Conflict of interest regulation for development applications on Council controlled land in NSW: the essential short guide

New rules, which took effect on 3^rd April 2023, have been introduced by the Environmental Planning and Assessment (Conflict of Interest) Regulation 2022, affecting council-related development applications on land under the 'control' of a local council.

Local councils are entrusted with a range of decision-making powers so that they can govern in the best interests of their local communities. An important principle is that these responsibilities are exercised impartially and do not improperly confer an advantage or disadvantage on any person.

On occasion, local councils in New South Wales need to make an application for a development that they wish to undertake on land that they own, occupy or otherwise control. As they are also the authority for consenting to development applications made under the Environmental Planning and Assessment Act 1979 (NSW) (the Act), there is a clear potential for a conflict of interest to arise with consequent impacts on others.

Key amendments to conflict of interest regulation applicable to council-related development applications in NSW

The key changes  recently agreed upon by the NSW Parliament include the following:

(1)The meaning of a council-related development application

There is a revised definition of a council-related development application to mean one, for which the council is the consent authority, that is:

(a) made by or on behalf of the council, or

(b) for the development of land

      (i) of which the council is an owner, lessee or a licensee, or

     (ii)  is otherwise vested in or under the council's control.

(2) Recording the details of conflicts

All council-related development applications and related development consents must be added to a council's register. In addition to the ordinarily required details, entries in the register must include the details of any conflicts that may have arisen, along with any measures taken by the council to manage those conflicts of interest.

(3 ) Conflict of Interest Policy Document

A council will not be allowed to determine a council-related application unless it has adopted a conflict of interest policy which must also be considered in making its determination.

A conflict of interest policy means a policy that:

(a) specifies how a council will manage conflicts of interest that may arise in connection with council-related development applications because the council is the consent authority, and

(b) complies with the Council-related Development Application Conflict of Interest Guidelines published by the Department and available on the NSW planning portal.

The policy objectives of the document are to:

• ensure that development assessment recommendations are properly made and that all parties are dealt with fairly;
• avoid any occasion for suspicion of improper conduct in the exercise of development assessment functions; and
• ensure that no action, statement or communication to any party conveys any suggestion of willingness to improperly provide concessions or preferential or unduly favourable treatment.

(4) Minimum period for public exhibition

 The minimum public exhibition period is 28 days. This compares to the regular 14-day period for other development applications.

(5) Mandatory statement

 A development application for which a council is the consent authority must be accompanied by either:

- a statement specifying how the local council will manage any conflicts of interest that may arise because the council is the consent authority, that is, their management strategy; or

- a statement that the council has no management strategy for the application.

(6) Guidelines

The Department of Planning and Environment has published Council-related Development Application Conflict of Interest Guidelines. The Guidelines require that a council's conflict of interest policy concerning council-related development applications should:

- establish management controls and/or a management strategy to address potential conflicts of interest and at the various stages of the development process for the types of council-related developments  that the council might be involved in;

- outline the process through which potential conflicts of interest will be identified, the risks assessed and appropriate management controls determined; and

- outline the process that will be followed to publicly communicate the management approach for each development, which is subject to the policy.

Both a sample of a conflict of interest policy and a sample management strategy are provided within the Guidelines to assist councils in formulating their own documents.

As a matter of best practice, the Guidelines recommend that the council's conflict of interest policy should also address conflicts that may occur after consent has been granted.

What does it mean?

The new Regulation has been introduced to address the situation of potential conflicts of interest where a council might be considered to be 'marking its own homework' in that they are both the applicant and the consenting authority.

Conflict of interest is about transparency. A council will not be permitted to determine a council-related development application unless it has adopted a conflict of interest policy and considers that policy in making its determination. The policy must specify how the council will manage any conflicts of interest that do arise in connection with such development applications. Compliance with the Guidelines published by the Department of Planning and Environment is expected.

The outcome is that it will not be legally possible for a council-related development application to be determined by the consent authority, including in the Land and Environment Court on appeal, unless the council has adopted a conflict of interest policy and applied it when determining the application.

Contact our Land and Environment Court Lawyers in Sydney, NSW

Szabo & Associates Solicitors act on behalf of councils in NSW as well as a wide range of private clients. We are experienced practitioners who can offer expert legal advice on property development and planning issues. If necessary, we can also represent clients in the NSW Land and Environment Court or Supreme Court when disputes arise. If you need advice or assistance in navigating these changes or on any other matters raised here, we can help. Please contact us on 02 9281 5088 or complete the online contact form.