Productivity Commission: Inquiry into First Home Buyer Ownership



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7. Australian Issues

7.1 Possibly the first test case on the legality of an affordable housing condition imposed in a planning framework arose in the New South Wales Land and Environment Court in 2000. In Meriton Apartments Pty Ltd v Minister for Urban Affairs and Planning3, Cowdroy J considered the legality of the South Sydney Local Environmental Plan 1998 (Amendment 2), under which the developer was required to provide affordable housing as a condition of a development. The LEP was subordinate legislation, having been made under the Environmental Planning and Assessment Act 1997. As such, it’s purposes had to be squarely within the powers given to councils under the Act to impose development conditions. A range of arguments as to why the affordable housing requirement was unlawful were raised, but the key issues, and one which proved fatal to the Council was whether it had power under its enabling legislation, as a legitimate planning function, to make the requirement.


7.2 Cowdroy J. held it did not, on the basis that the provisions of the LEP did not relate to a “planning purpose” authorized by the Act. Although an objective of the Act was to encourage the “management and development of natural resources including cities…for the purpose of promoting the social and economic welfare of the community…”, he considered the community welfare aspect was not an object of the Act, but rather an I tended result of the developments with which the objects were concerned. Presumably then, provided that natural resources were developed, the result of the development was not something with which the planning authority had jurisdiction to deal. The interpretation seems unduly restrictive of an objects provisions, if the object is to approve developments that result in community welfare, the planning authority must have power to regulate aspects of the development that achieve that purpose. Although some commentators consider the decision has universal application, it is important that it be confined to the statute under consideration. In Queensland, for example, the Integrated Planning Act (IPA) objects are drafted in wider terms. “Ecological sustainability” is the key purpose of IPA (s1.2.1). It is defined as the “balance” integrating 3 things, one of which is the maintenance of the social well being of people and communities (s 1.3.3 ( c). Such well being is explained as occurring when maintained through “affordable, efficient, safe and sustainable development” (s 1.3.6 ( c) (i).
7.3 Local governments have power to make planning schemes to identify environmental outcomes to be achieved in the context of the objects of the Act. These outcomes are also defined in Schedule 10 to the Act to embrace outcomes that effect physical and natural resources as well as social, economic and cultural conditions. The cumulative effect of these provisions is to give the local authority in Queensland broader jurisdiction than those in NSW. Consistent with this interpretation, the Brisbane City Council promulgated City Plan 2000 to include a number of provisions relating to housing affordability and how it night be achieve through higher densities and near public transport (S 4.2.2.2 and 4.2.2.3).
7.4 Under City Plan, Local Area Plans have been made for particular areas that drill down further into the detail of how affordable housing might be provided. For example, in the New Farm Tenerife Local Area Plans the affordable housing outcome might be measured by performance criteria that encourage development bonuses. Acceptable solutions to meet the criteria are suggested as development that meet the special needs of those housed for at least 10 years with administration by housing cooperatives or government agencies or height and car parking relaxations.
7.5 With the objects of IPA drafted in wide terms, encompassing social well being through affordability as a component of ecologically sustainable development, it is suggested planning schemes that permit or require affordable housing in Brisbane are within power.

Planning Possibilities

7.6 The process of imposing conditions as part of development approvals must be done within the framework of a valid town plan, but is also subject to s 3.5.30 IPA, which states that the condition must be a reasonable or relevant requirement of the development to be valid. Two alternative tests exist for the validity of conditions, in both cases they must fairly and reasonably relate to the permitted development, not ulterior objects4. The affordable housing requirement in the Meriton case was characterized as being an effective “surrender” of land by the owner to be controlled by a community housing provider without any compensation. The “relevance” of a condition is judged by the functions of local government, it is to assess and condition developments to as achieve “ecologically sustainable development” and rationality, in balancing the elements of the ESD concept. The reasonableness of a condition depends on how it relates to the purpose of the development: if a development itself seeks to provide affordable housing, through the density bonuses or other relaxations offered by Council for that purpose, it might be regulated by appropriate affordable housing conditions.



7.7 If local authorities need additional heads of power to provide for affordable housing in planning schemes or as conditions of development is deficient, legislation can be amended to expressly allow for such powers. This occurred in New South Wales following the Meriton case, and has occurred in the United States where affordable housing is a recognized area of municipal government responsibility. In Queensland, where affordable housing is encouraged under planning schemes by density bonuses or relaxations, and applications are made to build such housing, the imposition of conditions would appear to be within a local governments power.

7.8 The permission to build is quite distinct from the continued enforcement and monitoring of the affordable housing obligations. It is of prime importance that these obligations be secured on the land, so that when developers sell to investors, the obligations continue and can be enforced by state or local governments. Such enforcement is possible under the Torrens system of land registration.



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