Builders have reported wait times of up to two years for projects gaining planning approvals, while some local councils operate with little to no planning staff.
A large volume of planning approvals during the pandemic, combined with rising land values, government-backed building incentives, and a lack of planners has created development application backlogs in many local councils.
"We have heard different quotes, around 12 to 18 months or up to two years, quite lengthy delays, I think because of the lack of resources in councils," said Master Builder's Victoria executive director of policy and media Megan Peacock.
NSW has set a priority for Faster Housing Approvals, with a target of 90 per cent of housing approvals to be determined within 40 days, while in Victoria councils have 60 days to decide on the application before VCAT can do a review.
It is adding to the pressure builders and clients are already facing amid a material shortage, and rising material costs and interest rates.
"It makes it very difficult," Ms Peacock said.
"The builders are very understanding of the difficulties the councils are having in terms of the lack of resources, the difficulty recruiting staff, [which are] adding to the lengthy delays of these planning permits.
"But it's really having an impact on them in terms of delaying their pipeline of work, the impact of cost increases when those delays happen, and then trying to secure trades to come onto site when they are unsure when these planning permits will go ahead and delays in signing contracts."
Councils operating with no planners
Local government is acutely feeling the pressure of the planning backlog.
The NSW president of the Planning Institute of Australia, Sharon Smith, said she was aware of at least two New South Wales councils who had lost all their planning staff and were relying on the state government to help process development applications.
Some other local councils were automatically sending out letters when a development application was lodged to advise of delays.
Ms Smith said for those working in the planning sector, rate-capped local government was not always the most attractive career option, with the state government offering higher salaries and people preferring to stay in metropolitan areas for career progression.
"Some councils are offering above award wages," she said.
"That's difficult, because the minute you start offering it for one profession it's hard to not to reciprocate that for other professions."
The pandemic exacerbated the issue.
"We used to get a lot of staff from England, from Canada, and from New Zealand, and that free flow of planners into the country doesn't seem to be happening as much," Ms Smith said.
Clearing the backlog
The Indigo Shire Council in north-east Victoria has worked through a backlog of planning applications after being swamped during the pandemic.
"At the same time though we have also had a struggle attracting and retaining staff, so we have had a situation where we had the doubling of planning permits and a halving of staff through that difficult period," said council CEO Trevor Ierino.
Normally Indigo has between 200 to 300 applications backlogged at any one time.
"In the last one to two years we have had a real backlog of planning permits but we have been really working through those. We have got staff on board now which is great, and we have really been able to catch that backlog back up," he said.
"But there's no doubt there's always ongoing pressure with planning applications and planning permits."
The backlogs come after a 2019 review by the Victorian Red Tape Commissioner to streamline state and local government building and planning approval processes and reduce delays.
It produced 27 recommendations.
The Better Planning Approvals team has since partnered with more than 30 Victorian local councils across Victoria to create greater capacity within local planning systems.
Regional Planning Hubs have also been put in place to provide surge capacity and clear the existing planning application backlog, assisting 14 rural and regional councils to complete 472 planning application since July 2021.
More than 200 additional planning applications are currently or soon to be worked on by the hubs.
