Over the past week or so there’s been no shortage of comment on the Federal Budget and it’s sure to be an ongoing topic, and so I would like to look at a few less publicised topics that were somewhat under the radar.

The first concerns the search for a new Secretary for the NSW Department of Planning & Environment and whoever this person might end up being, it’s a position we should all be interested in.

Currently the state government’s planning reforms are treading water, and progress which is vital to the development industry is in the hands of the new-look cabinet and in particular with the new Planning Minister Pru Goward. Labelled as the biggest shake-up of planning in more than 30 years, the planning overhaul has been in limbo since November 2013.

Under the previous Planning Minister Brad Hazzard, plans remained deadlocked including the key aim of a new fast-tracked development pathway. However there are community and industry concerns about the planning reforms and so the new Secretary and Ms Goward will face a few hurdles.

This newly created position was one of the first steps taken by the Minister and brings together the functions of planning, environment, heritage and local government and as noted in the recruitment advertising calls for candidates able to shape the future of planning and the environment in the State. For many years planning delays and red-tape have been seen as holding back the development industry. While according to Meriton’s boss Harry Triguboff, affordability has also been impacted making it harder for first time buyers and inflating prices.

There are many reasons why this role will be keenly watched after applications close on June 8th.

Building Products On The Up

On a related but somewhat different path, only one day after the Federal Budget was announced a statement from CSR announced a full year net profit of $72.0 million, up a very impressive 143% with a statutory net profit of $88.1 million.

CSR noted that building products earnings increased by 20% with growth across most businesses, and that building approvals for both detached and multi-residential housing continue to grow strongly.  According to CSR this trend is expected to lead to increased demand over the next few years as multi-residential projects near completion and in another positive sign for the industry CSR also notes a solid pipeline of transactions currently under negotiation.

In February Boral Limited also announced another healthy result with a 73% increase in net profit for the six months ended 31st December 2013. The Building Products division’s significant turnaround was in part due to the tailwind of improving housing construction demand in New South Wales and Western Australia.

The results from CSR and Boral do indicate that a move to see stronger development activity is now starting to take hold. The trend is further underlined by the ASX Materials Index which has increased by 8.34% in the last 12 months, while the related Industries Index has also increased by 9.45% over 12 months.

These figures are important as they point to how successfully we are moving from the resources construction boom. While the Resources Index rose 8.16% over the last 12 months the three-year trend is down 9.11%.

Planning Needs to Get in to Step

The pending appointment of a new planning and environment supremo for NSW and the need for new planning laws to be sorted out, may appear to be some distance from either of the boardrooms of CSR or Boral. However these two news items are linked because they point to the continued transformation of the national economy.

And while I have avoided direct comment on the Federal Budget, its strong infrastructure focus will no doubt impact CSR, Boral and similar companies and our future new department secretary as well. In a wider context new residential developments will soon come into the picture as planning rules for NSW are re-visited and as the construction sector benefits from strong infrastructure spending.