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The Emerging Planning Paradox

The Emerging Planning Paradox
The Emerging Planning Paradox

OPINION:

Many good businesses have gone to the wall since March 2020. Some had solid business plans – but that didn’t save them. And here’s the problem that we are faced with now.

I read a draft strategy that is going to a Council to cover off on development guidelines for an area. The report (to be considered in May 2020) extrapolated historical demographic data to justify not supporting further residential development stating that there was an unmet demand for restaurants and retail. It is obvious that it is highly unlikely that that demand will materialise in the short or medium term now.
All of the future plans are predicated on historical information but when there is a significant shift in the trend – how relevant are the plans? The answer is probably not very relevant at all anymore. This dilemma is a microcosm of the real issue. Greater Sydney Commission District Plans and all the way down through to the local housing strategies have probably been rendered meaningless over the past month or so.
The problem is that if we don’t acknowledge this, then the plans themselves will be the architecture of major economic shocks across the sector.

There was a meeting of peak bodies by the Department of Planning during the week. They were trying to use multipliers to establish which projects they should prefer over others. Once again, the problem is that these multipliers are an historical manifestation – and It is highly unlikely that any metrics based on past performance will be remotely relevant to what we will be confronted by in the immediate future. A CEO in the meeting challenged using the metrics, and while it may easily be passed off as rent seeking, he has a very good point. Multipliers and plans based on historical information may not actually deliver in the future.

The government is beset by a planning paradox. They rely on plans as a justification for their actions. But if their plans are irrelevant what does that mean about their actions? We are in a rather precarious position.

It is about the response. Plans are not going to work in the prevailing circumstances – they may in fact be counterproductive as they are based on conditions that no longer exist. In public policy theory, we have moved the planning system to an almost totally rational policy model – hierarchy of plans all interrelated and inflexible and virtually immutable. The challenge is that we need an incrementalism model under the prevailing circumstances. If we are going to get through this, the Government is going to have to make incremental and tactical decisions and not rely on rigid plans that have been outdated in a matter of weeks.

This could actually be a bit of a painful experience. Governments aren't used to moving quickly. This is not to say that the officials are not working particularly hard at the moment. But they are working hard trying to do things under a model that is no longer applicable. I suspect that they will not realise this for a while. Success will be totally dependent on how long it takes them to acknowledge circumstances have permanently changed and develop immediate responses.

Stephen Albin

Stephen Albin

Stephen Albin is the Managing Director of Urbanised Pty Ltd, an economic advisory firm serving leading companies in the property, infrastructure, finance and agriculture sectors. Stephen was formerly the CEO of the Urban Development Institute of Australia (NSW), a director at Macquarie Bank Banking and Property Division as well as holding senior positions at TTF Australia and the Property Council of Australia. He started his career as an economist with the Commonwealth Government. He is presently on the Council of the UDIA NSW.

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