Federal Treasurer Jim Chalmers is putting $29.8 million behind a Western Australian planning overhaul aimed at cutting approval times and opening more land to housing and commercial development, as Perth continues to grapple with high prices and pressure on new supply.
The Commonwealth funding will back changes to planning and zoning rules, centralise some higher-density development decisions and encourage modern construction methods under the revived National Competition Policy. Chalmers described the agreement with Western Australia as “an important milestone” in the government’s productivity program, saying the aim was to cut red tape, accelerate construction and get more homes built.
One of the biggest changes will tackle the complexity of WA’s planning system. The government says more than 800 land-use terms and 269 zones are currently in operation. Those definitions and zones will be consolidated across metropolitan Perth and the Peel region, an area that accounts for about 85 per cent of development activity in the state.
Higher-density residential and mixed-use projects within 800 metres of selected train stations will also move towards centralised decision-making through the Western Australian Planning Commission.
That builds on work already under way through the Cook Government’s Precincts WA program. Ten priority station precincts have been identified at Ballajura, Bassendean, Carlisle/Oats Street, Claisebrook, Cottesloe, Glendalough, Morley, Mosman Park, Redcliffe and Swanbourne. An improvement plan covering eight of those precincts took effect in late July, while Ballajura and Redcliffe are being progressed separately. More detailed zoning, density and development controls are still being prepared.
Jim Chalmers is backing a $29.8 million overhaul of WA’s planning system aimed at speeding up approvals, unlocking higher-density development and lifting housing construction, as pressure grows on governments to turn planning reform into actual new homes
The shift towards state control of approvals is likely to remain one of the more contested elements of the plan. Councils in Perth’s western suburbs have already raised concerns about transport infrastructure, community consultation and the relationship between state-led density plans and existing local planning work. In Mosman Park, 76 of 125 submissions received during local consultation opposed the proposed station precinct plan, while 34 were supportive or conditionally supportive.
The political argument from Canberra is that approval reform has become an economic productivity issue as much as a housing issue. Chalmers said the package was “all about cutting red tape and faster approvals to boost construction, build more homes and support businesses in Western Australia”.
There is evidence behind that argument, although faster approvals alone will not guarantee that approved projects are built.
The Productivity Commission found last year that Australia now completes about half as many dwellings for each hour worked in housing construction as it did in 1995, with physical productivity falling 53 per cent. The average detached house took about 10.4 months to complete in 2023-24, compared with 6.4 months a decade earlier. The commission identified slow and complicated approvals, regulation, workforce constraints and weak adoption of new building techniques among the causes.
Research published this month by The Balance Sheet reached a similar distinction between approvals and actual construction. It found that while approvals have been improving nationally, housing starts have not kept pace, with feasibility, labour shortages, costs and planning restrictions all affecting what ultimately gets built. The report noted that the official national forecast remains about 980,000 homes against the Housing Accord target of 1.2 million.
The pressure is particularly relevant in Western Australia. ABS figures show 5,923 dwellings commenced in the state in the March quarter, compared with 6,430 in the December quarter. WA completed 5,052 dwellings during the March quarter. More recent approvals data showed 2,277 dwellings approved in trend terms in June, slightly lower than May.
At the same time, housing values have risen sharply. ABS data showed Western Australia recording the strongest quarterly increase in mean dwelling prices in the March quarter, up 7.2 per cent to about $1.10 million. Perth remained the strongest-performing capital over the year to July, although Cotality data showed the pace of growth slowing considerably as higher interest rates began to weigh on the market.
The federal package also proposes a digital portal for subdivision applications, which the government says could shave as much as four weeks from processing times. A separate fast-track pathway is planned for renewable energy and strategic industrial projects, supported by a new Office of the Coordinator General.
Modern construction methods are another part of the agreement. Canberra wants to remove regulatory barriers to prefabricated, modular and other newer building systems, an approach consistent with the Productivity Commission’s recommendation that governments make it easier for the industry to adopt new techniques.
That may help address the construction bottleneck, but the housing research suggests technology cannot substitute for planning reform. The Balance Sheet found that construction productivity and planning constraints need to be tackled together, arguing that new technology can reduce building costs and labour requirements but cannot create additional developable land where planning rules prevent it.
Separate from the $29.8 million planning and construction package, another $52.3 million has been made available to WA under the updated National Competition Policy agreement. That includes $43.1 million for heavy vehicle reforms, $6.5 million for changes allowing health workers to work closer to their full scope of practice and $2.7 million towards nationally consistent standards for household electrical products.
The money is not an unconditional transfer. Commonwealth payments will be made as Western Australia delivers the agreed reforms, making implementation, rather than the announcement itself, the next test.
Chalmers said cooperation between governments could achieve economic outcomes that individual jurisdictions could not deliver alone. For housing, the harder test will be whether simpler rules and faster decisions translate into more projects moving from approval to construction, and ultimately into completed homes.
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