Local councils say the market, not the planning system, is to blame for a shortage of housing following the release of the NSW Productivity Commission’s White Paper.

The report, launched by NSW Treasurer Dominic Perrottet last week after a three-year review, outlines a reform agenda for the state focused on housing, infrastructure, innovation and talent.

The paper says housing supply has failed to keep up with demand and lays the blame in part on what it says are overly prescriptive and complex planning regulations.

“Strict constraints on the location, nature and density of housing are limiting choice and leaving people with less income to spend on other goods and services,” the report says.

‘Prescriptive and inflexible’ rules

Productivity Commissioner Peter Achterstraat found that regulations on apartment design and car parking are adding to the cost of housing while a lengthy DA process is restricting supply and reducing affordability.

He says “prescriptive and inflexible” land use rules for business are stifling innovation and infrastructure contribtions are perceived as opaque and inefficient.

The report highlights the increasing need for more open green space accommodate the growing population, connect communities and make cities resilient to climate change.

Key planning and housing recommendations include:

• review apartment design regulations

• bring long assessment times in line with best practice

• develop long-term housing targets

• incorporate benefits of open green space into land use planning

• replace stamp duty with a broad-based land tax

Market, not planning to blame

LGNSW says the proposed changes to the planning system would deliver benefits to developers but weaken council controls and community confidence.

“Unfortunately, the Productively Commission report falls into old rhetoric around planning and housing issues that unfairly lays the blame at the feet of councils,” president Linda Scott said.

“The planning system does not deliver housing – markets do. The housing market and its cycles are what determines actual housing delivery.

“Across NSW, councils have plenty of land already zoned for housing, but councils cannot control the decisions of developers and landowners to build and release homes for sale.”

But developers say the White Paper should be a wake up call for the NSW government.

“At present, supply is not matching demand, despite demand being low because of the pause in migration,” Urban Taskforce CEO Tom Forrest said. 

“Councils are not being held to account.”

LGNSW has welcomed other measures tin the paper  including a call for a long-term plan for water security, improvements to infrastructure and trade qualifications, and a recommendation to link the rate peg to council growth.

The White Paper also recommends :

• creating a Teaching Centre of Excellence to improve teaching quality

• introducing new pathways to trades qualifications for HSC-holders and mature aged workers

• changing regulations to encourage the use emerging technologies like drones and e-bikes

• encourageing the use of recycled water for drinking

• lifting the ban on nuclear electricity generation for small modular reactors

• improving land use regulation for gas

• replacing motor vehicle duty for eligible electric vehicles with a road user charge

• leveraging Opal fares as an incentive to use public transport