September Message from Michael Tilt, CEO

It was certainly a busy month across the Nation for our team. The future of cities was a common theme across the offices, whether it be in metropolitan or regional cities.  Brian Haratsis, our Chairman presented at the Urbanity conference held in Brisbane in September on the impact of autonomous, electric and shared vehicles on spatial planning and the real estate industry. His talk highlighted what happens when global technologies collide with cities. I encourage you to have a read through the presentation. Congratulations to our many clients who received awards for their industry leading projects.

The NSW Minister for Planning and Housing also recently launched the Greater Newcastle Metropolitan Plan. It is the first metropolitan plan prepared outside a capital city in Australia and is the key to unlocking the future of Greater Newcastle. As Minister Roberts said, “The new Greater Newcastle Metropolitan Plan provides the platform to attract more businesses and skilled workers, and to maximise the commercial business opportunities of the Port of Newcastle and Newcastle’s expanding airport, bringing greater exports and critical tourism capital”. MacroPlan is very proud to be a member of the core consulting team to deliver the first ever metropolitan plan for Greater Newcastle. Link to the plan:  https://www.planning.nsw.gov.au/Plans-for-your-area/Greater-Newcastle-metropolitan-planning

The National Housing Finance and Investment Corporation (NHFIC) is a Commonwealth agency dedicated to improving housing outcomes. The NHFIC offers loans, investments and grants to encourage investment in housing, with a particular focus on affordable housing, which forms a key part of the Australian Government’s plan to help reduce pressure on housing affordability. MacroPlan has substantial expertise in housing, property economics and financing. If you need help with applying for this funding, please contact one of offices to speak to a MacroPlan expert for tailored assistance.

I also had the pleasure of attending a major presentation by Warwick Turpin, our General Manager of Retail, who was the keynote speaker at the September Property Leaders Event at the Sydney Savills office. The theme of the evening was ‘Reinventing Retail’ and Warwick spoke about the growth and increasing importance of ‘non-retail’ within shopping centres and shopping centre precincts. MacroPlan has tracked the increasing proportion of ‘non-retail’ footprints in all shopping centre classes across Australia since 2000 and its implications for landlords. We identified 9 key reasons for landlords to continue to consider adding ‘non-retail’ GLA. To discuss the trends, please contact Warwick on 0438 675 397 or warwick.turpin@macroplan.com.au.

Finally, I would like to welcome all the new staff who joined the MacroPlan team in September.  The high calibre of new staff is certainly a welcome addition to the national offices. The demand for Macroplan continues to grow, particularity with the recent changes in market fundamentals, the strategic direction from Government and the investment focus of our clients.

I look forward to personally catching up with many of you over the next month.

Michael Tilt Chief Executive Officer

MacroPlan expert witness evidence results in win for shopping centre

In a significant win for the development industry and proponents generally, the Western Australian State Administrative Tribunal (SAT) has granted development approval for a new shopping centre in the suburb of Midvale, despite fierce opposition from both the respondent decision-maker and existing retail operators in the area. This case hinged around the net economic benefits of competition to the community. Brian Haratsis, Chairman, was Expert Witness for the client, working directly with Lavan, the client’s legal team. After 14 months, 4 reports, 37 hours of cross-examination, and objections from the State Government of WA, Coles and IGA, the SAT found in favour of MacroPlan’s client.

Similar constraints in the zoning system apply across many of Australia’s planning jurisdictions. The Productivity Commission has been openly critical of the use of planning policies that require approval authorities to consider the commercial impacts and sustainability/viability of established business when assessing development applications.

The decision in John Nominees Pty Ltd v Presiding Member of the Metro-East Joint Development Assessment Panel confirms that commercial competition is not a valid reason to refuse a development application and unless there was the clear potential for a net loss of benefit to the community, new retail developments should be supported.

The proponent in this matter submitted a development application for a neighbourhood centre-type shopping complex on vacant land in Midvale.  The land was zoned for residential development rather than specifically for commercial purposes.  The land was subject to a structure plan, but the area that included the subject site was designated in the structure plan as being subject to further planning.  A new commercial strategy document adopted by the City of Swan had identified this general area as being suitable for a future new retail centre.

The development application was refused at first instance by the Metro-East Joint Development Assessment Panel (JDAP), primarily based on concerns that the proposal would divert retail trade from three existing shopping centres in the locality, to their detriment.  The JDAP’s purported planning justification for this reason for refusal was State Planning Policy 4.2 – Activity Centres for Perth and Peel (SPP4.2), which refers to establishing and protecting a defined retail hierarchy.

The proponent subsequently commenced an application for review in the SAT in respect of this refusal.  After an unsuccessful mediation with the JDAP and a formal reconsideration process, the matter was programmed towards a final hearing, at which stage, representatives of the three existing shopping centres in the locality were granted leave to intervene.  The proponent therefore effectively had to contend with four different respondents in this SAT proceeding.

As the reasons of the SAT record, the respondent and the intervenors largely approached this matter as being a dispute about economics.  There were six hearing days alone spent on the topic of retail sustainability, during which the various expert witnesses for the respondent and the intervenors attempted to persuade the SAT that the proposed development would put the existing shopping centres (and in particular the supermarket anchor tenants) out of business.

The SAT in its reasons correctly identified that this was a planning matter and that by reference to SPP4.2, increased commercial competition is not itself a relevant planning consideration.  Further, the SAT correctly concluded that SPP4.2 would only warrant refusing a development application if a given proposal would lead to a loss of services to the community, which loss would not be made good by the proposal itself.

The SAT ultimately preferred the expert evidence put forward by the proponent’s retail economist, which found that although there would be a diversion of trade, it would not be enough to threaten the viability of the existing shopping centres in the area.  The SAT further indicated a view that even if, as a worst case scenario, other supermarkets in the area were made to go out of business, the proposed supermarket would be a superior offering and would clearly make good any loss of services to the community.

The SAT concluded that the development application was supportable by reference to SPP4.2 and would be consistent with orderly and proper planning, despite the current absence of any specific structure planning provisions.

The ramifications from this decision are significant. This decision of the SAT demonstrates that even in challenging scenarios with significant resistance from various stakeholders, meritorious development applications should and can be approved.  This SAT decision should see decision-makers adopt a more flexible approach to applying policy documents such as SPP4.2 and disregard the potential for increased commercial competition as a planning consideration in determining proposals.

At the Productivity Commission stated in its 2017 five-year review, these policies “.. have particularly egregious impacts on competition…. and should be eliminated nationwide“.

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For more information on MacroPlan's expert witness case, or to discuss your retail property research requirements, please contact Warwick Turpin - General Manager Retail or Joel Taylor, General Manager, National Business Development.

 

 

Positive Employment Impacts with the Implementation of Connected and Autonomous Vehicles in Australia

MacroPlan was commissioned by the Australian and New Zealand Driverless Vehicle Initiative in mid-2018 to estimate the evidence-based employment impacts arising from the introduction of connected and automated vehicles (CAVs) into the Australian car fleet. There are compelling economic, industry development and environmental benefits for Australia to be an early adopter of CAVs (most of which will be electric). Mobility is a big domestic challenge for Australia with its great distances and its sparse population. There is substantial latent demand for travel demonstrated by the early success of Uber.

CAVs are forecast to formally enter the Australian marketplace in 2020 with the National Transport Council providing the necessary regulatory frameworks. CAVs have different production and operational value chains to traditional motor vehicles. This is because they require substantial software, artificial intelligence, new types of hardware and communications devices. CAVs are also likely to require new recharging and road infrastructure and upgraded telecommunications including 5G bandwidth. Additionally, CAVs require new regulatory, insurance and administrative frameworks.

CAVs will significantly change how we live and use cities. This radically disruptive technology has the potential to substantially improve access to jobs, services and entertainment for all citizens and to create new industries, occupations and prosperity.

MacroPlan’s research demonstrates that Australia is poised for significant job growth in higher value industries and services as it embraces the digital mobility and CAV transport revolution. Platform technologies such as mobile phones have created new industries and increased productivity and employment. Similarly, CAVs will become a platform technology.

Estimating future job impacts requires consideration of likely future increases in travel demand due to CAV benefits derived from lower prices, more choice and the potential for more productive use of in-vehicle time. Digital disruption generated by CAVs and new mobility services will create unprecedented opportunities for the industry and services’ sectors.

There is a school of thought that argues “robots are stealing our jobs” with up to 40% of jobs being lost due to technology (Ford 2015). Research by Borland and Coelli (2017) examine new technology impacts on jobs in Australia since the 1960s. They find no proof that job numbers have decreased as a result of new technologies.

Their research is cited by the Reserve Bank of Australia in a paper on “Structural Change in the Australian Economy” (March 2018) providing evidence for Australia that while technology has made some jobs obsolete, it has created other new jobs and overall jobs numbers have not been impacted.

However, Borland and Coelli (2017) acknowledge that the introduction of technology does cause job polarisation. Jobs involving non-routine and cognitive skills relatively safe from artificial intelligence tend to be concentrated at the top and bottom of the skill distribution whilst routine and repetitive skilled jobs are concentrated in the middle. New technologies have decreased the relative demand for middle rung jobs and consequently hollowed out the middle of the labour market.

MacroPlan’s research finds a net increase in jobs for Australia with the introduction of CAVs. Its research presents a set of projected employment benefits through three phases of CAV implementation. MacroPlan’s view is that these phases need to be traversed before widespread acceptance and availability of CAVs make them ubiquitous.

  • Phase One is the Investment Phase from 2018 to 2025 focussed on research and testing generating almost 2,000 direct and indirect jobs
  • Phase Two is the Implementation Phased from 2026 to 2035 focused on accelerated take-up generating over 3,200 direct and indirect jobs
  • Phase Three is the Transformative Phase from 2036 to 2045 focussed on hyper-mobility generating over 9,200 direct and indirect jobs.

Key industries that will experience employment growth in the research and testing phase are professional, scientific and technical services, information, media and technology and administrative and support services.

By 2025, CAVs will be common on Australian roads. This will mean that the mobility industry in Australia will go through an accelerated take-up phase with job gains and job losses becoming evident. For example, job losses will go beyond drivers to sectors like health, police, insurance and car repairs due to reduced accidents.

CAVs are likely to require new infrastructure, hardware, software, road infrastructure and telecommunications. In addition, CAVs require new regulatory, insurance and administrative (e.g. cybersecurity) frameworks which will generate new jobs.

MacroPlan’s research finds that the introduction of CAVs will lead to increased levels of economic activity, productivity, wealth and employment. Platform technologies such as mobile phones have created new industries and increased productivity and employment and MacroPlan predicts this will be the path for CAVs.

For further information on this report or to better understand the impacts of Autonomous Vehicles, please contact Tony Carmichael, National Principal Strategic Advisor today.

Urbanity 2018 - Brian Haratsis's presentation on autonomous, electric and shared vehicles

For those who wanted to know what makes a great city,The Urban Developer ran their second Urbanity conference in Brisbane in September. It was held at the Brisbane Royal International Convention Centre from 18-20th September. It was billed as a conference for the creators and custodians of cities in the Asia-Pacific. It was also an another opportunity for attendees to hear from our Chairman Brian Haratsis. He gave a very engaging keynote presentation on the impact of autonomous, electric and shared vehicles on spatial planning and the real estate industry. If you missed the event, a copy of Brian's presentations slides are available here.

For more information on the impacts of Autonomous Vehicles or to arrange a presentation with Brian, please contact us today.

 

New government funding supporting housing development

Recently, the National Housing Finance and Investment Corporation (NHFIC) released the details of the National Housing Infrastructure Facility (NHIF).  The NHIF is a $1 billion facility that offers concessional loans, grants and equity investments to help support enabling infrastructure for housing projects. The fund is aimed at improving housing outcomes for Australians, including the supply of housing and investment in housing, in particularly, social and affordable housing.

For housing developments, including individual projects and growth areas, this means the ability to finance infrastructure components which may currently be restricting development feasibility, or advancing priority infrastructure programs to deliver critical infrastructure, such as bridge connections or major utilities, in the short term instead of in 10+ years’ time.

This funding could provide the opportunity to turn a medium density project with no affordable housing to a high density project with dedicated affordable housing.  It could also be the difference between a vacant site with contamination issues and a remediated site that supports new housing development opportunities.

Funding is available for new or upgraded infrastructure for services such as water, sewerage, electricity, telecommunications or transportation and site remediation works including the removal of hazardous waste or contamination.  Eligibility for grants and finance is based on the ability to demonstrate that a project is unlikely to proceed, or would be likely to proceed only at a much later date, or with a lesser impact on new affordable housing, without financing provided by the NHFIC.

To apply for funding an applicant must be an Australian State or Territory, a local governing body, a local government owned investment corporation, a utility provider, a registered community housing provider, or a special purpose vehicle (SPV).  An SPV can be a joint venture, a partnership or an incorporated entity involving, so long as at least one member is an eligible proponent.

For private developers, there is the opportunity to enter a SPV to apply for funding for relevant projects.  For example, this could be establishing a joint venture with a community housing provider to deliver a social housing project, or it could be entering a partnership with Council to fund critical infrastructure required to service a specific development and/or growth area.

Up to $175 million of the facility is available as grants with the remaining $825 million available as concessional loans and equity investment, which will form part of a revolving permanent fund (with returns on loans and equity investments to be reinvested).

Expressions of interest for funding opportunities are now open and additional information can be accessed here: https://nhfic.gov.au/nhif/.  If you would like assistance with developing a funding application for your project, please contact one of our experts today.