Shelter NSW’s submissions on the Place-based Infrastructure Compact for Western Sydney and Aerotropolis Precinct Plan

Late last year, the Greater Sydney Commission and Western Sydney Planning Partnership exhibited infrastructure and land-use plans for Sydney’s newest city centred around the Western Sydney Airport.

Shelter NSW has now lodged submissions on these plans—the Initial Place-based Infrastructure Compact (PIC) and the Aerotropolis Precinct Plan—challenging and questioning why they both exclude meaningful action to house people on ordinary incomes who are expected to live and work there. Mainly, their only actions include a renewal of existing social housing estates that will deliver 200 additional social dwellings in 20 years and a 5% target of affordable housing as part of new mixed-use residential development subject to viability.

What is the PIC?

The PIC is essentially a plan to provide the infrastructure that is necessary to support an expected level of growth. Prepared by the GSC, it follows an initial three-step process to:

• forecast expected growth in jobs and housing;
• estimate what infrastructure in needed, its cost and funding source; and
• evaluate the benefits of paying that cost.

The exhibited PIC reports the findings of that analysis and presents a costed plan to sequence infrastructure which the GSC will now put to the NSW Government as a strategic business case. The ‘compact’ refers to an agreement by the contributing agencies and providers—for health, education, transport, water, electricity, and so on—to implement the PIC if it is approved.

What does the PIC do for social and affordable housing?

The GSC excludes social and affordable housing from its process. Instead of planning for it on the basis of need as it has done with other infrastructure, it includes an action to provide it only “where feasible”. For social housing, this means the renewal of existing public housing estates located around St Marys and Mt Druitt, provided that land values rise sufficiently to redevelop them at higher densities with private housing—similar to what we see at the moment with Waterloo in Sydney’s east. For affordable housing, it means the application of the GSC’s 5% target for contributions in private development on rezoned land.

So, how much housing will this deliver? Buried in over 1,000 pages of supporting technical appendices is analysis that found only 200 additional social housing dwellings would be provided after 20 years. As for affordable housing, another technical appendix reports that the GSC commissioned analysis on the feasibility of applying its target to the PIC area but this report was not included as one of the exhibited documents. As such, it is unclear how much will be delivered. Notably, though, the economic evaluation of the PIC claims that the benefits of affordable housing cannot be calculated as improvements in liveability—such as achieving the GSC’s ideal of a ’30-minute city’— are measured in terms of increased ‘willingness to pay’ for housing.

What is the Precinct Plan?

Prepared by the Western Sydney Planning Partnership—a unique tri-level government body—the Precinct Plan is a land-use plan that applies to some-but-not-all of the precincts that make up the Aerotropolis, which itself makes up about one-third of the initial PIC area (see the maps below). Its purpose is to shape development by setting rules that future master-plans and development applications must comply with according to various ‘frameworks’ for the built and natural environment. On face value, the almost 30 technical studies that have informed the Precinct Plan set it up to shape the Aerotropolis into a liveable and connected place; providing of course that the expected growth actually eventuates and heat levels are mitigated as planned.

What does the Precinct Plan do for social and affordable housing?

The Precinct Plan takes a similar approach to the PIC in planning for affordable housing: not on the basis of need but on the basis of feasibility. Specifically, it includes a requirement—adopted from the GSC—that 5% of new mixed-used development with a residential component must be provided as affordable housing. It is worth noting that the areas that are zoned to allow for housing of any kind are relatively small compared to the much larger areas that are zoned primarily for employment.

In any case, the legal mechanism that normally gives effect to these targets—an affordable housing contribution scheme—has not yet been proposed for the Aerotropolis. Other contribution schemes have in fact already been prepared, including a Special Infrastructure Contribution (SIC) by the Department of Planning and a local fixed-rate levy jointly prepared by Penrith and Liverpool City Councils, but neither can be used for affordable housing. This complexity in the planning system potentially makes the enforceability of the Precinct Plan’s requirement unclear.

As for the rate of 5% itself, this has been set with reference to feasibility analysis that does not in fact appear to have been provided or conducted. Again, buried in one the technical reports is analysis by private consultants which indicates that the viability of the affordable housing target will be tested at the time a development application is lodged. This is likely to mean that developers simply do not factor it in as a cost when they purchase sites from landowners—making a negative result on a future viability test a self-fulfilling prophecy.

For this very reason, the feasibility analysis that does inform the Precinct Plan factors in other contributions such as the state-level SIC and the local-level contributions levy. And yet, it specifically excludes affordable housing as a cost that developers will be expected to factor in. It is this same analysis that goes on to say that these additional contributions are unlikely to be viable. Without access to the relevant models, it is impossible for Shelter to test the veracity of these claims. That the same analysis shows that land values in the Aerotropolis have already doubled in the previous 5 years as a result of planning decisions makes it hard to believe.

What did we say in our submissions?

Our submissions point out the once in a lifetime opportunity to plan a new city and ask why social and affordable housing is being excluded at a scale that is proportional to the growth envisioned. Both the PIC and the Precinct Plan rightly focus on the opportunity to improve equity in Western Sydney by rebalancing the number of ordinary and well-paying jobs available there. However, in seeking to replicate the success of Eastern Sydney, it seems apparent that these plans will repeat its same market failures.

The purpose of social and affordable housing is in part to prevent unfair competition between people on ordinary incomes—those in low- and moderately-paid work, in casual and part-time employment, or getting by on support payments—who live and work in the same place as those on high-incomes. Without these non-market and alternative-market options, we can expect the same results of these individuals and families losing out in decades-time: compromises in amenity, paying too much rent, moving further away, sacrificing independence and privacy, and even homelessness.

Ironically, if Shelter NSW were planning a new city, we would potentially follow the same process as the PIC: we would forecast growth in the number of jobs but be clear as to what kinds of jobs they would be; we would estimate what levels of social and affordable housing would be needed to support that growth, how much it would cost, and who would pay for it; and we would evaluate its economic and social benefits. And were we to use the kind of private contribution mechanisms set out in the Precinct Plan, we would be open and transparent about what levels of affordable housing are truly viable in light of rising land values that have already doubled in the previous 5 years.

You can read our full submission on the PIC here and the Precinct Plan here.

What happens now?

The GSC and the Planning Partnership will respectively proceed to enact their plans after reviewing feedback gathered through the exhibition phase. It is important to point out though that they will repeat this process again as both the PIC and the Precinct Plan apply only to what are called initial areas and initial precincts. As the maps below show, more PICs and more Precinct Plans will follow.

In preparing our submissions, we have gained an appreciation that not many people in the community will have the time or planning-specific knowledge to understand what these plans are, how they work, and what they mean for housing people on ordinary incomes. Indeed, Elizabeth Farrelly commented on them recently in a Sydney Morning Herald article that you would need a PhD and 10-year term in solitary confinement to comprehend them. For that reason, we are looking to prepare a detailed explainer document which we will share soon.

As part of this, we will also look to engage with the GSC and the Planning Partnership to understand why these plans exclude meaningful action on social and affordable housing. After all, given the once in a lifetime opportunity to plan a new city, how can it be acceptable to say that only 5% of people who work there will be able to afford to live there?