Housing Supply and Urban Planning Australian

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Housing supply and urban

planning reform: the recent
Australian experience,
2003–2012
a a
Nicole Gurran & Peter Phibbs
a
Urban and Regional Planning, Faculty of Architecture
Design and Planning (FADP), University of Sydney,
Darlington, NSW, Australia
Published online: 09 Oct 2013.
To cite this article: Nicole Gurran & Peter Phibbs (2013) Housing supply and urban
planning reform: the recent Australian experience, 2003–2012, International Journal of
Housing Policy, 13:4, 381-407, DOI: 10.1080/14616718.2013.840110
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International Journal of Housing Policy, 2013
Vol. 13, No. 4, 381–407, http://dx.doi.org/10.1080/14616718.2013.840110
RESEARCH ARTICLE
Housing supply and urban planning reform: the recent
Australian experience, 2003–2012
Nicole Gurran* and Peter Phibbs
Urban and Regional Planning, Faculty of Architecture Design and Planning (FADP),
University of Sydney, Darlington, NSW, Australia
This paper examines the emergence in Australia of housing supply as a key

consideration in urban policy and reform. Australia has experienced declining
housing affordability over the past decade, and sluggish housing construction
since the GFC. As in many other nations, there has been a growing emphasis on
land use planning as the major supply constraint, resonating with theoretical
debates about the legitimacy of planning and development control in the context
of an ongoing neo-liberal campaign for deregulation across the Australian
public sector. Through a detailed analysis of Australian government and
industry discourse between 2003 and 2012, this paper finds the arguments for
planning as the chief cause of housing market problems weak and contradictory,
and heavily reflect the views of industry lobby groups. While not absolving
planning as a potential supply side constraint, ongoing change to the planning
system itself creates uncertainty and distracts from the range of positive policy
levers that might be used to promote housing supply and affordable homes for
low- and moderate-income groups.
Keywords: urban planning; regulation; housing; Australia
Introduction
Over the past decade, debates about planning regulation and housing outcomes have
achieved considerable political resonance in nations such as the United Kingdom
(UK), the United States (US), parts of Europe, New Zealand, and Australia. In
nations where housing supply has failed to keep pace with demand, home purchase
has become increasingly unaffordable for low- and moderate-income earners (Ball,
2010; Barker, 2008; Bramley, 1998; Monk & Whitehead, 1999). In the case of US,
some suggest that supply constraints exacerbated price inflation during the lead up
to the 2007–2008 housing crisis, resulting in sharper declines when the bubble burst
(Richardson, Mulligan, & Carruthers, 2012). Neo-liberal ideology, challenging
government intervention in markets (Sager, 2011), has resonated in these settings,
*Corresponding author. Email: nicole.gurran@sydney.edu.au

Ó 2013 Taylor & Francis
382 N. Gurran and P. Phibbs
with unresponsive housing systems appearing to demonstrate the case against plan-
ning regulation as a key supply constraint (Meen & Andrew, 2008).
Australia represents an interesting context in which to examine how concerns
about housing supply constraints play out in the policy arena. Australia’s housing
market is one of the most expensive in the world, and, following the 2008–2009
Global Financial Crisis (GFC), seems one of the most resilient. Yet although robust
housing values have benefited the majority of Australian home owners’ sense of
wellbeing, and contributed to macro-economic stability, there are deepening hous-
ing affordability problems for low- and moderate-income earners (Burke & Hulse,
2010). One of the most puzzling aspects of Australia’s long housing boom
(1997–2004) and subsequent stabilization has been the failure of an adequate sup-
ply side response. Since the year 2000, rates of housing construction have consis-
tently lagged behind population growth and household formation. In this context, a
powerful narrative has emerged to position land use planning regulation as the
major factor limiting housing supply.
It has been claimed that Australia’s housing policy discourse is characterized by
many orthodoxies – dominant notions with significant symbolic authority, such that
the notion becomes assumed, and eventually uncontested, in policy discussion
(Batten, 1999). This paper examines the emergence of a new housing orthodoxy in
Australia – the crisis of supply – focusing particularly on how policy discourse has
come to frame planning regulation as the dominant explanation for this crisis, and
planning reform, the dominant solution.
Overall, Australia’s housing system is characterized by relative stability (with
around 70% of households in home ownership, a quarter in private rental, and the
remainder in social housing), and a high quality dwelling stock (Beer, Baker,
Wood, & Raftery, 2011). Until around the turn of the new millennium, the vigorous
private building industry generally kept pace with demand for new homes. Housing
policy debates focused on the importance or otherwise of home ownership as a
social objective, and the desirability of detached dwellings as the prevailing subur-
ban form in the context of a growing emphasis on urban containment (Batten,
1999; Paris, 1993; Yates, 2001).
Housing became a matter of bi-partisan national policy concern in the early
years of the new millennium, as first home owners found it increasingly difficult
to enter the market. Previous Liberal administrations had tended to leave housing
and urban policy matters to the states, with two particular periods of Common-
wealth interest in housing policy coinciding with the Whitlam Labor administra-
tion of the early 1970s, and the Keating administration during the early 1990s.
However, in 2003 the Liberal Prime Minister John Howard directed Australia’s
Productivity Commission to examine housing affordability (Productivity Commission,
2004) after it became clear that first home buyers were being excluded from the hous-
ing market as a result of house price inflation. This marked the beginning of a series of
national initiatives and inquiries on aspects of the housing system; the formation of a
International Journal of Housing Policy 383
series of ministerial and officer level working party committees within the auspices of
the Council of Australian Governments (COAG) and its special purpose reform council
(COAG Reform Council, 2009); and the establishment of a special purpose National
Housing Supply Council (NHSC) in 2008. The period has coincided with the ongoing
implementation of a national de-regulation agenda (Hollander, 2006; National Compe-
tition Council, 2011), sustained scrutiny of state and local planning and development
control processes (COAG Reform Council, 2011; Local Government and Planning
Ministers’ Council, 2011; Productivity Commission, 2011), and extensive planning
system reform across all jurisdictions.
The research for this paper includes a detailed analysis of policy discourse sur-
rounding these processes over the past decade (2003–2012). Discourse analysis
encompasses a variety of research techniques for systematically analyzing texts to

reveal and explain meaning in relation to underlying systems of power and knowl-
edge (Atkinson, 1999; Fairclough, 2003). Discourse analysis is often used in urban
and housing research to expose how certain positions and relations or power are
constructed, reflected, or reinforced (Hastings, 2000; Lees, 2004). Methodological
techniques used include quantitative content analysis (whereby significant state-
ments, words, or images within policy texts are codified and counted) to more quali-
tative forms of interpretative analysis, whereby structures of meaning are identified
and interpreted in context (Ahuvia, 2001). The latter approach pays particular atten-
tion to ways in which particular statements or claims are formed, the institutional
setting in which these claims arise and gain legitimacy, and the evidence used to
support claims (Batten, 1999).
For this study, seminal national level reports sponsored by or produced
within government over the past decade were systematically analyzed to identify
key arguments, particularly in relation to the causes of Australia’s housing
affordability problems and the policy prescriptions needed to address them. This
process revealed that a spectrum of factors – such as the impact of demand side
triggers (income growth, lower home mortgage rates, taxation incentives for
property investment) and supply side factors (chiefly inelastic supply due to
unresponsive planning systems and infrastructure constraints) are recognized in
the documents reviewed. However, our chronological analysis shows a shifting
emphasis over the decade 2003–2012, when housing supply and the land use
planning system (the regulatory process for land allocation, development con-
trol, and local infrastructure provision) became a major focus. We also reviewed
influential housing and development industry publications prepared over the
time period, and major reforms to planning and development control systems,
articulated through government discussion papers and enacted by the states
through legislative change. To test the external validity of claims made about
the planning system in this body of discourse, available sources of data on plan-
ning system operations, produced by national and state level governments, are
also examined.
The first section of the paper situates the study in the context of wider debates
about planning regulation and the private market. The second section presents the
analysis of Australian housing, urban policy and industry advocacy discourse.
Third, the paper critically interrogates the evidence used by both industry and gov-
ernment bodies to underpin arguments for planning system reform as a response to
Australia’s housing supply and affordability problems. While not absolving plan-
ning as a potential contributor to supply side constraint, this analysis reveals that
available evidence implicating planning as the chief cause of housing market prob-
lems is weak and contradictory. Further, planning reforms have neither appeared to
influence patterns of housing supply or affordability nor dampened the appetite for
additional planning system change.
Planning regulation and the housing market

Policy concerns about the relationships between planning regulation (the legally
enforceable system for land allocation and development control) and housing out-
comes mirror wider neo-liberal challenges to the legitimacy of land use planning as
a form of government intervention in the market (Sager, 2011). From a welfare eco-
nomic perspective, this intervention is necessary to correct market failure and man-
age environmental externalities. However, there are potential concerns about the
market impacts of land supply policies designed to manage the environmental
impact of development; and perceived transaction costs associated with government
intervention (Webster, 1998). Much of the empirical research in the field has been
undertaken in the US and the UK (for example, see Bramley, 1998, 2013; Glaeser
& Ward, 2009; Gyourko, Saiz, & Summers, 2008; White & Allmendinger, 2003),
although there is an emerging body of contributions from other nations character-
ized by different systems of urban governance and housing provision, including
Hong Kong (Hui & Ho, 2003), South Asia (Dowall & Ellis, 2009), Africa (Egbu,
Omolaiye, & Gameson, 2007), and Europe (Altes, 2009). These diverse studies
highlight the need to consider contextual differences in housing markets and land
use regulation, both in examining relationships between planning and housing, and
in transferring findings.
There are methodological problems in measuring the extent to which housing
supply and affordability problems within a particular setting are caused by planning
constraint, or reflect other market forces and conditions largely impervious to the
planning system. Housing markets are complex and unique, with low substitutabil-
ity across housing locations and homes, particularly within cities and regions char-
acterized by access to valuable amenities, such as waterfront or alpine views, built
heritage, or the quality of public transport or services (Fisher, Pollakowski, &
Zabel, 2009). Planning controls typically reflect and protect such attributes which
are inherently scarce, while also reflecting innate geophysical constraints (Saiz,
2010).
Further, the planning process is one element in a complex supply chain affected
by wider construction industry trends, the cost and availability of labor and materi-
als, the cost and availability of development finance, and the market decisions of
developers or house builders (Adams, Leishman, & Moore, 2009; Guthrie, 2010).
Such decisions include the pace of housing development and the release of homes
to the market. For instance, research in the UK has shown that builders will main-
tain steady output during times of high demand (achieving higher sales prices)
rather than build and release houses more quickly (Adams et al., 2009). Similar
findings have been demonstrated in the US, even in contexts of low regulation
(Guthrie, 2010).
While the supply chain is important, demand factors – such as income growth
and the cost and availability of finance, appear to exert a stronger influence on
urban house prices (Bramley, Bartlett, & Lambert, 1995; Dawkins & Nelson,
2002). Fiscal policy and the cost and availability of finance also influence demand
and the scale of house price inflation (Leishman & Bramley, 2005). The flood of
cheap money preceding the GFC led to a surge in demand that resulted in a global
escalation of housing prices even in countries such as the USA that had responsive
supply systems (Sanchez Caldera, & Johansson, 2011). A more striking example is
Ireland, where rising demand and population growth led to a surge in house prices
from the mid 1990s despite a relatively laissez faire planning system which did not
appear to constrain housing output nationally (Norris & Shiels, 2007), ultimately
resulting in a severe market correction due to oversupply following the 2008/2009
Global Financial Crisis (Gkartzios & Norris, 2011; Kitchin, O’Callaghan, Boyle,
Gleeson, & Keaveney, 2012).
Ellis, a senior official at the Australian Central Bank, writing in 2006, highlights
the impact of demand pressures on house prices in Australia:
Even the most flexible and least regulated construction sector would struggle to lift its
output from something equal to a few percentage points of the dwelling stock to
accommodate a surge in demand of 50 per cent or more . . . It is therefore inevitable
that housing prices would rise in the face of such a surge in demand. (Ellis, 2006, p. 7)
Empirical research on relationships between planning and the housing mar-

ket is limited in Australia. In part this is due to a paucity of reliable data on
urban regulation maintained by either state or local governments, although this
is gradually changing (Gurran, Phibbs, & Gilbert, 2012). A recent study sought
to determine the influence of an urban growth boundary on Melbourne’s, using
land sales data for periods before and after the imposition of the boundary, and
examining prices for urban and rural land within and beyond the boundary
(Buxton & Taylor, 2011). The researchers concluded that values moved in the
predicted direction, with land beyond the boundary remaining consistent with
those for comparable rural areas, while those within the boundary lifted
sufficiently to stimulate residential growth, without causing inflationary pres-

sures across Melbourne’s greater housing market.
Another study sought to explain house price movements across Australia’s capi-
tal cities (Otto, 2007). Amongst the potential factors examined (demand side meas-
ures of population growth, interest rate movements, and income growth); and
supply side factors (planning constraint), the study found that mortgage rate move-
ments (lower interest rates) accounted for between 40 and 60% of price gains, with
the most significant economic impacts being in the most expensive housing market
– Sydney. In the absence of data on planning constraint in Australia, a proxy was
created using data on rates of planning approval/refusal, which differ slightly
between all of the capital cities; but this was found to be insignificant (Otto, 2007).
To investigate developer perspectives on costs associated with the planning pro-

cess (from application fees and developer contributions to holding costs arising
from delay) developers of 26 residential projects were interviewed between 2008
and 2009 (Gurran, Ruming, & Randolph, 2009; Ruming, Gurran, & Randolph,
2011). The study also sought to reconcile self-reported evidence on costs associated
with the planning system, by industry advocates, and self-reported evidence sup-
plied by developers themselves. Industry advocacy bodies claimed specific burdens
associated with development contributions and environmental regulation, while
individual developers expressed more concern over the uncertainty of requirements,
particularly in jurisdictions such as Queensland and NSW where successive system
changes had created significant instability. Similar findings were reported in a study
of the impact of development charges for infrastructure in Sydney, NSW, again
involving interviews, found that developers did not generally report charges as a
constraint provided the cost was known in advance and clearly linked to services
provided within the local area (Abelson, 2010).
In summary, there has been a body of empirical research on relationships
between planning regulation and the housing market, the majority of which has
been undertaken in the UK and the US. The approaches and findings of this work
continue to be contested and are likely to be highly contingent on particular regula-
tory and housing market conditions. The empirical basis for exploring relationships
between planning and the housing market in Australia is particularly narrow, but, in
line with international studies, points towards demand factors as being more impor-
tant overall drivers of housing trends than land use regulation. As discussed further
below, the geography of housing demand in Australia focuses on established inner
ring suburbs which offer limited opportunities for new development. Finally,
although the research reviewed here has had some policy impact, notably informing
planning reform agendas in the UK (Barker, 2008), there has been surprisingly little
attention to the ways in which debates about the relationship between planning reg-
ulation and the housing market are treated in policy discourse or mediated through
policy intervention. The following section of the article considers these issues in
relation to Australia.
Investigating land use planning and the Australian housing market 2003–2012
Australia is characterized by a three-tiered federal system of government. The
national level ‘Commonwealth’ government is responsible for important aspects of
economic and housing policy, including grants for first home buyers, taxation settings
(with capital gains tax exemption on the family home), and funding for housing assis-
tance through modest capital grants to the states and territories for affordable housing
initiatives (including construction of new public and community managed dwellings),
and rental support for eligible households in private rental accommodation. The states
are wholly responsible for urban planning, including policies and regulations govern-
ing land release and development, with local government involvement in area-based
planning and assessing development proposals. While each of the six states and two
self-governing territories have their own planning laws and systems, overall Austra-
lian planning reflects elements of both the British tradition, with early state planning
legislation borrowing from the United Kingdom’s (UK) 1947 Town and Country
Planning Act, and retaining commitment to discretionary, merit-based planning
assessment, as well as the more codified American approach to land use zoning and
development control (White & Allmendinger, 2003).
Australia’s housing market is shaped by its highly concentrated geography,
which focuses on eight primate state and territorial capital cities, and a distinct
dwelling typology of predominantly detached dwellings in suburban neighbor-
hoods. There is a bifurcation of the housing development process, with housing
developers mainly concerned with selling land (building lots), while purchasers of
the land, often individual households, arrange for dwelling construction through a
separate contract. Around 2% of total housing supply is provided through new con-
struction, but most second home buyers express preference for existing homes
within established neighborhoods (Productivity Commission, 2004).
Australian house prices grew by more than 6% per year between 1995 and
2005, rising to around 15% each year between 2001 and 2003 (in comparison to
historical average annual increases of 2.5% when considered over the whole
period 1960–2010) (Yates, 2011, p. 263). In 2008 the newly established
National Housing Supply Council (NHSC) found significant underproduction of
new housing relative to underlying housing demand – measured in terms of pro-
jected household formation rates minus net dwelling completions. By 2011, the
national shortfall was estimated to be 228,000 dwellings, rising to 663,000
dwellings by 2031 on current trends.
Along with this projected supply deficit, the NHSC has drawn attention to wors-
ening affordability problems across all jurisdictions (Table 1). By 2009–2010,
around 480,000 of households below the 40th income percentile (41.7%) were pay-
ing more than 30% of their income on rent, and around 600,000 households below
the 50th income percentile were exceeding the affordability threshold on mortgage
repayments (Australian Institute of Health and Welfare, 2011; NHSC, 2011).
Table 1. Low-income households in rental and mortgage stress, 2009–2010.
NSW Vic Qld WA SA Tas ACT NT Aust
Rental stress% 47.6 41.4 43.3 35.8 28.6 28.1 32.2 33.2 41.7
Mortgage stress% 44.9 34.1 33.0 41.2 34.7 30.8 18.6 33.4 37.4
Source: Derived from AIHW (2011) and NHSC (2011).
The supply council’s methodology for estimating housing shortage is open to

question, particularly following the release of 2011 Census data which showed
lower than predicted population growth, and a slight increase in the average house-
hold size, indicating a reduction in household formation rates. However, it is clear
that housing affordability problems have begun to affect all capital cities in Aus-
tralia, with low-income earners and those seeking to enter home ownership facing
significant pressures. The severity of problems differs, with NSW currently the
most unaffordable state for low-income earners, with nearly half of all low-income
households paying more than 30% of their income on housing, and around 45%
experiencing mortgage stress (Table 1).
There are also varying patterns of development activity across the states and ter-
ritories. Figure 1 isolates the three most populous Australian states for comparison
of housing completions since 1980. As shown, quarterly dwelling completions dem-
onstrate considerable fluctuation across these jurisdictions, with overall output
peaking towards June 2000, prior to the introduction of a national 10% Goods and
Services Tax (GST), which brought forward demand as consumers wanted to avoid
paying the GST on their new house.
Although NSW sustained the highest national completions until March 2004, it
has subsequently trailed behind the state of Victoria. This trend has been used to
support claims that supply constraints – associated with land release policies and an
unresponsive planning system are a key explanation for the particularly severe
housing affordability pressures in NSW in comparison to the other states (NSW
Treasury, 2012).
Review of housing policy discourse

As outlined above, the discourse analysis method used for this study involved
reviewing national level reports on housing affordability in Australia; prominent
industry body submissions and position papers; and seminal planning reform docu-
ments produced across the five most populous Australian states (Table 2). We
review these in loose chronological order, highlighting the evolution of the narra-
tive about housing affordability, supply, and the planning system.
In 2003, the Commonwealth government tasked the national Productivity Com-
mission (an independent body empowered to undertake enquiries on behalf of gov-
ernment) to examine affordability for home buyers and overall housing market
Figure 1. Dwelling completions by quarter – all dwellings – September 1984–March 2012 – NSW, Victoria, and Queensland.
Source: ABS Building Activity 8752.0. Table 39.
International Journal of Housing Policy
389
Table 2. Australian government and industry publications on housing policy and the
planning system 2003–2012.
Category Author Title Year
Housing Prime Minister’s Summary of Findings for 2003

Taskforce on Home the Prime Ministerial
Ownership/The Task Force on Home
Menzies Research Ownership
Centre
Productivity Commission Inquiry into First Home 2004
Ownership
National Housing Supply State of Supply Report 2008, 2010,
Council 2011, 2012
Parliament of Australia A good house is hard to 2008

find: Housing
affordability in Australia
COAG Housing Supply Housing Supply and 2012
and Affordability Affordability Reform
Reform Working Party
Industry
publications
Housing Industry Restoring Housing 2003
Australia Affordability – the
housing industry’s
perspective
Residential Development Reasons to be fearful? 2006
Council/ Property Government taxes,
Council of Australia charges and compliance
(PCA) costs and their impact on
housing affordability
Urban Development State of the Land; UDIA 2006
Institute of Australia National Land Supply
(UDIA) Study
Property Council of Improving Housing 2006
Australia Affordability in NSW; A
plan for industry and
government
Residential Development Boulevard of Broken 2007
Council/PCA Dreams; The future of
housing affordability in
Australia
Residential Development Australia’s land supply 2007
Council/PCA crisis; Supply/demand
imbalance and its impact
on declining housing
affordability
(continued)
Table 2. (Continued )
Category Author Title Year
Urban Development An Industry Report into 2008

Industry Australia Affordable Home
Ownership in Australia
Property Council of Planning gone mad 2012
Australia
State planning
system reform
NSW Department of A New Planning System for 2012
Planning and NSW Planning Green
Infrastructure Paper 2012
QLD Government Planning for a Prosperous 2007

Queensland
SA Government Better Planning, Better 2008
Future
Victorian Government Cutting red tape in planning 2006
Reformed Zones for 2012
Victoria
Government of WA Planning Makes it Happen; 2009
a Blueprint for Planning
Reform
National planning
system reviews
Productivity Commission Performance Benchmarking 2011
of Australian Business
Regulation: Planning,
Zoning and Development
Assessments
COAG Reform Council Review of Capital City 2011
Strategic Planning
Systems; Report to the
Council of Australian
Government
Local Government and First National Report on 2011
Planning Ministers’ Development
Council: COAG Assessment Performance
Business Regulation 2008/09
and Competition
Working Group
efficiency (Productivity Commission, 2004). Drawing on over 320 written submis-

sions (from government, development and finance industries, housing advocates,
and individuals), as well as 37 public hearings involving public and private sector
organizations, and individuals, the Commission found that the main causes of house
price inflation were related to demand (falling interest rates), exacerbated by
Figure 2. Falling interest rates and real house prices, Australia 1989–2004.
Source: Productivity Commission (2004, p. xviii).
‘inherent’ supply limitations (the general stickiness of housing markets in assem-

bling land and constructing dwellings and Australia’s prevalent demand for existing
homes within established suburbs). Figure 2 charts house price movements between
the boom years from the late 1990s to 2004, over which period mortgage interest
rates halved.
The Commission concluded that even an increase in supply would be unlikely
to arrest price growth, at least in the short term:
the dominant source of the widespread escalation in prices has been a general surge in
demand – above the normal increases associated with population and income growth –
to which supply was inherently incapable of responding, at least in a way that could
moderate the pressure on prices in the short term. (p. xvii, original emphases)
This conclusion was based on an analysis of new finance commitments for

homes, which showed a marked increase in investment in existing dwellings, while
investment in new dwellings remained relatively stable. Indeed, the Commission
found that new housing sales had never accounted for more than 2% of Australia’s
total housing stock, which on average has an annual turnover rate of between 6 and
8% (p. xx).
Submissions from the housing development industry focused on supply side
constraints largely associated with planning policies and related compliance costs
(the introduction of a 10% goods and services tax, long standing stamp duties on
property transactions, and contributions for infrastructure):
Australia is experiencing a structural decline in the affordability of housing due to

escalation in land prices arising from state and local government taxes, charges and
levies; and artificial constraints on land supply for development. (HIA, 2003, pp. 6, 7)
The Housing Industry of Australia (which represents the interests of the housing
construction industry) also argued that inefficient development approval processes
and the policy of urban containment had created land supply shortages, and called
for planning reform:
Shortages of land for urban development have been institutionalised by failures in the
land development approval process, the outcome of which has been precipitous
increases in the price of the ‘raw’ land component of serviced land. The imposition of
growth boundaries exacerbates price pressures and provides opportunities for people
to speculate on undeveloped land within the growth boundary . . . It is estimated that
planning and building regulation creates inefficiencies that add in the order of 10 per
cent to the total cost of a typical new home. On this basis, the gains from a more effi-
cient regulatory system could produce substantial savings, the benefits of which would
be passed on mainly to new home buyers within a highly competitive housing indus-
try. (Housing Industry of Australia, 2003, p. 5)
The Productivity Commission acknowledged the:
overwhelming view put to this inquiry by those involved in seeking development

approvals is that the processes are deficient and have become increasingly so – and
that this has contributed to the escalation in house prices. (p. xxvii)
Consequently, the Commission suggested potential scope to ‘moderate’ price

and affordability pressures ‘by improving land release and planning approval pro-
cesses; and ensuring that developer charges for infrastructure relate appropriately
to the benefits provided to home buyers’ (p. xii).
A ‘Task Force on Home Ownership’, comprising eminent international academ-
ics and economists was appointed at around the same time as the Productivity Com-
mission review, also on the initiative of the former Prime Minister John Howard, in
conjunction with the Liberal (political) party affiliated ‘Menzies Research Centre’.
Unlike the independent Productivity Commission, the Taskforce relied upon
commissioned studies, partly funded by developers and financiers, including new
non-bank home lenders (‘Wizard Home Loans’, ‘Rams Home Loans’, and Aussie
Home Loans’) and the HIA (Joye et al., 2003, p. 2). While predominantly interested
in opportunities to provide new financial instruments to support home ownership,
the Task Force found:
a growing disjunction between the price of Australian homes and their underlying
costs of production . . . Significantly, this does not appear to be a manifestation of natu-
ral limitations on the availability of land, but rather a product of regulatory restrictions
that artificially inflate the cost of housing. Viewed differently, these constraints on the
construction of new dwellings and the release of greenfield and brownfield sites act as
a burdensome tax on building, which in turn leads to a mismatch between the accom-
modation needs of Australian households and the stock of available homes. (Joye
et al., 2003, p. 24)
The Prime Minister himself blamed state planning policies for affordability
problems, as reported by a major newspaper in 2006:
People argue . . . that housing is less affordable now than it was previously. Why? It’s
not because of interest rates. Interest rates are half of what they were 20 years ago. . ..
Now why is it less affordable? Because the cost of land has gone up. Why has the cost
of the land gone up? Because too little land is released. (Sydney Morning Herald
[SMH], 2006)
At the time of this statement, six of the eight State and Territory governments
were in the opposite political camp to the national government so there was a lot of
blame shifting between layers of Government. By blaming state planning agencies
for housing affordability problems, the Commonwealth government was able to

preside over wealth appreciation in the form of house price growth (and falling
interest rates), benefiting existing home owners. At the same time the Common-
wealth could accuse the states of undermining home ownership through policies of
urban consolidation which were unpopular with the housing industry and home
owners in existing suburbs alike.
The Property Council of Australia (PCA), which represents the real estate and
property development industry has also been an influential commentator on the
impacts of government intervention on the housing market, releasing a number of
position papers between 2006 and 2012 (Table 2). In announcing the findings of a
commissioned study which sought to quantify government imposed costs on resi-
dential development (primarily using member self-reported estimates), the property
council brought together concerns about goods and services taxes and stamp duty
with burdens arising from planning regulation (controls and assessment processes);
the costs of infrastructure contributions levied through planning approval; and spa-
tial policies for urban consolidation:
These findings overturn conventional thinking that housing prices are primarily driven
by issues such as interest rates, supply and demand, and consumer confidence. With
the combined impact of various government costs now the second most expensive part
of the cost of developing new housing product (more costly even than the land), it is
clearly time for governments around Australia to rethink their approach to housing
development.
First, governments at all levels must immediately stop adding to the cost of housing
development, second, alternate mechanisms for funding infrastructure related to
growth must be found. . . .
Third, the mechanisms of development assessment must be reformed if we are to

reduce the risks associated with residential development and associated costs. . .
Fourth, the issue of artificially restricting land supply through ‘urban growth
boundaries’ must be revisited. (PCA, 2006, p. 7)
It is worth noting that other more impartial commentators such as Ellis quoted
earlier in our paper reached sharply different conclusions. Nevertheless, the prop-
erty council continued to claim that price inflation was a consequence of planning
regulation. Its 2007 report, Boulevard of Broken Dreams; the future of housing
affordability in Australia, cited research commissioned by a commercial consul-
tancy firm to assert that planning regulations added $29,000 to dwelling prices – a
remarkable level of precision given the difficulty reported in the international litera-
ture on measuring price effects associated with planning or supply constraint:
Many State Government planning policies now favour urban consolidation at the
expense of suburban growth. . . This market restriction – imposed by state government
policies – has had a real price impact estimated by Macroplan at around $29,000 per
dwelling. (PCA, 2007, p. 3)
The following year, a third national level investigation into housing affordabil-
ity was initiated by a standing senatorial committee of Federal Parliament (Parlia-
ment of Australia, 2008). Like the Productivity Commission (2004), the committee
found that affordability pressures were a function of strong demand, stimulated by
higher average real incomes, increases in the number of double income households,
smaller household sizes and faster household formation; with strong population
growth underpinned by higher international immigration. Financial factors includ-
ing the decline in home loan interest rates and greater availability of credit, and tax-
ation incentives for investment in second and third properties, were also found to
explain the scale of house price inflation. The Parliamentary Committee accepted
arguments put forward by industry sectors that land release policies associated with
urban consolidation may have contributed to supply and affordability pressures,
but, rather than abandoning these policies they called for investment in infrastruc-
ture to support the development of new centers in appropriate locations, although
this recommendation has not been taken up in a significant way (for a summary of
regional development initiatives led by the Commonwealth and states see Gurran,
2011, pp. 111–112).
The Committee also accepted the by now pervasive view that complex and
costly planning requirements had exacerbated the supply shortfall, and that plan-
ning reform would improve housing affordability:
State and local governments’ planning processes are too complex and often involve
long delays and high costs. . . . The state governments should reform and simplify their
planning processes so that local governments can process planning applications more
quickly. (p. 10)
Such reform was already underway in most of the states, as discussed further
below. In 2012, responding to the commencement of a new cycle of planning
reform in state of NSW, the property council commissioned a completely fictional
account of the planning system entitled Planning Gone Mad. This document
bemoans the very culture of planners in local government:
We want to put on record . . . the desire and ability of local government planners to
place all development into a straightjacket, and the growing NIMBY movement’s
capacity to frustrate legitimate development proposals. . . It is hoped that this story . . ..
will confirm to all policy and decision makers that the planning system in NSW has,
indeed, gone mad. (PCA, 2012)
Later in the year, the national level ‘Housing Supply and Affordability Reform’
working party, comprised of Treasury and other senior government officials, within
the Council of Australian Governments Reform Council released its final report.
This report relied on internal ‘analytical work’ to arrive at a position that was par-
ticularly scathing about state planning processes.
TheWorking Party’s examination of the housing supply chain identified multiple instan-
ces where developers and builders faced significant delay, uncertain timeframes and
unpredictable regulatory frameworks in bring new land and dwellings to market. Such
delay and uncertainty increased the cost of housing by increasing developers’ holding
costs and by adding to the risk that businesses face in the development process . . .. Many
of these costs that developers and builders incur typically lower the overall supply and
delivery of housing to the market, thereby reducing housing affordability. (p. 2)
Once again, planning reform is identified as the major policy response:
‘reforms that remove impediments to housing supply’ by improving ‘the efficiency of . . ..

(and timeframes involved in) referrals, development assessment and rezoning processes’
will ‘remove unwarranted pressure on house prices and ensure that the quantity, location
and type of housing stock meets the community’s needs over time’. (pp. 2–3)
What is surprising in this analysis by the Housing Supply and Affordability

Reform Working Party, commenting in late 2012, is that little account is taken of
the impact of the Global Financial Crisis (GFC) in the assessment of why housing
supply since the GFC has been so constrained, although the GFC is mentioned
twice in relation to house price falls and the government’s own stimulus action in
boosting turnover and construction (pp. 6, 26). A range of sources, including reports
by industry bodies, have highlighted the impact of the GFC on development finance
(e.g. National Australia Bank [NAB], 2011; PCA, 2012) and the tendency of house-
holds to reduce debt and increasing saving. When the operation of residential hous-
ing and credit markets has led to a major international financial collapse it would
appear reasonable that key stakeholders including consumers and the development
finance sector might have other things on their mind other than the operation of the
planning system. Nevertheless, instead of focusing on these alternative explanations
of the lack of residential housing supply the role of the planning system has been
highlighted. This would appear to be a case of seeking an issue which provides

ideological alignment rather than one based on evidence.
Further, although the earlier reports reviewed also called for planning system
reform, the Housing Supply and Affordability Reform Working Party’s report was
released in late 2012 so follows several years of reform implementation (Gurran,
2011). The following section outlines the key features of these reforms.
Australian planning reform

As noted, while responsibility for land use planning in Australia sits with the states
and territories, there is increasing national level interest in urban affairs and plan-
ning through the Council of Australian Governments (COAG Reform Council,

2011). National level drivers for planning reform also include the ongoing imple-
mentation of National Competition Policy (now termed Australia’s Reform
Agenda) (Productivity Commission, 2005), which has promoted deregulation and
privatization initiatives across all sectors and the ‘Development Assessment
Forum’, a national level coalition of industry and planning agency representatives.
This group has also been particularly influential in promulgating a model for nation-
ally consistent development assessment in Australia (Development Assessment
Forum, 2005). While the group’s ideal of a nationally ‘harmonised’ planning sys-
tem (Development Assessment Forum, 2005, p. 6) remains elusive, there has been
much policy transfer between the states and territories as they pursue procedural
change.
These changes have been explicitly intended to remove regulation or ‘red tape’
associated with the planning process (Department of Sustainability and Environ-
ment, 2006; Government of Western Australia, 2009); achieve speedier plan mak-
ing and assessment timeframes (Government of South Australia, 2009; NSW
Government, 2012); and implement standardized planning templates and zoning
conventions (Department of Planning and Community Development, 2012; NSW
Department of Planning, 2009). There has also been an emphasis on and greater
codification of simpler development, to reduce perceived burdens associated with
discretionary merit-based decision-making (Department of Infrastructure and Plan-
ning, 2009; Department of State Development Infrastructure and Planning, 2013;
NSW Department of Planning, 2010). To promote greater certainty and community
confidence in the planning system, some jurisdictions have also sought to
‘depoliticise’ decision-making, usually by limiting local council involvement, and
introducing special purpose development assessment panels or committees (Depart-
ment of Planning and Local Government, 2006; Gurran, 2011).
Some reforms have represented profound examples of de-regulation. For
instance, the series of reforms undertaken in NSW since 2005 was precipitated by
the introduction of special ministerial discretion to approve major public and pri-
vate sector projects under the former Part 3A of the Environmental Planning and
Assessment Act 1979 (Gurran, 2011). While special ministerial powers to ‘call up’
major development projects (rather than leave assessment with local or regional
adjudication) are found in most Australian planning jurisdictions, these powers are
generally highly circumscribed. The NSW ‘major projects’ reforms were unrivalled
in terms of the discretion and latitude they provided for the planning minister to
approve private and public sector projects, irrespective of existing planning regula-
tions, and was explicitly intended to address perceived regulatory burdens and
transaction costs constraining private development (Knowles, 2005). The original
provisions were revoked six years later, following a change of government.
However, while the amendments altered the language and procedures for develop-
ment deemed to have state significance, the overriding intent of the legislation – to
enable such projects to bypass any existing planning regulation to the extent that
this legislation would otherwise prevent the development – remains intact (see
Gurran, 2011).
In 2011 the Productivity Commission and the Local Government and Planning
Ministers’ Council both issued benchmark reports, for the first time providing
national data on key ‘performance’ indicators to measure and compare planning
systems of the states and territories. Most of the ‘performance’ measures address
the key reform priorities highlighted by the Housing Supply and Affordability
Reform working party (that is, decision timelines and certainty).
While opining that all Australian state and territorial planning systems suffer
‘objectives overload’, the Productivity Commission found that the NSW planning
system is perceived to be the most complex, uncertain, and constraining system in
Australia:
Views of businesses which regularly interact with planning regulators are . . . telling
. . . In particular, the New South Wales planning, zoning and DA system is considered
by business to perform the worst and Queensland the best. (Productivity Commission,
2011, p. xx)
Despite these perceptions, on the range of measures used by the Productivity

Commission to examine planning system performance in its own report – such as
zone complexity (measured in terms of the average number of zones in a local
plan), and decision speeds (for rezoning/land supply and for development assess-
ment), the state of NSW appeared to score better than the other jurisdictions.
Although the adequacy of measures is open to challenge, using the Productivity
Commission indicators, NSW has a lower than average numbers of zones in local
plans (a modest 20, in comparison to 40 in the high growth region of South East
Queensland), which the Productivity Commission interprets as a measure of relative
simplicity, and shorter times for land supply processes (from the location of sites
through to the installation of infrastructure) in NSW than South East Queensland,
Adelaide, and Perth (Productivity Commission, 2011, p. 144).
Figure 3. Median days approval, all Development Applications, 2008–2009 Australia.

Source: Derived from Local Government and Planning Ministers’ Council (2011).
Further, in relation to median decision times (measured in days), it appears that

far from being the slowest state, overall development approval times in NSW are
faster than many of the other jurisdictions (Figure 3). NSW also had faster average
times for approving residential developments than Victoria and Queensland
(Figure 4).
Certainty of planning approval, mentioned by the COAG Reform Council
(2012) to be a key issue, also appears higher in NSW than might be expected in a
jurisdiction encumbered by an unresponsive planning system. While there is a
widely reported perception that planning approvals in NSW are highly uncertain
(e.g. NSW Parliament, 2009), in practice, the vast majority of development applica-
tions are approved. This is shown in Figure 5, which plots approval rates for devel-
opment across a 3-year period to 2009–2010. Also of note is that the reforms
intended to simplify the NSW planning system and improve certainty have been
implemented progressively since 2005 but seem to have had no discernible impacts
on already high approval rates.
In summary, a series of national reviews have called attention to growing
affordability problems, particularly for first home buyers, as well as an overall
shortage of new housing production relative to household formation, although
the scale of housing shortage remains uncertain. Industry bodies have insisted
that shortages are due to restrictive planning policies and inefficient and costly
regulatory processes. While attentive to industry perspectives, the 2003
Figure 4. Median days approval time, residential development and subdivision 2008/2009,
NSW and Victoria.
Source: Derived from Local Government and Planning Ministers’ Council (2011).
Productivity Commission’s inquiry into the cost of home ownership and the
2008 Senate Committee both concluded that the unprecedented confluence of
income growth and increasingly affordable access to finance, combined with
the inherent supply constraints associated with demand for homes in estab-
lished areas, had provoked a structural change in Australia’s housing market, a
diagnosis reinforced by recent economic analyses (ANZ, 2012; Yates, 2011).
However, by 2012, national policy discourse had shifted from this balanced
analysis to an emphasis on supply side constraints arising from policies con-
cerning land release, combined with slow, inefficient, and uncertain planning
systems in need of major reform.
Of all the jurisdictions, the state of NSW is considered the most problematic.
NSW has Australia’s most severe shortage of affordable homes and has experi-
enced a pronounced slump in rates of new dwelling production, since the mid
2000s. While these two factors, combined with the strength of community and
industry perception that the planning system in NSW is the nation’s ‘worst’ – it
seems surprising that key available indicators do not reveal particularly marked
differences between NSW and the other jurisdictions. If anything the extant evi-
dence, narrow and problematic as it may be, paints NSW in a more favorable light
than many of the other Australian states. Similarly, although the state of Victoria
is the stand out performer in lifting rates of housing supply, on this data,
International Journal of Housing Policy
Figure 5. Planning approval rate, Sydney Metropolitan Region, 2007/2008–2009/2010.

Source: Derived from NSW Department of Planning (2008a, 2008b, 2010) and NSW Department of Planning and Infrastructure (2011).
401
Victoria’s planning system would seem to be far slower and less certain than those
of the other jurisdictions. Therefore, the current empirical evidence relied upon by
governments is not only narrow and problematic, it is also inconsistent with the
policy rhetoric it is intended to serve – that is the framing of housing supply and
affordability outcomes as a consequence of planning system performance.
Conclusion
The emergence of housing supply as a key driver for urban planning reform in
Australia has been examined with a focus on government and industry discourse
between 2003 and 2013, during which time housing affordability rose to
national prominence. Analysis of key government reviews of the causes of hous-

ing affordability problems, and policy remedies proposed, reveals a growing
alignment between government and industry positions over the time period, and
implies that planners and regulatory systems will need to defend themselves
against a development sector which is, not surprisingly, usually seeking less reg-
ulation. By 2012, the Housing Supply and Affordability Reform working party
had declared that the major policy remedy for Australia’s shortage of affordable
housing was ongoing planning system reform to address system complexity and
delays. However, these recommendations followed a series of reform interven-
tions across the states and territories since the middle of the 2000s, all of which
have been dedicated to removing regulatory barriers to development in the form
of ‘red tape’; and improving planning consistency and certainty through stan-
dardization and codification of planning requirements. Further, longitudinal
analysis of Australian dwelling completion trends, and the emergence of housing
affordability pressures which extend back into the 1980s, seem to challenge the
thesis that planning system constraints explain the growing gap between under-
lying demand and new housing production (Yates, 2011). In terms of under-
standing and monitoring this gap, further research should establish reliable
benchmarks for new housing production against existing and forecast needs,
bearing in mind demographic changes (slowing household formation rates) and
Australian preferences for homes within established suburbs. Such changes
might signal a need for increased home renovation and adaptation of existing
stock rather than new construction.
The data presented here are limited to sources currently available to policy
makers, which demonstrate a strong bias towards quantitative indicators of
planning system efficiency, such as decision speeds, approval rates, and rates
of appeal. These data provide little scope to examine or compare policy con-
tent of local plans, or the locality specific characteristics of planning authori-
ties, which may better explain perceptions of planning system performance,
particularly in relation to perceived inefficiency and complexity. Nevertheless,
when examined closely with attention to particular jurisdictions and trends
over time, even this narrow evidence base fails to align with the dominant nar-
rative whereby planning is positioned as the overarching explanation for slug-
gish housing production, and planning reform, the primary solution. This
suggests that policy makers, particularly those beyond the planning system
itself, are seeking arguments that ideologically align with their views – in this
case de-regulation of planning controls.
Even when demonstrable planning system inefficiencies exist, as is undoubtedly
the case in many Australian state and local jurisdictions, ongoing change itself cre-
ates uncertainty and often leads to new complexities and delays as new administra-
tive processes are bedded down. Further, administrative reform distracts from the
range of other proactive policy levers that might be used to promote housing supply
and affordability. Some of these are within the remit of land use planning, but
depend on targeted intervention and policy conviction. They include measures to
price basic infrastructure into the process of land conversion, through clear devel-
oper contribution frameworks; strategies to enhance and extend amenity within
existing and new development areas, as a basis for spreading the geography of
housing demand; and strategies to encourage, incentivize, and deliver, affordable
housing development by both private and non-profit sectors. Other strategies for
overcoming the shortage of affordable housing include investment in major infra-
structure needed to shift demand pressures from the inner cities, and direct financial
subsidy incentives for the construction of new affordable homes, along with prop-
erty tax reforms. That the latter strategies are likely to be the most unpopular with
governments, depending on significant commitment of public funds, and running
counter to the prevailing trend towards neo-liberalism in the Australian public sec-
tor, likely explains why the emphasis on land use planning as the supply constraint
has provided such a compelling distraction in recent years.
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Housing Supply and Urban Planning Australian

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This article was downloaded by: [Anadolu University]

On: 22 December 2014, At: 17:51

International Journal of Housing

Housing supply and urban

To link to this article: http://dx.doi.org/10.1080/14616718.2013.840110

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This paper examines the emergence in Australia of housing supply as a key

*Corresponding author. Email: nicole.gurran@sydney.edu.au

encompasses a variety of research techniques for systematically analyzing texts to

Planning regulation and the housing market

Empirical research on relationships between planning and the housing mar-

sufficiently to stimulate residential growth, without causing inflationary pres-

To investigate developer perspectives on costs associated with the planning pro-

Table 1. Low-income households in rental and mortgage stress, 2009–2010.

NSW Vic Qld WA SA Tas ACT NT Aust

The supply council’s methodology for estimating housing shortage is open to

Review of housing policy discourse

Category Author Title Year

Housing Prime Minister’s Summary of Findings for 2003

Parliament of Australia A good house is hard to 2008

Category Author Title Year

Urban Development An Industry Report into 2008

QLD Government Planning for a Prosperous 2007

efficiency (Productivity Commission, 2004). Drawing on over 320 written submis-

‘inherent’ supply limitations (the general stickiness of housing markets in assem-

This conclusion was based on an analysis of new finance commitments for

Australia is experiencing a structural decline in the affordability of housing due to

The Productivity Commission acknowledged the:

overwhelming view put to this inquiry by those involved in seeking development

Consequently, the Commission suggested potential scope to ‘moderate’ price

for housing affordability problems, the Commonwealth government was able to

Third, the mechanisms of development assessment must be reformed if we are to

Once again, planning reform is identified as the major policy response:

‘reforms that remove impediments to housing supply’ by improving ‘the efficiency of . . ..

What is surprising in this analysis by the Housing Supply and Affordability

highlighted. This would appear to be a case of seeking an issue which provides

Australian planning reform

ning through the Council of Australian Governments (COAG Reform Council,

Despite these perceptions, on the range of measures used by the Productivity

Figure 3. Median days approval, all Development Applications, 2008–2009 Australia.

Further, in relation to median decision times (measured in days), it appears that

International Journal of Housing Policy

Figure 5. Planning approval rate, Sydney Metropolitan Region, 2007/2008–2009/2010.

national prominence. Analysis of key government reviews of the causes of hous-

Australia’s housing reform agenda. Melbourne: AHURI.

Saiz, A. (2010). The geographic determinants of housing supply. Quarterly Journal of

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