IBAC, the development industry and Australia's newest planning disaster

As we watch the unfolding spectacle of political corruption in ICAC proceedings in NSW, here in Victoria there is a smug conviction that politics in Victoria is better than all that. ICAC’s revelations about the Obeids and the corrupt dealings of politicians on both sides are conveniently attributed to the peculiar characteristics of NSW history, and the system of privilege and preferment that characterised the colony’s early history.

NSW has come a long way since then. Established in 1989 by the Greiner government, ICAC has been able to uncover embedded and systemic levels of corruption in a way which gives some confidence that wrongdoing can be investigated and exposed to public scrutiny.

In Victoria neither party has chosen to follow the NSW example. The Brumby government proposed an Anti-Corruption Commission but there was little support for the model it came up with, due to its complexity and its underlying inadequacy in important areas. In 2010 the Liberal/National coalition went to the election promising to establish a model which would have all of ICAC’s powers, but the Independent Broad-Based Anti-Corruption Commission (IBAC) it created in 2012, is unable to investigate misconduct in public office, and can only act when it already possesses evidence an offence may have been committed.

In its first report tabled in Parliament earlier this year, IBAC’s Commissioner Stephen O’Bryan SC stated that IBAC has been unable to investigate serious corruption as its enabling legislation does not provide power to carry out this role. The ten investigations it carried out in its first year of operation included matters like bribes over cemetery plots, police assaults – low-level issues.

The Napthine government has stated that it will respond to IBAC’s request for greater powers, but is yet to detail how it will go about this. And Labor has yet to announce policy in this area.

In 2009 NSW enacted stringent legislation preventing developers from making donations to political parties. Despite this prohibition the ICAC hearings have shown the extraordinary lengths politicians will go to in order to benefit supporters, especially developers who can make substantial donations to party coffers. In Victoria, by contrast, there are no restrictions on developers’ contributions to political parties.

No comprehensive data is available on donations to political parties in Australia – our electoral laws are amongst the loosest amongst English speaking countries. There is no limit on electoral expenditure; donations must be disclosed when they exceed $12,800, but the regulations enable donations to be made to the national and state branches of political parties, so donations of up to  $102,000 made in this way do not require disclosure. Victorian Liberal Party Director Damien Mantach recently told a closed meeting that the party would spend over $10m on the 2014 Victorian election.

Melbourne is currently in the grip of an apartment construction boom, with more apartments being built than at any time in the city’s history. Local developers have been joined by development groups from China, Singapore and Malaysia, and many projects are now exclusively marketed offshore. Melbourne City Council, which currently has a population of about 115,000 people, is projecting a population of about 188,000 by 2030, rising to 212,000 in 2036; most of this huge increase will be housed in high rise apartments.

An indication of what was to come was provided in a statement by Planning Minister Mathew Guy on February 17, 2012 when he outlined his vision for a “radical grand CBD” which "could see the city transformed into a Manhattan-style metropolis, five times its present size achieved through a new Capital City Zone, which would abolish height restrictions…... "I think it could lead to the centre of Melbourne becoming one of the truly great high-density population areas for Western cities anywhere in the world," he said.

He also emphasised the need to encourage development and stop road blocks via a "streamlined planning approval process for the CBD to speed up and encourage development….. although height and density restrictions will remain over certain pockets of the expanded metropolis to protect key areas."

 Three months later the State government announced the largest urban renewal scheme in Australia’s history for Fishermans Bend. The area for redevelopment abuts the CBD and comprises 240 ha of mainly industrial properties; the State government projects an eventual population of over 80,000 residents and 40,000 workers by 2050, in an area which currently has about 200 residents. The effect of the rezoning, without any planning controls in place, was to immediately provide windfall capital gains to property holders in the area. According to Property Observer in June 2013, “there are suggestions developers had land banked the sites years ago tipping the State government would rezone them as residential when in power…..this is proving correct”. Prof Michael Buxton said at the time that what the government did was scandalous in “rezoning such a large area of land as capital city zone without any rules being in place, and enriching canny speculators…you could not get a worse example of how not to develop than Fishermans Bend”.

The Goodman Group, to take one example, owns about 28 ha in Fishermans Bend. In July this year it reported that it had revalued its properties from $120 million to $403 million, and that it is planning a massive $500 million residential development in its first project for Fishermans Bend, comprising a vertical residential village to house 1354 apartments across four towers. If that uplift in value was uniform across the entire renewal area, some billions of dollars have been gifted to Fishermans Bend property holders without any component of this uplift being captured by government for the provision of essential infrastructure.

On July 28 the State government finally released the Structure Plan for Fishermans Bend. This plan is intended to define the preferred direction of future growth and to specify how the development will be managed.

The Structure Plan shows nominal height restrictions of 30 storeys or lower affecting less than 10% of the total renewal area. Even these specified heights are qualified as ‘discretionary’. The remaining area of approx. 220 ha is zoned as ‘discretionary’ – i.e., there are no height controls at all and approvals are entirely at the discretion of the Minister. There are no provisions about affordable housing, about social housing, or about environmental and sustainability measures. And there are no minimum standards in areas like the size of apartments, provision of ventilation and access to natural light. No wonder the Structure Plan has been described by people around the Metropolitan Planning Authority as a “developers’ prospectus”.

A key issue at the heart of these planning decisions is that the two local Councils, Melbourne and Port Phillip, have effectively been sidelined as a result of the Capital City Zoning changes. Port Phillip can only deal with applications of four storeys or less, and Melbourne City Council with developments of less than 25,000 sq mts, a size exceeded by nearly all the high rise applications approved or to come. The existing Metropolitan Planning Authority is a creature of the State government, with no independent powers or capacity to influence government decisions. So in practice there are no objective and public standards which could constrain the Minister in assessing the many applications now on his desk, not only in Fishermans Bend but also within Melbourne City Council boundaries.

We are entering uncharted territory in Victoria. Any decision made by the Minister is unchallengeable – if there are no minimum rules or standards, how can any planning decision be wrong or inadequate?

With the State election just three months away, the Victorian planning system needs three substantive changes. First, an independent Metropolitan Planning Authority, based primarily on local government, is needed to create an effective planning scheme which balances Statewide and local interests within a transparent and accountable framework. Secondly, in an ideal world donations to political parties by developers should be banned by both parties. Realistically this is unlikely to happen until enough politicians have been exposed in taking bribes and giving preference to those developers boosting party funds. This won’t happen until the most important component is in place -  an effective ICAC, with all the powers of its NSW counterpart is an absolute necessity. In Victoria no one knows at present where the money goes, but it is clear that billions of dollars are being poured into Melbourne, that this process will accelerate over the next few years, and with the prospect of soaring profits in prospect it is inconceivable that future governments won’t be immune from the kind of actions exposed by the Fitzgerald Inquiry in Queensland and ICAC in NSW.