Victoria Shifts to Ambitious Pro-Development Agenda

In early March, the Victorian Government capped off an extraordinary week of housing announcements with the release of the much-anticipated strategic planning document, Plan for Victoria. 

The plan codifies what had become common knowledge in the Victorian development sector since the release of the Housing Statement in September 2023—that at the centre of the State Government’s reform agenda between now and the next election (November 2026) will be the planning system.

To this end, the plan—and the week of announcements leading up to it—signal a meaningful shift in planning policy towards an ambitious, pro-development agenda.

What remains to be seen is whether the welcome shift in rhetoric will be reflected in outcomes.

Ambition matched by accountability 

The plan reiterates the Government’s commitment to the construction of 2.24 million homes to 2051—an ambitious target that has been met with scepticism by some in the industry who question whether this is realistic given the Government is already struggling to hit the Housing Statement’s target of 80,000 homes a year.

The plan largely mimics the policy aims of Plan Melbourne 2017-2050 that it replaces, with a doubling-down of strategies such as encouraging urban infill and consolidation, reducing private car ownership and increasing the diversity of housing typologies available for Victorians.

Where the plan diverges from the Government’s previous statement is a commitment to managing sprawl in regional cities, which it claims threatens the viability of Victorian agriculture.

Encouragingly, the plan is underpinned by a strong commitment to accountability, with clear metrics for deliverables against which progress can be monitored.

Given the scale of the Government’s commitments, an outcome-based approach (as opposed to the opaque metrics of Plan Melbourne) is welcome. 

The ambitious—albeit reduced—targets for local government areas have been measured by reference to actual development potential (as opposed to the capacity of planning schemes in their current forms).

Whilst the details are yet to be made public, the Government has signalled its intention to remove planning powers from councils who consistently fail to meet their targets.

Roadblocks

While the plan represents a welcome set of actionable steps the Government can take to improve the outlook for Victoria’s development sector, a few notable exceptions have left major developers feeling short-changed.

Missing from the plan was any commitment to relieve the tax pressures hitting the development sector disproportionately hard, with the UDIA chief Linda Allison writing on LinkedIn that “getting the tax settings right will be essential to bringing forward industry’s ability to meet the ambitious targets set out in the plan”.

Property Council of Victoria executive director Cath Evans concurred that despite the encouraging changes in the plan, “without critical property tax reform, Victoria will struggle to attract the investment it needs to deliver future housing”.

The Property Council proposes land tax exemptions for high-density development and an extension of the Government’s proposed 12-month off-the-plan stamp duty concession.

The Productivity Commission’s recent report Housing construction productivity: Can we fix it? also highlights several major areas of reform not canvassed in the plan but necessary to the delivery of additional housing it proposes, such as building regulation review, occupational licensing reform and the promotion of Modern Methods of Construction.

These issues are compounded by shortages of workers and materials that have led to industry-wide cost escalations and builder collapse.

Without more state and federal government support to address these shortages—such as pushing out the delivery timeframes of public infrastructure projects and increasing skilled migration pathways for in-demand trades—these shortages threaten the capacity of the sector to meet the plan’s targets.

Accordingly, whilst the plan marks an important consolidation of State Government strategy in promoting more development, questions remain about the effectiveness of what’s been proposed without complementary changes to the tax regime and public support for the sector.

Planning & Property Partners remain ready to assist you navigate these changes, the details of which we are well across.  To learn more about what these reforms mean for you, please contact us through our website. 

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