By Anthony Whealy, Partner and Clare Collett, Special Counsel

Last week the Department of Planning, Industry and Environment (The Department) released an Explanation of Intended Effects (EIE) on clause 4.6 of the Standard Instrument – Principal Local Environmental Plan, the clause which sets out the test for varying a development standard when making a development application.   The EIE, titled ‘Varying Development Standards: A Case for Change’ proposes amendments to clause 4.6 which it says are aimed at clarifying and simplifying the test in clause 4.6, although the Devil would appear to be in the detail.

Clause 4.6 of an LEP is intended to provide flexibility to a consent authority to approve a development which exceeds a development standard.  Whilst the current clause 4.6 which is included in all LEPs includes a ‘test’ for determining whether such consent should be granted, there have been differing interpretations of what this means in practice, and a plethora of lengthy and complex Court judgments dealing with these issues.  Minister Stokes has said that the planned reforms to clause 4.6 are designed to provide clarity on what is required for a clause 4.6 request.

What is the new test under clause 4.6

The EIE states that the proposed revised clause 4.6 will require a consent authority to be directly satisfied that the applicant’s written requests demonstrates two essential criteria:

• The proposed development is consistent with the objectives of the relevant development standard and land use zone; and
• The contraventions will result in an improved planning outcome compared with what would have been achieved if the development standard had not been contravened.

In deciding this, the consent authority is to consider:

• The public interest;
• Environmental outcomes;
• Social outcomes; or
• Economic outcomes.

Importantly, the long-standing requirement that the applicant demonstrate that “it is unreasonable or unnecessary to comply with” the development standard is proposed to be removed entirely. It appears, in fact, that the intention here is to make it more difficult for applicants to justify (and therefore to even seek) a variation from development standards. The Department’s publication released yesterday couches this in terms of seeking to prevent opportunities for corruption in development, but overall it certainly appears to suggest that by removing this long-standing component of clause 4.6, the aim is to appease local government concerns, and to restrict the ability of developers to seek variations.

Similarly, the new “improved planning outcome” test is remarkably silent on the obvious question of “improved for whom?”. If the outcome must be improved for only the neighbouring sites, that may well be a very difficult test to meet, in the context of an application seeing additional height or floor space, for example. Whereas the current version of clause 4.6 makes it very clear that a stated objective is to achieve better outcomes “for and from development”. That is, achieving a better planning outcome for the development itself is an important aim of clause 4.6. Nevertheless, the proposed changes would appear to at least arguably eliminate that notion, and require an applicant to prove that a development exceeding the controls simply achieves “an improved planning outcome compared with what would have been achieved if the development standard had not been contravened”.  This seems to us to be an attempt to tighten clause 4.6, rather than to simplify it or to increase its flexibility.

The EIE also states that an ‘alternative test’ may be used where the variation is minor and appropriate to the circumstances but it may be difficult to establish that there is an improved planning outcome.  The EIE indicates that these circumstances may include a small breach of the height control on a sloping site where measures have been taken to design the building with the topography of the site.  The EIE seeks feedback on this alternative test.

We note that the EIE does not include the actual proposed text of the new clause 4.6.  We understand that this is because the EIE is intended as a discussion paper and the Department will consider feedback prior to finalising the wording of the new clause.

Are there any other important changes?

In addition to the simplified 2-step test for clause 4.6 requests, the EIE proposes two other significant changes.

First, exclusions under clause 4.6(8) will be removed.  Clause 4.6(8) currently provides that certain development standards cannot be varied under clause 4.6 (that is, it excludes the application of clause 4.6 to some development standards)  The removal of clause 4.6(8) means that Councils will no longer be able to dictate that certain development standards are not subject to a clause 4.6 request and thus variation.   Instead, a variation of any development standard will be possible, provided that it meets the new two-part test.   The removal of clause 4.6(8) will be welcomed by developers and will remove the current situation where each consent authority has excluded different development standards.   Importantly, the removal of clause 4.6(8) should allow for development standards to be varied for complying development.

The second major change is that consent authorities will need to publicly report reasons for their decision to approve or refuse a development with a variation to a development standard sought by way of clause 4.6. 

Another change which is more procedural in nature is to remove the requirement for consent authorities to obtain the concurrence of the Planning Secretary prior to granting a consent for a development which contravenes a development standard.   As the consent authority will be required to publish reasons for a decision to approve a development with a contravention, there remains a ‘check and balance’ within the system.

What would the changes mean in practice?

Minister Stokes has stated that the proposed new clause 4.6 does not represent a radical change in practice but is instead aimed at clarifying the test and ensuring the focus is on positive planning outcomes.  Indeed, the elements of new clause 4.6 test are already typically covered in written clause 4.6 requests.   Importantly, when deciding whether to approve a contravention of a development standard under the new clause 4.6, consent authorities can consider social and economic outcomes.

However, introducing a requirement that a consent authority publish reasons for allowing a contravention of a standard seems likely to make consent authorities even more reluctant to approve clause 4.6 requests.  Whilst consent authorities must now publish a register of clause 4.6 requests, the requirement to go one step further and publish reasons may make Councils even more wary of a development which seeks a variation of a development standard as they may perceive that their decision will be subject to greater scrutiny.   The requirement to publish reasons to refuse a clause 4.6 request (whereas currently the clause 4.6 register only shows approved developments) may lead to Council’s viewing their lists of refusals as a badge of honour.

In our view, the inclusion of an ‘alternative test’ as currently proposed is also problematic and is likely to undermine the Department’s intention to simply and clarify clause 4.6.   For example, the EIE states that the alternative test may be used when ‘the contravention is minor and relates to a small portion of the site, and therefore the environmental impacts of the contravention are minimal or negligible’.   We can envisage many scenarios where an applicant and a Council would have different views as to whether the contravention was minor or negligible.  In our view, providing for an alternative test is both practical and sensible and will reduce costs and delays associated with clause 4.6 requests.  However, clear guidance needs to be provided as to when this alternative test would apply.  Without this, there is a risk that there will be disagreement as to which test should be applied in the first instance.

As outlined above, the removal of clause 4.6(8) is a welcome change which simplified planning controls.

Making a submission

The Department is seeking feedback on not only the new clause 4.6 test but also on the type of guidance material which would be required to provide a clear understanding and application of the new test.

Clause 4.6 is a key part of the planning system which provides important flexibility.  We urge interested parties to make a submission and would be happy to assist in preparing such submissions.

The EIE is open for public comment until 12 May 2021 and submissions can be made at www.planning.nsw.gov.au/variations-review.