New South Wales July to December 2023

Abstract

Premier Chris Minns has made the State's acute housing shortage his number one priority, to the extent that it is the only policy area in which the Government has been notably active. The issue was given added salience by new housing targets adopted by National Cabinet in August. New South Wales will be required to increase the construction of new homes to 75,000 per year for the next five years, twice the current annual forecast (Sydney Morning Herald, 18 August 2023). Greatly increased high-rise development in areas with established infrastructure was the Premier's solution. Minns adopted an aggressive rather than persuasive approach to implementing his strategy. Over-development has traditionally been an issue that politicians have been wary of. Minns seems to have decided that the intensity of the current crisis has turned large-scale development into a vote winner, particularly with young people facing the prospect of never being able to afford to own a home. Turning up the rhetorical heat, he has stigmatised opponents of his pro-development policies as selfish “NIMBYs” (Not In My Backyard) who were “allergic to change” and unsympathetic to the plight of young home seekers. Minns also accused councils of using heritage listings as a tactic to prevent development: “They don't have the gumption to come out and say, well, ‘We don't want anyone else moving into our community and we certainly don't want any uplift in development’” (Guardian, 11 December 2023). He warned local councils that if they attempted to resist his planning reforms he would turn to the “nuclear option” to over-ride them: “We've got the powers inside the New South Wales Government […] to enact reform, to pursue housing targets and completions […] We don't need any enabling legislation to make that happen” (SMH, 27 September 2023).

Minns also decided, in spite of the damage association with corrupt developers did to Labor in the Eddie Obeid era, to ally himself closely with the development industry. He told a property industry lobby group that the “previous governmental attitude towards developers would be overturned from a position of suspicion and mistrust, to encouraging companies who engaged in positive, well-constructed properties” (SMH, 27 September 2023). Planning Minster Paul Scully told a property developers' group: “You may have noted we were the first Opposition in New South Wales in a long time — perhaps ever — who did not take a strong anti-development campaign to the election” (SMH, 5 August 2023).

The newly appointed head of the Planning Department, Kiersten Fishburn, whose brief is to lead the housing blitzkrieg, said that it was time to “take risks” and “prise the barnacles” off the New South Wales planning system. She added: “There is always the risk that as a consequence, some malfeasance will corrupt a bit of the system. But does the small risk outweigh the benefit of getting more market certainty? I would argue at the moment you should probably be taking risks rather than locking the system down” (SMH, 26 August 2023).

Sections of the Sydney development industry have long been associated with corruption and substandard construction. Prominent developer Jean Nassif, for example, is currently under investigation by the Independent Commission Against Corruption (ICAC) and is being sought by New South Wales Police over issues relating to his collapsed property empire (SMH, 23 August 2023). In January 2024, a new, 900 apartment building, which Minns had used as a backdrop for a media announcement spruiking high-rise development, was found to have serious structural defects in the concrete slab on which it was built (SMH, 18 January 2024).

In response to major construction faults in new apartment buildings, the previous Government appointed David Chandler as Building Commissioner with a brief to clean up the industry. According to Chandler, up to 20 per cent of property developers in New South Wales are “risky” (SMH, 18 January 2024). In an attempt to counter negative perceptions about developers, Minns made the Building Commission (previously part of the Department of Fair Trading) a standalone agency led by Chandler, increasing its staffing from 40 to 400 (NSW Government, Media Release, 4 December 2023, https://www.nsw.gov.au/media-releases/boosting-building-quality). However, as Michael McGowan commented in the Herald: “If shoddy buildings are already slipping through the cracks, how will the regulators cope when Sydney is a construction zone? Minns has promised the electorate he can deliver density without sacrificing quality of life. Now he has to prove it” (18 January 2024).

In November, the Government announced local councils would be forced to lift restrictions on the construction of medium density housing. The new policy will allow terraces, townhouses and mid to low-rise apartment blocks near transport hubs and town centres (NSW Government, Media Release, 28 November 2023, https://www.nsw.gov.au/media-releases/new-rules-to-fast-track-low-rise-and-mid-rise-housing).

Another major initiative was the signing of a memorandum of understanding between the Government and the Australian Turf Club to explore relocating Rosehill Racecourse to allow the construction of a mini city of 25,000 new homes and a metro station (NSW Government, Media Release, 7 December 2023, https://www.nsw.gov.au/media-releases/proposal-to-relocate-rosehill-racecourse).

The “big bang” came in December when the Government announced a two-tier programme to over-ride local government planning powers and facilitate development applications. Accelerated rezoning of areas within 1,200 m of eight Sydney transport hubs will, it was claimed, allow construction of up to 47,800 high and mid-rise homes over the next 15 years. As well, 31 locations across the State will be “snap” rezoned to make multi-storey residential apartment construction permissible within 400 m of metro or rail stations and town centres. It is estimated this will result in 138,000 new homes being created. A mandatory 15 per cent will be for affordable housing. Heritage areas will be subject to the new planning rules. All 39 areas will be designated entertainment precincts to allow late night trading and ease restrictions on amplified music (SMH, 7, 9 December 2023).

Youthful Liberal MLC, Chris Rath, took a different line: “The reality is that you're not going to lose your seat because of ten letters that you receive [about] a development from a few NIMBYs that don't want it to go ahead. But you will lose your seat if only one-in-five Gen Z and one-in-four Millennials are voting for the Liberal Party because they can't afford to buy a home” (SMH, 16 October 2023).

Greens housing spokeswoman, Jenny Leong, accused Minns of “pandering” to developers and shifting the blame for the crisis to local communities: “The idea that these communities are merely ‘allergic to change’ is deeply insulting. If the Premier is so keen on increasing supply, why didn't the recent budget include funds for a massive investment in the building of affordable, social and public housing?” (SMH, 27 September 2023).

Local Councils across the political spectrum reacted angrily, accusing the Government of “ignoring residents” and seeking to “destroy the increasingly rare single lot family home with a backyard” (SMH, 24 November 2023). They threatened legal action and public campaigns. Zoë Baker, the independent Mayor of North Sydney, attacked Minns' approach as “planning in the way totalitarian regimes do it. It's like Ceaușescu in Romania, that we're going to scrub everything and just put up towers. It doesn't have to be either-or, it's not a zero-sum game, in the one area you can have medium and high density as well as heritage — which itself isn't always low density.” Baker said the government needed to explain “what they are going to be doing to support greater sewage capacity, open space, new schools and more hospitals. This divisive Nimby Yimby (Yes In My Backyard) thing doesn't help, in fact it just gets in the way of us working collaboratively in accommodating more density” (Guardian, 11 December 2023). The ALP Mayor of Inner West Council, Darcy Byrne, announced he was convening a summit of mayors of affected councils. He criticised what he described as a “madcap scheme for towers. Given the massive cost of purchasing a terrace in Rozelle and surrounding suburbs, high-density rezoning wouldn't deliver much new housing at all. You'd have to find a Saudi sheik or a Russian oligarch to afford the astronomical cost of buying up blocks of homes for redevelopment” (Guardian, 11 December 2023).

Minns' relentless focus on housing may have won him support, particularly among young voters, but it has also created a powerful coalition of enemies. His bulldozer approach to legitimate concerns over the effects of large-scale development has the potential to alienate local communities. Those who see their neighbourhood and lifestyle under threat, particularly in heritage areas, will protest vehemently. The Government's focus on development in areas other than western Sydney, where its political strength is, will raise questions about divisive politics. Minns is also in danger of being seen to be in too cosy a relationship with the development industry. If developers continue to engage in shoddy practices, his push for more high-rise risks being discredited.

The Government's first ministerial casualty was not long in coming. On 3 August, Minister for Skills, TAFE, Tertiary Education, the Hunter and MP for Newcastle, Tim Crakanthorp, was forced to resign when his Chief of Staff revealed he had failed to disclose his wife and in-laws' extensive property holdings in Newcastle. Crakanthorp was also lobbying for approval of a local development without disclosing his extended family stood to benefit financially if it went ahead. Minns referred the matter to ICAC for investigation. Michael Koziol commented in the Herald: “This is a government that came to power in March promising a new wave of ethical conduct, free from the scandals that engulfed the previous mob […] Yet here we are, with the office furniture barely moved in, and Labor has already suffered its first ministerial casualty over the smelly combination of property interests and improper disclosure” (SMH, 2, 3, 5 August, 15 September 2023).

Transport Minister Jo Haylen was embroiled in controversy over staffing appointments. The head of Transport for New South Wales, Rob Sharp, was sacked soon after Labor took office. He was replaced by Josh Murray who had worked for former Labor Premiers Bob Carr and Morris Iemma. Haylen's Chief of Staff, Scott Gartrell, sent Murray a copy of the job advertisement. The consultants hired to undertake the recruitment process did not consider Murray suitable, commenting: “He has not, however, had large-scale strategic, operational or people leadership experience which would likely make his appointment to this role a significant risk.” Gartrell then intervened to suggest Murray should be interviewed. Murray and a senior public servant emerged from the interview process as the favoured contenders. Haylen met with both and recommended Murray's appointment. It emerged that Murray was a long-time ALP member and a friend of Haylen and Minns, and that he and his wife, the daughter of former ALP Minister Brian Langton, had donated $1,450 to the Labor campaign. The Opposition accused Haylen of improperly interfering in the process to appoint a Labor “mate” and demanded she and Murray resign. Minns responded that the Transport Minister had his full support (SMH, 28, 29, 30, 31 August 2023).

Further allegations of impropriety involving staff in Haylen's office emerged in October. Gartrell requested the secondment of Kieren Ash to the Minister's staff as a Departmental Liaison Officer. This is a non-political, bureaucratic role in which the incumbent acts as a link between the Minister and Department. Ash had a long and active Labor background, having been a candidate and campaign manager. The acting Department head, Howard Collins, was so concerned by the appointment that he sought specific assurances that Ash would not be playing a political role. These were duly forthcoming. However, documents revealed by a successful motion in the Legislative Council for disclosure of papers clearly demonstrated that Ash was, in fact, heavily involved in political work. Gartrell departed as a result. The Opposition again called for Haylen to resign, claiming she had breached the Ministerial Code of Conduct. She refused and asked Murray to investigate — hardly a convincing response given the recent controversy surrounding him as a political appointment. Minns again backed his Minister, although conceding “things could have been done better with personal staff” (SMH, 3, 4, 5, 6, 8 November 2023).

Minns fulfilled his election promise to lift the previous Government's cap on public sector wages. This did not mean, however, that he was prepared to meet all union demands, and serious industrial disputes resulted. The Government offered public sector workers a 4 per cent pay rise plus a 0.5 per cent superannuation increase, which most accepted. The Health Services Union, however, under its forceful Secretary, Gerard Hayes, aggressively pursued a larger increase, threatening industrial action unless its demands were met. At one stage, Hayes claimed that his members were “better off under the former Perrottet Government.” The Government quickly yielded, offering a flat rate pay rise which would see “the wages of the lowest-paid staff jump by as much as 8 per cent and end threats of rolling industrial action” (SMH, 3, 4, 7, 28 July).

There was also a bitter dispute with the Teachers' Federation. The Federation claimed that it had reached a deal with the Government on 31 May. However, the Government subsequently added conditions to its offer. The Federation accused the Government of an “act of betrayal,” warning that industrial action would ensue. The head of Unions NSW, Mark Morey, said that the Government's subsequent offer had “raised alarm within the union movement because it mirrored the former Coalition Government's controversial wages cap.” In September, the Government caved in and agreed to a generous pay deal for teachers making them the best paid in Australia. It claimed that savings had been identified in the Education budget that would cover the cost of the rises (SMH, 3, 7, 8, 20 August, 5, 15 September 2023).

Treasurer Daniel Mookhey delivered his inaugural Budget on 19 September. There was much vehement condemnation of privatisation and many promises to safeguard and expand the public sector in line with traditional Labor values. The consensus seemed to be that it was a moderate, responsible, risk-averse Budget.

Treasury estimated the budget deficit would reach $7.8 billion in 2023/24; however, an $844 million surplus is expected in the following financial year. Increased returns from property and payroll taxes have boosted the State's revenue. An expenditure review conducted by Mookhey identified $13 billion in savings which will be redirected to improving the budget position. A review of the State's infrastructure programme led to savings due to the reprioritisation and abandonment of some projects. Debt remained high but gross debt is forecast to be $14.8 billion lower and net debt $10.5 billion lower by June 2026 (NSW Government, Budget 2023/24, Budget Paper No. 1, Budget Statement).

Much of the Budget was about fulfilling election promises to commuters, public sector workers, parents, renters and first home buyers. There was a range of subsidies to help cope with cost-of-living pressures. Housing was a priority area, with $2.2 billion committed to a housing and infrastructure plan. The lifting of the public sector wages cap and the resulting pay rises means the wages bill will grow by about 4 per cent annually over the four years to 2027 to $55.6 billion, just under half of recurrent expenditure. Transport headed the infrastructure expenditure list at $72 billion over the next four years, followed by $14 billion on health and $10 billion on education in the same period (SMH, Australian, 19 September 2023, Guardian, 20 September 2023).