Employment zones reform

The NSW Government is committed to supporting a productive economy by enabling business and jobs in the locations where they are needed and delivering on the vision for an area outlined with local and state strategic plans.

The Department of Planning, Industry and Environment is currently working on a suite of planning reforms. This includes the delivery of a simplified employment zones framework that suits the future of work, is fit for purpose, supports productivity and jobs growth while facilitating delivery of strategic plans and planning priorities.

The reform of employment zones aims to support long-term economic recovery through job creation and encourage increased productivity in NSW.

A key outcome of the project will be to ensure employment zones provide clear strategic intent, include clarity around their application and increase flexibility around land uses.

What are we doing?

The existing Business (B) and Industrial (IN) zones with five new employment zones and three supporting zones will be replaced with five new employment zones and three supporting zones under Standard Instrument (Local Environmental Plans) Order 2006 (SI LEP Order). 

We have developed the employment zones framework based on quantitative and qualitative evidence to:

• maximise productivity while minimising land use conflicts and ensuring they are fit for purpose
• address current barriers within the planning system that limit the ability of businesses to establish, expand or adapt
• better support councils in the delivery of the strategic vision contained in their Local Strategic Planning Statements and background studies. 

How are we doing it?

The department did quantitative and qualitative research to inform the employment zones framework and implementation approach. 

A critical component of the department’s research was the stakeholder engagement program which involved working with other state agencies, all councils in NSW as well as key peak, industry and stakeholder groups to understand the current barriers within the existing zoning framework. 

We heard from councils, industry and government agencies that there is lack of clarity surrounding the purpose of several of the existing zones, that land use tables are inflexible, definitions reflect outdated business models and create land use conflicts, and that there is inconsistent application of the zones across the state. 

Feedback received in local government workshops is that councils want a zoning framework that supports good planning outcomes that manages contemporary land use conflicts, sustains employment lands, focuses retail uses within centres and creates a link between the zones and strategic planning. 

We will continue to work closely with local government and have detailed discussions with our key stakeholders while we implement the new zones within individual local environmental plans.

Why are we doing it?

Benefits of the proposed changes include: 

• a more legible suite of zones – clear strategic intent for each zone that builds on strategic work by the state and local government over the past five years 
• greater flexibility within the proposed zones – across the proposed employment zones framework with a significant increase in mandated permitted uses. 
• vibrant and viable centres for communities – by retaining core retail uses in centres. 
• support for the city to develop and meet the operational needs of businesses and communities – support for urban services uses by providing a dedicated zone 
• innovation for emerging land uses and unique precincts that require a flexible planning response – a new zone that facilitates detailed precinct planning to support local enterprise. 
• managing industrial land use conflicts and amenity impacts – Two industrial focused zones appropriate to protect different scale of employment activities and to provide a buffer to incompatible land uses. 
• responding to the changing nature of industry and business – three new land use terms and an update to six existing terms to meet contemporary needs. 
• reduce need for a spot rezoning – increase in mandated permitted land uses in zones allows greater options for businesses to establish, expand or pivot without the need for a planning proposal.
• increase in jobs closer to homes reduces journey to work – more employment generating uses permitted in centres and industrial precincts reduces the need for long commutes improving productivity and reducing costs.
• reduce administrative costs and complexity of future application processes – proposed employment zones framework will facilitate expanded application of complying development which has significant cost savings from faster approvals meaning reduced holding costs.
• greater business output potential – increase in mandated permitted land uses results in greater access to potential sites and opportunity for diverse businesses to co-locate with associated productivity gains.

Consultation and feedback

The employment zones framework was on public exhibition from 20 May 2021 until 30 June 2021. All submissions received by the department have now been considered. This feedback was used to help shape and refine the employment zones framework.

The submissions report outlines which groups provided submissions, how many submissions were received, and summarises the key issues raised. The submissions are published on the Planning Portal.

Policy finalisation

Overall, there was general support for the intent of the reforms and the overall framework. Individual submissions express the different views and interests of local government, industry and peak groups, consultant planners, academics and the community. We have sought to balance these interests in finalising the employment zones framework.

Supporting jobs and productivity, alongside supporting delivery of councils’ long-term strategic planning objectives and priorities continues to be the central purpose of this reform. Overall, the new employment zones framework will:

• provide greater certainty for the community, councils, and the development industry
• support councils’ long-term strategic planning objectives
• support businesses, industry, and society to grow, respond and adapt as necessary, and
• facilitate innovation and changes in business processes now and into the future.

In response to the feedback received on the position paper we have made the following changes to the employment zones framework:

• updated the land uses that are allowed in the local centre and commercial centre zones.  Introduced more specific terms, instead of the parent term ‘tourist and visitor accommodation’ to avoid land use conflicts
• reworked the objectives to better reflect the strategic intent of the finalised employment zones
• renamed the W4 zone to ‘Working Waterfront’
• amended the definition of ‘shop top housing’ to make it clear that use outside of ground floor non-residential is allowed.
• removed the mandated prohibition of aquaculture in several existing and proposed zones. Councils will now be able to set permissibility within land use tables and the Primary Production and Rural Development SEPP 2019 will continue to apply
• removed 'domestic' from the new circular economy land use term 'goods repair and reuse facility' and placed it under the 'business premise' parent term
• tightened the wording around ‘creative industries’ and removed reference to certain activities that can already be accommodated under other land use terms
• allowed councils to determine certain mandated land uses regardless of if the land uses are 'permitted with consent' or 'permitted without consent'. For example, home businesses, building and business identification signs
• will not proceed with the exhibited consolidation of land use term definitions: home improvement retail premises, trades retail premises, and storage and distribution premises – these land uses will remain as currently defined
• drafted land use tables for the SP4 Enterprise Zone.

The Amendment Order to the Standard Instrument (Local Environmental Plans) Order 2006 has now been published. This introduces the new employment zones alongside the existing business and industrial zones and enables implementation into individual local environmental plans to begin.

The new employment zones come into effect within the Standard Instrument Principal Local Environmental Plan on 1 December 2021. This allows employment zones to be introduced after references to environment zones are updated, to reduce the risk of misinterpretation where environment zones are currently referred to by just the E prefix in environmental planning instruments. See conservation zones for further information.

In the coming weeks, the department will provide councils with the proposed zone translation detail for existing business and industrial zones. The translation detail will include:

• preliminary zone application maps through a specific spatial viewer link
• preliminary land use tables that have been compiled from the mandated land uses within the Amendment Order combined with the permitted and prohibited land uses that existing within individual business and industrial land use tables within existing local environmental plans
• recommendations around local provisions, schedule 1 additional permitted uses and planning proposals currently in train.

This detail will need to be reviewed, confirmed and returned to the department to enable the next steps in implementation to occur.

The translation detail is supported by a toolkit and implementation plan to guide councils during the transition process. The department will also provide a community guide explaining the changes to employment zones.

Next steps

The translation detail will need to be endorsed by councils for public exhibition. The exhibition of proposed amendments to individual LEPs is planned for early 2022.

More information

For more information on the employment zone reform please

• email the employment zones project team
• view the implementation plan (PDF, 749 KB)
• See the land use matrix (XLSX, 88 KB)

The employment zones reform work will inform and align to the work the department is doing to prepare draft Employment Land Strategy Guidelines to assist councils in preparing Employment Land Strategies as part of their local strategic planning framework. Visit Employment Lands Strategies and Guidelines for information.

The Greater Sydney Commission (GSC) is also undertaking a review of the policy setting for industrial land. The outcomes of that review will inform strategic planning for industrial land. The proposed employment zones will provide a statutory framework to give effect to that strategic planning. Visit GSC Industrial Lands Policy for more information.

Banner image by: Destination NSW.