Rio Tinto’s Chris Salisbury has today penned an op-ed in The Australian arguing that strict planning processes are costing the Australian economy dearly and how reform is required to allow the economy to move forward:
IMPROVED productivity has become the mantra for businesses across Australia as they strive to remain globally competitive.
While much of this challenge rests with individual companies, there is also a significant role for governments to play by ensuring the policy, regulatory and taxation settings don’t put businesses at a competitive disadvantage…
…government agencies must be required to adhere to mandatory timeframes in assessing and determining applications to bring an end to the seemingly endless delays that beset the system today.
It is equally important that government finds a way to ensure projects are properly assessed on their merits just once, without a never-ending cycle of appeals.
An effective planning system should address community feedback and maintain environmental safeguards for major projects through a clear and consistent process, not the courts…
All major projects, from housing to infrastructure, industrial and mining developments, go through the planning system. It is the gateway to continued employment and prosperity… We all have a stake in getting it right.
It’s hard to disagree with Salisbury’s assessment, even if his article focuses on the mining industry.
Take the all important housing market, which effects each and every Australian. Here, plans for development too often get tied-up in cumbersome red tape, as summarised in the below table from the Productivity Commission’s 2011 planning report:
When combined with the artificial restriction of land supply and excessive levels of taxation on new development, the impact on dwelling construction has been immense. Fringe lot prices have skyrocketed:
And the rate of dwelling construction has collapsed:
Which makes the RBA’s plans for housing to fill to void left as the mining investment boom unwinds a forlorn hope, despite record low interest rates, rising prices, and first home buyer stimulus targeted at new construction:
It also highlights why there is no substitute for reforms aimed at fixing the underlying structural barriers that prevent affordable and desirable houses from being supplied to the market, namely: freeing-up land supply and competition amongst land holders and developers; reducing taxes and regulatory changes on development; steamlining development approval processes; and improving the provision of housing-related infrastructure.
Until such supply-side issues are addressed, not just in the housing market but elsewhere, the Australian economy will remain hamstrung as the once-in-a-century mining boom unwinds.
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