Melbourne’s Suburbs Under Siege: When Planning Powers Become a Cash Grab

The Victorian government is pushing ahead with sweeping planning reforms that will dramatically reshape dozens of Melbourne’s best-loved suburbs. They tell us it’s about solving the housing crisis. But scratch the surface, and it looks just as much like a clever scheme to boost land values, so they can slug property owners with higher taxes — all while stripping local communities of their say over the very streets they live on.

Under these new laws, Planning Minister Sonya Kilkenny has taken direct control of major planning decisions in 50 suburbs, removing that power from local councils. This means residents from Malvern to Brighton to Toorak no longer get much say over what goes up next door. Developers can expect far fewer hurdles, higher towers, and faster approvals — all dictated by Spring Street.

Higher density — but at what cost?

Take Malvern. It’s long been a suburb prized for its tree-lined streets, heritage homes and modest village atmosphere. Under these new powers, Malvern is now an “activity centre” slated for high-density apartments close to the train line. It’s the same in Camberwell and Box Hill. This concentration of multi-storey developments around public transport hubs might sound reasonable, but with local height controls overridden by the state, you can expect big new projects that dwarf the existing streetscape, push up land values — and yes, push up council rates and land tax assessments in due course.

A handbrake on first home buyers

Then there’s the knock-on effect to market forces. Land in these rezoned hotspots will become more valuable not because of any improvement made by the owner, but because the government has changed the planning envelope to permit more intensive use. That means higher sale prices, which flow through to higher stamp duty on the way in, higher land tax for investors holding rental stock, and bigger rates notices each year. These costs inevitably end up paid by someone — be it renters, buyers trying to scrape into the market, or families trying to stay put.

The excuse: Melbourne’s “big future”

The Allan government says this is about housing 9 million Victorians by 2050. But there’s more than a whiff of ideology here. This push for a “Big Melbourne” masks the fact that successive state governments — Labor and Liberal alike — have failed to properly invest in decentralising growth. Instead of growing regional hubs like Ballarat, Bendigo and Geelong with the same fervour, they keep funnelling people into Melbourne and then blame “housing shortages” to justify tearing up local character.

What’s really at play? Revenue.

It’s impossible to ignore that every time land values jump because of a zoning uplift, so too do state revenues. Land tax, in particular, has become a favourite of Spring Street. It’s a tax on holding land, and as land values surge under these new planning rules, so too does the government’s take — all without needing to announce a new tax. It’s a backdoor way to lift the tax burden without the political heat.

Examples:

• In Brighton, where apartment towers will be easier to build near the train line, property values on developable lots will soar. That means higher land tax for owners who never wanted to build towers, just live in their homes.

• In Glen Waverley and Ringwood, the state is overriding council planning schemes to allow major mixed-use projects. These might bring shops and new apartments, but also jam up local roads and infrastructure — again, with no promise of equivalent investment in local schools or hospitals.

• Even in historically low-rise leafy areas like Surrey Hills or Canterbury, planning overlays that protected streetscapes are now effectively trumped by ministerial fiat, with local objectors given less weight.

Who pays? You do.

The end result is that homeowners who bought into a suburb for its amenity and character now face being taxed on the “theoretical development potential” of their land. Developers might cash in by buying these homes, knocking them over, and putting up blocks of flats. But if you’re not selling? You’re paying more land tax on a property that you never wanted to develop.

Is it lawful? Of course. But is it right? That’s for voters to decide.

Under the Planning and Environment Act 1987 (Vic), the Minister for Planning does have the power to amend planning schemes and take over applications. And under the Valuation of Land Act 1960 (Vic), land is valued on its highest and best use — which means your little Edwardian on a quiet street is suddenly rated like a future apartment site.

But just because they can, doesn’t mean they should. Melbourne risks losing much of what made it special: distinct suburbs with their own look, feel and pace. In return we get higher state taxes and more congested streets.

So next time you hear someone in Spring Street talk about “sweeping powers for a big Melbourne”, ask yourself: whose pocket does it really fill? And whose neighbourhood will they turn upside down next?