Premier Daniel Andrews says planning reform could still occur without introducing new legislation

After an embarrassing backflip on social housing reform, Premier Daniel Andrews says planning approvals could still be streamlined.

Daniel Andrews has left the door open to streamline planning approvals just one day after his government’s embarrassing backflip on a controversial package of reforms.

The state government on Tuesday sensationally scrapped its $800m social housing tax, which would have also included key reforms to building and planning approvals in a move that industry said would cut red tape.

Key industry bodies reacted furiously to the government’s decision to not proceed with the “much awaited” planning reforms.

Urban Development Institute of Australia Victoria CEO Matthew Kandelaars said: “It’s frustrating that the government has chosen to hold to ransom the improvement of inefficiencies within a state-sponsored planning system that would help to accelerate the Victorian economy out of the pandemic … The only place where a social housing tax and planning reform is linked is within the bubble of Spring Street politics.”

Despite the government vowing to never reintroduce the package, even if Labor is re-elected in November, the Premier on Wednesday said planning reform could still occur without introducing new legislation.

“There was some proposals to change the law. They’re not happening, but the point I’m making is there are other things you can do to try and make the best decisions and make them in the quickest amount of time,” he said.

Daniel Andrews says planning reform could still occur without introducing new legislation. Picture: David Crosling

“Red tape is someone in the eye of the beholder. Some people would see red tape as something that should be reduced, other people might say there’s some protections for local communities in the Planning Act at the moment.”

Mr Andrews said the government had a strong track record when it came to “making better decisions and trying to make them as fast as we can.”

“You can do things without necessarily changing the law just by working really hard to get as many applications approved as fast as possible,” he added.

“Some of these planning decisions are not always easy, but we have – without changing the law – done many things to try and have more stock available, (and get) projects large and small approved in good time.

“Whether that’s supporting the training of additional planners, working with local councils, expanding those experts that are about getting more blocks of land out to market and getting big projects and small projects out to market as fast as possible.”

Opposition leader Matthew Guy said the government’s position on the reform appeared to change every day.

“The government’s approach on this new tax has been a disaster,” he said.

“No one has any consistency.”

Opposition planning spokesman Ryan Smith said the government should reverse its “shameful dummy spit” that had stalled the reforms, which he said were “vital in changing the state’s current planning system”.

“Billions in benefits and thousands of jobs all stalled because the industry won’t cop a tax that will inevitably be passed onto new homebuyers,” he said.

“Victorians are crying out for red tape to be slashed, without a new tax.”

Tax ‘off the table for good’

The state government is set to dump its highly contentious social housing tax.

It comes less than two weeks after the announcement was made.

Development giants and industry leaders slammed the proposed 1.75 per cent social housing levy, which was set to add an extra $20,000 on the median price of a new house in Melbourne from July 2024.

It would have applied to all new developments featuring more than three dwellings, or three or more lot subdivisions in Melbourne, Ballarat, Bendigo and Geelong.

Under the proposed reforms, social housing properties would have been exempt from paying rates.

The Herald Sun revealed some homeowners across the state would be slugged an extra $80 in rates a year, if the reforms came into effect.

Treasurer Tim Pallas confirmed the tax was officially dead.

Mr Pallas said the package was “off the table for good” and would not proceed under a re-elected Andrews Labor government.

“They are done, they are dusted and they are finished,” Mr Pallas said.

“This is clearly a disappointing result.”

The plan was set to add an extra $20,000 on the median price of a new house in Melbourne.

Mr Pallas slammed the building and construction sectors, accusing them of carrying out a “misinformation campaign” and putting out “entirely ludicrous costs”.

“We are not going to play a game where consumers are frightened in the current environment,” he said.

The Treasurer confirmed there was a level of concern from his parliamentary colleagues about the impact the levy would have in the lead-up to the election.

“There was a disinformation campaign, which the industry itself was prepared to enable,” he said.

“We are not going to sit back and watch this industry misrepresenting the cost and the effect of these changes.”

The Urban Development Institute of Australia’s Victorian chief, Matthew Kandelaars, hailed the government’s backflip as a “win for homebuyers”.

Mr Kandelaars said the fierce backlash from the industry served as a reminder to the government that Victorian homebuyers were “fed-up with the tax burden that continues to hurt housing affordability”.

“Scrapping this tax was the only sensible thing to do,” he said.

Treasurer Tim Pallas says the building and construction sectors carried out a ‘misinformation campaign’. Picture: Daniel Pockett

“UDIA Victoria has always supported a broad-based contribution to fund social and affordable housing, through which the burden is shared across the whole community and we remain available to government to discuss how such a mechanism could be implemented.”

But Mr Kandelaars said the UDIA was disappointed that the government’s long-awaited planning reforms — which would remove red tape by cutting up to six months off planning permit applications – was also scrapped.

“The only place where a social housing tax and planning reform is linked is within the bubble of Spring St politics,” he said.

“It’s frustrating that the government has chosen to hold to ransom the improvement of inefficiencies within a state-sponsored planning system that would help to accelerate the Victorian economy out of the pandemic, with a $20,000 tax on homebuyers. The ultimatum was put to us, but it is a position we could never accept.”
Shadow Treasurer David Davis said the “humiliating backdown” proved the government was in “disarray”.

“Daniel Andrews would rather bully industry to conform with its plans rather than work with them on an agreement that best reflects the interests of all Victorians,” Mr Davis said.

“The fact that planning reforms, which would help address the issue of housing affordability in our state, aren’t considered unless you agree to a big new tax speaks volumes on how this government operates.”
Property Council Victorian executive director Danni Hunter said the announcement was “deeply disappointing” for the property industry.

The Property Council is incredibly disappointed by the Andrews government’s decision this morning to withdraw its proposed planning reform and social housing package,” Ms Hunter said.

“We have been ardent advocates for planning reform and a better system to deliver social and affordable housing on behalf of the property industry, and the broader Victorian community.”

Council to Homeless Persons CEO Jenny Smith said every home built under the proposed contribution fund was desperately needed.

“Today is a devastating day for people working to end homelessness in Victoria,” Ms Smith said.

“This was a small contribution asked of developers who for decades have made windfall profits in a runaway housing market, and who were set to make more profit from planning reforms.

“The inevitable consequence is more Victorian families without homes.”