By Aaron Gadiel, Partner

The NSW Government has made two apparently contradictory decisions.  It has sidelined the Independent Planning Commission from decision-making for most state significant in-fill affordable housing developments and given the City of Sydney free reign over a wide sweep of development activity.

On Friday 13 December 2024 the NSW Government published the State Environmental Planning Policy (Planning Systems) Amendment (State Significant Development) 2024.

This legal document made changes as to the decision-making process for certain development.

State significant in-fill affordable housing development

The document changed the arrangements for who is the ‘consent authority’ for some state significant in-fill affordable housing developments.

Under the previous arrangements — for all types of state significant development — the Independent Planning Commission has been the consent authority for:

• development to which the local council has objected; or
• development to which at least 50 objections (other than from a local council) have duly been made; or
• development application is made by someone who has disclosed a reportable political donation.

For other matters — regarded as less contentious — the Minister for Planning and Public Spaces has been the consent authority, with the Minister’s functions normally exercised by officers of the Department of Planning, Housing and Infrastructure under delegation.

As a result of the changes made on 13 December, the consent authority for state significant development applications for in-fill affordable housing will now be the Minister for Planning and Public Spaces even if:

• the local council objects to the development; or
• there are any number of objections to the development.

The Independent Planning Commission will still be the consent authority if the development application is made by someone who has disclosed a reportable political donation.

This move will be welcomed by developers. Many developers have, in the past, been frustrated that — having followed a lengthy assessment process dictated by Department officers — members of the Independent Planning Commission have raised new or different issues in (what should have been) the final stages of the decision-making process.

The removal of the Independent Planning Commission from a decision-making role for contentious state significant in-fill affordable housing development should help streamline the process for those developments.

However, it is entirely unclear why — in this new era of focusing on boosting housing supply — the changes have not been applied to state significant:

• build-to-rent housing developments;
• seniors housing developments; or
• residential development within a rail corridor.

This inconsistent approach appears unjustifiable.

There is a transitional provision that says that the changes do not apply when:

• ‘environmental assessment requirements’ (commonly called ‘SEARs’) were notified for the development within the two year period prior to 13 December 2024; and
• the development application is made within two years after the day on which the ‘environmental assessment requirements’ were notified.

Free reign for the City of Sydney

The NSW Government has washed its hands of a swathe of potential development within the City of Sydney.

The City of Sydney had previously secured an exemption for itself from the build-to-rent housing state significant development stream (when it was introduced in 2021).

The City has now been granted a far more extensive exemption from state significant development provisions.  In general terms, these exemptions mean that a wide range of development that would be regarded as state significant development elsewhere will, in the City of Sydney, no longer be regarded as state significant development.

The affects development of the following types:

• seniors housing;
• manufacturing;
• warehouses or distribution centres;
• cultural, recreation and tourist facilities; and
• medical centres.

Again, there is a transitional provision that says that the changes do not apply when:

• ‘environmental assessment requirements’ were notified for the development within the two year period prior to 13 December 2024; and
• the development application is made within two years after the day on which the ‘environmental assessment requirements’ were notified.

It is odd that — at time the state government is recognising that local government is a substantial impediment to new development — such a large slab of future development is being re-assigned to the City of Sydney.

Development applicants will, of course, still have the protection of ‘deemed refusal’ or actual refusal appeal rights to the Land and Environment Court.

The bottom line

The NSW Government appears to have made two contradictory decisions.

The first decision streamlines the approval process where local councils or vocal residents are objecting to new development.

The second decision suggests that the state government has a great deal of trust in the judgment and the capabilities of the City of Sydney.

The best way to try and rationalise the apparent inconsistency is to say that the state is looking to lighten its ‘state significant’ workload — so as to free up capacity to deal with increasing number of ‘in-fill affordable housing’ state significant development applications.