advisory Committee to have the courage to declare this work inadequate.

Sidelining and Abandonment of Relevant Strategic Work

Several existing reviews could have helpfully informed the zones review process. Unfortunately links back to this work have not been drawn, and several of these more substantive projects have been quietly set aside.

VPSMAC

The discussion paper’s section on “background” refers in vague terms to the Victoria Planning System Ministerial Advisory Committee:

The Victorian Planning System Ministerial Advisory Committee was commissioned in June 2011 to examine all aspects of the system, including possible zone reform. Recommendations around review of Victoria’s zone structure were subsequently made.

This seems to invite the interpretation that the zone review follows from the recommendations of the VPSMAC. Yet the VPSMAC’s discussion about zones centres mainly on the need for more flexibility in tailoring zones to particular circumstances, and on the particular example of the Farming Zone. It is difficult to draw a link between the VSPMAC’s findings and the headline changes of the current review.

What’s more, the fate of the VPSMAC from here is unclear. The Committee’s appointment represented the current government’s clearest commitment to rigorous and open system review. The committee’s “Initial Report” was finished in December 2011 and released in May 2012, and it is clear from that report that it expected to continue its work. Yet since then the government has been silent about the future stages of the project.

The VSPMAC work should be allowed to continue, and this work should be timed to allow it to constructively align with the zone review.

Retail Policy Review

The Retail Policy Review is of direct relevance to the proposed commercial and industrial zone changes. This project stalled after an initial discussion paper in October 2008. Its recommendations appear to have become inconvenient for the current government, notably by their opposition to the loosening of restricted retail allowed by Amendment VC88. The review’s page – including the discussion paper – was removed from the DPCD site earlier this year, so it is presumed that this review has been abandoned.

This review or equivalent work is vital to understanding and evaluating the impact of the proposed zone changes, which make sweeping changes to commercial and industrial zones. This review or equivalent work needs to be completed before those changes are made.

Advisory Committee into Residential Zones

The report of the Advisory Committe into Residential Zones, prepared in August 2009, is a substantial document that drew on over 236 submissions to the previous government’s consultation process. It is of obvious and direct relevance to the current review.

Frustrated at the continue failure to release that report, I sought it by FOI in January of this year. The Department refused that request until almost literally the last possible moment. Ordered by VCAT to circulate their grounds by 13 July, ahead of a hearing on 17 July, they instead announced the new zones on 11 July, released the report on 13 July, and released the zones themselves on 17 July, the day they would have had to defend the failure to release the report at VCAT.

Even when released, the Advisory Committee report was not referenced in the zone material or linked to on the associated page of the DPCD website, as would have occurred routinely in the past. So while refusal to release the report was justified on the basis of its links to the current review, the review itself does not mention or rely upon it.

That review should be published alongside the zone review material on the DPCD website. DPCD should clarify how the current draft of the zones responds to that work. The Advisory Committee should make use of the considerable time and effort that went into that review in considering the current residential zones.

Metropolitan Strategy

The final input that has not been taken into account is the work on a new Metropolitan Strategy, since the zones have been announced before that work produced its first discussion paper.

The review makes several assumptions about matters such as activity centre policy (discussed later in this submission) that would be a vital part of the Metropolitan Strategy discussion. Yet the zone reform is proceeding ahead of the strategy, seemingly based on different assumptions. This threatens the legitimacy of the Metropolitan Strategy and means that the zones lack a proper strategic underpinning.

Regional Growth Plans

A nearly identical point to the above applies in the regional context. The zone changes should draw on the findings of the Regional Growth Plans.

The tools of planning should be built in response to a strategy, not put in place while strategic objectives are still being formulated.

Zone Liberalisation vs. Better Application of Zones

In my submission to the VPSMAC I argued that in Victoria we need to rethink the way we undertake strategic planning so that it is more focussed on the codification of spatial solutions to achieve policy objectives. This is the core of what planning should be about, but we have done it poorly during the VPP-era in Victoria. To put it crudely, our strategic planning tends to focus on cataloguing vague decision guidelines for statutory planners (“What Should We Think About?”), rather than actually coming up with some answers to spatial dilemmas (“What Goes Where?”).

The general gridlock and lack of clarity created by this failure of strategic planning has then led to misguided calls for reform that focus simply on smoothing the process, rather than making the system more effective so that there is a point to having the process in the first place. In the context of zones, this tends to result in broad liberalisation: attempts to reduce permit triggers and widen discretion. While easy to do, this reduces the effectiveness of the zones as tools.

I believe that the zone review provides two very clear examples of this problem. The first relates to the rural zones. The current Farming Zone exists because there was concern that the old Rural Zones provided excessive discretion for non-agricultural uses. Yet they were rolled out extremely widely and with insufficient resources put to determining where agriculture should be protected and where other rural uses such as tourism should be focussed. Frustration has mounted because that “What Goes Where?” work – in this case, involving deciding where to apply the Rural Activity Zone instead of the Farming Zone – was not done. Now, in reaction, we see the pendulum swinging the other way, with calls for increased discretion in rural areas.

Similarly, we see in the calls for a liberalisation of both the industrial and commercial zones a general sense that the system is not accommodating modern forms of retail. Again, there are other responses available rather than simply widening discretion in the zones. (This is discussed further in the consideration of activity centres below.)

Opposing such liberalisation should not be mistaken for a failure to appreciate the regulatory burden of the system. On the contrary, as a planner working in local government I am keenly aware of those impacts. However, the burden of regulation is especially egregious if the regulation is having no benefit, and the increasing liberalisation of the zones risks creating such a system. The only reason to have a planning system is to achieve outcomes that the unhindered market would not deliver. The current reforms risk smoothing out impediments to business to the point that other social outcomes – and activity centres are taken as a case in point in the next section – fall by the wayside.

The key to retaining the integrity of the zoning system is not, generally, to increasingly liberalise it. The key is to return to serious strategic planning of the “What Goes Where?” variety. Rather than diluting zones so that they provide little hindrance to business but also little policy outcome, we need to have strong and purposeful zones and then get better at using them to direct outcomes.

In the example of the rural zones, for example, that means doing work to identify agricultural land that should have strong protection, and sites for tourism, and then zoning accordingly. In the context of activity centres, it means properly monitoring land supply and using the zones to ensure that the needs of business are met while preventing a stampede of business to cheap industrial land.

This does not mean that I believe planners should constantly intervene or micromanage. There will be situations where the market should be allowed to run unfettered: this should in fact be the default position where clear planning objectives are not identified that justify intervention. However protecting agricultural land, and reinforcing activity centres, are in my view worthwhile policy objectives that should not be abandoned.

It is my view that the current review has simply liberalised zones without grappling at all with the options surrounding how to better apply zones.

Recommendations:

• Re-examine instances of zone liberalisation in the reforms to ensure that the zone’s ability to codify spatial outcomes is not being weakened
• Once the purpose of the changes is clarified, consider alternate approaches to achieve the objectives that use the zones to direct spatial outcomes.

Activity Centre Policy and the New Zones

Across this review and the changes made by Amendment VC88, there seems a general hostility to activity centre planning, found in particular in the increasing permission of commercial use of industrial land, which is generally out-of-centre.

The Planning Minister reinforced this impression when he made the following comments to a regional newspaper (the Warragul Citizen, August 17):

The planning fraternity [has] very rigid and out-dated views about what forms a town and about what forms an activities area, that are really linked to the 1970s and 1980s… This romantic notion that the only area where a place of employment should be able to open is in a defined area or part of a town [is] just an out-dated point of view.

That quote suggests that there is a belief that traditional activity centre planning is outdated and unrealistic. This would explain the trend across these changes and the previous amendment VC88, which removed floor space restrictions for restricted retail.

Between them, those two changes would see the following uses able to establish in one or more of the industrial zones:

• Offices
• Supermarkets under 2000m²
• Any shop adjoining a supermarket
• Shops of any size that sell goods categorised as restricted retail, including office supplies, pet goods, party supplies, home entertainment, baby and children’s goods, and a range of other goods.

This is supportive of the impression gained from the Minister’s quote: there appears to be a deliberate shift away from older policies that were aimed at protecting industrial land from encroachment and encouraging uses that did not have a very clear need for fringe industrial locations to locate in centres. The industrial zones now appear to be very much open for business.

Such changes seem to assume that there is a lack of adequate commercial land, but an ample supply of industrial land, justifying some sacrifice of the latter for the former. This proposition requires further justification. Even if true, however, it may only be a transient situation, or applicable to certain regions. I would suggest caution is warranted before opening up industrial land and continuing to distort the retail sector by allowing some uses to establish in industrial areas but forcing others to stick it out in centres.

However even if the Minister were right, and traditional direction of uses towards centres is “outdated,” that kind of policy shift should emerge from the Metropolitan Strategy process. Not only is that work not complete, but the material released thus far offers no hint that this is policy shift is on the table. For example, the Strategy’s “Strategic Principles” talk of “reinforcing the role of employment in selected activity clusters in suburban Melbourne,” which if anything seems like affirmation of existing activity centre policy.

The zones have been justified with reference to the Productivity Commission’s November 2011 report Economic Structure and Performance of the Australian Retail Industry in press releases. This at least has the virtue of being a substantial study. However its narrow focus purely on economic competition and efficiency suggests planners should pause before using it as the sole basis of land use policy. Issues such as the social or transport planning impacts of a dispersed, centre-less form are not clearly on the Commission’s radar.

And, again, it needs to be noted that the Commission’s position with regards to activity centres is a long way from currently declared policy. If the zones are to be based upon the Commission’s recommendations then that conflict needs to be confronted and explained in clear policy documents. Simply following the Commission’s recommendations, while leaving current policy in place, creates a policy conflict.

Even the Productivity Commission, however, acknowledges the need to balance freeing up business with the competing imperative of protecting industrial areas from encroachment. In another publication, Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Development Assessments (April 2011), it noted:

Land use zones… in activity centres which are less prescriptive and exclusionary to businesses and industrial zones which are available only to industry would enable planning and zoning systems to facilitate improvements in the competitiveness of city land use.¹

The Productivity Commission’s approach therefore requires an appropriate allocation of land between commercial and industrial zones, and then a loosening of controls within each category. While I still have reservations about the Commission’s work, this is a much more nuanced approach than simply loosening controls across both sets of zones and allowing commercial uses to encroach into the industrial zones.

Such an approach is consistent with my comments earlier in this submission about the need to revive the Retail Policy Review, and to look at solutions that consider the application of zones as preferable to ad-hoc liberalisation.

Detail Concerns

I have not concentrated upon issues of detail in this submission. This is partly due to limitations of time, and partly because I have seen other submissions that have covered many detail issues and feel the points I would make have been adequately covered. For example, I contributed to the PIA Victoria submission and generally agree with its comments regarding detail. I also read the Moreland City Council’s submission and generally support its comments on detail.

In particular, the proposed new Section 1 uses in residential zones appear to have been poorly thought through. There is no adequate means of controlling the amenity impacts of buildings associated with such uses, and no means to control aspects such as operating hours. The conditions surrounding where these uses could locate seem arbitrary and not to serve any obvious purpose. These changes seem likely to further undermine struggling neighbourhood centres, and lead to a ragged, dispersed form at the edge of larger centres. Again, I refer to the PIA submission on this point.

I also query the move to 200m² and 80m² thresholds for the need for a planning permit in the new residential zones. While it is certainly true that good design outcomes can be achieved on small lots with the right tools, simply lowering the threshold without releasing (let alone testing) new design codes to accompany the revised thresholds is inappropriate. Our current ResCode tools are based on twenty years of refinement, across several generations of codes (VicCode 1 and 2, The Good Design Guide, and ResCode) that were based upon a 300m² threshold. Using them to design for smaller lots will lead to poor outcomes and conflict at the application stage.

Conclusion

I said at the outset of this submission that I have prided myself on making constructive comments with regards to planning reform. However, there should be no avoiding the hard truth about the current zone reforms.

These changes appear to be rushed and ill-considered. The supporting material is of a deplorable standard and provides no strategic justification whatsoever. Reviews that could have informed the zones have been variously pre-empted, disbanded or buried. The process – prior to the appointment of the Advisory Committee – has lacked transparency and fuelled speculation in the industry that vested interests might have driven the changes. Submitters have been left to effectively undertake the strategic analysis for this amendment themselves.

This is an extremely poor review, and the process sets a new low bar for consultation and strategic justification. Yet the ramifications of approval of these new zones would be far-reaching, with the potential to seriously undermine activity centre policy that has had longstanding bipartisan support.

I urge the Advisory Committee to do what it can to hold the government to a higher standard.

1. Productivity Commission, ‘Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Development Assessments’ (Australian Government, April 2011), 354.