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ICAC recommends reforms to Part 3A of the NSW Planning legislation

Monday 13 December 2010

The Independent Commission Against Corruption (ICAC) recommends that the NSW Minister for Planning refer private sector applications under Part 3A of the Environmental Planning and Assessment Act 1979, which exceed development standards by more than 25%, to an independent quasi-judicial body for determination.

The Commission recommends that this role be assumed by the Planning Assessment Commission (PAC). In view of the important functions the PAC would assume, the Commission makes recommendations to strengthen its independence and to ensure that it is composed of appropriate persons, on a full-time basis but with a limited tenure.

The Commission's report, The exercise of discretion under Part 3A of the Environmental Planning and Assessment Act 1979 and the State Environmental Planning Policy (Major Development) 2005, released today, makes altogether 20 recommendations to more effectively manage and mitigate potential corruption risks in the Part 3A process.

Commencing in 2005, Part 3A consolidates the different assessment and approval regimes for "major" projects in NSW determined by the Minister for Planning. The State Environmental Planning Policy (Major Development) 2005 (the MD SEPP) identifies several classes of Part 3A projects including significant private developments (for example, residential flats and commercial developments), and public sector infrastructure projects (for example, desalination plants and pipelines).

The ICAC recognises that it is appropriate that in many of these classes the Part 3A discretion should continue to be vested in the Minister. Nevertheless, in other situations there is a risk that perception may arise of corrupt influences playing a part in the Part 3A decision-making process. The key issue is the adequacy of safeguards when such Part 3A discretions are exercised. The need for adequacy of safeguards applies to elected or unelected officials at every level of government.

"The Part 3A system is characterised by a lack of published, objective criteria," the report says. "There are also various elements of Part 3A that are discretionary, particularly as regards residential and commercial development, which are prohibited or exceed existing development standards. The existence of a wide discretion to approve projects that are contrary to local plans and do not necessarily conform to state strategic plans has the potential to deliver sizable windfall gains to particular applicants. This creates a corruption risk and a community perception of a lack of appropriate boundaries."

While there are no established examples of the corrupt use or manipulation of discretion under Part 3A there is, nonetheless, considerable discretion built into Part 3A. Similar kinds of discretion have been the subject of several Commission investigations and investigations in other jurisdictions and beyond.

Under the current system, the Minister has the discretion to declare a project to be a Part 3A project by Ministerial Order. It is the loose criteria and the broad discretion that potentially give rise to perceptions of undue influence. The risk of this occurring is heightened by the Minister not being bound by the provisions of local environmental plans (and SEPPs generally, in the case of critical infrastructure projects).

To limit discretion and improve safeguards, the ICAC recommends that the NSW Government amend the EP&A Act to limit the application of Part 3A to projects that are permissible under existing planning instruments. The Commission also recommends that the PAC perform a gateway role, by way of independent scrutiny, in reviewing proposals to call in private sector projects via specific Ministerial Order.

The Commission and the NSW Department of Planning established a joint task force this year to examine whether there were corruption risks attached to Part 3A and to develop measures to address any of the identified risks. The Commission acknowledges the valuable assistance provided by the Department in participating in the task force.

However, the report has been prepared in its entirety by the Commission, and consequently its recommendations are those of the ICAC.

Full Report