Warning of corruption risk under state’s new planning rules

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Senior integrity and planning experts say new rules allowing developers to bypass local councils by seeking approvals from the planning minister may have heightened the risk of property-related corruption in Victoria.

The warnings come after the tabling of the anti-corruption watchdog’s Operation Sandon probe into allegedly corrupt land deals in Melbourne’s south-east, and the release last month of the state government’s landmark housing statement.

Victorian Premier Jacinta Allan and her predecessor, Daniel Andrews.Credit: Gus McCubbing

The Independent Broad-based Anti-corruption Commission’s Sandon report, released in late July, warned that corruption risks could not be addressed by transferring planning powers from elected councillors to the minister.

“The corruption risk that applies to a councillor may also apply to a minister,” the report said.

Despite this, on the same day the government released its housing statement, it amended the state’s planning rules to allow developers and businesses to avoid local council and community scrutiny by seeking approval for larger projects directly from Planning Minister Sonya Kilkenny.

Sonya Kilkenny MP at the Carrum Train Station construction site in 2020.Credit: AAP

Patrick Fensham is a partner at SGS Economics and Planning, a prominent consultancy that advises the government. Fensham said centralisation of power with the minister made the risk of corruption “potentially even greater”.

He said it was currently unclear what criteria the minister would use to make decisions, or how this would interact with current planning rules.“It is … essential that there is opportunity for the community and appellants to provide input on significant development proposals,” said Fensham.

“That’s critical. One of the reasons we’ve got fairly exhaustive appeal processes, panels, third-party rights, is to actually hold decision makers to account for the consistency of decisions with adopted policy, but also their public impact.”

The Age is not suggesting that Kilkenny has behaved improperly.

Under the changes introduced as part of the housing package, developers with projects that “may” include so-called affordable housing and are valued at more than $50 million in Melbourne, or $15 million in regional Victoria, will be able to avoid local council and community scrutiny by seeking approval directly from the minister.

The rules also allow the minister to waive the affordable housing condition, and consider residential projects without it.

Projects deemed as making a “significant contribution” to the Victorian economy, including through creating jobs, valued at $10 million in Melbourne, or $5 million in regional Victoria, are now also eligible for assessment by the minister.

The government did not directly specifically respond to a series of written questions.

“We are considering the recommendations from Operation Sandon and will respond in due course,” a spokesperson for Kilkenny said on Monday. The government would rewrite the Planning and Environment Act 1987 “to build a modern, fit-for-purpose planning system”, they said.

When it was tabled in July, the Sandon report recommended that statutory planning decisions currently made by local councillors be transferred to non-elected expert planning panels, following the lead of NSW and several other jurisdictions.

The report identified the tension between a councillor’s role as an elected representative and planning decision-maker as “a significant corruption risk”.

It stressed that that risk would not be resolved by transferring responsibility from councillors to the planning minister, pointing to controversial ministerial decisions in the past that “raise concerns about improper influence, or at least raise questions about the underlying motivations for decisions at the state level”.

The examples cited were former Bracks-era planning minister Mary Delahunty’s overriding of the city council in her contentious approval of and development at Hilton Hotel in East Melbourne, and former opposition leader and Baillieu-era planning minister Matthew Guy’s decision to rezone land at Ventnor on Phillip Island.

While those decisions were controversial, neither were found to be corrupt.

Former Victorian Liberal leader and ex-planning minister Matthew Guy.Credit: Eddie Jim

Instead, Sandon called for decisions on significant projects to be made by independent, professional planning panels noting that such panels “can play an important role in promoting transparency, ensuring rigorous merit-based decision-making, and reducing the risk of politicisation in statutory planning”.

Monash University adjunct Dr Stephen Rowley was an expert planning witness to Operation Sandon’s public hearings in 2020.

In advice to the Municipal Association of Victoria shared with councils last week, Rowley said that while the Sandon report raised concerns about councillors making major planning decisions, “it made it clear that the same issues exist with ministerial decision-making”.

He said it was troubling and “really odd”, therefore, that the government would centralise decision-making with the minister and also broaden the minister’s powers to vary things like building setbacks and height.

“Centralising decisions and broadening the scope of discretion in one big move is very hard to square with the Sandon report,” said Rowley.

The Sandon report noted that NSW, South Australia and Western Australia have all introduced independent planning panels with sweeping powers to make statutory planning decisions, rather than merely provide advice or recommendations.

In response to questions from The Age, an IBAC spokesperson noted that, in the Sandon report, “IBAC made significant and specific recommendations for reform which are clear in their intent”.

IBAC acting commissioner Stephen Farrow and deputy commissioner David Wolf.Credit: Wayne Taylor

Commenting on the Sandon report in July, then premier Daniel Andrews said the government would consider each of the report’s 34 recommendations and respond “in due course”. It remains unclear whether the new rules centralising power with the minister will be altered as part of a more comprehensive government response to Sandon.

The Municipal Association of Victoria has been strident in its criticism of the changes to planning rules. “Operation Sandon’s was crystal clear on this,” said association president David Clark. “Taking planning powers directly into Spring Street does absolutely nothing to minimise corruption risk.”

The change comes more than a decade after the former NSW government moved to “depoliticise” planning decisions, with the repeal of so-called Part 3A provisions of NSW’s planning laws, which gave the planning minister extensive powers to approve “state significant” major projects.

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