Tourism Planning Taskforce Report - Western Australian Planning ...

1Front cover photographs:1 Yallingup Beach Holiday Park - Western Australian Tourism Commission2 Kooljaman at Cape Leveque - Western Australian Tourism Commission2Tourism Planning Taskforce Report.The text contained in this publication may be reproduced in any formfor the purposes of research or study.Additional copies of this publication are available in electronic form athttp://www.dpi.wa.gov.au/planning or printed copies may be obtainedfrom the Department for Planning and Infrastructure.Department for Planning and Infrastructure1st Floor, Albert Facey House469 Wellington StreetPERTH, Western Australia 6000Telephone: (08) 9264 7777Facsimile: (08) 9264 7566Internet: www.dpi.wa.gov.auPublished by the Department for Planning and Infrastructure, Perth Western AustraliaEndorsed by Cabinet January 2006

ForewordTourism generates jobs and wealth for Western Australians. In 2005, over 6.5 million people visited theState generating approximately $4billion in income. Direct and indirect tourism employment is estimatedat 72,000 people - approximately 7.7 percent of the Western Australian workforce. Tourism is particularlyimportant in providing jobs in regional areas.In September 2002 we established the Tourism Planning Taskforce to investigate whether our planningrules properly catered for this industry – how we protected tourism sites from inappropriate residentialdevelopment, how we could better zone caravan parks and what impact strata titling had on tourismfacilities.The Taskforce investigations provided the opportunity for the factors and issues that have shaped thedevelopment of the State’s unique and highly valued tourism industry to be explored. This in turn led tothe setting of key principles, which will ensure a sustainable tourism industry, based on appropriatedevelopment and the maintenance of affordable and equitable access to the community’s most valuedholiday locations.The key principle identified is that a sustainable tourism industry, with its many inherent benefits,requires tourism development to be undertaken for tourism purposes. To achieve this, theTaskforce has recommended an increased focus on land-use planning for tourism, formulated at aregional and local level. Also recommended is a State framework that recognises the high value thecommunity places on strategic sites, and emphasises the continuing use of these for tourism purposes.This Report presents a significant reform of tourism planning in Western Australia. The Government’sendorsement of the Report recognises that greater emphasis will be given to land use planning fortourism in Western Australia.In releasing this Report, I would like to acknowledge the Hon Adele Farina MLC and the taskforcemembers for their considerable efforts in its formulation. Their diverse range of expertise has resulted ina balanced and comprehensive suite of recommendations.I commend the Report to you and look forward to a continuing role in its implementation.Alannah MacTiernan MLAMinister for Planning and InfrastructureTourism Planning Taskforce Reporti

GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89FURTHER READING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90APPENDICES1 Financing Tourist Accommodation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .942 List of Submitters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .973 Summary of Primary Submission Issues and Taskforce Response . . . . . . . . . . . . . . . . . .1004 List of Briefings Received by the Taskforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1145 Attributes of Success, Strata Titled Tourist Developments . . . . . . . . . . . . . . . . . . . . . . . .116TABLES1 Indicative Valuation Effects of Alternative Residential and Strata Options . . . . . . . . . . . . .572 Indicative Land Tax Comparisons for a Single Lot Subject to AlternativeSubdivision Schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .583 Sample Zoning Table for Tourism Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79FIGURES1 Visitor Numbers and Visitor Expenditure, Western Australia 2003 . . . . . . . . . . . . . . . . . . . .92 Occupancy Rates and Accommodation Development, Western Australia. . . . . . . . . . . . . .14ivTourism Planning Taskforce Report

SummarySummary• In September 2002, the Minister for Planning and Infrastructure, the Hon Alannah MacTiernan MLAestablished a taskforce to examine issues surrounding the trends of introducing residentialcomponents to tourism developments on tourist zoned land and the strata titling of tourismdevelopments. This report outlines the findings and recommendations of the taskforce.• In establishing the taskforce, the Minister noted that policy development would require investigationof potential impacts generally, and on:- the maintenance of a high level of accessibility to prime recreation areas by the general population;- the high potential of tourism development to generate regional employment opportunities; and- the maintenance of a variety of tourist accommodation options throughout the State.• The taskforce was chaired by the Hon Adele Farina, MLC, Member for South-West Region andincluded members from government agencies and the tourism and development industries. Itsinvestigations were required to address the whole of the State.State tourist accommodation industry• The Western Australian tourism industry, while growing consistently, is relatively immature withinvestment limited by: a high proportion of domestic tourists, distances and cost of internal travel,infrastructure, high seasonality and a limited range of high-end facilities, particularly in regional areas.• Tourism in the State has a unique character, which provides a point of difference that will be importantto the future national and international competitiveness of the industry.• A strong component of the industry character in regional areas is a focus on the local market, withfacilities generally being highly accessible, affordable and providing an important domestic holidayfunction with social, cultural and lifestyle benefits.• The Australian trend toward coastal living will result in increasing residential pressure on existing andproposed coastal tourism sites. In response, this requires an increased focus on strategic tourismplanning if the economic, social and environmental benefits of sustainable tourism are to be achieved.• Western Australia had 6.9 million visitors in 2003 with about 11 domestic visitors for each internationalvisitor. The average spending of international visitors is significantly higher than for domestic visitors,making them more important to the economy of the State than their numbers indicate.• A sustainable tourism industry requires investors to be able to achieve reasonable operationalreturns, facilitating funding of marketing, maintenance and improvement of facilities. This is notachieved where development is real estate driven and not based on growth in tourism demand.• Western Australia has sites and locations, which have particular attributes and characteristics ofstrategic value for tourism. These sites have potential for the development of facilities that achievethe competitive edge, assisting long-term viability of the industry and the quality of life in the State.The tourism development framework• The issues subject to taskforce investigations are not addressed at a policy level within the Stateplanning framework, but are reflected in many local government planning schemes. A majority ofthese schemes provide a clear intention that tourist zoned sites are for short-stay accommodationonly.• Tourism Western Australia (previously the WATC) has established a clear position opposing the useof tourism sites for residential purposes:“The WATC supports prime land zoned for tourist accommodation being used for demonstratedtourism purposes. The WATC is seriously concerned about the encroachment of permanentresidential accommodation onto prime land set aside for tourist accommodation purposes.” (WATCBoard, 2002).Tourism Planning Taskforce Reportv

Summary• The rezoning of a tourism site of strategic value to facilitate residential use will result in a reductionin the ability to accommodate future tourism demand and have a detrimental impact on tourismgrowth.• Where sites are of a lower-order tourism value, more commonly urban-based and identified asnon-strategic, then the implications of limited residential use are considered less significant. Subjectto a tourism dominance in a development being retained, an integrated residential component maybe appropriate in supporting the development.• Where a residential use component is supported on a non-strategic tourism site, the taskforceconcluded that a maximum of 25 per cent residential use only should be considered. Above this level,the potential for the residential use to dominate the tourism orientation of a development significantlyincreases. In association with this limit, specific design and management guidelines also are requiredif the development is to be sustainable as a tourism facility.• There is an increased focus required on the retention of caravan parks for tourism purposes and onthe extent of long-stay use and park home development appropriate within tourist caravan parks.Term of Reference 3:Review trends in the strata titling of tourism facilities and the operational and management impacts ofvarious tenure arrangements. This will include assessment of the impact on: management structures,control and enforcement of occupancy requirements, increases in the cost and loss of variety inavailable accommodation, and increased pressure for permanent occupancy.• The use of strata schemes for tourism developments primarily is undertaken to achieve projectfinancing and profit realisation from such projects. It has become the dominant mechanism forfinancing tourism developments since the late 1980s.• Implications of the use of strata schemes are dependent on the associated managementarrangements and can include:- developments initiated on the basis of real estate as opposed to tourism demand;- loss of capacity to accommodate future tourism demand;- facilitation of residential and/or ‘lock up’ developments on tourist zoned land; and- delivery of a poor tourism product.• On balance, the taskforce recognised strata schemes as important in the funding of tourismaccommodation development and recommends their continued use, subject to specific requirementsfor integrated management and particular design requirements.• The use of survey strata or vacant lot strata schemes increases the risks associated with achievinga bona fide tourism development. The use of such schemes are supported only where particularrequirements to address construction, design, management and integration issues are proposed.• The Caravan Parks and Camping Grounds Act 1995 introduced a prohibition on the strata titling ofcaravan parks and this is supported. Extension of this restriction to include alternative low-densityaccommodation types also is recommended.Term of Reference 4:Investigate the implications of the development of permanent residential accommodation and/or stratatitling of land zoned for tourism development on the valuation of individual properties and similarly zonedland under the Valuation of Land Act 1978 and associated land tax implications.• The impact of land tax on the sustainable operation of a range of regional tourist accommodationfacilities has become an issue of concern to the tourism industry over recent years. Land taxincreases that are disproportionate to increases in income-earning potential have been perceived asaffecting the general affordability of coastal holiday opportunities and reducing the range ofaccommodation available, through encouraging redevelopment.Tourism Planning Taskforce Reportvii

Summary• In addition to industry concerns, this has resulted in a significant level of public reaction, and isaffecting the Government’s ability to meet its objective of ensuring a range of holiday opportunitiesare retained in popular beachfront localities.• These land valuation and associated land tax increases have partially resulted from trends in stratatitling and residential use of tourism sites, but to a greater extent are due to the use of blanket tourismzoning classifications.• The use of a detailed zoning framework that zones tourism sites for a specific purpose or category oftourism development can have ancillary benefits in ameliorating land tax increases through reducingthe speculative effect on the valuation of such land.• A review of land tax scales and the tax treatment of tourism properties with low capital value isrequired if the Government’s objectives for tourism development, including the retention of a varietyof tourist accommodation, are to be supported.Taskforce recommendationsThe taskforce has proposed integrated changes to the current planning policy framework for tourismdevelopment. This includes providing a high level of protection to identified strategic tourism sites andsupport for their development in achieving a sustainable industry, and a range of tourist accommodationthroughout the State. The ability to incorporate residential components in the development of lower-ordersites under specific criteria and subject to design requirements also is recommended.The principal components of the recommended policy framework are:• The preparation of a Land Use Planning for Tourism State Planning Policy as the primary mechanismfor introduction of taskforce recommendations.• The preparation and approval of local tourism planning strategies, or specific tourism componentswithin local planning strategies, by local government as a framework for decision-making on tourismproposals. A local tourism planning strategy will identify strategic tourism sites or locations thatprovide for the retention and future development of a range of tourist accommodation to meetprojected demand in that locality.• The establishment of a specific body to work with local government in the identification of strategictourism sites across the State.• Local governments are to be assisted by, and consult with Tourism Western Australia and Departmentfor Planning and Infrastructure, in the preparation of local tourism planning strategies.• Introduction of an extended range of definitions for tourism developments with specific reference tolength of stay provisions.• Introduction of a range of tourism zonings to promote the retention of a range of touristaccommodation facilities.• The use of Special Control Areas to introduce specific requirements in respect to strategic tourismsites and/or locations.• Support for the continued use of strata schemes in the financing of tourism developments subject tospecific requirements for integrated development and management.• Introduction of requirements for the linking of various development components within a tourismfacility to protect the tourism values of a site.• The introduction of an interim position for adoption by the Western Australian Planning Commissionand local government to guide the consideration of residential proposals on tourist zoned sites priorto the completion of the tourism components of local planning strategies.viiiTourism Planning Taskforce Report

Chapter 1Introduction1 IntroductionThis report outlines the findings of thetaskforce, based on its investigations of theterms of reference and related issues, andpresents its conclusions andrecommendations. The focus of investigationshas been on the issues of residentialcomponents in the development of touristzoned land and the strata titling of touristzoned land. It also has; been necessary todeal more generally with the issue of land forfuture tourism development, which currentlymay not be zoned for tourism purposes.In establishing its approach to the terms ofreference, there was a clearacknowledgement by taskforce members ofthe unique character of the Western Australiantourism industry. This included the broadcommunity accessibility to high-valuerecreation areas currently enjoyed, and thatthis point of difference will be valuable for thefuture success of the industry. The protectionof this character through the development ofsustainable tourism products, with anemphasis on the use of high-value tourismland for tourism purposes, was recognised asa key principle.1.1 Scope of taskforceinvestigationIn July 2002, the Minister for Planning andInfrastructure (Minister), the Hon AlannahMacTiernan MLA, announced her intention toestablish a taskforce to examine issuessurrounding the trends of introducing aresidential component into developments ontourist zoned land, and the strata titling oftourism developments. The Ministeracknowledged the lack of strategic directionavailable to local government and the WesternAustralian Planning Commission (WAPC)when considering such applications. TheMinister identified concerns with the trends inrespect to accessibility to prime recreationresources for the general public, potentialimpacts on regional employment opportunitiesand maintaining a variety of tourismaccommodation options.These trends had been brought to theMinister’s attention through a series ofproposed rezonings of tourism land to providefor residential use, and approaches at agovernment agency and local governmentlevel, on concerns with inappropriatelystructured strata titled tourism developments.The identified trends primarily represent thedevelopment industry’s approach to dealingwith the difficulties of increased financialrestrictions on investment funding for tourismdevelopment. Other factors are the relativefinancial benefit of residential investment overtourism development in high-amenity coastalareas, and a perceived lack of viability fortourism development on some sites. Thedifficulty for the development industry inachieving development viability on sometourism sites is evident in their long vacancyperiod, with proposals based on a mix ofresidential/tourism use, or residential-onlydevelopments being pursued.The scope of the taskforce investigations wasto review the justifications for and implicationsof the identified trends and recommend apolicy framework to guide the assessment offuture proposals. Specific terms of referencewere provided that reflected the Minister’srequirement for the taskforce to report within areasonable period and the need for ongoingassessment and determination of suchapplications.The taskforce investigations addressed theterms of reference as they applied to thewhole State. There was; however a particularfocus on the implications of developmenttrends in regional areas, where the majority ofissues that gave rise to the Taskforceoccurred, and the importance of these areasin establishing the State’s tourism character.1.2 Terms of referenceThe terms of reference for the taskforce areto:• Undertake an examination of the merits ofthe justifications used by proponents insupport of their applications to provideresidential development on land zoned fortourist purposes and consider criteria forthe assessment of such claims.• Assess the implications of allowing a mix ofpermanent and tourist accommodation onland zoned for tourism purposes in termsTourism Planning Taskforce Report1

Chapter 1Introductionissues and implications associated with eachof the terms of reference were interlinked.Although the prerequisites for financingtourism development were noted as thefundamental drivers of current trends, thetaskforce considered that any policy responseneeded to be viewed in a holistic context andtake into account the outcome in terms oftourism product. The complexity of the issuesinvolved, and the early recognition that ablanket policy approach would be unlikely toaccommodate regional variations across theState, also steered the taskforce toward thedevelopment of a policy framework to providefor improved strategic consideration of tourismland use issues, as opposed to a purelyprescriptive outcome.In addition to the State strategic policy context,as set out in this report, the expectations ofthe taskforce members also were guided bythe following issues, as identified by theMinister, in the background to theestablishment of the taskforce:• the retention of prime tourist zoned sites fortourism purposes;• the potential for land use conflict betweentourism and residential uses - detractingfrom tourism values, including the touristexperience available;• the provision and retention of variety in therange of tourist accommodation optionsavailable, particularly low-cost options;• the absence of an existing policyframework to guide the Minister, WAPCand local government in the considerationof such applications;• the potential impact of strata schemes onthe ongoing operation of tourismdevelopments for tourism purposes;• accessibility for the general public to primerecreation and holiday sites; and• maximisation of regional employmentopportunities associated with tourismdevelopment.Within this context, the taskforce identified thefollowing expected outcomes:• To identify the primary land use planningobjectives and criteria for touristaccommodation development thatrecognises regional and metropolitandifferences, and the circumstances in whicha residential component will be acceptablein a tourism zoning.• To define types of tourist accommodationand the suitability of a residentialcomponent, and the percentage/proportionof any such component.• To establish clear guidelines for thecalculation of any residential component,eg percentage of developable area.• To consider the introduction of mixed usezoning and the requirement for anincreased focus on outline developmentplans and detailed area plans within suchzonings.• To identify and detail the parameters andcharacteristics of strategic tourism sitesand the particular controls that shouldapply to such sites, with specific referenceto the suitability or otherwise of residentialoccupation.• To identify the conditions required tofacilitate the retention of strategic tourismsites, including those that are Crown Land,for a variety of tourism development,including the consideration of financialincentives such as land tax relief andretention in Crown ownership.• To develop a strategy with associatedpolicies, to combat the erosion of theState’s relatively few high-value (premium)tourism development sites, ensuring theiravailability to generate the future benefitsthat the tourism industry offers.• To consider the potential complementarybenefits that may derive from a residentialcomponent in a tourism development.• To identify issues associated with tourismuse of residential dwellings andrecommend any further work that may berequired at a State level.• To define the primary considerations to beincluded in strata title managementstatements or alternative arrangements fortourism developments to ensure that theyoperate as bona fide tourism facilities.• To develop a strategy to retain a variety oftourist accommodation on the State’s primetourism sites from five-star resorts tocamping and caravanning, which will offera noticeable competitive advantage overother states.4 Tourism Planning Taskforce Report

Chapter 1Introduction• To identify evaluation criteria associatedwith the strata titling of tourismdevelopments to ensure they will functionin the best interests of a sustainabletourism industry.• To assess the different forms of strata titlingand their suitability for use in financingvarious types of tourist accommodation.• To provide policy recommendations thatsupport the viability of touristaccommodation development, highstandards of design and construction,appropriate servicing and aestheticoutcomes.At the commencement of the taskforceinvestigations, a review also was undertakenof available literature on tourism land useplanning issues and tourism development ingeneral. This indicated that there was littledocumented research and the taskforce wouldneed to rely largely on information collectedthrough submissions, briefings and its owninspections, investigations and analysis.Following advertising of its report andrecommendations in August 2003, thetaskforce has held seven meetings at which ithas considered the submissions andundertaken further investigation of issuesraised in consultation with industryrepresentatives. This report contains the finaloutcomes and recommendations of thetaskforce.1.7 Consultation processThe consultation process was guided by aconsultation strategy with the objectives ofobtaining information from the industry ontrends, implications and current issues inrespect to the terms of reference, andensuring all sectors of the industry were keptinformed of the taskforce work and outcomes.This was assisted at an informal level by thebroad range of industry groups representedthrough the members. At a formal level, thestrategy involved two consultation processes.An important component of the taskforce’sinitial investigations was a four-week publicsubmission period with associated pressadvertising and forty submissions werereceived. The information obtained by thetaskforce from the submissions was importantin the process of investigating the terms ofreference as it highlighted issues ofimportance to operators, developers, and to alesser extent, consumers. In some cases,while the information was anecdotal, itrepresented the only documented outcomes ofthe implications of the identified trends.The taskforce reported to the Minister on theterms of reference in July 2003, providing asummary of its investigations and outcomes,and a recommendation that these be subjectto public consultation. The taskforce reportwas then released for public comment inAugust 2003 for a 10-week period, whichinvolved public briefings in Busselton andBroome. Further industry sector briefings wereheld with the Property Council of Australia(WA), Tourism Council of WA, TourismWestern Australia, and the Caravan IndustryAssociation (WA).48 submissions were received in response tothe report. (See Appendix 2). During thereview of submissions, the opportunity alsowas provided to selected submitters toaddress the taskforce to expand on thecontent of their submissions. These briefingswere held over two days in February 2004.(See Appendix 4).The submissions raised 28 issues. While therewas consistency in many submissions, andacross sectors, on the issues of importance,there was no evident consensus as to the bestdirection for the taskforce to follow. (SeeAppendix 3).Primary submission issues:• resources required and primaryresponsibility for the preparation of tourismstrategies• identification of high-value tourism sites -resources and process• retention of high-value tourism sites fortourism purposes• conditions for inclusion of a residentialcomponent in a tourism development• recognition of regional variations andregional seasonality in policy framework• use of government managed land fortourism purposesTourism Planning Taskforce Report5

Chapter 1Introduction• management arrangements andconditions for strata titleddevelopment• flexibility for industry to respond toinvestment requirements• importance of land tax to tourismdevelopmentsIn order to address the issues raised in thesubmissions satisfactorily, the taskforceworked closely with the Urban DevelopmentInstitute of Australia (WA), Property CouncilWA, Tourism Council of WA and TourismWestern Australia (Tourism WA) in developingand evaluating potential alternative policypositions on a number of particular issues.These included common management, stratatitling, goods and services tax implications,mixed use zoning and the identification ofstrategic sites. While not necessarilyendorsing all the taskforce recommendations,each party acknowledged the significantconcessions contained in therecommendations developed through thisconsultation process. These subsequentlywere endorsed by the full taskforce and nowform part of the recommendations. (SeeChapter 8).1.8 Outline of the reportChapter 2 provides background and contextfor the report through discussion of someprimary issues and trends associated withtourism and the future growth of the industryin the State.Chapter 3 provides an overview of thestatutory arrangements as they relate to theassessment and development of touristaccommodation in the State, and a limitedcomparison from a national perspective. Thisoverview is achieved through a review ofWAPC policies, and a selection of localgovernment planning schemes. A summary ofthe key issues that relate to the terms ofreference also is provided.A detailed discussion of each of the terms ofreference is provided in chapters 4 to 7.Chapter 8 presents the taskforcerecommendations, including the identificationof areas where further investigation isrequired.6 Tourism Planning Taskforce Report

Chapter 2State tourist accommodation industry2 State touristaccommodationindustry2.1 IntroductionThe Western Australian tourism industry hasbeen growing steadily over recent years, in itscontribution to the State economy and in itsown right. However, it still is considered asrelatively immature and characterised by ahigh proportion of domestic tourists, lowmidweek demand, high seasonality and alimited range of high-end facilities, particularlyin regional areas. While recent growth inregional tourism has seen the development ofa range of niche markets, based on theunique and diverse attractions, and arealisation of the high-value of suchdevelopments to the industry, the rate of suchdevelopment has been limited by factors,including the relatively low base population,distances and high cost of internal travel andaccess to the State, and in some locations, alack of services. These factors continue tochallenge the viability of accommodationdevelopments in the majority of regionallocations. Yet they also have created a tourismindustry of unique character that provides apoint of difference that will be important to thefuture national and internationalcompetitiveness of the industry.A strong component of this character inregional areas is a focus on the local market,with facilities providing a high level ofaccessibility, affordability, generally being of asmall scale and in some cases, limitedservices. Recent years also have seen thedevelopment of a greater range ofaccommodation types, which has broughtsignificant advantage to the whole industry,and improved the broad community benefit.The challenge for the industry now is toensure a range of accommodation types ismaintained, so that the very importantdomestic holiday function of regional tourismfacilities is retained in conjunction withnational and international tourism growth.The Australian tradition of summer holidays onthe coast has a strong social and culturalfunction, with the continued ability to accesstraditional holiday sites highly valued. As theState’s population becomes increasinglyurbanised the benefits of these sites to thehealth and social wellbeing of the communityalso becomes increasingly important.While Western Australia is physically large,and nodes of regional development oftensparsely spread, the opportunities forestablishment of new tourism nodes is limitedby a number of factors, including communityconcerns, environmental impact, lack ofinfrastructure, the conservation estate, accessand physical limitations, and Native Titleissues. As the coastal movement of theAustralian population continues (Salt, 2001),increasing residential pressure on existingtourism sites will result, requiring an increasedfocus on strategic tourism planning. Withoutthis focus, opportunities for future tourismdevelopments, and the resultant economicbenefits will be lost, along with the currentcharacter of the industry and its importantsocial and cultural role.In addressing the terms of reference, thetaskforce was cognisant of the need toconsider the requirements of achieving asustainable tourism industry, and to ensurecontinued investment in touristaccommodation projects. These requirementsare not always synergistic, with the industrysubject to rapid change and very sensitive toexternal effects. In reflecting State strategicpolicy as it relates to tourism, this dictates theneed to provide a land use planningframework focused on creating a robust andsustainable tourism industry. Whileacknowledging that the development industryis best placed to assess immediate marketand demand conditions, it is within thislong-term context that the taskforce evaluatedthe beneficial concessions of residential use,sought by the industry, in the development oftourist zoned land.Any reference to “tourism development”generally should be read as development of“tourist accommodation”, including ancillaryand subsidiary commercial and managementfacilities unless specified otherwise.The findings, conclusions andrecommendations of this report have beenbased on the taskforce’s investigations andTourism Planning Taskforce Report7

Chapter 2State tourist accommodation industryinformation received, including submissions,and with regard for relevant State strategicpolicy context:• State Planning Strategy (WAPC, 1997)“Economic Principle: Creating a WealthyCommunity: Facilitate land use planning forthe growth of the tourism industry, which issensitive to environmental constraints.”• Hope for the Future: The WesternAustralian State Sustainability Strategy:(Government of Western Australia, 2003)“Tourism has much potential to support thesustainable use of our natural resources.Western Australia’s unique and highlydiverse natural environment offers adifferent kind of tourism experience thatpeople from around the world are wanting:subtle, low impact, more natural andcultural experiences.The most rapid area of growth in tourism isnature based tourism and eco-tourism.Western Australia’s special status as amarine and biodiversity hotspot is asignificant global marketing opportunity.The development of sense of placeprocesses will also make WesternAustralian settlements more attractive tovisitors.”• Tourism Western Australia: Vision(WATC, Corporate Plan 2002/04)“Generate significant employment andeconomic growth for the State bypositioning Western Australia as Australia’sleading nature based tourism destination”.Tourism FactsExports of tourism goods and servicescompares favourably with other Australian‘traditional’ export products. For example,exports of tourism products are greaterthan coal, or iron, steel and non-ferrousmetals, but less than food and live animals.Tourism contributed $3.6 billion directly andindirectly to industry gross value added in2001/02. When considered in terms ofother industries tourism adds value tomultiple industries such as accommodation,transport services, retail trade, education,cultural and recreational service, plus muchmore.Based on the Australian Bureau ofStatistics Tourism Satellite Account, $73.3billion in tourism consumption in Australiaduring 2002/03 accounted forapproximately 540,700 jobs Australia-wide,representing 7 jobs for every $1 million intourism consumption in Australia. From acommunity perspective, many of these jobsare filled by young people - many inregional areas.2.2 Future of tourism inWestern Australia2.2.1 Global trendsWorld travel and tourism is expected todirectly and indirectly contribute US$4,217billion of world gross domestic product (GDP)in 2004, which is equivalent to 10.4 per cent oftotal world GDP. In the next ten years traveland tourism GDP is expected to achieveannualised real growth of 3.3 per cent,bringing GDP up to US$6,927 billion in 2014.In terms of employment, world tourism directlyand indirectly employs 214 million people or 8per cent of world employment in 2004. This isexpected to grow to 560 million jobs in 2014,an annualised real growth rate of 1.7 per cent.Direct and indirect capital investment in traveland tourism is estimated to amount to a hugesum of US$802 billion in 2004 (9.4 per cent oftotal investment), increasing to US$1,401billion in 2014.(World Travel and Tourism Council, TourismSatellite Account, Travel and Tourism ForgingAhead 2004)2.2.2 National trendsTourism directly accounted for 4.2 per cent ofAustralian Gross Domestic Product in2002-03, and was directly responsible foremploying 540,700 people, or 5.7 per cent oftotal employment in Australia.Tourism consumption by domestic householdsand international visitors to Australiaaccounted for $73.3 billion worth of goods andservices, in 2002-03. While international visitorconsumption in Australia accounted for $16.78 Tourism Planning Taskforce Report

Chapter 2State tourist accommodation industrybillion representing 11.2 per cent of totalexport earnings.(Australian Bureau of Statistics, TourismSatellite Account 2002-03).Australia attracted around 4.5 millioninternational visitors, and 75 million domesticvisitors (52 million intrastate, 23 millioninterstate), in 2003.(Bureau of Tourism Research, Internationaland National Visitor Survey 2003)2.2.3 State trendsTourists comprise two groups, those travellingoutside their home country (internationalvisitors) and those travelling within their owncountry (domestic visitors). For the purpose ofthis report the following definition of atourist/visitor has been adopted; “someonespending at least one night at a destination”,to be a domestic tourist/visitor they must alsobe “over 40 km from home” (Bureau ofTourism Research, International and NationalVisitor Survey).In 2003, Western Australia had 6.9 millionvisitors who spent about $3.9 million. Ofthese:• 570,300 international visitors spentabout12.8 million nights, with a totalexpenditure of $1,2 billion. Internationalvisitors spent about $94 a day whilst inAustralia.A total of 6.4 million domestic visitors spentabout 30 million nights, with a totalexpenditure of $2.7 billion.Domestic visitors also comprise two groups,those travelling outside their own State andthose travelling within their own State. InWestern Australia, domestic visitors in 2003consisted of:• 983,000 interstate visitors (14 per cent oftotal visitors) who spent $1 billion, Thisaccounts for an interstate daily expenditureof $106*.• 5,937,000 Western Australians seeing theirown State (80 per cent of total visitors) whospent $1,652 million, This accounts for anintrastate daily expenditure of $84*.• Estimates based on Bureau of TourismResearch, Regional Expenditure Model2000.Although Western Australia has almost 11domestic visitors for each international visitor,international visitors stay longer and spendmore daily than intrastate visitors, makingthem much more important to the Stateeconomy than their numbers indicate.Figure 1. Visitor numbers and visitorexpenditure, Western Australia2003WA Visitors 200378% Intrastate14% Interstate8% InternationalWA Visitor Expenditure 200344% Intrastate23% Interstate33% International(Source: Bureau of Tourism Research, Nationaland International Visitor Survey, 2003)Direct and indirect tourism-relatedemployment is estimated to be 72,000 people,approximately 7.7 per cent of the WesternAustralian workforce, or one job in 13.2.2.4 Tourism demandInternational visitor numbers are expected tosurpass one million by 2013. The averageannual growth rate for international visitorsnumbers is estimated at 6.2 per cent a yearover the next 10 years. As an export industry,tourism is noted as particularly valuable as away of redressing Australia’s balance of tradesituation.Tourism Planning Taskforce Report9

Chapter 2State tourist accommodation industryAchievement of this growth will requireinvestment in sufficient infrastructure,attractions, accommodation and other tourismfacilities. In addition, the retention of WesternAustralia’s natural attractions and character isnecessary, to ensure the State remains aspopular a destination in 10 years’ time. Theprivate sector usually will provide the facilitiesneeded by tourists if there is confidence infuture demand and project viability, and thepublic sector has played its part. Public sectorinvestment required includes new roads totourism attractions, sealing of existing gravelroads, upgrading of airports and air services,provision of marinas, and generaldevelopment of tourism facilities.International travel and tourism are linkedstrongly to the world business cycle. Risingincomes, reduced restrictions on travellersleaving certain countries, worldwidemarketing, a low oil price relative to Europe,favourable exchange rate and increasedawareness of Western Australia’s, uniqueenvironment and tourism character all havecontributed to a growing influx of visitors.On the other hand, the world business cycle issusceptible to extreme events such as theterrorist attack on the USA on 11 September2001, and the SARS outbreak. FollowingSeptember 11, international travel decreasedsignificantly as people’s confidence in aviationsafety plummeted. However, domestic tourismincreased as Australians chose to take theirholidays within Australia. In some areas ofWestern Australia, particularly the South-West,domestic visitor numbers increased after 11September 2001.The local industry also is vulnerable to majorupsets in the business world. The collapse ofAnsett Airlines on 14 September 2001disrupted domestic air travel. Tourismbusinesses in the north of Western Australiawere particularly disadvantaged as themajority of routes and scheduled services tothe area were operated by Ansett and itssubsidiaries.2.2.5 Future development needs oftourism industryA successful tourism industry requires aparticular combination of attractions, facilitiesand services to meet the needs of tourists.Tourism planning can be considered in termsof five groupings - attractions, access,accommodation, amenities and activities.These five “As” of tourism have been used asa framework to identify and address thedevelopment needs of the tourism industry inWestern Australia.AttractionsTourists are motivated to visit a destination byits natural and built attractions. To besustainable, attractions need to be unique,authentic and marketable. They also need tohave sufficient controls in place so that thetourism volume is sustainable in the long termwithout damaging the quality of the attraction.Western Australia is fortunate to have a widerange of natural features, which are strongattractors for the international market. Many ofthe State’s natural attractions are located innational parks, which come under theresponsibility of the Department ofConservation and Land Management (CALM),which provides an essential service to touristsand much of the success of tourism inWestern Australia depends of the resourcesallocated to CALM to maintain its existingattractions and develop new ones.Perth is the major gateway for internationaland domestic visitors and will continue to playa critical role in the development of tourism inWestern Australia. Although the State has awide range of natural attractions, major builtattractions in and around Perth are in shortsupply compared with most other Australiancapitals. More attractions are needed,particularly those which promote the State’sindigenous and multicultural background andits outback heritage.AccessAir: Perth often is described as the mostisolated capital city in the world. Air access isa critical component in the development oftourism in Western Australia. A key toincreased international visitor numbers is tohave more airlines with more seats flying frommore countries. Such diversification will assistin protecting Western Australia from the moresevere effects of one airline deciding toreduce or terminate its flights to Perth.10 Tourism Planning Taskforce Report

Chapter 2State tourist accommodation industrySustainable, reliable domestic air travel relieson a number of airlines operating withinAustralia, whether domestic or international.The collapse of Ansett would have been lesstraumatic for the tourism industry if there hadbeen more than two airlines flying domesticpassengers within Australia. The expansion ofVirgin Blue and Qantas and the resurrection ofSkywest will help to provide increased airlineaccess to destinations within WesternAustralia.Most regional centres in the State haveairports capable of handling jets of up to 70seats, and several major airports that canhandle larger jets. The factors that limitsubstantially larger numbers of tourists visitingcountry destinations by air are the lowfrequency of departures and the high price ofeconomy class fares. Tourism destinations inthe north of the State are particularlysusceptible to interruptions in air services.Road: The greatest amount of travel withinthe State is by road. Western Australia’s sizerequires a first-class road network. Generally,sealed roads are essential for national andinternational-standard attractions to realisetheir full job-creation potential. The exceptionis in remote locations where large numbers oftourists would be environmentallyunsustainable or culturally inappropriate. Mostowners of two-wheel drive vehicles will nottake them on to gravel roads and hire carcompanies generally will not provide insurancefor their vehicles on gravel roads. As a result,the upgrading of an existing gravel road to asealed road or the construction of a newsealed road has a significant impact on thenumber of visitors to a region, and theresultant jobs created. Examples include thesealing of the 29 km from Denham to MonkeyMia in the Gascoyne and Monkey Mia resortbeing developed because of this. The sealingof the 16 km from Exmouth Road into CoralBay, also in the Gascoyne, resulted inconsiderable development of accommodationand other tourism facilities.In remote areas where cost precludes gravelroads being sealed in the foreseeable future,regular grading of the roads is important. Thisalso is true for a selection of outback roads,such as Gibb River Road, that are popularwith the four-wheel drive adventure tourismmarket as an experience in their own right andare better kept as gravel or earth roads.Rail: Rail plays a small but important role inthe State’s passenger transport facilities. TheIndian Pacific, operating from Sydney to Perth,is one of the great railway journeys of theworld. The service has declined in recentyears from one a day to two a week. There ispotential for growth by targeting high-yieldsectors of markets that produce largenumbers of visitors for Sydney andMelbourne, such as the United States andCanada.Within Western Australia, the Prospectorservice to Kalgoorlie, the Australind service toBunbury and the Avonlink service to Northamare the three main government rail servicesvisitors can use to see attractions in regionaldestinations. There also are numerous localcommunity groups that operate rail tours fromseveral hundred metres to several hundredkilometres.While not providing a significant contribution toaccess to tourism facilities throughout theState, a number of the rail facilities havepotential to develop as attractions in their ownrightSea: Access to the State’s attractions by seaincludes cruise shipping, ferries, tour boatsand private pleasure craft, most of which areoperated by the private sector. The main ferryservices operate on the Swan River in Perth,and from Perth, Fremantle and Hillarys toRottnest Island.The State Government’s involvement hasincluded developments such as the MandurahOcean Marina, Geraldton Marina andExmouth Marina.Cruise shipping is a market sought after bymany coastal towns in Western Australia witha port able to berth liners, and is a marketsector that has increased in recent years.Small-boat cruises and hovercraft travel alsoprovide unique attractions in some areas.Sea transport within the State is limited buthas the potential to provide a unique attractionto accessing some destinations.AccommodationSuccessful accommodation developmentdepends on building the right type of facility toTourism Planning Taskforce Report11

Chapter 2State tourist accommodation industrysuit the needs of an identified marketsegment. Tourists are interested in staying inaccommodation that reflects the values andattributes of the surrounding area. Touristseeking a nature-based experience wantsmall-scale, single-storey accommodation thatdoes not harm nature and fits in with itssurroundings.There also is a trend towards apartment styleaccommodation as opposed to the typicalhotel room. This is part of a national trendtowards serviced apartments that providelarger living and work areas, where busyexecutives also can bring their families. Theseapartments usually are rated at four to fourand half stars (AAA Tourism self cateringapartment category).Due to distance, poor access and the highcost of providing facilities, there is a shortageof accommodation in many of the State’s keynature-based tourism areas. Suchaccommodation bottlenecks also can have aflow-on effect to other tourism destinations inthe area. For example, a shortage ofcoach-standard accommodation in FitzroyCrossing resulted in a national coachcompany cancelling an around-Australia tour,disadvantaging other Western Australianlocalities the tour was scheduled to visit.AmenitiesAmenities are basic services that provide forthe needs of tourists at a destination.Examples include:• shops with shopping hours expected of atourist destination;• sufficient parking bays for self-drivetourists;• public transport to local attractions andeasily understood timetables,• sufficient public rubbish bins during thetourist season;• restaurants and cafes with a high standardof service and flexibility in their menus;• central tourism information centre andtourism information widely available inhotels and shops and at attractions;• public telecommunication facilities;• clear directional signs; and• well-maintained public toilets.Many of these amenities are services providedby local government to its ratepayers and, ahigh degree of co-ordination is needed toensure that tourism use of such facilities doesnot compromise the local community, and theresentment of tourists is avoided.ActivitiesActivities undertaken at a destination may beactive, such as diving and whitewater rafting,or they may be passive, such as relaxing on abeach. Feedback from visitors to the State isthat many want more things to do.Development by the tourism industry of arange of visitor activities needs to be anurgent priority. Of particular importance areactivities that provide nature-based andcultural tourism experiences.In investigating and responding to the terms ofreference the taskforce has taken into accountthe five “As” of tourism. However, its terms ofreference clearly are focused on theaccommodation sector with the need toprovide a framework that will encouragedevelopment of the right facilities for asustainable tourism industry.2.3 Trends in touristaccommodationIn establishing the taskforce, the Minister wasconcerned with trends in thedevelopment/tourism industry to seek to mixtourist and permanent residentialaccommodation within a single developmenton tourist zoned land. The increasing use ofstrata schemes for tourism developments andits potential adverse impact on their ongoingoperation also required review.The investigations of the taskforce haveconfirmed that these trends are significant inthe tourist accommodation/developmentindustry, with strata schemes being used as afinancial mechanism in the majority of mediumand large-scale developments. It also is clearthat in many cases, these trends, andassociated legislative requirements, areinfluencing the style of accommodation andthe management structures under which theyoperate. This in turn is affecting the tourismexperience available in the developments, with12 Tourism Planning Taskforce Report

Chapter 2State tourist accommodation industryconcerns raised by some sectors of theindustry and Tourism WA about the quality ofthe product being delivered, including itsability to meet market requirements.Based on the information received by thetaskforce, financial considerations appear tobe the main drivers behind the increased useof strata schemes, and the incorporation of apermanent residential component into tourismdevelopments. This is related to the stringentfinancial conditions required by lendinginstitutions for tourism developments and thelow rate of return reputedly achieved by amajority of tourism developments. Anotherdriver is that not all sites zoned for tourismpurposes under local schemes are suitable orappropriate for such development. This resultsfrom changes in market conditions,development of surrounding incompatibleuses, and in some cases, an originalapplication of the zoning that wasinappropriate.The taskforce has noted that support for theinclusion of a residential component withintourism sites also has been to provide a baselevel of population in an area. This is arguedas having benefits for small businessestablishment, infrastructure use, security, andin creating an active tourism environment. Thetaskforce received submissions supporting thisview, primarily from regional areas, withseasonal tourism demand, but did not acceptthat the purported benefits necessarily wouldbe achieved.In addition to the direct effect of these trendson the tourism product delivered, a number ofsubmissions suggested these trends also areincreasing the value of tourist zoned land outof proportion with the investment return. Thispotentially exacerbates the financial risk indevelopment of such land for tourismpurposes, increases residential developmentpressure, and undermines retention of existinglow-cost tourist accommodation facilities.Redevelopment on tourist accommodationsites, particularly in high-value coastal areasof the State, has resulted in a loss of variety inaccommodation and reduced accessibility tothese sites for specific sectors of thepopulation. The implications of the increaseduse of strata schemes and the potential forinclusion of a permanent residentialcomponent on the land tax payable on suchproperties were noted as drivers in this trendof redevelopment to higher-orderaccommodation. The use of generic touristzonings to cover the range of accommodationtypes from a caravan park to a resort also wasnoted as a significant factor in this trend.Caravan parks and camping groundstraditionally have been the pioneer tourismuse along the coast and in other scenic areasof the State, and have tended to be thesubject of redevelopment pressures asaccess, and availability of services improved.These facilities then were replaced withdevelopments on new sites or in nearbylocations. However, the development ofreplacement facilities no longer is occurring ata rate sufficient to cover redeveloped sitesand as such is resulting in a reduction inaccommodation diversity. This lack of newdevelopment appears to be due to a numberof factors, including the lack of availability ofnew low-cost sites and the servicing costsassociated in establishing these sites. Tourismindustry concern has been expressed ascaravan ownership is substantial andincreasing.Anecdotal evidence provided to the taskforceby the Department of Local Government andRegional Development indicates that manylocations have insufficient caravan park baysfor travellers. The lack of development of newparks and the redevelopment of existingparks, combined with the conversion ofshort-stay sites to long-stay use, are importantfactors in this trend.In addition to providing tourism growthforecasts, Tourism WA has identified that theState’s present tourism market is experiencinglow visitor demand, relative to accommodationavailable, due to an increase in the number ofrooms over the last five years. However, thisis part of a normal seven to 10 year demandcycle. (See Figure 2). The taskforce noted itsconclusions need to recognise the position ofthe industry in the cycle, and notover-compensate for current difficulties inachieving investment in the sector.The trends of high expenditure perinternational visitor, and the requirement forTourism Planning Taskforce Report13

Chapter 2State tourist accommodation industryWA to be increasingly competitive on aninternational basis, if the international marketis to grow, also were noted by the taskforce.Along with this, it was recognised that thepresence of international touristaccommodation operators in regional areaswas very limited, and that this needs to beaddressed for the international tourism marketto expand.Figure 2: Occupancy rates andaccommodation development,Western Australia.Bed Spaces60000580005600054000520005000048000460004400042000400001997/98 1998/99 1999/00 2000/01 2001/02 2002/03Bed SpacesOccupancy Rates %(Source: Australian Bureau of statistics: Survey ofTourist Accommodation)2.4 Summary of key tourismissuesA number of the main issues and implicationsidentified in taskforce investigations arecommon to each term of reference.2.4.1 Tourism requirements andstrategic tourism sitesOccup. Rates60In investigating the primary issue of theimplications of the integration of permanentand tourist accommodation in a singledevelopment, it was identified by the taskforcethat there are a number of different categoriesof tourism and various forms of touristaccommodation, that directly influence theoutcomes on this question. The definition of atourist as “someone spending at least onenight at a destination over 40 km from home”includes the whole spectrum of visitors, from aregional business traveller to an internationalvisitor booked into a single resort for a week.To enable an assessment of the implications,the taskforce identified three main categoriesof tourist based on perceived accommodationpatterns and common experience interests.5958575655 %5453525150Short-stay Visitor - This category includesthose seeking a tourism experience and themajority of international visitors. Preferredaccommodation is resort or hotel style, locatedand designed as a tourism facility, with a focuson the overall experience provided in thatfacility, as opposed to accommodation only.The demand for such resort facilities is notdominant in the market, although thedevelopments of these facilities can leadtourism growth in an area, and can becomeiconic in tourism marketing. This segment ofthe market also includes backpackersaccommodation.Developments designed to meet this marketprovide a range of services, access torecreation and entertainment venues, and anatmosphere and ambience conducive tosocialisation.Short/Medium-Stay Visitor - This categoryincludes those seeking a holiday experienceand includes a majority of inter and intrastatevisitors, with the quality of accommodationbeing important, but not necessarily with afocus on the experience it provides.Such visitors are more likely to accessattractions within the wider area and preferself-contained accommodation, having areduced focus on surrounding activities. Thissegment includes the substantial holidayhome market in some areas of the State, andin this demonstrates a preparedness to usethis type of accommodation. The interests of ashort-stay business traveller generally aresimilar to this group in that the focus is on theaccommodation and facilities available, asopposed to the experience available within thefacility.Developments meeting this market segmentvary greatly in standard and services andfacilities provided, with the main differentiationbeing that the facility will not necessarilyprovide a tourist experience. While suchfacilities can and will accommodate theshort-stay visitor, seeking a tourismexperience, it may well not fully meet theexpectations of such a visitor.Seasonal - Long-stay Visitor - This categoryconsists predominantly of intrastate visitors toan area and ranges from those with a secondhome in a regional area to the seasonal,14 Tourism Planning Taskforce Report

Chapter 2State tourist accommodation industrylong-stay caravan park resident. In a numberof regional areas this category also includesseasonal and “fly-in fly-out” workers, who maybe considered semi-permanent residents.While visitors in this category can, and inmany cases are accommodated in residentialareas, they also are noted as investors inregional tourist accommodation developments.The structure of regional tourismdevelopments, where external areas aremanaged commonly and the opportunity existsto derive income from short-term tenants, areattractions for this category to invest in suchfacilities.There also is a broad range ofaccommodation facilities within which touristsare accommodated:• hotels and motels• serviced tourist apartments• guest house/lodge• resorts• caravan parks - camping grounds• private dwellings as renter or owner/holiday homes• chalet and cabin parks• backpackers• bed and breakfast• rural / farm stayThe taskforce considers this categorisationimportant in identifying those forms ofaccommodation and segments of the tourismmarket where the implications of permanentaccommodation in a tourism development aresignificant, ie where tourists are seeking ashort-stay experience. This is in contrast to aseasonal-long-stay visitor, where the impacton their tourist experience of a residentialcomponent is likely to be minimal. It is theshort-stay and to a lesser extent, theshort-medium stay segments of the tourismmarket that are the most important in framingthe tourism character and future growthpotential of tourism in the State, and as suchhave been the focus of the taskforce.In developing a land use response, thetaskforce has noted the need for theidentification of strategic tourism sites, whichare seen as destination sites with particularattributes and characteristics that enableviable short-stay tourism developments to beachieved. Such sites are not limited to thosesuitable for resort-style developments, but alsocan include low-cost accommodation sites.The appropriate development of such sitescan have wider economic benefits in an area,and are critical in establishing a sustainabletourism industry.These sites also are viewed as having thepotential to provide developments that achievethe competitive edge, assisting long-termviability and the quality of life available in theState. The taskforce noted that the CableBeach Club in Broome had been important inthe growth and development of State tourism,and was considered to provide an example ofthe potential of strategic sites.These high tourism value or premium siteshave been termed as strategic sites by thetaskforce, with other sites of a lesser but stillimportant tourism function termednon-strategic. This categorisation has beenimportant in the taskforce’s consideration ofthe terms of reference. The taskforceacknowledged the importance in thedetermination of strategic sites, with criteriaand a process to achieve this is included inthe recommendations. It also is acknowledgedthat the status of such sites is not alwaysstatic, and may change with the tourism valueof an area, influenced by tourism demand,investment and infrastructure provision.2.4.2 Generating growth in thetourism industryThe taskforce received submissions thatpromoted the view that the growth of tourismshould be supply led, “build it and they willcome”, ie tourism potential can be realisedonly where development of touristaccommodation is provided ahead of demand.While Tourism WA confirms that a tourismproduct must be available when it is marketed,and that tourism growth can be influencedsubstantially by marketing, it emphasises thatsustainable growth can be achieved onlywhen operators/investors are achievingreasonable returns. This allows sufficientresources to be allocated for marketing,maintenance of service levels, cyclicalrefurbishment and long term redevelopment,which requires reasonable occupancy levels.This is not necessarily achieved when aTourism Planning Taskforce Report15

Chapter 2State tourist accommodation industrydevelopment is real estate driven not basedon tourism demand (Warnken et al, 2003).Some sectors of the industry have argued thatexisting tourism zoning restrictions haverestricted the growth of the industry but thetaskforce recognised them as necessary toencourage development of a sustainableindustry. Without planning restrictions on theresidential development of tourism sites, thereis clear potential for the industry to focus onrecovery of investment capital in a project,through sale of units with a residential optionto second-tier owners/investors, as opposed toproviding a sustainable tourism product.Increasing residential demand in high-amenitycoastal locations has the potential to result inintensive mixed use and residentialdevelopment of tourism sites, as in South-EastQueensland, potentially compromising localand State tourism objectives and aspirations.The taskforce also noted the need to maintainoptions for future tourism development, whichis likely to involve an increased focus on thedevelopment of existing zoned sites. Thisarises as the establishment of new coastaltourism development sites was consideredunlikely to receive wide community support.2.4.3 Regional importance of tourismThe taskforce recognises the economic benefitthat can accrue from investment in, andincome from tourism development, especiallyin regional areas. It is noted thatapproximately 80 per cent of visitors to theState travel outside the Perth metropolitanarea, which has significant advantages for thecreation of local employment. Thedevelopment of regional tourism can also bebeneficial to the level of services andcommercial infrastructure, including thedevelopment of the cultural, environmentaland recreation assets of a locality, and therange and quality of access to and from thelocality.The taskforce also recognised that highconstruction costs in many regional areas canaffect the feasibility of tourism developmentproposals.The taskforce acknowledged the uniquecharacter of regional Australia as the basis ofgrowth of the nature-based tourism market,with the beauty, unspoilt nature, variety oflandscape and wildlife, and Aboriginal cultureidentified as fundamental motivators for travelin regional Australia.2.4.4 Financing tourism developmentThe taskforce received a number ofpresentations, and commissioned a summarypaper, on the institutional conditionsassociated with the financing of tourismdevelopments. (See Appendix 4). It wasadvised to the taskforce that financialinstitutions take a conservative position whenconsidering finance for tourism developments,justified by them from their previous significantlosses in this sector. The developmentindustry has responded with the use of strataschemes and proposals for residential use tofinance tourism projects. It was noted that theability to use strata schemes for tourismdevelopments, where a green title subdivisionwould not be approved, financially was veryimportant and the basis for the development ofmany successful tourism facilities.The difficulties in achieving a dedicatedtourism development on some sites areevident in their medium to long-term vacancy.The taskforce acknowledged that theachievement of a residential component in atourism development, although not essential,could provide the opportunity for adevelopment to occur sooner and provide amore secure return to a developer.The taskforce accepted that in the currentmarket, a unit in a tourism development thatdoes not have a residential use restriction iseasier to sell than one that does. It therebyprovides a higher level of security to afinancial institution, will correspondinglyreduce the level of developer equity requiredin the project, and minimise holding costs.While the taskforce recognised that the abilityto strata title tourism developments wasfundamental to some developments occurring,evident for the past 15 years, the inclusion ofresidential use was less commonly seen ascritical to a development proceeding. Aresidential component, or flexibility toaccommodate such, was primarilyacknowledged as reducing a developer’sfinancial exposure, and achieving premiumsale prices for individual units. It was noted16 Tourism Planning Taskforce Report

Chapter 2State tourist accommodation industrythat potentially it also facilitated a higher levelof servicing, infrastructure provision andgeneral quality of development and/or theirearlier provision than otherwise may havebeen achieved. Furthermore, other types offinancing for tourism projects are now beingpursued more commonly, including propertytrusts and vacation rentals (time share).These issues are explored in further detailunder term of reference 1. (See Chapter 4).The taskforce did; however identify a numberof long term concerns with built strataschemes that relate to the ability to maintainfunding for refurbishment and upgrading of thedevelopments, maintenance of standard fit-outand services, and general maintenance. It wasalso accepted that there may be potential toaddress these concerns with appropriatestrata scheme restrictions, conditions ofapproval and management statement/by-lawrequirements. It was also noted by thetaskforce that the use of strata schemes wasmore appropriate to resort-style developmentsthat facilitated integrated management, overlow density chalet or cabin developmentwhere there would be a greater propensity forself-management or use on a lock-up basis.These issues are explored in further detailunder term of reference 3. (See Chapter 6).2.4.5 Tourism developments andfinancial returnsThe taskforce recognises that the WesternAustralian tourism market is immature, hashigh seasonal and locational variation andoperates in a competitive market, resulting inrelatively low rates of investment return insome tourism developments. A consequencewill be that some sites recognised as havinglong-term tourism potential will not bedevelopable in the short term, resulting inholding costs for the owner. While there werevarious views in the taskforce on theprofitability of tourist accommodationoperations within the State, and theimportance of this to the findings, it stronglysupported the position that any policyapproach recognise the need to develop aneconomically sustainable tourism industry.Such an approach is necessary to ensureprofitability is adequate to facilitate initialdevelopment, maintenance, upgrading,redevelopment and marketing, all necessarycomponents for a sustainable industry.It also was recognised that the multiplier effectof tourism investment in an economy can besubstantial and to achieve this benefit StateGovernment support of tourism throughassisting the appropriate development ofstrategic sites in selected locations may bewarranted. In achieving sustainable tourismdevelopment, a blanket policy approach thatignored regional differences was recognisedas being unlikely to achieve this.2.4.6 Retention of variety andaffordability in touristaccommodationThe taskforce identified as a primary task theneed to address the retention of a variety oftourist accommodation opportunities intraditional holiday locations available to peopleat a range of socioeconomic levels due to thehigh social and cultural value of this use.The taskforce received submissions and notedthe Tourism Minister’s concerns that the Stateland tax framework was encouraging theredevelopment of many low-cost forms oftourist accommodation to resort-styledevelopments, and resulting in a loss ofaccommodation diversity. It was noted that thistrend had the potential to intensify as thecumulative effect of a number of years ofsignificantly increasing land tax took effect.It was advised to the taskforce by the ValuerGeneral’s office that this trend relates to theimmature nature of the tourism industry inWestern Australia, where currently a highervalue is placed on prime tourism land forresidential use, and is driven by the valuationprocess used for calculating land tax. Asproperties are valued at their highest and bestuse, based on an unimproved land value,where they are under a common tourist zoningit can result in similarly sized and locatedproperties paying similar land tax, irrespectiveof the extent of development orincome-earning potential of the property. Alow-key accommodation facility may paysimilar land tax to a five-star resort, resultingin continued pressure for the redevelopmentof the low-key property to generate sufficientincome to manage an increasing tax liability.Tourism Planning Taskforce Report17

Chapter 2State tourist accommodation industryThese issues are explored in further detailunder term of reference 4. (See Chapter 7).To retain a range of accommodation, thetaskforce acknowledged the need for theintroduction of more specific zonings, such as“caravan and camping grounds”, “chalet andcabin” and “tourist resort” into localgovernment schemes. The taskforce alsonoted the potential of Crown Land sitessuitable for tourism development to beidentified, made available and developed tomeet the demand for affordableaccommodation, and the need to retainexisting Crown sites used for low-key tourismdevelopment. An increased role for CrownLand is one of the potential mechanismsidentified if the loss of coastal caravan parksand low-cost accommodation developments isto be addressed.varying positions on the disposal of Crownsites designated for tourist accommodation,primarily caravan parks and camping grounds,since the 1980s. More recently, the need toprotect the community’s interest throughretaining public ownership, or limiting theoptions for alternative use of such sites whenfreehold title is issued, has been given ahigher priority. While it is recognised thatdifferent approaches still are applicable, giventhe range of Crown sites and their originalrelease/lease conditions, the taskforce hasnoted the need for applications for release ofCrown sites to be assessed under theprinciples of protecting the public interest, byensuring their use in perpetuity as affordabletourist accommodation.The Government, through the Department forPlanning and Infrastructure (DPI), has had18 Tourism Planning Taskforce Report

Chapter 3Current tourism development framework3 Current tourismdevelopmentframework3.1 Statutory arrangementsand policy frameworkfor tourismdevelopmentThe State planning framework has variouscomponents that either directly, throughstatutory controls, or via the establishment ofa strategic direction, influence thedevelopment of tourist accommodation. Inreviewing this framework, it is clear the mainissues of the taskforce terms of reference, andin particular residential use of tourist zonedland, are not addressed at a State policy level,but are reflected in some town planningschemes. The lack of a State policy positionmay result from the trends the taskforce isinvestigating being relatively recent. It may;however also be the result of the clearintention in a majority of local governmenttown planning schemes that tourist zonedsites are for short-stay accommodation only.Tourism Western Australian (Tourism WA) hasa well developed strategic framework, whichalso influences the development of touristaccommodation. It has released a number ofstatements expressing its concerns on thedevelopment of tourism sites for permanentresidential use, and the shortcomings of sometourism strata schemes.At the December 2002 board meeting of thethen Western Australian Tourism Commission(WATC), the following policy position wasadopted:“The WATC supports prime land zoned fortourist accommodation being used fordemonstrated tourism purposes. TheWATC is seriously concerned about theencroachment of permanent residentialaccommodation onto prime land set asidefor tourist accommodation purposes.”While a State Tourism Planning Strategy hasnot been developed, tourism generally is dealtwith in State and regional planning strategiesand policies.State Planning StrategyThe State Planning Strategy (SPS) provides avision for the future of Western Australia andincludes an overview of challenges facing theState, and associated planning responses.The SPS also provides a list of strategies andactions for government on the main principlesof environment, economy, community andinfrastructure for each of the 10 regions of theState.Those related to tourism are:Economic Principle: Creating a WealthyCommunityStrategies:“Facilitate land use planning for the growth ofthe tourism industry which is sensitive toenvironmental constraints. With a growingtourism market and the likely development ofa range of tourist experiences, there is a needto prepare for appropriate facilities in allregions. The planning process should alsoendeavour to support regional tourismdevelopment strategies. Each region cannotnecessarily compete in every area but mustbuild on natural strengths. To maximiseregional advantages it is necessary to identify,enhance and utilize natural assets and ensurethat the decision making system is able torespond to specific regional issues.”This is proposed to be achieved through thefollowing criteria and actions:Criteria:• identify sites for tourism facilities;• identify environmentally sensitive areas;• take account of regional tourism strategies.Actions:• include in schemes provision for touristaccommodation and other facilities in areaswith tourism potential;• identify country tourism opportunities andindicate infrastructure and planningrequirements;• continue to support tourism developmentwithin the framework established fordevelopment in ecologically sensitiveareas;Tourism Planning Taskforce Report19

Chapter 3Current tourism development framework• provide for tourism resorts in the Perthregion.”The SPS also identifies the need to givegreater emphasis to:• “identifying in regional plans, appropriatetourism facilities (such as resorts) in areaswith tourism potential;• considering, when giving planning approvalto develop tourism facilities, the extent towhich the facility is designed to reflect avisitor experience which complements thenatural environment.”Statements of Planning PolicyStatements of Planning Policy (SPP) areprepared pursuant to the Town Planning andDevelopment Act 1928 and, as the Act states,are “... directed primarily toward broad generalplanning and facilitating the coordination ofplanning throughout the State by all localgovernments”. Current SPPs deal with issuesranging from the provision of industrial buffersto place-specific planning.There are a limited number of SPPs inWestern Australia, none of which dealsspecifically with tourism. However, SPP 7,Leeuwin-Naturaliste Ridge, contains aStatement of Intent in respect to tourism, anda number of specific policy statements.Statement of Intent:A diverse and sustainable tourism base whichcomplements the existing character andlifestyle of the policy area will be facilitated by:• encouraging nature based and culturaltourism opportunities;• focusing coastal tourism in designatednodes;• integrating large scale tourismdevelopments into Principal Centres andother settlements;• promoting low scale tourism developmentthat is consistent with local characteristics;• encouraging innovative tourismdevelopment that responds to the localnatural and cultural environment;• assessing land use proposals for theirimpact on tourism; and• conserving these landscape, cultural andenvironmental values that offer futuretourism potential.”While SPP 7 does not deal in general with theissues the subject of the taskforce, it identifiestourism nodes and specifies that they shouldbe developed for short-stay purposes. Theexception is Smiths Beach, in the Shire ofBusselton, where there is specific provision fora limited permanent residential component.Under SPP 7 tourist accommodation isdefined as:“Establishments which providepredominantly short-term accommodation(i.e. for periods of less than two months) tothe general public. These include hotels,motels and guesthouses with and withoutfacilities; holiday flats, units and houses;and visitor hostels.Caravan parks which provide eitherpredominantly short-term (i.e. for periods ofless than two months) or predominantlylong-term (i.e. for periods of two months ormore) accommodation to the general publicand which provide powered sites forcaravans and toilet, shower and laundryfacilities (ABS, Tourism Accommodation,WA, 8635.5, June 1996).”The preparation of a Land Use Planning forTourism State Planning Policy is recognisedas providing an effective mechanism forimplementation of the outcomes of thetaskforce investigations.Regional Strategies - RegionalStructure PlansRegional strategies interpret the StatePlanning Strategy at a regional level andprovide a basis for co-operative action byState and local government on land use anddevelopment. Regional structure plans providefor the comprehensive planning of a region orsub-region to guide change in the short tomedium term.A review of regional strategies identifies thatthey generally deal with the issue of tourismdevelopment from the perspective offacilitating the achievement of the benefits oftourism for regional economic growth. Othercommon themes are:• encouragement of greater account to betaken for tourism issues in making land usedecisions;20 Tourism Planning Taskforce Report

Chapter 3Current tourism development framework• minimisation of environmental and socialimpact and ensuring that local characterand needs are not compromised by tourismdevelopment;• concentration of large scale tourismdevelopments in key development nodes;and• promotion of low-key, rural based touristaccommodation.The issue of residential use of tourismdevelopments or tourism nodes is notaddressed; however it is clear from thecontext of many of the strategies and actionsthat permanent occupation of tourism facilitiesis not envisaged.Planning Bulletins andDevelopment Control PoliciesPlanning Bulletins are released by the WAPCto provide advice on operational issues suchas legislation, planning practice, subdivisionand development control.Of relevance to the taskforce terms ofreference is Bulletin No 49 “Caravan Parks”(2001), which provides advice in respect toplanning for caravan parks. The bulletinacknowledges that the Caravan Parks andCamping Grounds Act 1995 and associatedRegulations 1997 provide for long-stay andshort-stay caravan parks. It emphasises theadditional issues that need to be considered inthe approval of long-stay parks due to thepermanent nature of the residents, includingproximity to services, education and healthfacilities, as opposed to the need to locateshort-stay parks near existing tourism andrecreation facilities.Development control policies guide theassessment of applications by the DPI. Ofrelevance to the taskforce terms of referenceis WAPC Policy DC 1.3, which deals withstrata titling. In addition to other matters, thepolicy reinforces the Caravan Parks andCamping Grounds Act 1995 prohibition of thestrata titling of caravan parks. The policyacknowledges that applications for other formsof tourist accommodation, that do not fallwithin the definition of a caravan park, can beapproved for strata titling and will be dealt withon their merits having regard to the localgovernment scheme. No distinction is made inthe policy between built strata and surveystrata subdivision.While not set out in the policy, the approval ofstrata subdivision of tourist accommodationdevelopment generally is subject to a numberof relatively standard conditions, which relateto:• restriction of use to tourist accommodationunder section 6 of the Strata Titles Act1985;• preparation of management statements thatdeal with building controls, fit-out andmaintenance, and require specificmanagement and leasing arrangements;• staged development issues; and• servicing.Local Planning StrategiesThe preparation by local government of localplanning strategies is required where the localgovernment is preparing a town-planningscheme, and was introduced under the TownPlanning Amendment Regulations (1999). Areview of local planning strategies prepared todate, although small in number, shows limitedattention to tourism issues, and a lack ofguidance on how tourism demand and existingsites should be dealt with in a zoningframework. The provision of a strategicframework for tourism, including theidentification of tourism sites or precincts isalso generally absent.Town Planning SchemesDevelopment control in regional WesternAustralia primarily is exercised through localgovernment town planning schemes(schemes). In the Perth metropolitan and Peelareas the respective region schemes alsooperate in conjunction with the local schemes.To guide the development of local schemes,the WAPC has prepared a Model SchemeText, which forms part of the Town PlanningAmendment Regulations (1999). One of theobjectives of the Model Scheme Text is toprovide a greater level of consistency in thelegal and administrative elements of schemes.The Model Scheme Text does not provide adefinition for short-stay accommodation,tourist accommodation or any similar land usecategory. Of relevance to the taskforce, itdoes; however define the following:Tourism Planning Taskforce Report21

Chapter 3Current tourism development framework“Bed and Breakfast: means a dwelling, usedby a resident of the dwelling, to provideaccommodation for persons away from theirnormal place of residence on a short-termcommercial basis, and includes the provisionof breakfast.Hotel: means premises providingaccommodation the subject of a hotel licenceunder the Liquor Licensing Act 1988, and mayinclude a betting agency on those premises,but does not include a tavern or motel.Motel: means premises used to accommodatepatrons in a manner similar to a hotel but inwhich specific provision is made for theaccommodation of patrons with motor vehiclesand may comprise premises licensed underthe Liquor Licensing Act 1988.”Caravan Park and Park Home Park aredefined consistent with the Caravan Parks andCamping Grounds Regulations 1997.“Caravan Parks: means an area of land onwhich caravans, or caravans and camps, aresituated for habitation;Park Home Park: means a caravan park atwhich park homes, but not any other caravansor camps, are situated for habitation.”The guide to use of the Model Scheme Textrecommends the use of a Tourist zone toaccommodate the development of tourismfacilities, including ancillary retail and servicefacilities.The Model Scheme Text does not provide anydirection to local government in thepreparation of their schemes on the definitionof Tourist Accommodation or the associatedissue of permanent occupation of suchdevelopments, other than for a bed andbreakfast establishment.The majority of local government schemeswere gazetted prior to 1999 and there isconsiderable variation in the way tourismdevelopments are defined, and how they areaccommodated within the various zones. Areview of the following schemes wasundertaken by the taskforce to determine thezoning of land for tourism development:Albany, Augusta - Margaret River, Broome,Bunbury, Busselton, Capel, Carnarvon,Cottesloe, Esperance, Exmouth, Fremantle,Gingin, Greenough, Mandurah, Manjimup,Rockingham, South Perth and Stirling.The majority of non-metropolitan schemescontain a generic zone for touristaccommodation development, which generallyis termed “tourist”, but in some instancesreferred to as “Short-stay Residential”.Schemes also contained specificdevelopment/land use categories for “HolidayAccommodation”, “Tourism Development” orsimilar. While these definitions generally wereclear in that the developments were intendedfor holiday, tourism, temporary or short-stayaccommodation purposes, only three schemescontained a specific time restriction. Thisranged from a maximum of three months inany 12 months (Busselton and Albany) to amaximum of four months. A number of thedefinitions of Holiday Accommodation werealso linked to the local government ModelLocal Laws for Holiday Accommodation(1974), which limits occupation to anaggregate six months in any 12 months.Two of the assessed schemes, Mandurah andBroome, provide a specific exemption, at thelocal government’s discretion, to allow acomponent of permanent residentialdevelopment as part of a tourism developmentin the Tourist zone. The residential componentwas not limited to a specific percentage butrequired that the tourism component of thedevelopment remain the predominant use.The local government have determined this asa residential component of up to 40 per cent,depending on the specific proposal.The achievement of similar mixed usedevelopments also would be possible under anumber of the other schemes as residentialland uses, such as grouped dwellings, alsocould be approved by the respective localgovernment within the Tourist zone. As withthe Mandurah and Broome schemes, thedetermination of an appropriate mix would bea merit assessment of a proposal by the localgovernment against the scheme objectives forthe zone.Where a local government has beensupportive of a proposal for a residentialcomponent in a tourism development, and thisis not provided for in the scheme, theapproach has been to require a schemeamendment to rezone the site, or to introduce22 Tourism Planning Taskforce Report

Chapter 3Current tourism development frameworka specific provision to facilitate the residentialcomponent.The Busselton scheme also provides arestriction on the permanent use of caravanparks, at a maximum of 15 per cent ofcaravan sites, the achievement of which issubject to the approval of the localgovernment. This differs from other schemes,which allow the development of caravanparks, in specific zones, in accord with theCaravan Parks and Camping GroundsAct/Regulations. In such instances, it is at therequest of the proponent and at the fulldiscretion of the local government as to thetype of park - short or long-stay. Once again,the local government would be guided by theobjectives for the respective zone within whichthe proposal was located. That is, a limitedextent of long-stay use only may beappropriate in a tourism type zone relative to aresidential type zone.A majority of the assessed schemes did notlimit the development of touristaccommodation to the specific tourist zoneonly. Schemes generally provided for low-keyfacilities as discretionary uses in theresidential zones, and higher order facilities inthe town centre / commercial and some ruralzones.Metropolitan local governments schemesgenerally do not provide for a specific touristzone. The majority include touristaccommodation land uses in the form ofserviced apartments/units, with the definitionlinking these to temporary occupation. Theseuses generally can be approved incommercial, mixed use, higher densityresidential and special beach/foreshoredevelopment type zones. This provides fordevelopments with a tourist component orexclusively tourist developments, to beachieved without rezoning, in a number ofsituations.A minority of the schemes provide guidanceas to the criteria for the assessment ofsubdivision applications within tourist zones,with recommended minimum lot sizesestablished. All of the schemes reviewed are;however silent on the issue of strata titling ofsuch developments. In response to this, somelocal governments have developed townplanning scheme policies on the issue.This review indicates that there is noconsistent position in local planning schemeson the issue of permanent residential use ofaccommodation developments on touristzoned land. While the provisions of a numberof schemes require a rezoning to facilitatesuch developments, there are as manyschemes that could accommodate tourismdevelopments with or without a residentialcomponent, at the local government’sdiscretion. In these schemes,residential/tourism developments may or maynot be guided by zone objectives requiring thedevelopment to be predominantly tourismorientated. It is also clear that a number oflocal governments are yet to be faced withsuch development proposals, and haveschemes that will not necessarily provide anadequate or clear framework for dealing withthe issue when it arises.Where the issue has been dealt with by alocal government in preparation of its scheme,there have been two distinct responses:• prohibit the permanent residentialoccupation of tourism developments withinspecific tourist zones (thereby requiring arezoning if the local government supportssuch a development proposal); or• provide flexibility for the local governmentto exercise its discretion in approving acomponent of residential use of tourismdevelopments, with its decision guided byzone objectives and a requirement to retaina tourism dominance in the zone.The determination of the level of residentialuse that can be accommodated in a tourismdevelopment while ensuring the tourismcharacter is retained adequately isacknowledged by the taskforce as a complexissue. Guidelines for determining appropriatelevels are required to take into account thecharacter and potential for dominance of aresidential component and cannot be basedeffectively only on numerical supremacy. Thisis explored further under the discussion ofterm of reference 2. (See Chapter 5.)The differences in the approaches of thevarious schemes are linked to the spatialapplication of the zone. Where increased localgovernment discretion has been provided for,it also is evident that the extent of the touristzoning generally is more extensive, beingTourism Planning Taskforce Report23

Chapter 3Current tourism development frameworkapplied on a precinct or area basis, asopposed to application to a number of specifichigh-value tourism sites.In a number of regional areas, the componentof the visitor market accommodated inresidential dwellings owned as holiday homesis significant, and this tourism use is importantto the local economy. The South-West localgovernments of Busselton andAugusta-Margaret River are investigating thesocial and amenity impacts of such use, and itsperceived impact on the operation ofpurpose-developed tourist accommodation.While this issue was outside the terms ofreference of the taskforce, it was noted as ashortcoming in the existing statutoryframework, given the lack of clarity, and that itrequires further investigation at a StateGovernment level with a view to assisting localgovernments to develop an effective response.Town Planing Scheme ZoningsThe taskforce terms of reference are specific totourist zoned land. To establish the requiredscope of investigations and an inventory ofsuch land, an analysis was undertaken oftourist zoned land in local governmentschemes in the South-West, Great Southern,Peel, Central Coast and Broome.As not all schemes contain a specific touristzoning, the review was based on schemezones that provide primarily for tourism typedevelopment, including tourism and short-stayzones, restricted use and special use zoneswhere tourist accommodation is the primarydevelopment type permitted, and specific hoteland motel type zones. It did not include ruraltype zones where these provide for ancillarytourist accommodation development such aschalets and other low key facilities. A numberof these schemes also provide for tourismdevelopment within Town Centre and likezones, along with many other uses. Thesezones also were excluded as previous tourismdevelopment has been limited and this isconsidered unlikely to change significantly.The outcome of this assessment shows thattourist zonings form a minor component only ofthe urban zoned land within each of theschemes reviewed. This generally is less thantwo percent and encompasses a very smallarea relative to residential zoned land. Reviewof the location of these sites also demonstratesclearly that the majority are located within anurban context, ie one or more boundariesborder a developed urban area, wheresignificant other residential opportunities exist.The analysis also showed that the size oftourist zoned sites, or contiguous areas, ishighly variable, from less than one hectare tomore than 100 hectare. It was also evident thatthere are few sites of a size and/or locationable to accommodate significant resort-styledevelopment, with a majority of sites of lessthan one hectare and a low level ofundeveloped sites.Town Planning Scheme PoliciesLocal government town planning schemesgenerally provide for the development ofscheme policies designed to provide guidanceto the local government, the community, andproponents to assist in the interpretation andimplementation of the scheme. Such policiesare subsidiary to the scheme and any Statepolicy framework, but can be an important partof the local planning framework.Of the local government schemes that werereviewed at least the shires of Broome andBusselton have developed scheme policies toguide their consideration, and recommendationof conditions, in respect to applications forstrata subdivision of tourist accommodationdevelopments. The Shire of Broome policysets out guidelines for the assessment of strataapplications and specific requirements forintegrated management designed to ensurethe ongoing management of a facility as abona fide tourism resort. In achieving this, thepolicy deals with such issues as managementstructure requirements, common maintenance,servicing and fit-out, availability of units forrent, and development of common facilitiesand amenity buildings as part of first-stagedevelopment.These policies have been developed within thecontext of the WAPC Policy DC 1.3 that stratasubdivision applications for touristaccommodation will be considered on theirmerits.Tourism WA also has developed a guide onthis issue, titled Strata Title TouristAccommodation Developments: Attributes ofSuccess. (See Appendix 5).24 Tourism Planning Taskforce Report

Chapter 3Current tourism development framework3.2 Role of governmentagenciesA number of government agencies, in additionto Tourism WA have a role in the regulation,promotion, development and in forming thecharacter of the tourism industry in WesternAustralia.In conjunction with the WAPC’s regulatory rolein zoning and subdivision for tourismdevelopment, as exercised through the DPI,local government also has an importantinfluence on tourism development through itsdevelopment approval process. Localgovernment also generally takes the primaryresponsibility in negotiating and approvingvarious agreements and undertakingsassociated with the subdivision of tourismsites or the strata subdivision of tourismdevelopments for approval conditions to becleared. In respect to ongoing use localgovernment has the authority andresponsibility for policing use restrictionsassociated with tourism developments.Local government also is responsible for theapproval, licensing and regulation of caravanparks and camping grounds, in accord withthe Caravan Parks and Camping GroundsRegulations, and is assisted in this regard bythe Department of local government andRegional Development. It also can have amajor role in supporting tourism developmentthrough the provision and maintenance ofpublic facilities and services.In respect to the development of touristaccommodation, the role of Tourism WA oftenis significant in pre-development planning andmarket assessment undertaken byproponents, through the provision ofinformation. It generally has a limited role inthe assessment process of tourismdevelopment proposals, or in the developmentof land use plans, even where tourism sitesmay be involved or proposed. Tourism WAbecomes involved in the developmentassessment process through the referral bylocal government or DPI of development andrezoning proposals for comment. This is notundertaken within a formal framework andappears to occur on an ad hoc and limitedlevel. The value of this referral process, whenundertaken, to the outcome of the approvalprocess has not been assessed. It is; howeveracknowledged that Tourism WA hassubstantial tourism development expertise thatwould be of advantage to local governmentand DPI in the preparation and assessment ofstrategic tourism planning documents and inreporting on tourism proposals.Through its Crown land administration function(formerly the responsibility of DOLA), the DPIand CALM have an important role in theState’s tourism industry as managers of landused for tourism purposes. For DPI, thisrelates primarily to its disposal, administrationand ongoing management of Crown Land fortourism purposes under various tenurearrangements from licences to freehold.Previously the role of the then DOLA hadbeen significant in implementing governmentdecisions in response to applications for theissue of freehold of reserves in regional areasmanaged for the purposes of touristaccommodation or caravan parks andcamping grounds. DOLA, and subsequentlyDPI, has, however more recently beendeveloping a policy framework to addressconcerns associated with the loss of low-costtourist accommodation that has occurredthrough this process.CALM provides a range of touristaccommodation facilities on land that itmanages in accord with endorsed NationalPark Management Plans, and/or the reservedpurpose of the land. CALM undertakes theplanning, development, and operation of thesefacilities largely independently of othergovernment agencies, including localgovernment. The lease of CALM land forprivate development and operation of facilities,with the infrastructure returning to CALM atthe end of the lease also is an arrangementthat has been used. CALM also has a verysignificant role outside tourist accommodationdevelopment in the management of many ofthe State’s iconic tourism attractions.3.3 Statutory arrangementsin other statesThe taskforce undertook a review of thestatutory framework that applies in otherstates, as it relates specifically to the terms ofreference, to determine if the subject issuesTourism Planning Taskforce Report25

Chapter 3Current tourism development frameworkhad been experienced and dealt with. Thiswas supplemented by the taskforce inspectiontour to South-East Queensland. Conclusionsfrom this review are that the issue ofpermanent occupancy of touristaccommodation is managed at a localgovernment level, where management occurs,and this is often on a case-by-case basis.The situation is similar to that which currentlyexists in Western Australia in that there is alack of a State policy framework. The centraldifference identified is a trend to use mixeduse residential zonings in high-demandtourism areas and approve the development(residential building) as opposed to the use(tourism or permanent residential). Someschemes provide the opportunity fordevelopment to take advantage of tourismrequirements, such as reduced parkingprovisions compared with residential, with littlepolicing of subsequent use/sale for residentialpurposes.State Government LevelContact with the planning and tourismagencies in Queensland, New South Wales,Victoria and South Australia indicated that theissues under review had not been widelyidentified. There was no developed policyresponse in any of the States and no relevantresearch that could be sourced at a State levelfrom either the planning or tourism agencies.The NSW Coastal Council advised that it hadconsidered the issue and recognised the valueof coastal sites for tourism purposes, but thishas not yet been reflected in the State CoastalPolicy.The advice from South Australia was that amajority of coastal tourism developmentswould require the approval of the StateGovernment, in addition to the localgovernment, and it would be likely thatconditions associated with permanentoccupancy would be imposed, but this wouldbe on a case-by-case basis.During 2004 it was identified that theCooperative Research Centre for SustainableTourism has been undertaking research intothe residential/tourism trend and issuesassociated with strata management acrossAustralia, but with a focus on the Gold Coast.While in its preliminary stages, this researchindicates concerns for the tourism industrywith the nature of mixed developmentoccurring and the inadequacy of many stratamanagement arrangements (Kelly Cassidy,Griffith University pers comm).Local GovernmentIn reviewing how the issue is dealt with at alocal government level, contact was made witha number of coastal and high-profile tourismlocal governments in the abovementionedStates. The responses clearly indicated thatfew local governments involved themselves inthe issue at a policy level, and very fewschemes contained occupancy restrictions oneither residential development or tourismdevelopment. Of those local governments thathad experienced and responded to the trends,this was on a case-by-case basis, usuallyassociated with larger tourism developmentsand achieved by way of developmentconditions.Where the trends had been recognised morewidely by the local governments, it wasacknowledged that it may be detrimental fortourism and the need to identify specific sitesexclusively for tourism purposes hadcommenced. In the local government areas ofNoosa and Tweed Heads, the trends havebeen responded to through the identification ofsites for tourism-only development, particularlycoastal resorts.Individual responses which providerepresentative examples include:Maroochy Shire, Sunshine Coast, QueenslandAt a strategic planning level, the localgovernment has identified a number of tourismprecincts where it seeks to encourage tourismdevelopment and has undertaken substantialinvestment in increasing the general amenityand facilities in these areas. At the schemelevel, these areas are not zoned exclusivelyfor tourism, but commonly zoned mixeduse/mixed housing. Within such zones, theuse classes multiple dwelling or integratedtourism development could be approved, withlittle to differentiate the developmentstandards or restrictions relating to each.Within these areas, commercial developmentat street level is also encouraged to provideinterest and vitality.26 Tourism Planning Taskforce Report

Chapter 3Current tourism development frameworkThe outcome reported is that the higher-valuedevelopments consistently are used fortourism purposes, although this is notregulated, with little permanent residentialoccupation. At the local government level, thiswas considered to reflect the higher demandand higher returns that could be achieved fortourist accommodation, over residentialdevelopment. This was not supported withfigures on tourism use of such developments,and there was some evidence thatresidential/holiday home use of suchdevelopments is higher than acknowledged bythe local government. The confidence intourism uses being able to outperformresidential uses in competing for limitedhigh-value development sites was alsoinconsistent with trends identified on the GoldCoast of the conversion of beachfront tourismdevelopments to residential units.In a non-urban inland setting, where the areaavailable for development was limited, it wasacknowledged that it would look more closelyat the tourism versus residential issue, but thatit had not arisen to date.Surf Coast Shire, VictoriaThe planning scheme for this shire is similar toMaroochydore in that areas identified at astrategic level for the encouragement oftourism development are not zonedrestrictively for that purpose, but provide formixed use development. It was reported thatwithin the two main coastal towns of Lorneand Torquay, there has been no problem ofresidential use competing with touristaccommodation. recent extensivedevelopment of higher-density apartments andresidential dwellings within these towns hadresulted in the majority being leased fortourism use. However, it was alsoacknowledged that new tourist-resortdevelopment had been limited, and that thismay relate to the high tourism use ofapartment accommodation.Ballina and Hastings shires, New South WalesThe general advice was that in Sydney andalong the NSW North Coast, there is usuallylimited difference between tourismdevelopment and residential development inrespect to development controls, with thedevelopments often being strata titled. Wherethere was a specific tourist zoning (which waslimited, as most higher density residential andcommercial type zones provided for tourismdevelopment), development conditions limitingthe use would be considered. It also wasadvised that strata tourism developments hadin the past been used as a basis for achievingrural-residential subdivision and that suchproposals now required rezoning to ensure thedevelopment was primarily tourism.The local governments clear emphasis in thedevelopment assessment process was onenvironmental, site amenity and communityissues, as opposed to the detail of theoccupation. It also was clear at this level thatthe implications of the potential loss ofhigh-value tourism sites to residential use, andthe impact of tourism use of residentialdevelopment on the development of touristresorts were not issues that had receivedextended consideration. The taskforceconsidered that this may relate to the extent ofexisting development in the areas reviewed, iethe development of high-value coastalgreenfield sites is not a common occurrence,and what was reported as the high demandand financial advantage of tourism overresidential development.Overall, it was clear that there commonly wasno distinction in the planning frameworkbetween permanent and tourism use ofresidential buildings in areas subject to touristaccommodation pressure, and that this wasnot necessarily a result of extendedconsideration of the issues, but simply theplanning system accommodating marketdemand.The tourism strategies of the various Statetourism departments also were reviewed,none of which contained policy statementsspecific to the issue the subject of the terms ofreference.3.4 SummaryIn reviewing the statutory and strategicdevelopment framework in Western Australiaand other States, the intention was toascertain how the terms of reference issuesare addressed, to provide a framework for thetaskforce investigations. It is clear that inWestern Australia, there is a relativelyTourism Planning Taskforce Report27

Chapter 3Current tourism development frameworkdetailed, although inconsistent, statutoryframework at a local level, particularlycompared with other States, but this is notsupported with State-level policy direction.This local government statutory frameworkand the protection it can afford to tourism siteswas recognised as an advantage for thetourism industry by a number of tourism andgovernment representatives in South-EastQueensland. While the lack of State policydirection reflects the arrangement in otherstates, there clearly are different pressures inWA relating to population, tourist numbers,and tourism seasonality, which may wellrequire the development of a differentapproach.28 Tourism Planning Taskforce Report

Chapter 4Term of Reference 14 Term of Reference 1Undertake an examination of the merits ofthe justifications used by proponents insupport of their applications to provideresidential development on land zoned fortourism purposes and consider criteria forthe assessment of such claims.4.1 BackgroundIn establishing the taskforce, the Minister wasconcerned with trends in thedevelopment/tourism industry to seek to mixtourist and permanent residentialaccommodation on tourist zoned land.Investigations by the taskforce andsubmissions received have confirmed that thistrend is significant.Over recent years, there has been a steadyincrease in the number of applicationsreceived by local government and the WAPCfor rezonings and scheme amendments toprovide for a mix of tourist and permanentresidential accommodation on tourist zonedland.The applications reviewed by the taskforcetook two basic forms:• Applications for an amendment or rezoningto a town planning scheme to delete userestrictions associated with length ofoccupancy, of the whole or a portion ofsites or units within a development that isproposed as tourism, and argued toprimarily still function as such.• Applications to rezone the whole or part ofa site to accommodate a use other thantourism (usually residential). In such cases,the rationale usually is linked to a lack ofdemand for tourism development and thereis no contention that the site will continueto serve a tourism function.This term of reference examines thejustifications used by proponents in seekingapproval to develop a tourism zoned siteunder both of these scenarios. Thejustifications identified generally fit into threecategories: financial, social-management andsite specific.4.2 Financial justificationsThe primary justifications put forward byproponents were financial. These generallywere based on:• Accommodation units in a tourismdevelopment without a short-stay userestriction sell for a premium and are morereadily saleable, generating early income toa project.• Development viability depends on apermanent residential component due tolack of tourism demand/market.• Financial institutions have refused tofinance tourist accommodation-onlyprojects, particularly in regional areas, withtourism units not considered adequatesecurity.The taskforce invited presentations from MrJeff Cohenca, Director Commercial Finance,Ashe Morgan Winthrop, and Mr GrahamO’Neill, Manager Property Finance, BankWestto explain the position of financial institutionsin respect to the funding of tourismdevelopments. The taskforce alsocommissioned a summary paper on the issuesfrom Mr Cohenca. (See Appendix 1).The taskforce was advised by representativesof the development industry that financialinstitutions take a conservative position whenconsidering finance for tourism developments,justified by them from their previous significantlosses in this sector. The developmentindustry has responded with the use of strataschemes for tourism projects and theincorporation of a permanent residentialcomponent, with pre-sales providing thesecurity required by the financial institutions.Review of development trends shows that theuse of strata schemes for tourismdevelopments now is common practice, andhas been the primary mechanism for fundingsuch developments in Australia over the past15 years. The inclusion of a permanentresidential component in tourismdevelopments to achieve project finance is amore recent trend. It also was determined thatthis is of lesser importance than the ability tostrata, with a number of recentdeveloper/operator tourism developmentsachieving development finance without theTourism Planning Taskforce Report29

Chapter 4Term of Reference 1inclusion of a permanent residentialcomponent.In the current market, an accommodation unitin a tourism development with no short-stayuse restriction is easier to sell than one with ause restriction. It thereby provides a higherlevel of security to a financial institution, andcorrespondingly will reduce the level ofdeveloper equity required in the project.The Taskforce was told the increasedsaleability of such a unit was related to:• the position of the financial institutions inmaking access to finance for residentialunits easier than for tourism units;• the ability to sell a lifestyle factor, based oninvestors being willing to accept a low rateof return on the investment where thepurchased unit is considered a holidayhome; and• the increased income security associatedwith a residential investment property.The inclusion of a residential component in atourism development therefore can havesignificant financial benefits for the developerin enabling preferential lending arrangementsto be established with financiers, relative to atourism-only development. It also can facilitatea quicker return on capital invested in thedevelopment through improved sales, and inreducing the time frame for development. Italso is argued that potentially it facilitates ahigher quality of development with a higherlevel of servicing and infrastructure provisiondue to earlier and higher returns.While the issue of a residential component isconsidered secondary to the ability to stratatitle in funding such developments, itpotentially can be critical to the establishmentof a project at a particular time, and theinfrastructure provided as part of a project.The inclusion of a residential component alsomay be considered a further move by thedevelopment industry to address a lack ofresponsiveness by financial institutions tocircumstances of increasing demand for touristaccommodation development.The history of tourism development on theEast coast of Australia would appear toindicate that where the opportunity existsmixed residential/tourism development willoccur, with the real estate market, as opposedto the tourism market, a the main driver. Theresult is the continued provision of touristaccommodation units, ahead of marketdemand, but which have accommodatedindustry growth over time. It has; however alsogiven rise to concerns expressed by sectors ofthe tourism industry about the quality of theresultant tourism product, negative impacts onthe tourism experience from resulting useconflicts, and the sustainability of theapproach, with high-value sites lost toresidential use.This latter concern is based on the high levelof competition and low returns generated inthe tourism condominium market, and theinability of operators to provide adequatetourism services, marketing, refurbishmentand maintenance under such conditions. Theresult is a general decline across the board inthe quality of accommodation and serviceprovided. Warnken et al (2003) considers thatthe South-East Queensland tourism industrylargely has been buffered from this effect todate as the majority of such development isrelatively new, and is in an expanding market.Serious concern is; however expressed for thefuture of the tourism industry when largenumbers of apartments from earlierconstruction booms mature simultaneously,and continuous low returns mean that fundingfor refurbishment and retention of theproperties for tourism use are not available.The consequence of this, in addition to adetrimental impact on the tourism market, isviewed as a loss of prime tourism sites toresidential use. In an analysis of the history ofSpanish tourism, Priestly (1995) similarlyidentified that a government approach ofexpansion at all costs and price regulation, toachieve numerical growth in tourism numbers,resulted in low returns, a predominance oflow-quality facilities, and a resultant collapsein foreign income from tourism.The taskforce also noted that in facilitatingdevelopment through enabling a residentialcomponent, as opposed to a developmentbeing held until adequate tourism demand isachieved, this may have negative implicationsfor existing operators and may not result in anoverall tourism benefit. However, it concludedthat subject to the introduction of a residentialcomponent being limited to specific sites andthe application of guidelines and conditions as30 Tourism Planning Taskforce Report

Chapter 4Term of Reference 1required to ensure a tourism outcome, this willminimise the negative impacts for existingoperators by reducing the rate at which suchdevelopments are likely to proceed to asustainable level. These concerns also needto be balanced against the findings thatwithout a permanent residential component,some tourism developments may not proceedbecause of an inability to secure finance. Fordiscussion of the guidelines and conditions tobe applied, see Section 5.7.The taskforce also received information that apermanent residential component in a touristaccommodation development could facilitatecompliance of such a development with ClassOrder exemptions issued by the AustralianSecurities and Investments Commission(ASIC) in respect to its consideration as aserviced strata scheme under theCorporations Act. While the taskforceacknowledged that under very specificcircumstances, this could occur, it was notaccepted that it should be a dominant factorabove tourism considerations in determinationof the suitability of a residential component ina particular development.4.3 Social - managementjustificationsThe social-management justifications putforward by developers in support ofpermanent residential components in tourismdevelopments focused on the benefitconsidered to accrue from the development ofan ethic of responsibility and general care forthe development in owners of permanentresidential units, irrespective of whether theowners were also permanent occupants.The development of an ownership ethic wasacknowledged by the taskforce, but it was notaccepted that this necessarily was in the bestinterest of providing a tourism experience at afacility. It was noted that such an ethic inowners had the potential to promote conflictbetween the tourist and permanent users of afacility. This, and further justificationsassociated with a permanent residentialpresence, are dependent on residential unitsbeing used on a permanent basis to:• provide an air of activity in the area andfacility throughout the year;• support the establishment and on goingviability of on-site and local commercialfacilities; and• improve infrastructure maintenance.The history of these developments has;however shown that while the level varies,purchasers of permanent residential units withina tourism development are likely to use themon a lock-up or holiday-home basis. They arevacant for substantial periods and the purportedbenefits of permanent occupation are notrealised, with vacancies also detracting fromthe tourism experience in peak holiday periods.However, it also is accepted that under suchcircumstances the potential for tourist-residentconflict is reduced, although there is acorresponding loss of capacity to accommodatetourism demand.The position was also submitted to thetaskforce that a residential component wasrequired in regional tourism areas to combatseasonal fluctuations, and facilitate theestablishment and ongoing viability oftourism-orientated commercial and recreationfacilities, improved infrastructure, and toimprove the character of the area generally.However, the high levels of local businesssupport associated with tourism, relative topermanent residents or the level of holidayhome use that may arise may not have beentaken into consideration.Submitters raised further issues in respect tothe wider economic benefit that can accrue to aregion from the development of a tourismfacility with a permanent residential componentthat otherwise may not be initiated. While thetaskforce accepted this position, it was notdemonstrated that this benefit generally wouldbe sustainable. It also was not clear to thetaskforce that the inherent potential value in aprime short-stay tourism site would not bediminished through the inclusion of a residentialcomponent due to the potential for conflict andthe devaluation of the tourism experience, andloss of the long term ability to accommodatetourism demand. Correspondingly, the taskforceconsidered that this justification had limitedvalidity for tourism developments where thepotential conflict and detrimental effects of aresidential component would be high, iestrategic sites, and as such, outweigh theeconomic benefits of early development.Tourism Planning Taskforce Report31

Chapter 4Term of Reference 14.4 Site-specific justificationsProponents seeking a residential componentput forward a considerable number ofjustifications that relate to the specificcircumstances of a site or the town/localitywithin which it is located.The taskforce was unable to be definitive onthe general validity of these due to the varioussite locations and conditions involved. It did;however acknowledge the need for sites to beconsidered on an individual basis taking intoaccount particular location issues, in additionto their potential strategic tourism value. Siteszoned for tourism purposes do not alwayshave a high potential or value for tourismpurposes due to a number of factors, including:• initial zoning that may have beeninappropriate;• changed market/demand situation; and• development of surrounding land uses thatno longer are compatible with tourismdevelopment.It also was noted that tourism developmentoften has been used as a vehicle in promotingand seeking approval for wider developmentschemes that primarily are residential. In suchcircumstances, the tourism sites can remainundeveloped after the residential developmenthas been completed. Thereafter, they are oftenreduced in size and/or relocated to provideadditional residential capacity, and in somecases rendered un-developable due tosurrounding land use. The taskforceacknowledged the need to provide the optionto re-evaluate the appropriateness of thetourism zoning of such sites. It also wasstrongly of the view that an increase in theup-front critical evaluation of such proposals inthe future was required.The taskforce also concluded that proposalswhere a residential element was included thatotherwise was outside the adopted planningframework, due to the desire to achieve atourism development, need to be consideredvery cautiously due to the potential for highresidential infrastructure and servicing costs tothe State of such development.Under both scenarios, where a residentialcomponent is considered consistent with theagreed planning framework, mechanismslinking tourism facility development to thestages of an overall project were consideredessential. Where this could not be achievedeffectively the development should not besupported.4.5 ConclusionsOn the basis of its findings, the taskforceaccepted that the basic financial justificationsput forward by developers in support of apermanent residential component in a tourismdevelopment are valid, and reflect the currentposition of lending institutions. The taskforcedid; however identify that these justificationswere focused on initial project funding and didnot consider the quality of the resulting tourismproduct, ongoing sustainability of a project, ornecessarily consider the benefit or impact ofthe development on the tourism industry. Italso was noted that the ability to include aresidential component in a development wassecondary to the ability to strata title, althoughstill important, in achieving project finance.Correspondingly, the taskforce considered thatif residential components in tourismdevelopments are to be supported, this needsto be on a specific category of tourism siteonly, and subject to development andmanagement conditions to reduce the negativeimplications.The general category of social-managementjustifications were seen as potentially givingrise to competing interests and greaterresident/tourism impacts, without a high levelof confidence in the benefits, and as such werenot considered compelling.In respect to site-specific justifications, thetaskforce recognised that it was necessary fora framework to be established within whichproponents, the State and local government, inconsultation with and with assistance from theWAPC and Tourism WA, can evaluate theneed for retention of specific sites fortourism-only purposes. This determinationrequires assessment of the overall tourismcontext of a locality and is discussed further inthe taskforce recommendations, Part 1. It alsois acknowledged that while protection andfacilitation of development is required forhigh-value strategic tourism sites, where a sitehas a limited tourism value or potential, it isappropriate for it to be rezoned for mixed useor an alternative purpose.32 Tourism Planning Taskforce Report

Chapter 5Term of Reference 25 Term of Reference 2Assess the implications of allowing a mix ofpermanent and tourist accommodation onland zoned for tourism purposes in terms of:• reducing the growth of touristaccommodation in relation to futuredemand;• potential loss of high-value tourism land(in close proximity to and withaccessibility to areas of highenvironmental, cultural and scenic valueor other locations of strong tourisminterest);• potential land use conflicts betweenshort-stay and permanent occupantscompared with any benefits that a moremixed community may bring; and• other planning issues in relation toallowing a mix, such as distance fromresidential services and the provision ofinfrastructure.5.1 BackgroundIn establishing the taskforce, the Minister wasconcerned as to the potential impacts ofmixing tourism and permanent residential usesin a single development in respect to land useconflict, impact on the tourism experience, theresidential amenity provided in suchdevelopments, and the loss of suitable andavailable land for future tourism development.This provided a clear framework for theidentification and assessment of the variouseffects. The absence of quantitative datamade consideration of components of thisterm of reference difficult, and dictated areliance on anecdotal evidence in somecases. The taskforce considered each areasof potential impact and based its conclusionson the cumulative outcome of theseassessments.5.2 Reducing the growth oftourist accommodationin relation to futuredemandThe implications of the loss of tourist zonedland to permanent residential use on theability to accommodate future tourism demandrelates to the ability for any land alienatedfrom tourism development to be replaced withland of equal tourism value and readiness fordevelopment. This is dependent on thetourism value of the alienated land, inconsideration of its location andcharacteristics, and issues such as availabilityof services. A high impact will be experiencedwhere the loss involves a prime tourism site ina location with limited alternatives. The valueof the loss of a tourism site also will be higherin locations where community opposition todevelopment of existing natural areas is high,and as such, options for replacement of a sitelimited.Where there are a significant number oftourism sites of equal value in a generallocality, or where other equal-value sites withpotential for development or rezoning fortourism purposes are available, then the lossis likely to be less significant.Two categories of proposals provide for theintroduction of permanent residentialcomponents to a tourism site:Category 1: covers zoning and developmentcharacter of a site retained as tourism but userestriction removed on whole or a portion ofthe site or specific number of units,Category 2: covers portion or whole of a sitezoned for residential use.In consideration of proposals under Category1, the following issues were identified inrespect to the ability to accommodate futuretourism growth:• This may result in a specific site reductionin the provision of tourist accommodationwhere the overall scale of the developmentremains unchanged due to allocation of aportion of the development to residentialuse. This potential loss may; however beaddressed where the site capacity existsfor the scale of the tourism development toTourism Planning Taskforce Report33

Chapter 5Term of Reference 2be maintained, in addition to the residentialcomponent.• This development style will limit tourismpotential unless the design approach andmanagement structure facilitates use of theresidential units for tourism purposes, asmarket demand dictates, and provides forfuture expansion and/or redevelopment.• The delivery of tourism units achieved insuch developments is likely to be ofadvantage to tourism where thedevelopment would not have proceededwithout the residential component.• The long-term loss of tourism potential mayoutweigh the short-term advantage ofachieving the development ahead ofsustainable tourism demand. This impactwill be reduced where design andmanagement conditions facilitate a changeof use back to tourism as demand grows.• Residential properties currently are usedfor tourism purposes in some localities, andwhile this demonstrates a high level offlexibility to accommodate seasonaldemand, it does not necessarily provide atourism experience or cater to the short tomedium stay visitor.• Where the site has strategic tourism value,the significance of a residential componentmay be high in limiting further tourismdevelopment, ie a second stage of thedevelopment to accommodate increaseddemand. A residential component also willlimit flexibility for redevelopment, expansionor upgrading to reflect market changes.• The extent of loss of the tourism function ofa site can be significantly greater than justthe proportion of the site or units allocatedto residential use. This results from thepotential for the tourism function andtourism experience to be downgraded,irrespective of demand, where there is aresidential component. Anecdotalinformation provided to the taskforceindicated that this outcome is moreprevalent where such developments arestrata titled and the interests ofowner-occupies become dominant over thetourism interest.The loss of potential to accommodate futuretourism demand from the introduction of acomponent of permanent residential useneeds to be balanced against the possibleimmediate loss to tourism if a permanentresidential component is not permitted anddevelopment of a site does not progress. Italso needs to be balanced against thepotential future loss to tourism if notourism-related development is achieved andsubsequently, the site is rezoned to anotheruse that excludes any tourism development. Inassessing these issues, the taskforceconsidered it likely that the potential loss totourism of permitting a residential componentin a tourism development will outweigh otherconsiderations on high-value tourism sites, butnot in respect to general sites where thepotential can be replaced.In consideration of proposals under Category2, where the site or portion of the site isrezoned for residential purposes, the followingissues were identified:• The land is lost to tourism with a highpotential for this to be long term andprobably permanent.• Significance of the loss of the site dependson site location and characteristics, with thesite value and ability to replace the sitebeing fundamental considerations. Wherethe loss involves a prime tourism site, withthe tourism zoning applied in reflection ofinherent tourism potential, then thesignificance of loss consequently is high ifthe site cannot be replaced.• Where the site is located in a natural orhigh landscape-value area and thereplication would compromise those valuesand its inherent tourism value, then thesignificance of the loss is high.• If the site is urban based with no particularlocational characteristics, the loss of thesite may be significant where the site is ofa size suitable for a tourism development,and land amalgamation in the surroundingarea and/or approval of a tourismdevelopment on an alternative site may bedifficult to achieve. However, thesignificance of the loss still is dependent ona current or projected future demand fortourism development in that location.In considering the significance of this issue, areview of local government schemes in anumber of urban areas was undertaken. Thisindicated that under the statutory planning34 Tourism Planning Taskforce Report

Chapter 5Term of Reference 2framework, there generally are opportunitiesfor development of new tourism sites withinurban areas (and limited rural tourism in ruralareas). However, this does not consider thetourism value of the lost sites, or the successof actual development proposals, as touristaccommodation often is one of a range ofuses that may be approved at the localgovernment’s discretion.The exception to this is in low tomedium-density residential areas wheretourism developments often are limited byzoning, and often opposed by residents of theimmediate area due to perceived amenityimpacts.The alienation of vacant tourism sites, orthose with dated developments, from atourism zoning where there is no current orprojected demand for tourism development onthat site also was considered. It was identifiedthat where tourism demand was low due to asustained market change, or changes insurrounding land use, the loss of tourismdevelopment potential also was likely to below.Where a loss of tourism development potentialoccurs through the rezoning of the site, orportion of the site, and there is no link totourism development on the remainder of thesite, the detrimental impact on the ability toaccommodate future tourism demand is clear.This is particularly significant for those coastalsites where replacement opportunities areconstrained.Where only a portion of a site is proposed tobe rezoned for residential use and this isbased on supporting associated tourismdevelopment, the potential loss needs to bebalanced against the possible immediate lossto tourism if the proposal does not proceed.For those sites with an identified tourismvalue, this will relate to the site characteristics,the ability to accommodate existing andprojected tourism demand, and the ability tolink the development of the tourismcomponent to the residential development.Examples of previous development proposalsbased on a proposed association betweenresidential and tourism components commonlyhave resulted in the tourism component notbeing built. This was considered todemonstrate some concerns with the ability tolink such developments effectively.For sites where there is no identified tourismvalue or future potential, or where the sitereadily can be replaced through the zoning ordevelopment approval process, it wasconsidered that rezoning for residentialpurposes would not have a detrimental impacton the ability to accommodate future tourismgrowth.In consideration of this component of the termof reference, the taskforce concluded that:• The rezoning from tourism to residential ofall or portion of urban based sites with noparticular tourism character, or existing orsubstantiated future demand for tourismdevelopment, will result in a site-specificloss, but is unlikely to result in a restrictionon growth of tourism accommodationdevelopment.• The rezoning of the whole or portion of atourist zoned site for residential purposes,where that site has an identified tourismfunction, will result in a restriction on theability to accommodate future tourismgrowth. Where the site is identified ashaving high tourism value, the significanceof this impact is high.• The retention of tourist zoned sites fortourism purposes only, where the siteshave an identified tourism function butlimited immediate demand, will notnecessarily benefit the growth of touristaccommodation in an area, and may bedetrimental relative to promotion of atourism development with a limitedresidential component.• A rezoning or scheme amendment toprovide for a tourism development with aresidential component on a high-valuetourism site will result in a loss of ability toaccommodate future tourism demand andwill have a detrimental impact on tourismgrowth.• The rezoning of a site from tourism toresidential negates the ability of the marketto return that development to a tourism useas demand increases, as may be achievedin a tourism development with a limitedresidential component under a tourismzoning.Tourism Planning Taskforce Report35

Chapter 5Term of Reference 2• The implications of the inclusion of aresidential component in a tourismdevelopment are more significant inrespect to the conflict between the usergroups and the effect of this on tourismcharacter, than simply the loss of touristaccommodation. A residential componentalso can limit the ability of management tomodify the character of a development tomeet changing market demand, andtherefore is detrimental on the ability toaccommodate future tourism demand.5.3 Loss of high-valuetourism landTourism sites of high-value are those sites thathave strategic value for the sustainabledevelopment and growth of the tourismindustry and need to be identified, developedand managed to provide the greatest benefitto tourism and the community. As discussed inSection 2.4 the taskforce has adopted theterm strategic for such sites. With particularimportance to this term of reference, it isacknowledged that the status of these sites isnot always static, and may change with thetourism value of an area, influenced bytourism demand, investment and infrastructureprovision.The inclusion of a permanent residentialcomponent in the development of strategicsites, or loss of portion of such sites topermanent residential use through zoning, hasthe following implications:• devaluation of the tourism experienceavailable through permanentresident/tourist conflict and potential for anon-tourism character to persist in thedevelopment. The outcome is theundermining of the potential of the site tooperate as a sustainable strategic tourismdestination, and the loss of the potentialwider benefit of this to the community;• loss of potential for staged development orredevelopment of a site over the long termto meet increasing tourism demand; and• devaluation of the character of a site’sattractions and/or the site setting, ie thoseaspects from which the site achieves itsinherent potential, through residential-styledevelopment.These implications have been identified on thebasis of assessment of the impact of theintroduction of a residential component totourism development on existing tourist zonedland.The taskforce notes that effective tourismplanning also will require the establishment ofa framework for identification of strategictourism sites that currently may not be zonedfor tourism purposes. Such a process also islikely to result in the identification of strategictourism locations, ie areas generally identifiedwith high tourism potential. These locationscan be identified in local government planningstrategies and schemes, in addition to thezoning of specific land parcels for tourismpurposes.With the identification of strategic tourismlocations at the broad planning level, thecapacity will exist for some areas within theselocations to be developed for tourismpurposes with a residential component, and toa lesser extent, residential purposes, withoutnecessarily giving rise to the aboveimplications. Achievement of this will involve amasterplanning process undertaken from atourism perspective that recognises long-termtourism demand. This may result in agreementon a graduation of integrated residentialdevelopment across a site, while retaining aprimary tourism function for the location as awhole. Such an approach to the developmentof tourism estates would provide increasedinvestment opportunities, and flexibility forsuch areas to evolve over time with changingtourism demand.The failure of some past examples of suchestate developments to deliver tourismdevelopment opportunities of a high value, orany tourism development at all, has beennoted by the taskforce. In addressing this, it isrecognised that the emphasis in planning ofsuch precincts needs to be on theidentification and appropriate designation ofsites of strategic and non-strategic tourismvalue. Where a residential component isproposed in support of the tourismdevelopment imposition of an overalldevelopment framework to ensure thepotential of these sites is not compromised, orthat the financial benefit of a residentialcomponent is not lost to the tourismdevelopment, also is important. This will36 Tourism Planning Taskforce Report

Chapter 5Term of Reference 2require an increased focus by the WAPC andlocal government on the effective statutorylinking of residential and tourism developmentin such estates.The taskforce also considered the loss oftourist accommodation opportunities that canarise from the conversion of short-staycaravan parks, many of which occupystrategic tourism sites and serve a strategictourism function, to either long-stay caravanparks or park home parks. As caravan parkscannot be strata titled, the element oflong-stay users within a park can be veryimportant to the ongoing viability of theoperation by providing a low-season oryear-round base income to the operator. Whileacknowledging this, the taskforce consideredthat a more consistent approach to the issuewas necessary, given the loss of tourismopportunities that had resulted in the past. Theapproval of proposals for such conversionsrests with local government and it wasconsidered that on tourist zoned land,determination of such applications should bebased on the assessment of the need fortourism as opposed to residential use. Thisassessment should be undertaken inconjunction with the local tourism industry,Tourism WA and WAPC and includeconsideration of the wider tourism demandsand function of the locality.In consideration of this component of the termof reference, the taskforce concluded that:• There is a loss to the tourism industry fromthe introduction of a permanent residentialcomponent on strategic (high-value) sitesfrom the reduction of tourism developmentpotential and/or the potential for the tourismexperience available in such sites to becompromised.• The taskforce endorses an approach tofuture tourism development that involvesthe identification and designation ofstrategic tourism locations. Within suchlocations, a residential component may beable to be accommodated where masterplanning can demonstrate that tourismvalues are not compromised, includingprovision for long-term demand, and thedevelopment of the tourism component isintegral to development of the site. Thetaskforce is aware that this approach hasbeen used in the development of integratedtourism-residential estates on the easternseaboard in association with thedevelopment of brand name resorts.• In consideration of the importance ofstrategic tourism sites and locations, andthe wider planning implications of suchareas for tourism purposes, the taskforceconsiders that an agreed framework for theidentification, management anddevelopment of such sites for tourismpurposes is required.• There is an increased focus required onthe retention of tourist caravan parks fortourism purposes, as many are located onstrategic tourism sites, and/or serve astrategic tourism function. Any loss of thesesites to residential use will affect the abilityto accommodate future tourism demand.5.4 Potential for land useconflicts between theshort-stay andpermanent occupants ina tourism developmentThe taskforce was presented in submissionswith a divergence of views on the potential forconflict between permanent residents andshort-stay users of a tourism complex. Thevarious views reflect the categories of visitorsand accommodation types as identified inSection 2.4. Anecdotal evidence provided tothe taskforce indicated that there is a highpotential for conflict between residents andtourists in some forms of tourismdevelopments, which relates to their differingobjectives for staying there. It also wasidentified that this conflict simply may exhibitas a devaluation of the tourism experienceavailable in a facility.In addition to issues outlined, the conflict alsorelates to the reduced level of service thatcommonly is associated with mixedtourism/residential developments, and theirorientation away from the interests and needsof the tourist. The taskforce noted this asessentially the consequence of the residentialcomponent reducing the viability of providing afull range of tourism services due to lack oftourism numbers and demand. This wasstrongly evident in mixed use beachfrontTourism Planning Taskforce Report37

Chapter 5Term of Reference 2developments in south-east Queenslandwhere access to reception and/or assistanceoften was limited to standard office hours.While published research on residentialconflict in built tourism developments couldnot be found, it is an issue investigated inrespect to caravan parks (AIUS, 1990). Thedifference in conditions between caravanparks and built developments will affect theextent of conflict; however it is considered thatthe principles of conflict are equally applicableto both development types. These arediscussed below.Territorial claimsPermanent residents have an increased desirefor privacy and personalisation of their site.This can result in the following outcomes:• the development of resentment andantagonism in permanent residentstowards tourist that may cross or passthrough public space that has beenpersonalised or is in proximity to their site;• the personalisation of space has thepotential to result in a loss of consistencyand variation in standards through out afacility; and• tourists at a facility with a permanentpopulation are likely to be made to feelintruders, particularly where access tofacilities is involved. This feeling will alsobe influenced by the attitude ofmanagement and the number of residentswho are possesive of common facilities.Separation issuesThe extent of actual and potential conflictbetween user groups is likely to increase asthe number of permanent residents increases,until they become the dominant group. This isdue to the different reasons for the groupsbeing in caravan parks, from rest, relaxationand enjoyment for tourists, and work andhousehold routines for residents.While a tourist is likely to be viewed as anintruder by residents, the tourist also mayresent the residents due to their better accessto facilities, knowledge of the park, having adetrimental impact on their tourismexperience.Determination of appropriate levelof a residential componentThe analysis indicates that the size of aresidential component and its location in atourism development are important to the levelof conflict and detrimental impact on thetourism experience that can result. Thetaskforce has identified that there is potentialfor a limited residential component to beincluded in the development of non-strategicsites, conditional on the tourism dominancebeing retained. As such, it was necessary fordetermination of the maximum proportion ofpermanent residential use, and associatedconditions, at which this still could beachieved.The taskforce reviewed existing localgovernment schemes and policy positions,which ranged from a residential component ofbelow 15 per cent to more than 40 per cent intourism developments on tourist zoned sites.There was; however a lack of documentedanalysis of the effects of the variouspercentages. As the taskforce was limited inits ability to undertake its own detailedresearch on the issues, information wassought through discussion with tourismoperators, managers and industryrepresentatives. Anecdotal evidence fromSouth-East Queensland was particularlyimportant in this regard, due to the number ofmixed tourism/residential developments in thearea. Through this process, the taskforce alsoidentified the need to establish specific criteriafor application of the residential percentage.Various methods historically have been used,including land area, unit numbers or floorarea, all of which can result in significantlydifferent outcomes.The outcome of this assessment was that amaximum of 25 per cent residentialcomponent was appropriate, based on sitearea and unit numbers and conditional onspecific design requirements, for the tourismdominance of developments to be sustainable.This was based on the following issues:• The personalisation and privacy issuesassociated with resident occupation of unitswithin a tourism development can dominatethe tourism character at very low levels.This relates to a loss of consistency across38 Tourism Planning Taskforce Report

Chapter 5Term of Reference 2a facility, externally and internally, and aloss of tourism character in a development.• Occupancy level of tourism units comparedwith residential units may result inresidential dominance at low levels duringthe low season. This can result in thedevelopment of protective attitudes inresidents to recreation and other facilities,and general access. This then can bemaintained into the high season, reducingthe tourism amenity. It also can result in adesire of residents to maintain low tourismuse, and result in specific moves to changethe orientation of a development away fromthe needs of the tourist.• The involvement of owners of permanentunits in corporate bodies generally isstronger and more consistent than tourismunit investors, and can result in residentialissues dominating management of adevelopment at residential levels of about20 per cent and above. The 20 per centresidential component was identified to thetaskforce by operators in the Queenslandmanagement rights industry as the catalystlevel at which residential unit holderstended to dominate other interests. Inspecific examples, this had resulted incorporate bodies reducing services andfacilities available to tourists, with theeventual consequence that the facility’stourism function was greatly reduced infavour of a residential focus.• A predominance of tourism use is requiredto provide for the maintenance and ongoingprovision of tourism services and facilities,including reception, room service from aviability and management effectivenessperspective.• The conflict between therecreational/holiday interests of tourists,and the domestic interests of residentsgenerally were considered manageable atresidential levels of about 20 per cent orless. At residential levels above this,operators acknowledged that the tourismexperience at a facility could becompromised.The taskforce reviewed the effectiveness ofdesign and management requirementsprepared and implemented by localgovernment to determine the basic principlesrequired to ensure retention of tourismdominance in developments. The suggestedconditions take into account the outcomes ofthe overall assessment of terms of reference 2and 3, relating to strata titling, and arecontained in the conclusions in Section 5.7.The taskforce also considered the location ofa residential component within a developmentas important as detrimental effects will beexacerbated where a residential componentoccupies the prime portion of a site, eg wherea residential component occupies thebeachfront of a site, and all visitors arerequired to pass this area to access thebeach, being the primary tourism focus.Where the residential part of the site is themost visible or located closest to recreationfacilities the effect also will be exacerbated.This therefore can result in a dominantresidential character to the development atlow residential levels and has the potential toreduce the tourism amenity significantly.In consideration of this component of the termof reference, the taskforce concluded that:• There is potential for conflict betweenshort-stay tourists and long term orpermanent residents within a tourismfacility due to the different objectives of thetwo groups. This conflict can manifest itselfin many ways but has two primaryoutcomes:- a devaluation of the tourism experienceat the facility through there being anon-tourism character or ambience, andthe tourist feeling like an intruder whenentering the development or using certainareas/facilities; and- an impact on the amenity of the residentdue to different lifestyle priority issues ofshort-stay tourists, who in many caseshave a higher recreation priority.• There is reduced potential for conflict inmixed tourist/residential developmentswhere the visitors are medium-stay holidayor seasonal visitors. This relates to reducedimportance on the tourism ambience of thedevelopment; however issues of conflictover ownership and intrusion still are likelyto occur.• The significance of the inclusion of apermanent residential component within atourism development on the potential forconflict will in part depend on the designTourism Planning Taskforce Report39

Chapter 5Term of Reference 2and location of the component within thesite. The greatest conflict and detrimentalimpact will arise where the residentialcomponent is in proximity to the tourismfocus or recreation/entertainment facilities.• There is potential to reduce the level ofconflict and detrimental impact on tourismof a residential component in a tourismdevelopment on a non-strategic site wherethe residential component is less than 25per cent of the development, and designand management such that the tourismorientation of the development isemphasised and maintained.5.5 Providing for a morebalanced communityEvaluation of this issue was undertaken on asite-specific basis, as was relevant to amajority of submissions received by thetaskforce, and from a wider perspective, whichgenerally relates to the ability to service andmaintain facilities for a tourism-onlydevelopment.The social and management justifications putforward by developers in support of theincorporation of a residential component intourism developments identified a number ofbeneficial outcomes on a site-specific basis.These were:• ability for a residential component toprovide support for commercial facilitieswithin a development;• provision of a level of management andownership presence; and• establishment of a level of year-roundactivity and use.These issues were discussed in detail underterm of reference 1, and the taskforce did notaccept that these benefits would outweigh thepotential negative implications associated withconflict between residential and tourist users,and the devaluation of the tourism experience,in respect to strategic sites.The taskforce received a number ofsubmissions supporting the need to establisha balanced population in the Cable Beachtourism precinct in Broome, through allowingresidential development. This issue providesan outline of the specific conditions thatprevail in some regional areas.The Shire of Broome has reviewed this issueon a precinct basis and considers that thereare potential advantages in permittingresidential development in a primarily tourismarea. The approach proposed by the shire isthe introduction of a residential component ona graduating basis with increasing distancefrom Cable Beach and the adjoiningcommercial/tourism focus. The advantagesare:• A base residential population will increasethe ability to establish viable commercialactivities in the area through reducedseasonality of demand, which will benefitthe tourism experience in the area in thelong term.• The Cable Beach precinct is large, beingoriginally designated on the basis that itpermitted mixed use development, and hasthe capacity to accommodate residentialdevelopment, particularly in the areas awayfrom Cable Beach, which do not have hightourism potential.• These areas are noted as requiring acatalyst for development to improve theoverall outlook and character of the area.• A more balanced, all-year population willresult in greater use of existinginfrastructure and investment in the area,and increase the ability to improve andprovide further infrastructure.The achievement of these advantages arecritically reliant on the permanent occupationof the residential units/development and thatthis occurs to a level that will outweigh thehigher expenditure on facilities, cafés,restaurants and tourism orientated specialtyshops, that otherwise would accrue fromtourism.As the residential component isacknowledged by the Shire of Broome as alegitimate land use in this context, it isnecessary that it be located to provide anadequate level of residential amenity. Whilethe level of integration between the residentialand tourism components would need to behigh in proximity to the strategic tourism focus,maintaining tourism dominance, it is acceptedthat this would reduce toward the periphery ofthe precinct.40 Tourism Planning Taskforce Report

Chapter 5Term of Reference 2The unique circumstances of the Cable Beachtourism precinct, particularly its size, and itspotential to accommodate long-term tourismdemand and an element of integrated andseparate residential development were notedby the taskforce. The approach to planning ofthis precinct also was noted as potentiallyproviding an example of a valid response toregional circumstances, subject to theestablishment of specific limits to theresidential development to protect thestrategic tourism value and capacity of thearea. This could be developed through a localtourism planning strategy.In consideration of this component of the termof reference, the taskforce concluded that:• The benefits that arise from theestablishment of a more mixed communitywithin a development on tourist zoned landdo not outweigh the negative impact of thepotential conflict between residents andtourists on focused strategic sites.• The proposed advantages of theestablishment of a base population in atourism precinct, and the ability ofpermanent residents in a development toreduce the impact of the seasonality of thetourism industry are noted. These benefitsare considered to be applicable only in veryspecific circumstances, where the benefitoutweighs the displacement of potentialtourism expenditure and the potentialdemand for additional residential services.5.6 The use of land zonedfor tourism purposes inrespect to access toresidential services andprovision ofinfrastructureThe residential environment provided to apermanent resident in a tourism developmenton tourist zoned land is influenced by amenityissues, associated particularly with conflictwith tourists, and the ability to accessresidential services.The taskforce accepted that the level ofresidential amenity that could be achievedwas likely to be acceptable on urban-basedtourism sites in respect to access to urbanservices. Some non-urban and regionaltourism sites were recognised as unlikely toprovide an adequate level of access toresidential services, which could havelong-term consequences for the State andrelevant local governments in respect toinfrastructure provision.There are examples of townsites around theState that were established as seasonaltourism locations and subsequently havedeveloped to contain a residential population.While the first generation of such a populationmay accept a level of servicing below thatnormally expected in a residentialenvironment, the process inevitably results inrequests for the provision of infrastructure inwhat are at times highly inefficient locations toservice. As such, the implications of theapproval of a residential component on touristzoned sites in relatively isolated locations canbe significant economically, and have ongoingfinancial consequences for State and localgovernment. Given the location of suchsettlements is not necessarily planned takinginto account residential needs, it also canresult in inefficient patterns of servicing andpotential duplication of services at both levelsof government.There also are implications in respect to theprovision of residential services that can affectthe tourism quality of a site, through creatingan overall atmosphere in the development thatis more orientated to residential than tourismneeds. This is particularly important in regionalareas where the isolation, relative lack ofdevelopment and natural beauty arerecognised as providing the “point ofdifference” that will increase futureinternational and national tourism. Thetaskforce considered that protection of thischaracter would be difficult to achieve ifnon-urban tourism sites are developed forresidential purposes with associated urbaninfrastructure.5.7 ConclusionsThe conclusions of the taskforce take intoaccount the validity of proponents’justifications for the inclusion of residentialcomponents, as reviewed under term ofreference 1, and the implications of mixingTourism Planning Taskforce Report41

Chapter 5Term of Reference 2tourist and residential accommodation, asdiscussed under this term of reference. Theconclusions also consider the role of tourismdevelopment in establishing sustainableeconomic activity, particularly in regionalareas. The need for a tourism development tobe sustainable in its own right and in its widerimpacts also is recognised.The taskforce acknowledges that itsconclusions in respect to sites deemed to beof strategic value may be viewed in somesectors as not addressing the financial issuesassociated with tourism development, and assuch, not facilitating the early development ofthese sites. However, it is considered that thedevelopment of such sites for tourism-onlypurposes is in the best interest of achieving asustainable tourism industry in the long term.It also is acknowledged that this may haveimplications in respect to some tourism siteshaving to be held until tourism demandincreases. The taskforce has sought toaddress this in the policy recommendations.(See Chapter 8).The taskforce noted that, on balance, thereare detrimental implications associated withallowing a mix of tourist and permanentaccommodation on tourist zoned land wherethat land has an inherent tourism value and/oris one of a limited number of developmentopportunities in a locality, ie a strategic site.The potential for a residential component todetract from the tourism function, the potentialloss of tourist zoned land, reduced level oftourism services available, introduction ofurban infrastructure, and/or the lack of accessto residential services and infrastructure aresignificant potential implications on strategictourism sites.These implications also were determined to beapplicable to non-strategic tourism sites to alesser and variable degree, and in part couldbe addressed through design andmanagement conditions. It was identified thatthe desired outcome for these sites would beachieved through the establishment of theresidential component without an occupancyrestriction. This is seen as facilitating themaintenance of tourism dominance andflexibility for future tourism use as demandincreases while also providing the financialbenefit of a residential component.These outcomes gave rise to a number ofspecific conclusions:• The detrimental implications associatedwith a permanent residential developmentor permanent residential component in atourism development on a strategic tourismsite generally would outweigh any benefit interms of the residential componentfacilitating early or more significant initialdevelopment or establishment of ancillaryfacilities. The taskforce considered that aframework should be established for theidentification of strategic tourism sites tofacilitate their retention for tourism-onlypurposes.• The importance of strategic tourismlocations and sites, and the wider planningimplications of the management of suchareas for tourism purposes, requires theplanning framework to identify these takeinto account the positions of the majorstakeholders. This would include at leastlocal government, the real estatedevelopment and tourism industries,community interests, Tourism WA and theWAPC. It also should take into accountState Government policy and beundertaken as an important component oflocal planning strategies, as required to beprepared when a local government isreviewing its scheme, or in the form of alocal tourism planning strategy.• Where sites have a lower-order tourismvalue, are more commonly urban based,and identified as non-strategic, theimplications of limited residential use areconsidered less significant where tourismdominance and function are retained. Inthese cases, the impact of the residentialcomponent may be secondary to thebenefit that can be achieved throughfacilitating a new development or thesignificant redevelopment of an existingfacility.• Not all tourist zoned sites under localgovernment schemes have, or will continueto have tourism potential or a tourismfunction of significance to the industry, anda planning framework is required thatallows for the identification andrationalisation of such sites to facilitate theiruse for non-tourism purposes.42 Tourism Planning Taskforce Report

Chapter 5Term of Reference 2• Where a residential component issupported on a non-strategic tourist zonedsite, the taskforce concluded that amaximum component of 25 per cent shouldbe considered, as the potential for theresidential use to dominate the tourismorientation of a development significantlyincreases above this. The taskforce alsoconcluded that specific design andmanagement guidelines were required ifthe tourism orientation of suchdevelopments was to be sustainable, andfor future tourism use of the residentialcomponent to be facilitated.• Where tourism developments are approvedon non-strategic tourist zoned land with aresidential component, this componentshould be developed as residential-nooccupancy restriction units. That is, it willform an integral part of the tourism complexbut will not be restricted in terms of lengthof stay. Achieving this outcome will requirecompliance with the following requirementsand guidelines:- The maximum proportion of residentialuse shall be determined such that the siteretains a predominantly tourism function,and shall not be greater than 25 per cent.- The maximum percentage ofresidential-no occupancy restrictionunits/development determined asappropriate on the site, being equal to orless than 25 per cent, shall comply withthe following at all stages of thedevelopment of the site.- The proportion of residential-nooccupancy restriction units relative to thetotal number of accommodation units onthe site shall be equal to or less than theapproved percentage.- The site area occupied by theresidential-no occupancy restriction units,and any areas designated for the specificuse of the occupiers of those units,relative to the area occupied by theshort-stay development, shall be equal toor less than the approved residentialpercentage. In calculating the areasoccupied by the short-stay andresidential-no occupancy restrictioncomponents, common areas and thosefacilities available for common use shallbe excluded from the calculation.- All accommodation units shall bedesigned primarily for tourism occupationand form part of an integrated complex.- Any residential-no occupancy restrictioncomponent incorporated within a tourismdevelopment shall not occupy thoseareas of the site providing the highesttourism values, eg the beachfront, shouldbe retained for tourism purposes and notresidential-no occupancy restriction units.- Design differentiation between tourismand residential-no occupancy restrictionunits within a development shall belimited to that required to accommodatethe various components of the tourismmarket.- Residential-no occupancy restriction unitsmay be segregated within thedevelopment and provided withrecreation and amenity facilities, but shallbe designed to enable use as anintegrated part of the complex.- The potential of a residential-nooccupancy restriction component inproviding a transition between the tourismdevelopment and surrounding residentialuses to reduce amenity impacts isacknowledged and separation of theresidential-no occupancy restrictioncomponent on this basis may beconsidered.- The development shall incorporatefacilities normally associated with touristaccommodation developments such asrecreation, entertainment, and thoserequired for integrated reception andmanagement.- Where a development is subject to astrata scheme, there should be amandatory requirement for a long-termmanagement agreement between ownersof tourism units and a tourismmanager/operator to provide forintegrated management of these units,and other units in the development usedfor tourism purposes. (Furtherrequirements in respect to strataschemes to improve the tourism outcomeof such developments are set out in theconclusions in term of reference 3).• The need for the retention of tourismcaravan parks, and the extent of long-stayTourism Planning Taskforce Report43

Chapter 5Term of Reference 2use and park home developmentconsidered appropriate within such parks,is an issue that requires consideration bylocal government. This should beundertaken in conjunction with the tourismand development industries, Tourism WAand DPI as a component of the preparationof a local planning strategy and reflected inthe local government scheme.44 Tourism Planning Taskforce Report

Chapter 6Term of Reference 36 Term of Reference 3Review trends in the strata titling of tourismfacilities and the operational andmanagement impacts of various tenurearrangements. This will include assessmentof the impact on management structures,control and enforcement of occupancyrequirements, increases in the cost and lossof variety in available accommodation, andincreased pressure for permanentoccupancy.6.1 BackgroundIn investigation of this term of reference, thetaskforce received a number of backgroundand briefing papers from the then Departmentof Land Administration (DOLA) andsubmissions from the then Western AustralianTourism Commission. These papers providedinformation on the types of strata schemescurrently used in tourism development, trends,tourism industry concerns, and a criticalreview of the capacity for managementrequirements to be achieved through theStrata Titles Act 1985 (the Act). The taskforceacknowledged the need for the review toinclude an assessment of the impact of stratatitled tourism development on the tourismindustry.There currently are two types of strataschemes available under the Act - strataschemes and survey strata schemes.The term strata scheme commonly refers to abuilt strata, but it also can mean a vacant lotstrata, where a number of the lots may notcontain a building or any portion of a building,or a survey strata.A survey strata plan creates lots similar to afreehold (green) title subdivision, and whilethere may be buildings on the property, theseare not shown on the plan. The boundaries ofsurvey strata lots are surveyed by a licensedsurveyor and shown on the survey strata plan,and look much the same as lots shown onsurvey diagrams for green title subdivision.Survey strata schemes commonly are used forthe strata subdivision of serviced butundeveloped land, with strata schemes usedfor the subdivision of buildings.The operation of strata schemes is controlledby the Act and strata by-laws, establishedpursuant to Section 42 of the Act. Amanagement statement also can be used toput in place by-laws, including conditions thatmay be required by a local government, theWAPC or the developer. By-laws are intendedto control the internal management ofschemes. The areas they can address arerestricted by Section 42(3) of the Act, to theeffect that “no by-law can act to prohibit orrestrict the devolution of lots or any transfer,lease, mortgage or other dealing therewith orto destroy or modify any easement implied orcreated by the Act”. The penalty for breach ofa by-law is $400. The Act is unclear as to thestanding of a third party, such as localgovernment, in establishing a privateprosecution for breach of a by-law, evenwhere that by-law was imposed at the requestof that organisation under Section 42(2d).The use of a strata lot also can be controlledwith a Section 6 restriction, and this commonlyis done in tourism developments to prohibitresidential use. Section 6 of the Act providesthat on registration of a plan a restriction ofuse can be established on a parcel or part of aparcel. The Act also provides that therestriction cannot be removed or modifiedwithout the resolution of the strata company,without dissent, and approval of the localgovernment, and where that restriction wasrequired by the WAPC, its approval.The use of strata schemes for tourismdevelopments primarily is undertaken toachieve financing and profit realisation fromsuch projects, and has become the dominantmethod for financing since the introduction ofthe Act in 1985. However, there are concernsexpressed by sectors of the tourism industrythat developments subject to strata schemesare not being developed on the basis oftourism demand, have resulted in residentialuse of tourist zoned land, and wheremanagement arrangements are not adequate,have resulted in delivery of a poor tourismproduct.6.2 Strata titling trendsA review of DPI records and informationsupplied by the Valuer General’s Officedemonstrates that the number of strataTourism Planning Taskforce Report45

Chapter 6Term of Reference 3schemes associated with tourismdevelopments has been increasing steadilyover the past 10 years, with the portion ofthose schemes based on survey strata alsoincreasing. It has not been possible toevaluate the use of strata schemes as aportion of tourism development in the scope ofthe taskforce, given the different approvalauthorities. However, submissions andinformation received by the taskforce supportsthe position that strata titling is used as afunding mechanism for the majority of tourismdevelopments, particularly for medium to largeprojects.Strata managementDeveloped tourism strata schemes generallyare managed in one of the following ways:• All units are managed by a professionalmanagement body (in cases a brand namecompany) located within the complex, withpooling of income and distribution of returnbased on unit entitlements. Thesestructures generally provide limited controlto the owner over use of the unit, and givethe management body authorisation tomaintain all units and facilities in a mannerthat achieves the best return on the facilityas a tourism operation. Developments willgenerally include restaurant, bar, café andrecreation facilities and all units will befitted out to a consistent standard andrequired to be maintained at that level.Such schemes are; however subject to therequirements of managed investmentschemes under the Corporations Act 2001,including the issue of a full productdisclosure statement and involvement ofresponsible entities in transactions.• A contract is provided to a managementcompany for the complex on the basis thatthe company has to establish a contractualarrangement with each of the unit owners.Under such arrangements, incomegenerally is not pooled, owners have achoice as to their participation in thescheme, and a high level of control overthe use of their unit. Units will generally berequired to be fitted out and maintained toa consistent level to be taken on by themanagement company, which also will beresponsible for the maintenance ofcommon facilities and provision ofreception and tourism services. Facilitieswill generally include a café and bar. Suchstructures may not fall under therequirements of managed investmentschemes, but still may be required to issuea product disclosure statement in accordwith the requirements of the AustralianSecurities and Investments Commission(ASIC).• Smaller facilities commonly are managedon a basis where income is not pooled andthe extent of site management is limited,and likely to be provided independently, notby a management company. The ownermay have the option of on-sitemanagement, but also can be limited toexternal management through a real estateagent or self-management. Under such astructure, there commonly is norequirement for units to be fitted out ormaintained to a consistent standard, andthe level of service provided and facilitiesavailable to guests is likely to be limited.Under the latter two schemes, the provision ofongoing site management is dependent on thedecisions of individual unit owners in keepingenough units in the pool to ensure a viablemanagement operation. While this decision ofthe owners can relate to the performance ofthe manager, it also can be influenced by theowners’ commitment to the project as atourism facility. Where units are withdrawnfrom the management pool, this will affect theability of the manager to provide adequateservice, marketing and general operationalattention to the remaining owners in the pooland/or an increase in per unit managementcost. This can have a compounding effectthrough reduced performance and tourismattractiveness of the development, resulting inreduced returns to owners. This mayprecipitate further withdrawal of units from themanagement pool. The eventual outcome ofthis process can be a loss of viability in on-sitemanagement and a collapse in the servicingand marketing of the development. It is underthese circumstances that increased residentialuse is facilitated and other detrimentaloutcomes to the tourism industry arise.There are strata titled developments in theState managed on a pooled income basis, andrecognised as providing a high-quality andsustainable tourism product. It is; however46 Tourism Planning Taskforce Report

Chapter 6Term of Reference 3clear to the taskforce that there is anincreasing trend to operate such facilitieswithout mandatory-pooled management toavoid capture as managed investmentschemes. This has the potential to underminethe value of strata schemes as a financing toolfor tourism development, due to theinadequacy of management structures andresulting outcomes.Project financingThe financing benefits of the use of strataschemes for tourism developments areachieved through distribution of investmentrisk, achieving secure pre-sales, financesecurity and reduced equity requirements.Their use also can assist early profitrealisation. This is achieved through enablingthe subdivision and sale of components of theland or buildings that make up a tourismdevelopment on a real estate basis, asopposed to profit being derived from theongoing operation of the development. (Seeterm of reference 1). It is these financialbenefits that have assisted in strata schemesbecoming the dominant mechanism forfinancing tourism developments.This approach has resulted in a predominanceof projects based on the construction of unitsfor individual sale to residential investors, withthe management rights disposed of to a thirdparty, and the developer having no furtherinterest in the property. This system ofdevelopment and management also has thepotential to shift the emphasis in developers’considerations from those factors required toprovide a sustainable tourism facility, takinginto account market conditions, to thoseissues that will result in a rapid sale of unitsand reduced holding costs.The development industry sees the marketingadvantages of strata schemes, being able tosell a title, as significant over other forms ofproject financing and acknowledges that this,in part, relies on tapping into the residentialreal estate market and selling a lifestyleimage. It is on this basis that sectors of theindustry see requirements for pooledmanagement and/or compliance with ASICrequirements for managed investmentschemes as undesirable, as residentialinvestors are discouraged, reducing theirpotential sales market. The outcome of this isargued by developers as a reduced ability todevelop projects profitably.6.3 Tourism issuesassociated with stratatitlingTourism WA has been examining the effect ofstrata schemes on tourism development for anumber of years. While it acknowledges thebenefits for financing of developments, it hasidentified concerns in respect to some projectswith the tourism product delivered, and theirsustainability as tourism operations. (SeeAppendix 5).Tourism WA has had considerable feedbackregarding the adverse consequences of stratadevelopments with inadequate managementframeworks. An example commonly cited iswhen units are not under the exclusive controlof the tourism manager/operator under apooling arrangement and they are obliged tolet units on a basis that has each physical unitoccupied for an equal period so that there isequal revenue distributed to each unit owner.This can result in the more appealing unitsbeing left empty, while visitors wanting theseunits are informed that only the less appealingunits are available. Visitors either book intoalternative accommodation or arrive, becomedisappointed with the operation of the resortand do not return to the area.When refurbishment and maintenance are notundertaken through a contractual process,under the control of the tourismmanager/operator, and instead are left with, orrequires the authorisation of, the unit owners,situations occur where disputes arise as to theneed for replacement of a product or thespecification of the replacement or repair. Thisleads to inconsistent standards across adevelopment and visitor dissatisfaction.Visitors frequently compare what they receivefor their money with what other visitorsreceive, with equality in this area criticallyimportant to visitor satisfaction.Equality also is important with internal fit-outs.When fit out standards are not consistent,visitor dissatisfaction will occur, eg a unitowner may fit a unit out with atop-of-the-range television/DVD and stereoTourism Planning Taskforce Report47

Chapter 6Term of Reference 3system. This causes that visitor someconfusion and disappointment on return visitswhen another unit has only a standardtelevision and no stereo system. A similarreaction occurs when two visitors in adjacentunits compare their respective units fit-outs,one with the expensive equipment, the otherwith a standard television and no stereo.Inadequate management arrangements thatallow unit owners to elect to leave their unitsempty for the time they are not residing inthem may result in a resort that looks halfempty and lacks atmosphere and vitality. Onceagain, this can reduce the visitor experienceavailable and the tourism value of the area. Italso has a detrimental effect on the ability tooperate the facility effectively, with consequentloss of tourism management.Tourism WA considers that there are severalexamples of poorly developed strata titledtourism facilities in Western Australia. Someare viewed as having been developer-realestate motivated, and tourism has been usedas the vehicle to gain the required planningand development approvals. This has resultedin some local governments seeking to limit theuse of strata schemes for tourismdevelopments, which has been acknowledgedby the taskforce as potentially of concern dueto the associated loss of the inherent financingadvantages of such schemes.The issues of tourism concern, as set out bythe Tourism WA, essentially arise from therights, interests and purchase intentions ofinvestors in schemes not effectively regulatedor managed for tourism purposes, reflecting aresidential as opposed to tourism investmentintention. While these issues are common tostrata schemes generally, they may beexacerbated in survey strata schemes withoutcommon management requirements. This canoccur as each lot (future tourism unit(s)) isdeveloped by individual owners and can resultin the lack of achievement of an integrateddevelopment.The appropriateness of the use of stratasubdivision also varies with the type ofdevelopments to which it is applied. The useof strata schemes for caravan park andcamping ground subdivision has beenprecluded through legislative change due tothe complex issues that this gave rise to. Thetaskforce also identified concerns in respect tothe use of strata subdivision within tourismzonings that provide for relatively low-densityforms of development, such as chalet/cabintype zones, due to the potential for suchschemes to promote real estate drivendevelopment, and facilitate residential holidayhome use, not tourism use.6.4 Strata schemes: generalissuesFinancing alternativesRestrictive policies of financial institutions, andpossibly the relatively low returns generallyachieved from the operation of tourismdevelopment over recent years (relative to theresidential sector), have resulted in restrictionson available capital for investment in thetourism sector. This is particularly evident inregional areas, with strata schemes employedby the development sector to overcome theseconstraints on development finance, which isthe most common and flexible mechanism offinancing tourism development. However, theyare only one of a range of schemes availablefor financing of tourism developments thatincludes:• syndication• vacation rental (time share)• private equity• (listed) property trustsEach alternative has advantages in specificcircumstances and is attractive to differentinvestment sectors. Correspondingly, eachpotentially could compensate for a restrictionin the use of strata schemes for tourismdevelopment. The taskforce; however acceptsthat under such a move, the level of tourisminvestment would be likely to decline, at leastin the short term, as the number of potentialinvestors is reduced.The need for a restriction on the use of strataschemes for tourism development, due to theissues outlined, was raised directly with thetaskforce. In consideration of this it was notedthat strata schemes are a legitimate tool forthe subdivision of tourism developments andcurrently are considered by the developmentindustry as fundamental to the financing of48 Tourism Planning Taskforce Report

Chapter 6Term of Reference 3such development. On this basis, thetaskforce considers that properly structuredstrata schemes should not be precluded fromapplication to tourism projects.Tourism demandThere is evidence that some strata titledtourism development essentially has been realestate driven, not in response to tourismdemand increases. Following construction,these developments have not achieved aviable level of operation as tourism facilities.Promoting such development ahead ofdemand can result in levels of competitionacross the industry that affect general viabilitylevels. This reduces the ability of operators toprovide adequate levels of service,maintenance, establishment of refurbishmentreserves and marketing. The long-term effectwill be detrimental for the sustainableoperation of the tourism industry in thelocalities where it is occurring, due to ageneral decline in the standard ofaccommodation, industry marketing and visitorservicing available. In balancing this with theinvestment benefits of strata schemes, thetaskforce concluded that the imposition ofappropriate management requirements thatensure proposals are developed and operateas tourism facilities would be adequate inensuring future developments reflect realgrowth in tourism demand.The ability to strata tourism sites also mayhave had an ancillary impact of increasing thevalue of tourist zoned land disproportionate tothe earning capacity of that land from atourism operation. This occurs as developerviability and profit are based on land/buildingsales and separated from operational returns.This may result in the early redevelopment ofproperties with low capital value facilities, anda corresponding reduction in the variety ofaccommodation available. It also increasesthe pressure on achieving early returns fromprojects due to the higher initial investmentrequired. The loss of variety results from thestandardisation of the product deliveredthrough strata developments, as a similardesign formula generally is adopted tomaximise the attraction to residentialinvestors. Recent examples of syndicateddevelopments have demonstrated that throughthe use of different financing mechanisms, agreater variety in the delivered product canalso be achieved, as the focus shifts awayfrom the delivery of a real estate product.Again, the taskforce considered that with theintroduction of common managementrequirements for tourism strata schemes, thedevelopment industry would be encouraged touse alternatives.The real estate focus in the marketing oftourism strata schemes is evident in theemphasis on capital gain and tax benefits, andlifestyle issues, as opposed to the promotionof a tourism asset achieving a reasonableinvestment return on that basis. This isdemonstrated further in the sale price ofhigh-amenity beachfront tourism units incomplexes where pooled letting of units isoptional, noted as disproportionately highrelative to any reasonable expectation of netrental return from tourism use.The development industry also has proposedthat the investment provided by the use ofstrata schemes for tourism developmentsassists to increase the tourism market. Toensure that this growth is sustainable, thetaskforce considers that mandatory integratedmanagement structures, with limited directowner involvement in unit letting, complexmanagement or operation, are required.Strata scheme managementarrangementsAchievement of effective integrated-commonunit management, co-ordination of marketing,total unit availability, retention of tourismcharacter, service provision and sustainabilityof management arrangements arefundamental if strata titled facilities are tooperate effectively as tourism developments.This generally has not been achieved withexisting developments subject to strataschemes with a resultant loss of tourismquality and capacity. Specific components ofeffective management are:• ability to achieve co-ordinated funding ofrepairs, minor and major refurbishment andeventual redevelopment;• ability to control corporate body influenceon management of developments, includinga change in orientation to the residentialinterests of owners, as opposed tomanagement for tourisms;Tourism Planning Taskforce Report49

Chapter 6Term of Reference 3• ability to achieve consistent internal fit outand standard of maintenance; and• ability to maintain sufficient units within themanagement pool to enable viablemanagement and tourism service provision.In addition to a requirement for mandatoryintegrated-common management, thetaskforce concluded that addressing identifiedshortcomings noted in existing strata schemesrequires developments subject to strataschemes to be of an integrated design andconsistent standard. However, there aresignificant shortcomings in the ability toachieve and enforce this through the Act, withconditions required to be imposed at the localgovernment and WAPC level.The taskforce received advice from DLI thatestablishment of integrated-commonmanagement requirements through strataby-laws is possible. However, due to thelimited penalties, and the lack of clarity underthe Act on the standing of third parties to bringprosecution action for non-compliance, thisshould not be relied on as the primaryregulatory mechanism, but only as a furtheradvice to prospective purchasers. In supportof statutory conditions, Section 6 restrictionsof use under the Act provide for more effectivepenalties and should be used to reinforcelimitations on use pursuant to planningconsent conditions.Management rightsManagement Rights is the term describing thebusiness of operating and managing aresidential or tourism property under a stratascheme. Due to the considerable number ofsuch schemes in Queensland, the StateGovernment developed legislation as part ofthe Body Corporate and CommunityManagement Act (1997) to control theoperation, establish the responsibilities andprotect the interest of such businesses.Similar legislation is also being developed inNew South Wales. Pursuant to the Act, a setof requirements, the Accommodation Modulewas provided for tourism and mixed useproperties. The legislation also requires thatoperators hold a restricted letting licence,which has been subject to criticism from somesectors of the Queensland tourism industry asthe required training contained no tourismcontent.While the Queensland industry is far exceedsthat of Western Australia in terms of thenumber of management rights businesses, thetaskforce considered that with continuedgrowth in tourism developments under strataschemes, benefits could accrue from thedevelopment of similar legislation. A focus insuch legislation on the tourism industry, withlicensing of operators to ensure at least basicskills in tourism accommodation management,was viewed as being essential and havingpotential long-term benefits for the industry.Corporations ActIn considering management requirementsassociated with tourism developments subjectto strata schemes, the taskforce has identifiedthe need for all units to be part of anintegrated-common management structure,ensuring all units are in the rental pool andavailable for tourism use. Based on legaladvice received on serviced strata schemes,under such a management arrangementwhere the use of units is limited to short-stay,and the scheme has greater than 20 investors,they would generally be considered managedinvestment schemes. The conditions of suchschemes are set out in ASIC Policy Statement140, 2000. Where some developers previouslyhave used ASIC Class Order exemptions (CO02/305, CO 02/304, CO 02/303) so thatschemes were not assessed as managedinvestments (due to there being only limitedrestrictions on residential use and optionalmanagement arrangements available to theowner), these may no longer be available.The taskforce received submissions that thecost of compliance with ASIC requirements formanaged investment schemes is high, and notviable for smaller developments by singleentity developers. However, it is clear that thisadvice primarily related to early schemeswhere clarification of ASIC requirements wasinadequate, and that costs have been reducedas more schemes have been approved.Nevertheless, it is noted that the ongoing costof such schemes is high and may still affectthe development viability of small projects. Inconsidering the impact of the requirement ofintegrated-common management and the costof ASIC compliance, the taskforce also hasacknowledged the consumer protection andinvestor confidence benefits of projects that50 Tourism Planning Taskforce Report

Chapter 6Term of Reference 3comply with the requirements of managedinvestment schemes. The priority for thetaskforce in recommending mandatorycommon management on strategic sites is inensuring a quality tourism outcome.Correspondingly, the taskforce has not soughtto restrict the letting of individual tourism unitsin complexes with a residential component tothe management body only and this mayenable projects to still be operated asmanaged rights schemes.In assessing these competing interests, thetaskforce acknowledged the requirement forintegrated-common management as afundamental component of achievingsuccessful tourism developments under strataschemes, and that these issues should be thefocus of the taskforce consideration, asopposed to how such schemes are treatedunder the Corporations Act 2001. Notingsubmissions to the taskforce on the high costsof ASIC requirements, it was considered thatwhile maintaining its position on integratedmanagement, the development of specificguidelines for serviced strata schemes and amodel format for product disclosurestatements to assist compliance with theCorporations Act 2001 would be beneficial.6.5 Vacant lot strata andsurvey strata schemesThe use of survey strata schemes and vacantlot strata schemes increasingly are beingpreferred by the development sector over builtstrata schemes as they are perceived asclosest to freehold (green) title, providing aresidential marketing advantage. They alsoare recognised as the most effective way toachieve immediate return on initial capitalinvested in basic infrastructure and services.Relative to built strata schemes, this furtherreduces the interest of the developer inensuring that the proposed complex is timedand targeted appropriately in respect totourism demand to ensure the potential forsustainable operation, as a tourism facilityexists. The extent of control over the deliveryof the final product in such developments isdependent upon the nature of contracts withindividual and subsequent purchasers of thevacant lots, and local governmentdevelopment approval conditions. These havenot always been effective in achieving aconsistent tourism product in a timely fashion.Such schemes also are attractive from the realestate perspective, in that they provide afurther advantage in significantly reducedstamp duty payable on the sale of the vacantlots, as opposed to a developed lots. Suchschemes also have the advantage of allowingtourism development to be established withlimited finance and low risk when comparedwith more traditional methods of financing.While this may cause development ahead ofdemand in some project markets, it also canfacilitate development in locations whereotherwise it may not be achieved.Survey or vacant lot strata schemes increasethe difficulty of achieving an integrated andconsistent tourism development over builtstrata schemes and can result in thedevelopment of projects that are marketed,and have the character of a residentialproduct. This is reinforced with the investorpurchasing a lot on which they undertake thebuilding, often with varying levels ofpersonalisation through direct designinfluence. An example of such personalisationin a strata scheme is the incorporation of winecellars within a number of tourism units in adevelopment, a feature that may beconsidered more akin to a residential dwelling.The residential character and ownershipinterest that arise in these circumstances thencan be very high. This is reflected in increasedpressure for residential use, which may bereinforced if tourism returns are not atexpected levels, and can result indevelopments used on a lock-up basis. Thereis a reduced risk of this where suchdevelopments are subject to mandatoryintegrated-common managementrequirements, there is no option for ownerdesign/construction influence, and the createdlots are limited to the building area. In thesecases the benefits of personalisation arereduced as the units cannot be used on aholiday home/lock-up basis.Such schemes also may result in extendedperiods for construction of facilities, reducedtourism amenity and non-viable numbers ofunits for management during this period.Where such schemes are approved, it isnecessary that these impacts are addressedTourism Planning Taskforce Report51

Chapter 6Term of Reference 3through the imposition of specific conditionson development and strata approvals.In consideration of these concerns, thetaskforce concluded that survey strata andvacant lot strata schemes were not desirablebut did have a role in the financing of tourismdevelopments. It was concluded that approvalof such schemes be conditional on mandatoryintegrated-common management andresolution of construction and timing issues.In summary, the taskforce was supportive ofthe use of strata schemes to allow stratasubdivision to occur concurrently with, orfollowing development. The creation ofserviced vacant lots through survey andvacant lot schemes was considered generallyundesirable but having application in somecircumstances under specific managementand construction conditions.6.6 ConclusionsStrata schemes are an important componentin the funding of tourist accommodationdevelopment. However, there are some risksfor the development of sustainable tourismprojects under such schemes and their useshould address the following issues:• Development preferably is fully orsubstantially constructed, with any stageddevelopment to include all commonfacilities required for that stage, anddemonstrate viable management potentialin terms of the number of units constructedin that stage.• Development is consistent with a validapproval issued by the local governmentand demonstrates consistent architecturaland building standards. In resorts wherethere are different classes ofaccommodation, rooms and facilities ineach class are of the same standard.• Establishment of long-term (25 years)management arrangements between unitowners and a tourism manager/operator toprovide for mandatory integrated-commonmanagement of all units and whichincorporates the following issues:- termination of the manager/operator andimmediate appointment of a replacementmanager/operator;- the management agreement between thetourism unit owners and the tourismmanager/operator must bind successiveowners;- development refurbishment as required tomaintain or upgrade the tourism standardof the facility is to be managed by thetourism manager/operator on adevelopment-wide basis through anannual mandatory levy, and theestablishment of a refurbishment reserveor similar mechanism;- the management agreement shall providefor all units within the classes provided tobe fitted out to a consistent standard andrequired to be maintained by the resortmanager to a consistent standard;- occupation of units is controlled by theresort operator with the managementagreement providing the ability to holdunits out of the rental pool only for theperiod required for maintenancepurposes, ie all tourism units shall formpart of the rental pool and be available fortourism use;- the ownership and management of thereception and common and recreationfacilities;- the potential for an alternative lettingarrangement with a licensed real estateor travel agent (separate from themanagement/caretaking agreement) tobe established by owners;- recording of the use of the facility andreporting on any non-compliance withmanagement statement and by-lawrequirements; and- strata plans are to be specified with aSection 6 restriction of use limitingoccupation of tourism units to TourismPurposes with an occupation restriction ofa maximum of three months in any12-month period.There are constraints to the achievement ofbona fide tourism developments where surveystrata or vacant lot strata schemes are used.These schemes should be approved only ontourist zoned land where it can bedemonstrated that each scheme will providefor a development consistent with the intentand objectives of the zone, be part of amandatory integrated-common management52 Tourism Planning Taskforce Report

Chapter 6Term of Reference 3arrangement and provide a bona fide tourismdevelopment. Additional conditions on suchdevelopments that address construction,facility provision and timing of developmentalso are considered necessary.The preclusion on strata titling of caravanparks under the Caravan Parks and CampingGrounds Act 1995 is considered valid andsupported, and considered warranted toextend such a prohibition generally to thestrata titling of land or developments within“Caravan Park”, “Chalet and Cabin” andsimilar low-density tourism developmentzones.Tourism Planning Taskforce Report53

Chapter 6Term of Reference 354 Tourism Planning Taskforce Report

Chapter 7Term of Reference 47 Term of Reference 4Investigate the implications of thedevelopment of permanent residentialaccommodation and/or strata titling of landzoned for tourism development on thevaluation of individual properties andsimilarly zoned land under the Valuation ofLand Act 1978 and associated land taximplications.The impact of land tax on the sustainableoperation of a range of regional touristaccommodation facilities has become an issueof significant concern to the tourism industryover recent years. Land tax increases havebeen perceived as affecting the generalaffordability of coastal holiday opportunities asoperators increase prices to meet increases inland tax. There also has been an impact onthe range of accommodation available, as thepressure for redevelopment has increased onlow-cost tourism facilities. In addition totourism industry concerns, this has resulted ina significant level of public reaction and isaffecting the Government’s ability to achieveits objective of providing a range of holidayopportunities in beachfront localities.In addition to the impacts of strata titling andthe introduction of residential components totourism developments on the valuation oftourism sites, the use of blanket tourismzoning structures under new town planningschemes has been a significant contributor tothis effect.7.1 BackgroundOver recent years, coastal towns in WesternAustralia (eg Busselton, Broome, Mandurah)have experienced high and sustainedpopulation growth rates, which have coincidedwith significant growth in tourist visitation andaccommodation development. These factorshave resulted in increased demand,speculation and increased property values forcoastal properties for residential and tourismuse.In 2000/01, the Valuer General’s Office (VGO)revalued land in a number of regional coastalareas, which resulted in many tourismoperators receiving substantial increases intheir land tax bills. These increases were mostpronounced in the Shire of Busselton, rangingfrom $2400 to $93000 (from 33 per cent to652 per cent). The process of objection to theunimproved valuations did; however reduce anumber of these increases, with the highestpost-objection tax increase being 343 percent. A number of the premises to receivesubstantial increases were caravan parks.This gave rise to expressions of operator andpublic concern as the increase in governmentcharges was seen to be promoting tariffincreases, thereby reducing publicaccessibility.The tax increases arose from increased landvaluations for the subject properties andprogressive land tax scales. Although landvaluations in the area are re-establishedannually, the increases reflected a four-yearperiod since the previous comprehensivevaluation review. The gazettal of a newplanning scheme that provided a blanketzoning for all tourism sites, from caravanparks to resorts, also resulted in upwardpressure on land prices and valuations. Anadditional unintended consequence of the landtax increases has been increased financialpressure for redevelopment of low-cost touristaccommodation facilities to styles ofdevelopment that achieve higher grossreturns, particularly along the coast. Responseto these pressures also has been facilitated bythe more flexible planning frameworkintroduced with the use of the blanket tourismzoning.It is noted that the VGO has committed toundertake more intensive annual reviews inmajor regional centres to minimise futurecatch-up increases in valuations.7.1.1 Land valuationsUnder the Valuation of Land Act 1978, land isvalued for land tax purposes at its unimprovedmarket value (UV), with this reflecting thehighest and best use of the land. Where arange of developments are included within asimilar land zoning, such as tourism, this canresult in similar land values on a per hectarebasis being determined irrespective of thenature of existing development on a site, eg acaravan park site may be valued on a unitarea basis equivalent to a five-star resort site.Tourism Planning Taskforce Report55

Chapter 7Term of Reference 4This method of valuation does not reflect theextent of development on the site or itsexisting earning capacity, but rather itspotential for development. The significance ofthis approach is greatest for thosedevelopments of a low capital andincome-earning potential, located onhigh-quality tourism/residential land, such asbeachfront areas.The UV method of valuing land has beeninvestigated in respect to its impact on tourismoperators through the Review of StateBusiness Taxes (DTF, 2002). The reviewacknowledged that some tourism operatorswith low value land improvements wouldbenefit from a shift to a gross rental value(GRV) land tax system (as used by localgovernment for rating purposes). It concludedthat:• On balance, the advantages of using theUV method of valuing land (the currentmethod used in Western Australia and allother states and territories that impose landtax) outweigh the advantages of the GRVmethod.• The volatility of land tax would be likely tobe substantially higher for tourismoperators in the Busselton region as theGRV of properties in that region arerevalued only once every four years.7.1.2 Land tax scalesProgressive tax scales cause a bracket creepeffect as increases in property valuationsmove properties into higher tax scales.Referring to the 2000/01 Busselton example,the increases arising from bracket creep weregreater than the direct impact of the valuationincreases for a number of properties.Under the Treasury paper “StreamliningWestern Australia’s Tax System” (DTF, 2002a)it is proposed to lessen the impact of bracketcreep through a reduction in the number ofthresholds from 10 to six. It was noted that theproposal would realise higher land tax billswhere the aggregate value falls between$700,000 and $1.9 million. In conjunction withthe land tax increases introduced for 2003/4this resulted in an adverse effect on the manytourism properties within this value category.While the effect of progressive tax scales canbe significant, the taskforce concluded that itwas an issue consistent across all businesses,and not directly within the capacity of thetaskforce to address, particularly as anyremedy proposed for the tourism industrycould result in unintended consequences inother business sectors. Correspondingly, thetaskforce has not developed any specificrecommendations on this issue.7.1.3 Effect on operatorsResearch on the land tax issue by TourismWA in December 2001 in the Shire ofBusselton indicated:• The land tax increases were seen as aconsiderable burden, as many operationswere on a break-even level.• There were limitations to passing on costsdue to publication of tariffs and packagedeals.• There was concern about the negativeoccupancy impact of tariff increasesrequired to cover increased costs.• Two caravan parks and two resorts wereconsidering closing.• There was very limited potential to increasetariffs in the off-season. Additional coststherefore would be recovered by increasesin tariffs in peak school holiday periods.• Low-cost accommodation operators wereexperiencing significantly increasedpressure for redevelopment and/orsubdivision to enable income-generationpotential to match land tax liabilities.7.2 Influence of apermanent residentialcomponent and stratatitling on valuation oftourist zoned landThe impact on land values of tourist zonedland through the introduction of a permanentresidential component in development of suchland will vary considerably depending onmarket circumstances, as applicable to eachproperty and the locality. The effect also willvary in response to local features such as56 Tourism Planning Taskforce Report

Chapter 7Term of Reference 4Table 1:Indicative valuation effects of alternative residential and strata options(Valuer General’s Office, Bunbury 2002.)Undeveloped touristzoned sitePermissibility of strataPermanent residentialcomponentValue effect1 Yes Nil 0.0%2 Yes 20% +7.5% (range 5-10%)3 No Nil -7.5%water frontage and views and the regionallocation. In assessing the magnitude of thisimpact it is noted that applications forresidential components generally have been inthe premium tourism areas, where competitionfor high-amenity residential properties is great.The valuation impacts in secondary locationswith low residential and tourism demand arelikely to be negligible.A review of sale prices in a number of tourismdevelopments indicates prices approximately20 per cent higher are achieved for units withno use restrictions, over tourism units. In thiscontext, it is noted that a residential unit maybe considered to offer the most to an owneras it provides for exclusive permanentoccupation if desired, as well as theopportunity for short-stay tourism use. It alsoprovides the option of long-term residentialtenancies, which may be considered moreimportant to the investor and financialinstitutions than the tourism performance ofthe complex.An analysis by the VGO (2002/03) hasindicated that the increase in site valueresulting from a 20 per cent residentialconcession, would be in the order of five to 10per cent in a high-amenity area. A developeralso would expect a faster rate of sales andeasier access to finance for purchasers of theresidential units over tourism units, furtherincreasing the benefit.Strata and survey strata schemes play animportant role in the financing of tourismprojects and any complete prohibition on theability to strata could be expected to affectland values. This impact may be nominal insome cases, or it could be considerable wherethe market lacks developers with the capitalbacking to underwrite projects in their ownright.Without the ability to strata, a tourismdevelopment would require thedeveloper/operator to demonstrate a long termcash flow reliant on adequate sustainable netprofit for the business, including forecasts ontariffs, occupancy rates and expenses. Undercurrent financial institution conditions, this maydisadvantage the financing of such projects,and could be reflected in the market’svaluation of development sites. In summary ofthese factors the VGO has indicated a likelyvaluation impact of a price reduction of up to7.5 per cent on tourist zoned land where aprohibition on strata subdivision of such siteswas introduced.Table 1 presents indicative valuation effectsprovided by the VGO for the purpose of thetaskforce investigations. These are based onalternative scenarios related to permanentresidential use and strata schemes with thebase case (1) representing the generalsituation under a tourist zoning.Strata schemes also were noted by thetaskforce as generally resulting in a reductionin the aggregate land tax collection due to thenature of the tax scales. This is shown inTable 2, which assumes each strata lot isowned by a separate entity not owning othertaxable land. While individual taxcircumstances will vary and affect the taxliability, as land tax is based on the aggregatevalue of all land owned as at 30 June of eachyear, it indicates that a strata scheme canhave a significant impact in reducing theoverall land tax levied. This is not necessarilysupportive of the delivery of a sustainabletourism product through integrated-commonTourism Planning Taskforce Report57

Chapter 7Term of Reference 4Table 2:Indicative land tax comparisons for a single lot subject to alternativesubdivision schemes (Valuer General’s Office, Bunbury 2002.)Tourist development of35 accommodationunitsLotsValue per lotAggregatedvalueTotal land taxAverage centin $Englobo - single lot 1$5,000,000$5,000,000$96,7821.94Survey Strata 35$350,000$12,250,000$41,3700.34Strata Plan 35$142,857$5,000,000$9,0000.18management, and returns significantly lessrevenue to the Government. It wasacknowledged that the benefit of this to thedeveloper/owner partially was offset by theadditional local government rates paid by suchdevelopments compared to those not subjectto strata schemes. This would have only aminor compensating effect in reducing thefinancial benefits that encourage this form ofdevelopment.While strata scheme land tax is calculated onan apportioned unit entitlement basis, surveystrata scheme valuations are based onindividual lot valuations.The inclusion of a permanent residentialcomponent and the ability to strata a tourismdevelopment on tourist zoned land willinfluence a range of development feasibilityfactors that affect the valuation of a property.These include:• pricing structure (a premium price currentlyis achievable for permanent occupancylots)• selling rate (market information is that lotswithout a residential use restriction areconsiderably more marketable)• perception of risk to developer, ease offinance (especially where lendinginstitutions perceive a higher risk)It is expected that such variations will begreater on sites larger than one hectare, whichwould require multi-stage development andgreater market justification.7.3 Potential responses:managing land taxincreasesAnalysis of issues associated with landvaluation and land tax effects on tourismfacilities indicates a number of options to, insome part, redress the negative implicationsof increasing land tax, particularly on low-costforms of tourist accommodation in primerecreation areas. It is these prime recreationareas that are viewed as highly critical, interms of developing solutions, as it is wherethe greatest pressure for redevelopment isexperienced. Correspondingly, it also is wherethe loss of tourist accommodation variety dueto land tax effects is and will be most evident.In developing a planning response to theseissues, the taskforce was cognisant that anyproposal should have a sound planning basis,with beneficial effects that may arise inrespect to land tax being a secondaryoutcome. The limitations of the planningsystem in dealing with land valuation and taxissues, and the outcomes of the Review ofBusiness Taxes (DTF, 2002), including therecommendation that the unimprovedvaluation basis of the system be retained, alsowere considered by the taskforce. It was notedthat there was a need for a more generalreview of the land tax system as it applies totourist accommodation, which has the capacityto take into account those issues outside thescope of the taskforce. This review wouldneed to address issues such as tax scalesand valuation methods, and reflect the widesocial and economic benefits of the tourismindustry.58 Tourism Planning Taskforce Report

Chapter 7Term of Reference 47.3.1 Zoning controlsThe use of specific tourism zonings inschemes has been identified by the taskforceas having potential ancillary benefits inreducing land tax impacts on low-key tourismoperations.The Shire of Busselton planning schemecurrently includes the majority of touristaccommodation developments within a touristzone. This zone provides for the approval of asignificant range of development types at thelocal government’s discretion. In response tothe land tax effects of this zoning structure,and concerns expressed about redevelopmenttrends, the local government and tourismoperators have proposed the use of a moredefined zoning system to cover the variouscategories of tourist accommodation in thearea. This system would establish the primarylimits to the intensity of tourism developmentthat is appropriate on a site through theplanning scheme, as opposed to this beingdetermined through the development approvaland associated advertising process. Thisincreases the certainty for the developmentsector and property owners on what can bedeveloped on a site, and is envisaged to act inreducing speculative purchase of such sites.The proposal is to introduce a more definedzoning structure that would include thefollowing zones:• Caravan park and camping grounds• Cabin/chalet park• Tourist-resortEach zone is proposed to contain specificrequirements in respect to the density ofdevelopment, with the extent of developmenttypes permissible increasing from the caravanpark zone to the tourist zone. (See Chapter 8).Advice from the VGO is that the impact of thisrevised zoning structure in reducing landvalues for high-amenity beachfront sites beingconverted from a tourist to a caravan park orcabin and chalet park zone could be as greatas 30 per cent and 20 per cent respectively.For properties further away from thebeachfront, the valuation difference betweenthe various zones is predicted to reducesignificantly. While these valuation effects canbe considered as indicative only, theydemonstrate that the use of a revised zoningstructure for the purpose of achieving theretention of a variety of tourist accommodationcould have a greater land tax effect thanaddressing either permanent residentialcomponents or the use of strata schemes.Other issues associated with this proposalinclude:• Reduction in value of properties reduceslending potential of owner and capital gainon sale.• The proposal has been discussed inBusselton on a voluntary basis, ielandowners would request to be rezoned toone of the more constrained categories.This may result in a low level of take-up,with continuing pressure from land taxeffects for redevelopment of many siteswith lower-cost forms of accommodation.• It provides a greater level of certainty forthe development sector and the communityon the intensity of development that couldbe permitted on a site.• The valuation estimates rely in part on themarket perceiving that a rezoning of a siteto a higher development zone is difficultand highly unlikely where a site is identifiedfor low-intensity tourism under a localplanning strategy. This may not be realisedif the voluntary approach is maintained andsites are not zoned consistent with thelocal planning strategy.The benefit that can be achieved with theintroduction of such a zoning structure on avoluntary basis may be limited. The use ofmore defined tourism zoning structures in thepreparation of planning schemes will assistlocal governments in the retention of a varietyof tourist accommodation facilities at variousaffordability levels within their locality.7.3.2 Limitations on the use of strataschemes and/or permanentresidential useIndicative estimates are that a limitation on theuse of strata schemes, in general, will nothave a significant direct effect on landvaluations, relative to the option of zoningcontrols. The use of survey strata and vacantlot strata schemes for tourism sites haslimitations in terms of achieving integrated andconsistent tourism developments that are usedTourism Planning Taskforce Report59

Chapter 7Term of Reference 4and managed on a tourism basis. Removal ofthe option for strata subdivision without amandatory requirement for integratedmanagement of units would assist in reducingthe pressure for redevelopment of low-costaccommodation facilities. This will be achievedas parameters for investing in such propertieswill shift from residential real estate intereststo returns based on potential tourismoperations, reducing residential speculationand property value increases. Thismanagement requirement also could limit thepotential for capital raising and the ability forsome sites to be developed or upgraded.The controls that apply to tourist zonesthroughout the State vary in their permissibilityof residential use. Rezonings also have beenundertaken to permit residential use wherethis was inconsistent with the base tourismzoning. This has affected the marketperception of tourism sites, with a premiumpaid on high-amenity sites, taking into accountthe potential of achieving a residentialcomponent. While this effect has been valuedby the VGO as less than that of using a broadtourism zoning structure, it is still a contributorto redevelopment pressure on low-costaccommodation sites. The taskforce hasdetermined that potential exists to reduce thiseffect through the introduction of specificcriteria and a strategic framework limiting theconditions under which a residentialcomponent on a tourism site would beconsidered. This will provide increasedconfidence as to the extent of residentialdevelopment that will, or will not, be approvedon a site. In conjunction with guidelines for thedesign and form of such residentialcomponents this will reduce the effect ofresidential speculation further.7.3.3 Summary of potentialresponsesThe taskforce has found that the effect ofrapidly increasing land tax in some regionalareas has had a disproportionate effect onlow-cost forms of tourist accommodation andhas increased redevelopment pressure onthese sites through the necessity to achievegreater income-earning potential. It wasconsidered that this had, and would continueto have, a negative impact on the range andaccessibility of accommodation available inbeachfront recreation areas.The introduction of a permanent residentialcomponent in tourism developments and thestrata titling of tourism development werenoted as having an impact on the valuation oftourist zoned land and the corresponding landtax levied. It also is evident that the impact ofthese factors is less than the impact thatresults from the use of a broad tourism zoningin local government planning schemes or thebenefit that potentially can be achieved by theintroduction of a more detailed tourist zoningstructure.The taskforce recommendations for theidentification of strategic sites and theirretention for tourism development will, in part,address these issues. (See Chapter 8). It alsowill result in a continued holding requirementover some sites. Where such sites are yet tobe zoned for tourism purposes and form partof a rural landholding, this is not considered asignificant issue. However, there will bestrategic sites zoned for tourism purposeswhich are not ready for development, due tolack of immediate demand or high cost ofservicing. In such cases, this delayeddevelopment potential should be recognisedthrough the zoning system, which may beachieved through a deferred zoning concept.Ancillary benefits of this will be recognition ofthe reduced potential of the land through theland tax valuation process, and an associatedreduction in holding costs.The taskforce considered options available forland tax relief for identified strategic tourismsites based on advice from the VGO andDepartment of Treasury and Finance. Thepursuit of tax relief options was seen asgenerally outside the scope of the taskforce,although acknowledged as the mostappropriate avenue for dealing with land taxissues.7.4 Goods and services taxThe introduction of the Goods and ServicesTax (GST) is argued to have had a detrimentaleffect on investment in strata titled tourismdevelopments. This arises under most stratascheme structures as GST is payable on thepurchase price of units and expenditure by60 Tourism Planning Taskforce Report

Chapter 7Term of Reference 4guests on goods and services provided. Whilethis issue is not directly within the terms ofreference of the taskforce, it has beenidentified as inequitable in favouring specificdevelopment types.Investors who purchase strata titled units in atourism development from developers will payGST on the purchase price and will not beeligible for a refund. This is because theAustralian Taxation Office views servicedapartments in a tourism complex as beingeasily switched between private and businessuse, even where part of a commercialcomplex, and so considers such units asresidential units.This differs from a tourism developmentundertaken without subdivision, as any GSTpaid on construction and sale of thedevelopment can be recouped by the investor.This issue could be resolved through theinclusion in the definition of commercialresidential premises an individual strata unit ofa tourism development that is subject tomandatory pooled management requirements,long term leases by investors to managementcompanies, and restrictions on residential use.These conditions reflect the recommendationsof the taskforce on the use of strata schemesfor tourism development. They are similar tothe requirements of the Foreign InvestmentReview Board for a strata titled hotel to bedesignated for foreign investment policypurposes.The taskforce concluded that achieving thismodification to the GST framework for stratatitled tourism development would supportinvestment in tourism projects. In addition, itwould encourage strata schemes of a formthat will result in sustainable tourism projects.7.5 Conclusions• The use of broad tourist zoningclassifications can have significant impactsin increasing the market values placed ontourist zoned land, and associated negativeimplications on the long-term viability oflow-cost forms of tourist accommodation.The use of more detailed zoningframeworks, designed to maintain a varietyof accommodation types, can haveancillary benefits in ameliorating theseimpacts through reducing the speculativeeffect on the valuation of such land.• The introduction of specific criteria and astrategic framework that clearly establishesthe permissibility or otherwise forincorporation of a residential component inthe development of tourist zoned land hasthe potential to reduce the land tax impactfrom increases in residential propertyvalues on strategic tourism sites.• Tourist accommodation developmentsunder strata schemes generally achievesignificant reductions in the aggregate landtax payable, relative to similardevelopments held by a single entity.Notwithstanding other applicable rates andlevies, this encourages the use of strataschemes contrary to the interests ofachieving integrated tourism managementof tourism developments.• The application of the land tax system totourist accommodation development doesnot take into account the wide communitybenefit of tourism investment, the need toretain strategic sites, including low-costtourist accommodation facilities, orinequities associated with the current taxingof developments subject to strata schemes.• The introduction of a tiered zoning structurefor identified strategic sites, such as theuse of a tourism deferred zone, is worthy ofinvestigation to provide for recognition ofthe future time frame for the developmentof some of these sites.• The introduction of the GST has createdinequities in the taxing of tourismdevelopments under strata schemes.Modification of the GST ruling for projectsunder mandatory common managementrequirements will acknowledge the bonafide nature of such projects and supportthis as the preferred model for tourismdevelopment strata schemes.Tourism Planning Taskforce Report61

Chapter 7Term of Reference 462 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendations8 TaskforcerecommendationsThe taskforce has made 26 recommendations,which to be implemented, will requireintegrated changes to the current planningpolicy framework, as it relates to tourismdevelopment. These recommendations arisefrom the conclusions set out under each of theterms of reference. Each recommendationtakes into account all the conclusions toprovide a comprehensive policy approach.Part 1 presents this integrated approach,which provides a planning framework thataddresses the majority of the taskforceconclusions. The complex and interdependentnature of the issues covered by the scope ofthe taskforce investigations has dictated suchan approach and, like most solutions tocomplex issues, has its own complexities.Consistent with the taskforce terms ofreference, the recommendations primarilyapply to land that is zoned for tourismpurposes and land that is identified as havingpotential for tourism purposes, and whereresidential use generally is not permitted. Itdoes not directly address the development oftourist accommodation on land not zoned fortourism purposes, eg a tourist chalet on arural property. Recommendations on themanagement and design of such projects areapplicable in addition to the statutory planningframework applying to that zone.The approach involves modifications to theState planning framework to provide animproved strategic and statutory context forthe consideration of tourism proposals. Therecommendations also provide guidelines andcriteria to assist the process of development ofthis framework.The recommendations recognise the need toprovide for the retention and development ofidentified strategic tourism sites for touristaccommodation purposes only, and inproviding for a range of tourist accommodationto be developed throughout the State. Theyalso recommend an approach to the zoning oflower-order tourism sites that provides theflexibility for development components that arenot restricted by residential occupancy limits.Specific criteria, design and strata schemeguidelines that support the development ofsustainable tourism projects are provided forthese sites.Part 1 also includes proposed changes to therequirements for the preparation of townplanning schemes to better reflect andrespond to the requirements of the tourismindustry, the retention of affordable tourismsites, and provide a more refined approach tothe zoning of tourism sites.The preparation of a Land Use Planning forTourism State Planning Policy is alsorecommended as the primary mechanism forimplementing the proposed planningframework.As the time frame for review of localgovernment town planning schemes may belong, it will be important that the policyapproach be effective at the schemeamendment level and through thedevelopment approval process. It is at thislevel that many proposals will be dealt with.Part 2 provides interim recommendations forthis purpose.Part 3 provides recommendations in responseto identified constraints and impediments tothe achievement of tourism development witha focus on assisting the initiation oftourism-only projects on strategic sites.Part 4 presents the taskforce position onspecific issues of importance to the planningand development of tourist accommodationthat require separate action or a focus byother agencies.PART 18.1 Comprehensive policyapproachThe recommended policy approach reflectsthe taskforce’s recognition that a significantlygreater emphasis is required to be given toland use planning for tourism in WesternAustralia, including the preparation of WAPCand local government policy, local planningstrategies and town planning schemes. As thisis achieved, it will provide a clear and effectiveframework to guide assessment of proposalsfor development and/or changes to land zonedTourism Planning Taskforce Report63

Chapter 8Taskforce recommendationsfor tourism purposes. This will have benefits inrespect to sites identified as suitable fortourism only and those that no longer have animportant tourism function and can be zonedfor alternative purposes.The principal components of therecommended policy are:• The preparation and approval of localtourism planning strategies or specifictourism components within local planningstrategies by local government as aframework for decision-making on tourismproposals. The tourism planning strategywill need to identify strategic tourism sitesand/or locations to provide for the retentionand future development of a range oftourist accommodation in that locality, andsites suitable for tourism development witha residential component.• A scheme amendment proposal that wouldresult in the loss of a tourist zoned site orintroduction of residential use todevelopment of a tourist zoned site mustaddress the function of the site in meetingfuture tourism demand in that locality.• The provision of guidelines to assist localgovernment in the development of localtourism planning strategies, includingapproaches to retaining and providing arange of accommodation types, and criteriafor identification of strategic andnon-strategic sites.• Local governments are to be assisted by,and consult with, Tourism WA and theDepartment for Planning and Infrastructure(DPI) in preparation of the local planningstrategy tourism component.• Introduction of an extended range ofdefinitions for tourism developments withspecific reference to length-of-stayprovisions.• The introduction of a range of touristzonings to promote the retention of a rangeof tourist accommodation facilities andrecognise the long-term tourism potential ofsome sites.• The use of Special Control Areas in townplanning schemes to introduce specificrequirements in respect to strategic sitesand/or strategic locations.• Modifications and additions to WAPC policyin respect to the use of strata schemes forthe subdivision of tourist zoned land.The use of the phrase “land zoned for tourismpurposes” in the recommendations refers tothat land where the zoning provides that thesole or predominant use is restricted to touristaccommodation and/or tourism developmentpurposes.8.1.1 State Planning PolicyA State Planning Policy (SPP) is the highestorder of planning policy. It is a statutory policymade under section 5AA of the Town Planningand Development Act 1928 and is approvedby the Minister and the Governor prior togazettal. An SPP may make provision for anymatter that may be the subject of a townplanning scheme and generally is concernedwith planning controls and to co-ordinate andguide planning and decision-making by Stateand local government and the Town PlanningAppeal Tribunal.The preparation of an SPP that incorporatesthe taskforce recommendations will requirethat the subject matters are given due-regardby the WAPC and local government inpreparing planning strategies, schemes and inmaking decisions on planning matters. Thiswill strengthen the implementation of thetaskforce recommendations through thestrategic planning framework and theconsideration of individual developmentproposals.Recommendation 1:That the WAPC prepare a State PlanningPolicy under s5AA of the Town Planning andDevelopment Act 1928 on Land Use Planningfor Tourism which is based on, and providesthe definitive mechanism for, implementationof the taskforce recommendations.8.1.2 Local planning strategiesLocal governments are responsible for thepreparation and review of Town PlanningSchemes for their area. The Town PlanningAmendment Regulations 1999 require thatwhen a local government proposes a townplanning scheme that envisages the zoning or64 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsclassification of land, the local governmentshall prepare a local planning strategy forapproval by the WAPC.Under Regulation 12A, a local planningstrategy shall —“(a) set out the long-term planning directionsfor the local government;(b) apply State and regional planningpolicies; and(c) provide the rationale for the zones andother provisions of the Scheme.”It is evident to the taskforce that few existingtown planning schemes in Western Australiamake specific or adequate provision fortourism uses and facilities. It also is evidentthat neither the Model Scheme Text or thePlanning Schemes Manual - Western AustraliaGuidance on the Format of local governmentPlanning Strategies make adequate referenceto, or provide sufficient guidance for tourismdevelopment to be dealt with adequately inschemes or local planning strategies.The current approach to tourism planningthroughout the State is highly variable andmay reflect this lack of policy guidance. Incontrast, there is a need for and widespreadinterest in tourism as an existing or potentialcontributor to the economies of most localgovernment areas and the State as a whole.The taskforce sees this interest as positiveand requiring more formal recognition in theland use planning process. It also is evidentthat in some instances, there is a lack ofappreciation of the potential negativeimplications associated with poorly developedand/or managed projects. Such projects canaffect tourism industry sustainability.In preparing or reviewing their town planningscheme(s), each local government shouldprepare a tourism component to the localplanning strategy that specifically addressesthe needs of tourism in its area. Where a localgovernment has prepared or decides toprepare a local tourism planning strategy thatdeals adequately with land use planning fortourism, the relevant conclusions andrecommendations may form the requiredcomponent of the local planning strategy. Thestrategy outcomes then should be reflected intheir planning scheme with specific zones andprovisions, as appropriate. The WAPC(through DPI) and Tourism WA will be requiredto assist local government in this process.The primary objectives in undertaking thetourism component of the local planningstrategy will be to identify:• strategic tourism sites, which are thosesites that are critical to the future growthand community benefit of tourism in anarea and the State, and wheredevelopment shall be for tourism purposesonly;• strategic tourism locations, which are thoseareas identified as having future tourismpotential and where further planning isrequired for the identification of specifictourism sites and other uses;• non-strategic tourism sites, which are thosesites that have an important tourismfunction but where their retention fortourism only purposes is not in all casescritical;• sites for the development of integratedtourist-resorts;• those sites that have a general zoning thatprovides for the development of touristaccommodation, such as Town Centre andsome Rural zones, and the role suchzonings have in accommodating futuretourism demand; and• those sites zoned for tourism purposes butno longer having an existing or potentialtourism function, and where rezoning of thewhole or part of the site for an alternativeuse is appropriate.This process also will need to consider theuse of government-managed or owned landfor tourism purposes, particularly in retainingand providing for a variety of low-cost touristaccommodation facilities and caravanparks/camping grounds. This should includethat land managed by the Department ofConservation and Land Management (CALM),DPI, LandCorp, State trading enterprises andlocal government.The importance of tourism as an industrysector varies considerably across the 144local governments in the State, as does theimportance of other economic functions. Thisis recognised in respect to the preparation oflocal planning strategies generally, and thesame flexibility is provided in respect to theTourism Planning Taskforce Report65

Chapter 8Taskforce recommendationstourism component of these strategies. Thetaskforce has identified that the coastal areasof the State are where the local planningframework has, and will continue to, comeunder the greatest pressure fortourism/residential development. As such, therecommendations place a priority onaddressing the land use requirements fortourism in these areas.The local tourism planning strategy has thepotential to be a highly effective document inproviding direction to local governments andthe development/tourism industry on tourismdevelopment issues. To achieve this, it willneed to provide a clear framework for theapplication of proposed tourist zones, and theintroduction of specific tourism developmentprovisions through the town planning schemereview process and in consideration of townplanning scheme amendments.Recommendation 2:That the requirements for the preparation oftown planning schemes identify that inproviding the rationale for the zoning orrezoning of land for tourism purposes or topermit tourism uses, the local governmentshall, with the assistance of Tourism WA,specifically address the needs of tourism in itslocal planning strategy.The key issues to be addressed, as relevantto the scale and nature of tourism in the area,are:• review the role and importance of tourismwithin the local community having regardfor state and regional planning policies inrespect to tourism;• identify the focus of tourism within thelocal, area including potential growth areasof tourism and the objectives for tourismdevelopment;• existing range of tourist accommodation;• principal tourism attractions and events inthe district;• emerging tourism developmentopportunities, including attractions andaccommodation;• projected demand for and range of touristaccommodation required;• identification and application ofsustainability principles to tourismdevelopment - economic, social/culturaland environmental;• existing and future infrastructure, includingtransport, water supplies, effluent disposal,medical services, leisure and shoppingfacilities related to or required for tourismdevelopment;• availability, retention and identification ofCrown Land (if appropriate) for provision ofcaravan and camping grounds and otherforms of tourist accommodation;• rationale for the application of touristzonings in a town planning scheme,including assessment of land supply, typesof accommodation and scale and characterof development;• identification of strategic tourism sitesand/or strategic tourism locations or activitylocations;• recognition of the existing and potentiallevel of tourism development that can becatered for on land not designated orzoned specifically for tourism purposes;• review of existing tourist zoned sites todetermine those to be retained for tourismpurposes and those suitable in whole orpart for zoning for alternative uses (ieidentification of sites that have no existingor potential tourism function of significanceto tourism development in the local area);• approach to providing for the long-termaccommodation of the range and volume oftourism development through designationof:- strategic tourism sites to be retained fortourism-only purposes;- non-strategic tourist zoned land suitablefor tourism development with a limitedcomponent of the development, whichmay be up to a maximum of 25 per cent,not having a length-of-occupancyrestriction;- the function of caravan parks as providingfor tourist, seasonal, and residential useand the need to provide adequatecapacity to accommodate each categorythrough limiting long-stay use of tourismparks and the conversion of caravanparks to park home parks;66 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendations- the proportion of cabin/chaletdevelopment that should be permittedwithin caravan parks and campinggrounds, reflecting the character ofexisting users and projected demand;and- mechanisms to ensure the sustainableretention of a range of touristaccommodation within the locality andprovision of opportunities for theaccommodation of emerging tourismdevelopment styles;• identification of principal design guidelinesfor the various tourist accommodationcategories or particular sites, wheredetermined to be required. This shouldinclude issues of site size and developmentdensity to guide the establishment ofsustainable developments. The developeddesign guidelines will need to have regardfor the particular design requirements oftourism development and the need to takeadvantage of a site’s characteristics andthe opportunities that can be affordedthrough multi-storey and increased-densitydevelopment. The guidelines also shouldestablish the requirement for thepreparation of development guide plansand the process for landscape andcommunity impact assessment wheredeemed necessary.8.1.3 Identification of strategictourism sitesThe requirement for the identification ofstrategic tourism sites across the State iscentral to the development of a sustainableand expanding tourism industry, and retentionof a range of tourism opportunities for thegeneral population. The process ofidentification of these sites will need to beundertaken expeditiously and in many cases,prior to the local government reviewing itslocal planning strategy/town planning schemeto reduce uncertainty for the developmentindustry and provide a consistent basis fordecision-making authorities. In achieving this,and in acknowledging the State-levelimportance of such sites, the allocation ofsufficient resources and establishment of thenecessary framework at a State level isrequired. In conjunction with this, the primaryrole of local government in the identification ofsuch sites within its area needs to berecognised in this framework.In meeting these parameters, theestablishment of a specific purpose tourismcommittee with broad industry representationhas been recommended to undertake thisprocess in priority local government areas.Recommendation 3:That the State Government establish andadequately resource a specific purposetourism committee to undertake theidentification of strategic tourism sites inpriority local government areas with thefollowing suggested membership:• Chair• Department for Planning and Infrastructure• Tourism Western Australia• Tourism Council of WA• Urban Development Institute of Australia(WA)/ Property Council of Australia (WA)• Western Australian Local GovernmentAssociation• Taskforce RepresentativeThe tourism committee is to make specificarrangements with the respective localgovernment in the area under consideration torecognise the significant work undertaken bysome local governments in tourism planning,ensure adequate recognition of regionalissues and consultation with stakeholders. Theprimary stakeholders identified to be involvedin this process are landowners, the tourismdevelopment industry, tourism facility owners,operators and marketing organisations, thelocal community and tourists, as appropriateto each local government area.The tourism committee also will seekrepresentation from the respective localgovernment and Tourism WA RegionalManager in the area in which it is operating,and CALM, LandCorp and other governmentland planners and managers where they haveresponsibilities in the area of interest.It is further recommended that Tourism WAand DPI, in conjunction with a localgovernment, prepare an example (model)tourism component of a local planningTourism Planning Taskforce Report67

Chapter 8Taskforce recommendationsstrategy and allocate sufficient resources forthis to be undertaken expeditiously.Criteria for the identification ofstrategic tourism sites andlocationsThe taskforce has identified that strategictourism sites should be a focus for tourismdevelopment with the zoning of such siteslimited to tourism-only purposes. Onnon-strategic tourism sites that are locatedappropriately to accommodate residentialdevelopment and where determinedappropriate in the planning context, flexibilitycan be provided for residential-no occupancyrestriction components in developments up toa maximum of 25 per cent. (SeeRecommendation 10). This distinction makesit critical for the designation of tourist zonedland as strategic or non-strategic to beundertaken against specified criteria thatprovide for the process to be documented andsubject to review.Strategic tourism sites generally will exhibit anumber of characteristics that set them apartfrom other tourism sites in terms of the highpotential they exhibit for tourism developmentthat will benefit the wider tourism industry.Criteria for the identification of such sites andfor application in the process of developinglocal/regional tourism planning strategies areidentified below. It is the sites thatdemonstrate one or more of these criteria thatare, or will become, iconic in the tourismindustry and which provide one of theplatforms on which to increase the widerindustry.The taskforce has not established minimum ormaximum recommended sizes in respect tostrategic tourism sites or locations as this canvary considerably within the context of thelocation, site constraints, servicingrequirements and other factors. A strategictourism site designation essentially will reflectthat planning has identified that the site isrequired in entirety for tourism purposes as itshighest use. A strategic tourism locationdesignation indicates that additional planningis required to establish the appropriate landuse pattern in achieving the best planningoutcome for the area, which may include fulltourism development or a mix of uses.The identification of an area of land, or aspecific land parcel, as strategic will not meaninherently that the area is available orappropriate for immediate development orre-development. Such a designation may bean outcome of the role of the site in the overalltourism market, as opposed to any particularphysical or locational characteristic. Anexample of this is a development providing atype of accommodation that increases thevariety available in an area, with the intentionthat this function be retained.As the local tourism planning strategyapproach develops, there also will be theidentification of strategic sites and strategiclocations where the economic conditionsappropriate for development will not bereached for a number of years. It isrecognised that an appropriate planning andland tax framework is required to assist theretention of the tourism potential of such sites,and to facilitate their development when therequired level of demand exists. Following thedesignation of strategic tourism sites, thesealso should become the focus for tourisminfrastructure development, marketing and inthe provision of a supportive developmentframework at State and local governmentlevels.The designation of strategic tourism sitesshould include existing tourist accommodationdevelopments where appropriate. This willoccur where it is considered necessary torecognise the importance of the site ordevelopment in retaining accessibility to arange of tourist accommodation options inprime tourism areas across the State.Recommendation 4:That for the purpose of guiding theidentification of strategic tourism sites andstrategic tourism locations and in thepreparation of a local planning strategy thefollowing criteria be included in therecommended SPP, Land Use Planning forTourism.These criteria are to guide the assessment ofthe strategic value of tourism sites or locationsand compliance with one or more of thecriteria will not necessarily determine that asite is strategic or otherwise. This68 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsdetermination will be based on the outcome ofassessment of the site against all criteria.Notwithstanding this, a primary considerationin the process is consideration of thealternative site criteria as this reflects theability for any loss of tourism potential at alocation to be replaced with an alternativeopportunity of equal or higher tourism valueand certainty.Criteria for identification ofstrategic tourism sites andstrategic tourism locationsSustainability: The site shall provide fortourism development that is sustainable inrespect to its construction, operation andfunction, in its site-specific and wider impacts.This will require a site to be developablewithout compromising the sustainable use ofthe area’s natural and cultural resources, haveregard for existing social structures and bepart of the delivery of diversified and balancedtourism opportunities.Planning Context: A site or location may beidentified in a regional planning strategy or ina region plan as having high tourism potentialand value or may be part of a developmentarea recognised in the State planningframework as having high tourism value.General location criteriaAccessibility: The ease of access to the site orthe associated attraction generally should behigh, and appropriate to the nature of thefacility or attraction.Examples are Lake Argyle, Yallingup and theSwan Valley.Uniqueness: The site may contain or be in thevicinity of an attraction of landmark value, oritself be of landmark value. The more uniquethe attraction, the more it will provide tourismvalue.Examples are Lake Argyle, The Pinnacles,Purnululu National Park, Tree-Top Walk,Whale World, Miners Hall of Fame andBusselton Jetty.Setting: The site may have an aspect andoutlook that facilitate recreational tourismactivities and/or the creation of a tourismcharacter and ambience. This site appealshould be such that it demonstrates a highlevel of tourism demand or has an inherentpotential for such and is highly marketable.Examples are Cable Beach, Broome, BunkerBay, Karri Valley, Coral Bay and NornalupInlet.Tourism Activities and Amenities: The siteprovides, or has easy access to, supportingactivities and amenities such as tours, fishing,historic sites, walk trails, environmentalinterpretation, cafes, restaurant, shops and thelike.Examples are Scarborough beachfront, CoralBay, Central Perth and Bunbury waterfront.Alternative Sites: The site has an element ofscarcity in that it may be the only opportunity,or one of a limited number of opportunities, toachieve a significant tourism development inan area, at a particular place or as it maydemonstrate a particular function orcharacteristic.Examples are Dunsborough, MonkeyMia-Shark Bay, Leeuwin-Naturaliste coastline,Windy Harbour.Site-specific criteriaSuitability: The site is located within a land usecontext that will not overly limit the extent ofactivities of guests within the resort due toamenity impacts on adjoining residents orwhere the adjoining uses potentially willdetract from the tourism character of the site.Examples are Rottnest Island, Bunker Bayand Smiths Beach.Capability: The site has the capacity to bedeveloped for tourism purposes andaccommodate the associated services in amanner that does not detract from the naturalattributes of the site or result in environmentaldegradation.Examples are clearing for bushfire protection,sewerage installation, water supply andrubbish disposal.Size: The site should be of a size adequate toaccommodate a sustainable tourism facility ofthe appropriate type for the location, withconsideration of future expansion, and exhibitpotential for the necessary level of services tobe provided.Tourism Planning Taskforce Report69

Chapter 8Taskforce recommendationsFunction: Strategic tourism sites may performa specific function, such as a traditional socialor cultural role, and/or serve a particularclientele, where that may not be replacedreadily.Examples are beachfront caravan parks,school holiday camps and Crown tourismleases.8.1.4 Endorsement of the tourismcomponent to local planningstrategyThe taskforce recognises that flexibility isrequired in respect to the detail that isnecessary within the tourism component of alocal planning strategy to reflect the variableimportance of tourism between localgovernment areas and to enable work alreadyundertaken by local government and TourismWA to be recognised.In some cases the preparation of a localtourism planning strategy will be preferred bythe local government and reference to suchstrategies in subsequent recommendationsshall be read as a reference to the tourismcomponent of a local planning strategy.Recommendation 5:Where a local government prepares a tourismplanning strategy for the purpose of providingthe rationale for the zoning of land for or awayfrom tourism purposes under a scheme, itshall request WAPC endorsement of thatdocument. The process for this endorsementshall follow the process as set out in theregulations for a local planning strategy andshall require that the DPI refer the documentto Tourism WA with a request for commentand have regard for any comment received inadvising the WAPC on that strategy.Priority for preparation of tourismcomponent in a local planningstrategyRecommendation 6:That preparation of the recommended SPP,Land Use Planning for Tourism, adequatelyreflect the variable importance of tourismbetween local government areas in the State.It also should identify coastal localgovernments and the City of Perth as priorityareas for determination of strategic tourismsites and preparation of tourism planningstrategies or tourism components to theirrespective local planning strategy.8.1.5 Scheme amendment prior todevelopment of tourismcomponent in a local planningstrategyGiven the relatively lengthy process involvedin the development of local planning strategiesand the review of town planning schemes, itwill be necessary for decision-makingauthorities to consider some rezoningproposals where this strategic work and theidentification of strategic sites have not beencompleted. To ensure that decisions on suchapplications are not unduly delayed, thetaskforce has proposed that the assessmentof the strategic value of the subject site beundertaken in the scheme amendment reportin accord with the recommendedrequirements.Recommendation 7Where a local government does not have alocal planning strategy endorsed pursuant tothis policy framework and an application for arezoning or scheme amendment is proposedfor a tourist zoned site to facilitate a residentialor non-tourism use, the amendment reportshall address the issues specified inRecommendation 2. This amendment reportmay be limited in its application to a specificplace or portion of the local government area,as is relevant to the associated amendment,and the scale and importance of tourism in thelocality.8.1.6 Strategic tourism locationsAs local tourism planning strategies developand take an increasingly strategic approach totourism planning, the application of the criteria(Recommendation 5) will result in theidentification of strategic tourism locations.This designation recognises the high tourismvalue of an area in general, within whichfurther planning may identify sites that are70 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsstrategic, non-strategic, and depending on thesize of the location, some that may have notourism function. The base zoning of suchlocations when identified may reflect theexisting land use, such as rural, as opposed tobeing specific to tourism development. Wheresuch locations are identified, the resultanttown planning scheme shall set out theprocess for further planning of the area, whichgenerally will require a masterplan or outlinedevelopment plan process.The strategic tourism location designationgenerally will not be applicable to single siteszoned for tourism purposes, particularly withinan urban context, as the policy frameworkproposed should result in such sites beingdetermined as strategic, non-strategic or ashaving no tourism value. However, thedesignation will be applicable to urban areasidentified as having redevelopment potentialwhere a primary function of the area istourism, or it is recognised as havingsignificant tourism potential.Through the planning process of strategiclocations, the allocation of specific zones orland use areas and related developmentprovisions will be determined. Where aresidential component is included in thelocation as part of an integrated developmentconcept, provisions linking the residential andtourism development will be required.Appropriate recognition of strategic locationsthrough a town planning scheme may includethe use of a special control area or specificzoning as a tourism investigation zone. Such azoning or introduction of a special control areashould allow for current uses and proposals tobe developed, where they do not compromisethe tourism potential of the location, identifythe process for further planning of the area,and any requirements for rezoning prior todevelopment. While flexibility exists in respectto the application of a special control area ortourism investigation zoning, it is expectedthat the special control area more commonlywould be used where the development of theland is outside the time frame of the currentplanning scheme and local planning strategy.of required development plans and associatedconcepts developed for these locations will beguided by the criteria set out in the localplanning strategy and/or planning scheme,and the principles for the use of tourism landestablished by the taskforce and in therecommended SPP, Land Use Planning forTourism.Recommendation 8:That where the preparation of a local planningstrategy results in the identification of astrategic tourism location, that specific processprovisions and assessment criteria to guidedetailed planning of the location be included inthe strategy, and the town planning schemewhere that land is to be zoned consistent withthat designation. The achievement of this in atown planning scheme can be via the use ofan special control area or specific zoning ofthe land as tourism investigation. Bothmechanisms are to require the preparation ofan outline development plan, or similar, andappropriate zoning prior to subdivision ordevelopment. Criteria for assessment of anoutline development plan also shall beestablished suitable to the site and reflectingthe taskforce policy framework and therecommended SPP, Land Use Planning forTourism.The required planning is to establish land useand development parameters for areas withinthe location, which may include strategic,non-strategic and non-tourism sites.Developed plans also may include thedesignation of land for specific-purposetourism developments, such as integratedtourist-resorts, which may cover part or theoverall location. Where plans proposeintegrated development, mechanisms are tobe established for linking the development ofany residential/non-tourism components to thedesignated tourism site, and linking thevarious tourism components, to ensure thefuture development of the tourism sites occursand the tourism value of the development isnot compromised.Recommendation 8 provides the flexibility fora range of tourism development concepts tobe developed within an area identified to be ofhigh strategic tourism importance. EvaluationTourism Planning Taskforce Report71

Chapter 8Taskforce recommendations8.1.7 Assessment of residential useproposals on tourist zoned sitesThe taskforce has identified that there is thepotential to provide the flexibility for residentialuse of a proportion of units in the developmentof some sites zoned and required to beretained primarily for tourism purposes. This isrestricted to those sites that are identified asnon-strategic and where the site is in asuitable location and planning context toaccommodate residential use, ie the sitewould provide adequate access to residentialservices and amenities, creates a sustainableresidential environment and does not result inexcessive servicing or infrastructure costs.Within this framework, not all sites identifiedas non-strategic will be considered in theplanning framework as suitable toaccommodate a residential component.The recommendations are designed to allowthe project-financing benefits of a residentialcomponent in a new tourism development or asignificant redevelopment of a tourism facilityto be achieved. It also establishes principles toensure any detrimental impacts on the tourismexperience available in such developments, orthe capacity to accommodate future tourismdemand through the permanent loss of land totourism purposes, are minimised. Achievingthis outcome requires specific controls on thenature and extent of the residentialdevelopment, which are outlined inRecommendation 9. Consistent with thefunctional character intended for thiscomponent of such developments, it is termedresidential-no occupancy restriction.The recommended policy framework requiresthat where sites are identified as suitable forthis development type, they are zonedspecifically to provide for the residential-nooccupancy restriction component prior todevelopment. This framework does notprevent proponents seeking to rezone toachieve a standard residential component or ahigher percentage of a development as aresidential-no occupancy restrictioncomponent. However, it does establish clearlythat this will be considered only where thelocal planning strategy or scheme amendmentprocess demonstrates that the site as a whole,or a specific part of a site, has no significantongoing or future tourism function or value.In determining an application for approval of aresidential-no occupancy restrictioncomponent on a site identified asnon-strategic, the tourism benefit and broadplanning context of that site will need to begiven high regard. It is clear that in a numberof areas across the State, the introduction of aresidential component into sites that may beisolated, have high rural or landscape values,are unserviced or seasonally inaccessible, oroutside the broad settlement strategy for thearea, would be inappropriate. Similarly theapproval of a component of residential use inan existing development where there is nodemonstrated tourism benefit also would beinappropriate.Recommendation 9:That in the preparation and approval of localtourism strategies and local planningstrategies, schemes and schemeamendments, that local government, DPI andthe WAPC use the following principles for theassessment of residential use proposals fortourism developments and on land zoned orproposed to be zoned for tourism purposes:Strategic Tourism Sites: Where a site isidentified as a strategic tourism site:No residential use is permitted and alldevelopment to be subject tolength-of-occupancy restrictions, exceptwhere the development is an Integratedtourist-resort, and management and designto promote operation as a tourism facility.The development of Integratedtourist-resorts will be supported on strategicsites or within strategic tourism locationswhere the land area for integrateddevelopment is a minimum of 30 hectaresand the site is located appropriately toprovide adequate residential services andamenity. Integrated tourist-resorts are to beprincipally tourism developments and shallprovide a full range of tourism facilities andattractions on site. Such developments shallprovide a principal tourism node or nodesbut may contain a residential componentthat is integrated in terms of function anddesign, but ancillary in terms of scale andpresence. The residential componentgenerally shall be separated and buffered72 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsfrom the tourism node(s) to the extentrequired to protect the tourism experienceand character. Such developments may be100 per cent tourism, but where a residentialcomponent is provided, this shall be basedon a minimum of two tourism units for eachresidential unit and a maximum of 30 percent of the site area allocated for residentialpurposes (the area defined as being forresidential purposes is exclusive of commonopen space, recreation areas and likefacilities). The location of the residentialcomponent shall be on those areas of thesite with the lowest tourism amenity. Suchsites shall be zoned specifically for thepurpose of an integrated tourist-resort anddeveloped consistent with an overallmasterplan. As a primary element, themasterplan shall ensure integrated andlinked development of the tourism andresidential components, including staging,and in achieving this may requiredevelopment of tourism components prior tosubdivision.Non-strategic Tourism Sites: Where a site isidentified as a non-strategic tourism site:A specified portion of the proposed tourismdevelopment or redevelopment of a site,being between zero and 25 per centinclusive (the approved percentage), may bepermitted without imposition of a residentialoccupancy restriction subject to the sitebeing located to provide adequate access toresidential services and amenities, within anappropriate planning context and zonedappropriately.- The maximum percentage of residential-nooccupancy restriction units/development onthe site shall comply with the following atall stages of the development:i) The proportion of residential-nooccupancy restriction units relative tothe total number of accommodationunits on the site shall be equal to or lessthan the approved percentage.ii) The site area occupied by theresidential-no occupancy restrictionunits, and any areas designated for thespecific use of the occupiers of thoseunits, relative to the area occupied bythe short-stay development shall beequal to or less than the approvedpercentage. In calculating the areaoccupied by the two developmentcategories, those facilities available forcommon use shall be excluded from thecalculation.iii) That any individual residential-nooccupancy restriction unit and as awhole any residential-no occupancyrestriction component of such adevelopment shall be of a design andscale that it clearly is subsidiary to thetourism component of the developmentsuch that the tourism componentremains dominant in all aspects.- The determination of the appropriateresidential-no occupancy restrictionpercentage between zero and 25 per centinclusive can be determined on asite-specific or local government areabasis. Determination of the approvedpercentage, or whether any residential-nooccupancy restriction component shall bepermitted, shall have regard for tourismissues and the sustainability of a residentialdevelopment within the broader planningand settlement context of the specific site.This assessment shall take into accountthe services, amenity and infrastructurerequirements that would be available to aresidential component, and required by aresidential component.- The establishment of performance criteriafor the determination of the applicablepercentage is encouraged in areas where itgenerally has been determined that aresidential-no occupancy restrictioncomponent is appropriate, based onadditional tourism accommodationprovision or significant upgrading, servicingrequirements, design approach toameliorate potential impacts on the tourismexperience, and ability to accommodatefuture tourism demand.- In implementing this recommendation anyproposal for residential-no occupancyrestriction use on a non-strategic tourismsite shall be subject to the zoning of thesite clearly differentiating it from other siteszoned for tourism purposes and where anyresidential use or occupancy greater thanthree months in 12 months is not permitted.Tourism Planning Taskforce Report73

Chapter 8Taskforce recommendations8.1.8 Design principles forresidential-no occupancyrestriction components intourism developmentsThe taskforce has identified a number ofpotential detrimental impacts from theintroduction of residential components intourism developments, and that these can inpart be addressed through the design of afacility, and by limiting the extent and functionof the residential component. In addition to,and in refinement of, these design principles itis acknowledged that a range of designresponses will be developed by industry andlocal government and this is encouraged.These responses should be considered onmerit and supported where consistent withthese design principles and in achieving themaximum tourism benefit from thedevelopment. In many cases these designprinciples are also appropriate to 100 percenttourism developments in ensuring a tourismfunction and character is achieved.In the following recommendation theresidential component supported onappropriately zoned non-strategic tourismsites is termed residential-no occupancyrestriction reflecting that the units primarily area permanent or long-stay component of atourism development, and may not necessarilyprovide a level of residential amenity thatwould be expected in a residential area.Consistent with this, the recommendationprovides that such development is notrequired to comply with the Residential DesignCodes of Western Australia to the extentnecessary to meet the recommendations,further increasing the flexibility available insuch projects.Recommendation 10:That the recommended SPP, Land UsePlanning for Tourism introduce the followingstandard provisions for the development ofresidential-no occupancy restrictioncomponents in tourism developments throughthe specific zoning of these sites astourist/accommodation or a like zone.• Where a tourism development is approvedwith a residential-no occupancy restrictioncomponent on land zoned appropriately, itcomply with the following design anddevelopment principles:- Those areas of the site providing thehighest tourism amenity, eg thebeachfront, shall be retained for tourismpurposes, and not designated forresidential-no occupancy restriction units.- The location of all units on the site shallprovide for ease of tourism accessthrough the site and facilitate easyaccess to areas of high tourism amenitywithin or adjoining the site.- The maximum proportion of residential-nooccupancy restriction units shall be suchthat the site retains a dominant tourismfunction and character, and shall bedetermined by the local governmentbetween zero and 25 per cent inclusive.- The maximum percentage ofresidential-no occupancy restrictionunits/development on the site shallcomply with the following at all stages ofthe development of the site:i) The proportion of residential-nooccupancy restriction units relative tothe total number of accommodationunits on the site shall be equal to orless than the approved percentage.ii) The site area occupied by theresidential-no occupancy restrictionunits, and any areas designated for thespecific use of the occupiers of thoseunits, relative to the area occupied bythe short-stay development shall beequal to or less than the approvedpercentage. In calculating the areaoccupied by the short-staydevelopment, those facilities availablefor common use, such as receptionand recreation facilities, shall beexcluded from the calculation.iii)Any individual residential-no occupancyrestriction unit, and as a whole anyresidential-no occupancy restrictioncomponent of such a developmentshall be of a design and scale that itclearly is subsidiary to the tourismcomponent of the development suchthat the tourism component remainsdominant in all aspects.- All units in the development shall bedesigned primarily for tourist occupation,74 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsform part of an integrated complex andshall not be subject to compliance withthe Residential Design Codes of WesternAustralia to the extent necessary to meetthese requirements, unless specifiedunder a planning scheme.- Design differentiation between tourismand residential-no occupancy restrictionunits within a complex shall be limited tothat required to accommodate the variouscomponents of the tourism market.- Residential-no occupancy restriction unitsmay be concentrated in an area of thecomplex and provided with specificrecreation and amenity facilities but shallbe designed to enable management anduse as an integrated part of the overallcomplex. In assessing the location ofunits, the potential for a residential-nooccupancy restriction component toprovide a transition between tourismdevelopment and surrounding residentialuses should be taken into account.- The development shall incorporate thosefacilities normally associated with touristaccommodation developments such asrecreation, entertainment facilities andintegrated management facilities.8.1.9 Subdivision of land zoned fortourism purposesThe taskforce assessment of land zoned fortourism purposes in coastal local governmentareas showed that such land generally makesup only a minor component of urban zonedland, with a majority of sites being relativelysmall at less than one hectare. Through itsinvestigation, the taskforce receivedsubmissions on the need to provide touristzoned sites of an adequate size toaccommodate the development of sustainabletourism enterprises, ie sites that have thecapacity to accommodate sufficientdevelopment to support management andprovision of commercial and common facilities.The number of tourism units in a developmentrequired to achieve this can range from lessthan 40 keys to more than 100 keys (thenumber of keys may be greater than thenumber of units), depending on the nature ofthe development, the location and targetmarket. If a resort level of facility provision andmanagement is to be achieved industry adviceis that a development of more than 90 unitsgenerally would be required for aregional/coastal site. The area required toaccommodate this number of units also canvary considerably between an urban-basedsite, where multi-storey development isappropriate, to a remote site wherelow-density development is required.Review of a range of existing developmentsproviding a minimum level of facilities andmanagement presence showed that in amulti-storey format a development can beachieved on a site of less than one hectare.Where development was limited to a single ortwo storeys, a site area of more than 1.5 hagenerally was required. Many resortdevelopments occupy significantly greaterareas of land, particularly where the characterand style of the development is establishedinternally. The ability to access sites largeenough to accommodate this can be critical tothe success of a development and is importantto the tourism industry overall.Applications for subdivision of tourist zonedland currently are assessed by the WAPCunder general principles for the subdivision ofland (WAPC Policy DC 1.1). This framework isconsidered deficient by the taskforce inproviding adequate guidance for thedetermination of such proposals given thespecific nature of tourism development. Whileit is not possible for assessment criteria at aState policy level to provide minimum lot sizes,they can provide for a more consistenttourism-responsive approach and increaseddirection to proponents. Where it is consideredthat minimum lot size criteria are required,these should be developed through the localplanning strategy and included in the localplanning scheme. The primary objective of thetaskforce in developing the recommendedcriteria was to ensure the retention of themaximum potential for establishment of asustainable tourism operation on a site,without restricting appropriate subdivision.Recommendation 11:That in the assessment of subdivisionproposals for land zoned for tourism purposes,the WAPC shall refer any such application toTourism WA with a request for comment andTourism Planning Taskforce Report75

Chapter 8Taskforce recommendationsshall have regard for that comment in itsdetermination. In determining an application, itis recommended that the WAPC seek toensure that the following objectives are metand, where these cannot be complied with, notapprove the application:• the proposed lot(s) will be able toaccommodate and provide thedevelopment flexibility necessary tofacilitate development of a sustainabletourism facility consistent with the site’szoning and location and, where identified,its tourism function under an endorsedlocal planning strategy or tourism strategy;• the retention or enhancement of thestrategic value of the site for tourismpurposes, including the relationshipbetween individual lots and areas of hightourism amenity (such as the beachfront)and potential in accommodating currentand future tourism demand;• the accommodation of services,management and recreation facilitiesassociated with development of the sitewithout compromising the character,development flexibility or tourism amenityof the site; and• where the zoning of the site provides for arestricted range of tourism uses, or a singleuse, the ability for all resultant lots to bedeveloped sustainably consistent with thatzoning.In assessing compliance with these objectives,it is recommended that the WAPC alsoconsider:• any approved development proposal for thesite that is consistent with, and supportedby, the proposed subdivision; and• whether the subdivision forms an integralpart of the staged development of the site.8.1.10 Strata schemes: assessment andmanagement conditionsStrata schemes are an important componentin the funding of tourist accommodationdevelopments and the taskforce hasconcluded that the continued use of suchschemes is important for the industry,particularly in regional areas. There areidentified risks in the use of such schemes inachieving sustainable tourism developmentsunless particular management requirementsare met. These requirements are set outbelow. The primary requirements are forcommon management of tourism units withina development and that units are madeavailable for tourism letting. This is designedto address issues of lock-up use of strata unitsand inadequate management andmaintenance of facility standards, as hasoccurred under some current stratamanagement arrangements.For identified strategic sites, therecommendations require that all units are partof a common management and lettingarrangement. Following detailed considerationof the strata issue, the taskforce concludedthat such a management regime wasnecessary in maximising the tourism benefitfrom the State’s best tourism sites. It isacknowledged that these managementrequirements will result in some schemesbeing considered managed investments underthe Corporations Act 2001 and that this hasfinancial implications for the establishment andoperation of these schemes. However, onbalance, it was considered that these costswere outweighed by the benefits of fullyintegrated schemes.In recognition of the development industry’srequest for increased flexibility in respect tostrata management, and in providing somepotential to operate developments asmanagement rights schemes, the option ofallowing flexibility for owners to opt out ofcommon letting arrangements, while retainingcommon caretaking/management, has beenprovided for on non-strategic sites. Thepractical limitations in establishing on-sitecaretaking and management for smallschemes also has been acknowledged withthe option for this to be undertaken off site.The use of strata schemes in the cabin andchalet zone is not supported as suchproposals are considered inconsistent with theobjectives of retaining a variety of touristaccommodation. The strata titling of cabin andchalet development on sites under otherzonings may be supported where consistentwith the planning scheme and subject tocompliance with strata managementrequirements. No change is proposed inrespect to the existing legislative prohibition ofthe strata titling of caravan parks.76 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsThe taskforce’s preferred position on strataschemes is for subdivision to occur concurrentwith, but not prior to development of tourismfacilities. The recommendations provide forsurvey and vacant lot strata schemes to besupported subject to conditions requiring thatpractical construction issues, such as limitingthe development period for a scheme or stageto two years, and management arrangementsare addressed.These conditions and assessment criteria willoperate in addition to existing criteria under alocal government town planning scheme or asset out elsewhere in these recommendations.Further information on issues to be addressedin the development of best practicemanagement structures for the sustainableoperation of tourism developments iscontained in Appendix 5.Recommendation 12:That the recommended SPP, Land UsePlanning for Tourism, provide additionalcriteria to WAPC Policy DC 1.3 (Strata Titles)for the assessment of strata applications fortourism developments to reflect the particularrequirements for the sustainable operation ofstrata titled tourism facilities. Specifically, theamendments shall provide for the inclusion ofthe following criteria to be considered in theassessment of strata applications on landgenerally zoned for tourism purposes, andconditions to be imposed on approvals oftourism developments and tourismcomponents of mixed use developments.Assessment criteriai) The development/site the subject of theapplication has a valid developmentapproval issued by the local government,which demonstrates architectural andbuilding standards consistent with anintegrated tourism facility, and wheredevelopment has been undertaken, it isconsistent with that approval.ii) Where development includes or isproposed to include a residential-nooccupancy restriction component, it isconsistent with the design guidelines(Recommendation 10) and the unitallocation is consistent with the maximumpercentage determined for the site.iii) Where a development the subject of theapplication is not fully constructed, it shallbe demonstrated that any staging willinclude in each stage the common facilitiesrequired for that stage and demonstrateviable management potential in terms ofthe number of units constructed in eachstage. In such developments, theconstruction and staging program shall besubject to conditions to minimise impacts ofconstruction on operating stages of adevelopment, and provide a specific timeframe for construction of units and commonfacilities within each stage.iv) The site is not a site within a “CaravanPark and Camping Ground”, “Chalet andCabin” or like zone under the localgovernment town planning schemes oridentified for such a purpose in the localplanning strategy.Conditions:i) The management statement for the stratascheme shall establish a Schedule 1by-law that requires as a minimum theestablishment of a unit managementagreement, lease or alternativearrangement between each owner of atourism use strata unit, or the ownerscollectively, and a common facilitymanager/operator to provide for commonon-site management of all such units for aminimum period of 25 years as a tourismfacility. The management agreement, leaseor alternative arrangement shall cover butnot be limited to resort reception, security,maintenance, caretaking, refurbishment,marketing and other services required forthe development to operate as a tourismfacility. The management statement shallbe approved by the relevant localgovernment and the WAPC, in consultationwith Tourism WA. The required by-law shallspecify the inclusion of the followingminimum requirements in the managementagreement:a) Termination of one facilitymanager/operator must be followed bythe immediate appointment of areplacement manager/operator.b) The facility management agreementbetween each unit owner/owners andTourism Planning Taskforce Report77

Chapter 8Taskforce recommendationsthe facility manager/operator must bindsuccessive unit owners.c) Development refurbishment as requiredto maintain, or upgrade, the tourismstandard of the facility is to be managedby the facility manager/operator on adevelopment-wide basis through theestablishment of a refurbishmentreserve, or similar mechanism.d) Entry to units, including by owners iscontrolled by the facilitymanager/operator with the managementagreement providing that all tourism useunits be available only for tourism use,including owners use, unless subject tomaintenance.e) Internal fixtures/fittings and décor ineach tourism unit are to be provided andmaintained to a specified consistentstandard suitable to tourism letting ofthe units.f) Owners of a unit in a strata scheme ofgreater than 20 strata units on anon-strategic tourism site may, as analternative to common letting, enter intoan agreement with a real estate agentor licensed travel agent of their choice,for letting of their unit only. Any suchagreement or letting practice shall beconsistent with the requirements of thefacility management/operatingagreement, excepting the common tariffstructure, and at all times provide for theunit to be available for tourism letting.g) For strata schemes consisting of 20units or less, on-site management andreception facilities and operations arepreferred but not required.h) The facility manager/operator is to keepa written record of all bookings of eachowner’s unit and must notify the stratacompany in writing if it becomes awareof any person occupying the unit for aperiod exceeding three months in any12 month period. On receipt of suchnotification, and in addition to its owncompliance action, the strata companyshall advise the local government withinwhich the development is located ofreceipt of that notification.i) It is preferred that management andreception facilities and manager’saccommodation shall form part of thecommon property or be held by thecorporate body. Where alternativearrangements are proposed, these shallensure that management and receptionfacilities and associated manager’saccommodation are subject to leasearrangements or ownership restrictionsand disposal mechanisms linked to thefacility management/operator function.j) All recreation, servicing/support andcommon facilities are to be located onthe common property and full use of allservices and facilities are to be availablefor all guests regardless of the bookingagent.ii) Strata plans are to be specified with aSection 6 restriction of use limitingoccupation to tourism purposes with anoccupation restriction of a maximum ofthree months in any 12-month period.iii) Any changes to the management statementaffecting the matters identified are to beapproved by the WAPC in consultation withTourism WA.8.1.11 Zoning and town planningschemesA local government scheme is a principalinstrument for implementation of land useplanning. A town planning scheme is astatutory instrument and once approved by theMinister and Gazetted has the same force andeffect as the Town Planning and DevelopmentAct 1928. Among other things, a townplanning scheme zones and reserves landwithin the scheme area and sets out thepermissibility of land uses and developmentcontrols. In conjunction with the proposedSPP, Land Use Planning for Tourism, it is animportant instrument for implementing thetaskforce recommendations.Part 4 of the Model Scheme Text provides fora town planning scheme to contain a zoningtable, which indicates, subject to theprovisions of the scheme, the uses permittedin the various zones. The permissibility of anyuse is determined by cross-reference betweenthe rows listing use classes and the columnslisting zones.78 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsThe symbols used in the cross-reference inthe zoning table have the following meanings:‘P’ means the use is permitted by thescheme providing the use complies withthe relevant development standards andthe requirements of the scheme;‘D’ means the use is not permitted unlessthe local government has exercised itsdiscretion by granting planning approval;‘A’‘X’means the use is not permitted unlessthe local government has exercised itsdiscretion by granting planning approvalafter giving special notice in accordancewith Clause 9.4*;means the use is not permitted by thescheme.* Clause 9.4 of the Model Scheme Text dealswith advertising of applications.Table 3:Sample zoning table for tourism usesZONESUSE CLASS (1)Caravan parkChalet & cabinMotel (2)Hotel (2)Tourist/resortTourist/accommodation(3)Touristinvestigation(4)General ruralResidential R20Bed & BreakfastXXXXXPDDCaravan and campingPark Home ParkCabinChaletGuest-houseHoliday HomeHotelMotelResortServiced ApartmentSingle DwellingGroup HousingMultiple DwellingPAPDXXXXXXXXXDAPPDXXXXXXXXXXDDDXXPXDXXXXXDDDXPDPPXXXDXPPPXPDPPXXXDAPPPDPPPPXDDDevelopment subject to compliance with adopted outlinedevelopment plan. Scheme may provide for minor ‘P’ uses.AXAAAXXXXXPXXXAXXXPXXXXPPDNotes(1) Manager’s facilities and ancillary commercial facilities are deemed part of the various Use Class as appropriate.(2) The specific tourism zonings of Hotel and Motel as included in the table reflect the strategic designation of suchsites, ie no residential use.(3) This zoning is applicable only to tourism sites determined to be non-strategic and appropriately located to include acomponent of residential development, with tourism use to be dominant. The level of the residential component isto be determined by the local government on a site-specific basis or established in the scheme, up to a 25 per centmaximum only.(4) This zoning is applicable to areas identified as strategic tourism locations and may be used as an alternative to thespecial control area designation.Tourism Planning Taskforce Report79

Chapter 8Taskforce recommendationsTable 3 demonstrates how tourism uses maybe dealt with in a range of zones. Theinclusion of specific purpose zones or the fullrange of tourist zones within the land usetable of a specific local government schemewill depend on the character of tourism in anarea, the range of tourism sites, and will notbe required in all town planning schemes.Residential uses are included to show theirpermissibility within the various zonesconsistent with the principles of the taskforcerecommendations.While tourism development occurs primarilyon land zoned specifically for that purpose, italso occurs under alternative zonings such ascommercial, town centre and mixed use zonessuch as commercial/tourism. Land zoned forsuch purposes was not within the scope of theterms of reference of the taskforce and assuch, have not been considered in detail orincluded in the sample zoning table. Thecontinued use of such zones in appropriatelocations in providing for a mix and intensity ofdevelopment that includes tourism uses issupported. Such zones are not considered anacceptable substitute for the zoning of landspecifically for tourism purposes in recognitionof the need to retain high-value tourism sitesfor that purpose. In the preparation of a localplanning strategy / town planning scheme,such zones should be viewed as providing anancillary role only in providing future tourismdevelopment opportunities.Tiered zoning frameworkThe taskforce has concluded that in order toprovide for the sustainable operation of arange of tourist accommodation types, it isnecessary to provide for a more detailedzoning structure that clearly sets out theextent and type of development that can beachieved in the specific tourism zone. It isproposed that this is achieved through theintroduction of a tiered zoning structure whichlimits the range of development permissible ona site to the capability of the site taking intoaccount the planning context and its identifiedtourism function.Recommendation 13:i) That the guidelines and requirements forthe preparation of town planning schemesbe revised to provide for local governmentsto adopt a range of tourism zones, whereappropriate taking into account the localtourism industry and range of tourism sites,with provisions specific to each zone. Thezones shall be based on thecategorisations of: Caravan Park andCamping Grounds, Cabin and Chalet,Tourist/Resort, Motel, Hotel, TourismInvestigation and Tourist/Accommodation.That the continued use of mixed use zonesthat provide for tourist accommodationuses in addition to other uses is supportedonly as additional to and not as a substitutefor, the identification and zoning of existingand new sites specifically for tourismpurposes.ii) That all new and reviewed town planningschemes contain a standard provision thatrequires all units in a touristaccommodation development to beavailable for tourism letting, and that limitsthe length of occupancy of touristaccommodation, short-stay accommodationand other forms of tourism development ontourist zoned land to three months in any12-month period.iii) That the tiered zoning framework, includingthe model provisions specific to each zone,be introduced in the recommended SPP,Land Use Planning for Tourism.Definitions for tourism usesThe Model Scheme Text Schedule 2 -Dictionary of Defined Words and Expressions(2) contains a limited number of definitions fortourism related use classes (see Section 3.1,p24). The introduction of additional definitionswas considered necessary in implementationof the taskforce recommendations to providefor consistency on development types.In the development of a tourism complex, it isexpected that it will provide a range offacilities and amenities for guests, with townplaning schemes generally providing for theinclusion of commercial components wherethese are ancillary to the tourism use. Theinclusion of commercial facilities in thedevelopment of land zoned for tourismpurposes should be designed primarily toenhance the tourism experience available atthe location. The use of the street level ofmulti-level tourism facilities for commercial80 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsuses related and ancillary to the tourismfunction is a design response noted andsupported by the taskforce.Recommendation 14:i) That the Model Scheme Text Schedule 2 -Dictionary of Defined Words andExpressions (2) Land Use Definitions berevised to include the following additionaldefinitions of tourism uses:“chalet” means an individualself-contained unit usually comprisingcooking facilities, ensuite, living area andone or more bedrooms designed toaccommodate short-stay guests, formingpart of a tourism facility and whereoccupation by any person is limited to amaximum of three months in any12-month period.“cabin” means an individualself-contained unit similar to chalet butmay lack ensuite facilities and maycomprise only one room and is designedfor short-stay guests, forming part of atourism facility and where occupation byany person is limited to a maximum ofthree months in any 12-month period.“eco-tourist facility” means a form oftourist accommodation that is designed,constructed, operated and of a scale soas not to destroy the natural resourcesand qualities that attract tourists to thelocation. The development should utilisesustainable power, have a low energydemand through incorporation of passivesolar design, provide for low waterconsumption, ecologically sensitive wasteprocessing and disposal with no pollutantproduct.“farm stay” means a residential building,bed and breakfast, chalet or similaraccommodation unit used toaccommodate short-stay guests on afarm or rural property and whereoccupation by any person is limited to amaximum of three months in any12-month period.“guesthouse” means integrated premisesfor short-stay guests comprising servicedaccommodation units and on-site tourismfacilities such as reception, centraliseddining, and management, and whereoccupation by any person is limited to amaximum of three months in any12-month period.“holiday home” means a residentialbuilding used to provide accommodationfor short-stay guests, rather thanpermanent residency, and excludingthose uses more specifically definedelsewhere.“lodge” - see “guesthouse”.“tourist resort” means integrated,purpose-built luxury or experientialpremises for short-stay guests comprisingaccommodation units and on-site tourismfacilities such as reception, restaurantand leisure facilities like swimming pool,gymnasium, tennis courts, and whereoccupation by any person is limited to amaximum of three months in any12-month period.“serviced apartment” means a complexwhere all units or apartments provide forself-contained accommodation forshort-stay guests, where integratedreception and recreation facilities may beprovided, and where occupation by anyperson is limited to a maximum of threemonths in any 12-month period;“Short-Stay Accommodation” and“Tourism Development” mean a building,or group of buildings forming a complex,designed for the accommodation ofshort-stay guests and which provideson-site facilities for the convenience ofguests and for management of thedevelopment, where occupation by anyperson is limited to a maximum of threemonths in any 12-month period andexcludes those uses more specificallydefined elsewhere.ii) That the additional definitions of tourismuses, be introduced in the recommendedSPP, Land Use Planning for Tourism.8.1.12 Special control areasSpecial control areas are designations under ascheme that typically deal with a single issueand provide for additional provisions orobjectives to be applied to a class ofdevelopment that overlap zone and/or reserveboundaries. Part 6 of the Model Scheme TextTourism Planning Taskforce Report81

Chapter 8Taskforce recommendationsprovides for special control areas to beincluded in a scheme to identify areas orplanning issues that are significant for aparticular reason.The taskforce considers special control areasa potentially useful tool to identify strategictourism locations in a scheme and to introducerelated special provisions. A special controlarea for this purpose can set out theframework by which the location will beplanned and the criteria for the variouscategories of tourism use and strategic sites tobe identified. Special control areas also mayset out guidelines on tourism-related mattersto be taken into account in consideringdevelopment applications within the specialcontrol area. An example is a requirement thatTourism WA is consulted on developmentapplications received for land within astrategic location.The special control area designation providesan option to the zoning of a strategic locationwithin a tourism investigation or similar zoneand will be applicable where the time framefor development is likely to be outside the nextscheme review process, ie longer than fiveyears.Special control areas also are considered anappropriate tool to identify strategic tourismsites in a scheme. In using special controlareas for this purpose, they can be applied toa range of base zonings, such as caravanpark and camping ground and tourist/resort,and set out particular scheme requirementsassociated with that land. This provides amechanism for land within the same zoningcategory to be distinguished on the basis of itsidentification through the local planningstrategy process as a strategic site orotherwise.Recommendation 15:That in the preparation of each localgovernment town planning scheme and localplanning strategy, consideration be given toinclusion of special control areas to introducespecific provisions for strategic tourism sitesand locations. These area designations shallbe designed to reinforce the primacy of thesesites for tourism development and establishthe particular development controls andobjectives that relate to the sites, includingprovisions in respect to interim uses andconsideration of development proposals.PART 28.2 Interim policyrequirementThe recommendations of the taskforce toaddress its findings will require time toimplement and take effect given the focus onlocal planning strategies - tourism planningstrategies and the recognition of the need totake a strategic approach to land use planningfor tourism. Correspondingly, it is necessary toestablish an interim position to guideconsideration by the WAPC and localgovernment on development and zoningproposals for land zoned for tourism purposesthat will require determination in the shortterm. This interim framework will be applicablewhile the recommended SPP, Land UsePlanning for Tourism, the identification ofstrategic sites and review of local planningstrategies is undertaken, and changes to townplanning schemes are brought into effect.This will allow development proposals to beconsidered and progressed where appropriatein a planning context and under the statutoryframework while the strategic tourism planningwork recommended by the taskforce isundertaken. Recommendation 7 identifies therequirements for the preparation ofamendment reports for proposals to rezonesites zoned for tourism purposes to analternative use.Recommendation 16:1. The taskforce recommends that the WAPCadopt an interim policy position in respectto the consideration of proposals forscheme amendments to provide for thepermanent residential use of tourismdevelopments or the non-tourism use ofland zoned for tourism purposes, based onthe following:i) Where a subject site is identified as astrategic tourism site in the amendmentreport and/or the WAPC receives advice82 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsfrom the DPI that the site is a strategictourism site in terms of the assessmentcriteria, then the WAPC not recommendto the Minister that amendment for finalapproval to the extent that this wouldfacilitate permanent residential use.ii) Where a subject site is identified as anon-strategic tourism site in theamendment report and/or the WAPCreceives advice from the DPI that thesite is a non-strategic tourism site interms of the assessment criteria, thenthe WAPC recommend to the Ministerthat amendment for final approval onlyto the extent that this would facilitate 25per cent or less residential-nooccupancy restriction use determined inaccord with, and subject to theconditions recommended by thetaskforce (Recommendation 13). Indetermining the residential componentbetween 0 per cent and 25 per centinclusive, the WAPC shall have primaryregard for the level of residential - nooccupancy restriction supported by thelocal government and the broadplanning and settlement context withinwhich the site is located.iii) Where a subject site is identified as nolonger required in whole or part fortourism development as it has nodemonstrated tourism demand orsustainable tourism function in theamendment report, and/or the WAPCreceives advice from the DPI that theamendment site has no sustainabletourism function, then the WAPCrecommend to the Minister thatamendment for final approval for thesubject site, or that portion onlyidentified as having no sustainabletourism function.2 It is further recommended that this interimpolicy position be adopted by the WAPC toinform its consideration of applications forapproval of tourism accommodationdevelopment generally and proposeddevelopment guide plans and outlinedevelopment plans that it is required toconsider pursuant to the State planningframework. In this regard, the WAPC mayrequest an applicant for such an approvalto prepare an assessment of the strategictourism value of the site pursuant toRecommendation 2.3 In preparing its advice in respect to 16 1.and 2. above, the DPI shall refer any suchapplication to Tourism WA with a requestfor comment and shall have regard to anycomment received in the preparation of itsadvice.PART 38.3 Facilitating sustainabletourism developmentThrough the taskforce investigations, a rangeof issues have been identified that act asimpediments to the initiation of tourismdevelopments. In a number of cases, it also isapparent that these impediments operatewithout effectively adding value or benefit tothe general community or to those projectsthat reach construction. In addition to this, it isacknowledged that while tourism projects havebroad multiplier benefits, particularly inregional areas, it also is a difficult industry inwhich to initiate development, facing stronginternational and national competition forinvestment funds. Correspondingly, theachievement of sustainable growth of theindustry and the development of the State’sstrategic sites will require ongoing support atthe broad industry and individual project level.The taskforce seeks the establishment ofspecific initiatives through Tourism WA toensure that this support is provided.The primary issues identified as impedingsustainable tourism development relate to:• co-ordination of development approvalprocesses• priority attributed to tourism projects bygovernment• infrastructure development• land tenure• lack of a regional planning framework• access to government incentives andsupportIn respect to the development of a regionalplanning framework, this is addressed in thetaskforce recommendations in respect to theTourism Planning Taskforce Report83

Chapter 8Taskforce recommendationsestablishment of an increased focus on landuse planning for tourism. Issues associatedwith the development approvals process areanalysed in the report Review of ProjectDevelopment Approvals System - FinalReport. This report also providesrecommendations for improving the approvalsprocess. While focused primarily on resourcedevelopment, it considers tourism projects andmakes a number of recommendations ofrelevance to tourism development.The difficulties of initiation of regional tourismprojects often can relate to the isolated natureof the development site and lack of basicinfrastructure. Existing headworks assistanceschemes operated through the Department ofIndustry and Resources have been effective inthe initiation of some tourism projects. The fullbenefit of such schemes for tourism willrequire a stronger recognition of the specificrequirements and benefits of tourismdevelopment. In achieving this, theestablishment of an additional headworksassistance scheme that is specific to tourismprojects and the development of strategic sitesis recommended.While the taskforce has made a number ofspecific recommendations it considers willassist the sustainable development of theindustry it has noted that the primaryrequirement is an increased recognition of theeconomic importance of tourism to the State.In this respect, appropriate tourism projects onstrategic sites are proposed for recognition asof State significance and requiring specificfacilitation through a co-ordinated approvalprocess. This role and the structure to achieveit is most appropriately developed andimplemented by Tourism WA in delivering itscore function “to develop or to facilitate thedevelopment of new tourism facilities andimprove or facilitate the improvement ofexisting tourism facilities in Western Australia”(WATC Act 1983).Recommendation 17:That the Government establish an improvedframework at the State level for the facilitationand support of tourism development onstrategic tourism sites that recognises thebroad social and economic importance andpotential environmental benefits of the industryand which includes:• The introduction of a funded tourismdevelopment specific headworksassistance scheme for the support of thedevelopment of 100 per cent touristaccommodation projects on strategictourism sites.• An increased focus by the StateGovernment on State tourism infrastructuredevelopment.• The recognition of 100 per cent touristaccommodation projects on strategic sitesas potential projects of State significanceand establishment of a strategic tourismprojects body through the Department ofPremier and Cabinet in conjunction withTourism WA to provide an integratedapprovals system for such projects.• Initiation of a project designed to influencethe position of financial institutions inrespect to the funding of tourismdevelopments, and collaborate with anyFederal or other State Governmentinitiative in this regard.• Review tenure arrangements forgovernment release of tourismdevelopment sites to ensure financialrequirements for project development canbe met while retaining primary control onland use and development wherenecessary.• A preparedness by government tonegotiate incentives schemes for 100 percent tourist accommodation projects onstrategic tourism sites that recognises thepotential for low net returns during thedevelopment and early operation of suchprojects and which considers the use ofdeferral agreements in respect to Statetaxes.8.3.1 Effect of GST on tourisminvestmentThe introduction of the GST has had adetrimental effect on investment in strata titledtourism developments as GST is payable onthe purchase of individual units, in addition toreturns on operation of the business that theunit may form part of. This approach by theAustralian Taxation Office recognises thatunder some strata management arrangements84 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsowners may withdraw their unit from themanagement/letting pool and reside in it. Theachievement of an adjustment to the GSTpolicy ruling to exempt the purchase of units inbona fide tourist accommodationestablishments, as provided for in thetaskforce recommendations, will assist inencouraging investment in this sector of themarket.Recommendation 18That the Government make a submission tothe Federal Treasurer and the AustralianTaxation Office seeking a modification to GSTRuling 2000/20 so that strata titled 100 percent tourist accommodation developments onstrategic tourism sites subject to commonmanagement and letting arrangements areconsidered commercial residential premisesand thereby are treated similarly to hotels,motels and other tourist accommodationfacilities.PART 4.8.4 Additionalrecommendations8.4.1 Land taxThe taskforce has found that the effect ofrapidly increasing land tax in some regionalareas has had a disproportionate effect onlow-cost forms of tourist accommodation andincreased redevelopment pressure on thesesites to provide a greater income-earningpotential. It was considered that this had, andwould continue to have, a negative impact onthe range and accessibility of accommodationavailable, particularly in beachfront recreationareas.In addressing these conclusions, the taskforceproposed the use of a more detailed zoningstructure and other mechanisms to beintroduced as part of the comprehensiveplanning framework. Advice provided to thetaskforce from the Valuer General’s Office(2003) is that this will have a beneficial effectin reducing land tax increases for thoseproperties zoned for a specific tourismpurpose that generally is consistent with thecurrent use of the site.As tourist accommodation developmentsunder strata schemes generally achievesignificant reductions in the aggregate land taxpayable on such developments, relative to thesame developments held in a single entity, thetaskforce also has recommended that this bereviewed.Recommendation 19:That the Treasurer and Minister for Tourism beadvised that the taskforce considers that thecurrent land tax framework is considered tohave a negative impact on a considerableportion of low key tourist accommodationsites, and as such work against the StateGovernment’s objectives for tourismdevelopment and the retention of a variety oftourist accommodation.Recommendation 20:That the land tax system be examined, withthe objective of providing tax relief foridentified strategic tourism sites, includinglow-cost tourist accommodation facilities, andreducing the inequity associated with currenttaxing of developments subject to strataschemes relative to developments held undera single land title.8.4.2 Residential holiday homesThe high level of use of residential propertiesin some regional areas of the State as holidayhomes on a commercial basis, and theimplications of this for residential amenity andviability of dedicated tourism developments,was raised specifically with the taskforce.While noting the importance of the issue andthat it required further investigation, it wasacknowledged as outside the terms ofreference.Recommendation 21:That the issue of the commercial use ofresidential dwellings on residential zoned landfor tourism purposes be the subject of furtherinvestigation by the WAPC, in conjunction withlocal government, Western Australian LocalTourism Planning Taskforce Report85

Chapter 8Taskforce recommendationsGovernment Association and Tourism WA,with a view to the development of guidelinesto assist local government to respond to theissue effectively.8.4.3 Use of government managedlandThe taskforce has identified that there is animportant role for government-managed orowned land in the future development oftourism in the State, as many tourism iconsare located on such land and it includes alarge part of the State’s coastline.Government-managed land also has animportant role in the retention of a range oftourist accommodation with many low-keyaccommodation facilities currently located onsuch land. Recommendation 22 reflects theimportance of integrating tourism developmentacross an area with regard for private sectorand government requirements and seeks toensure these issues are considered bygovernment agencies.As the development pressure on coastal areasincreases, the role of government-managedland is envisaged to increase in terms of theprovision of sites for future tourismdevelopment. These sites also will play a rolein the retention of strategic tourismopportunities where demand conditions forsustainable tourism development are still to bereached.Recommendation 22:That the WAPC, LandCorp, CALM, DPI andlocal government note the important role forgovernment managed land in future tourismdevelopment in the State and be required tohave regard for this when preparingmanagement and development strategies andplans for these landholdings.Recommendation 23:That DPI, through its Crown Landadministration function take action to developand implement policies to ensure theidentification and appropriate protection ofgovernment-managed or owned strategictourist accommodation sites and caravanparks and camping grounds for tourismpurposes. Such a policy is to include theconsideration of conditional purchase optionsunder the Land Administration Act, leaseholdarrangements, and the use of Section 75conditional tenure, and only where this cannotbe achieved Section 15 covenants, to ensurethe land can be used only for its designatedpurpose. The nature of conditional freeholdand leasehold descriptions of use to also bespecific to the designated purpose of the land,eg caravan park and camping ground, touristresort, and to specify the nature of use of thesites. In this regard, specific considerationshall be given to the need for the maintenanceof adequate short-stay sites and limitations onthe development of permanent structures andpark homes on caravan parks.8.4.4 Corporations Act 2001In considering management requirements forsustainable tourism developments subject tostrata schemes, the taskforce has identifiedsignificant benefits where all units are part of acommon management and letting structure.Based on advice received on serviced strataschemes, the taskforce understands thatunder such an arrangement schemesgenerally would be considered managedinvestment schemes under the CorporationsAct 2001, and be subject to specificcompliance and reporting requirements.Various structures, such as unit lease-backwith fixed returns, schemes with not more than20 investors and schemes with an investmentprice of more than $500 000 are exempt fromthese particular requirements under ASICpolicy. The taskforce has; however notedsubmissions that common management andletting as required on strategic sites may makeparticular development structures unviable. Inassessing these competing interests, thetaskforce acknowledged the benefits ofcommon management in achieving successfultourism developments and the need to provideflexibility where possible to meet therequirements of various development andfinancing structures. The achievement ofmodifications to the Corporations Act 2001 toreduce the impost on serviced strata schemeswhile retaining investor protection was seenas a beneficial outcome for sustainabletourism development.86 Tourism Planning Taskforce Report

Chapter 8Taskforce recommendationsRecommendation 24:That the Federal Government be requested toreview the compliance requirements for stratatitled tourism development projects consideredmanaged investment schemes under theCorporations Act 2001 and develop guidelinesand a model format for the preparation ofproduct disclosure statements, to reduce thefinancial cost of compliance to such schemes.8.4.5 Management rights legislation“Management Rights” is the term describingthe business of operating and managing aresidential or tourism property under a stratascheme. The Queensland Governmentdeveloped legislation as part of the BodyCorporate and Community Management Act,1997 to control the operation, establish theresponsibilities and protect the interest of suchbusinesses. While the Queensland industry farexceeds that of Western Australia in terms ofthe number of management rights businesses,the taskforce considered that with continuedgrowth in tourism developments under strataschemes, a review of the legislativerequirements of such businesses waswarranted. A focus in such a review on thetourism industry, with licensing of operators toensure at least basic skills in touristaccommodation management, was viewed ashaving potential long-term benefits for theindustry. The Department of Consumer andEmployment Protection has released a paperon the Regulation of Holiday AccommodationManagers, which reviews the need forimproved management of the industry.Recommendation 25:That in conjunction with the outcomes of thereview, Regulation of Holiday AccommodationManagers, the Government urgently reviewthe need for the development of managementrights or similar legislation and the regulationand accreditation of holiday accommodationmanagers, with a focus on the particularneeds of the tourist accommodation industry.8.4.6 Consultation and reviewThe taskforce recommendations provide for arelatively significant increase in focus ontourism land use planning by local governmentand the WAPC, and important changes intourism development policy. These proposalshave been subject to extensive publicconsultation and review. Further consultationalso will occur in the preparation of therecommended SPP, Land Use Planning forTourism.While acknowledging the extent ofconsultation through the policy developmentprocess, a review of the recommendations isconsidered warranted by the taskforce within arelatively short period to assess the outcomesfor the tourism industry and ensure the policyframework remains up to date with tourismindustry trends.Recommendation 26:The recommendations of the taskforce besubject to review within a five-year period offinalisation and/or implementation.Tourism Planning Taskforce Report87

GlossaryGlossaryASIC:Australian Securities and Investments CommissionATO:Australian Taxation OfficeBTR:Bureau of Tourism ResearchCALM:Department of Conservation and Land Management (WA)Crown Land:Land not alienated from the Crown in any way, includes Governmentreserves.DOLA:Department of Land Administration (WA) (DOLA was replaced by the DLI withits Crown Land administration function moving to DPI in July 2003).DPI:Department for Planning and Infrastructure (WA)DLI:Department of Land InformationDTF:Department of Treasury and FinanceGST:Goods and Services TaxMIA: Managed Investments Act 1998SPP:State Planning PolicySustainability: Sustainability is meeting the needs of current and future generations throughsimultaneous environmental, social and economic improvement. (The WesternAustralian State Sustainability Strategy)Tourism Development: Refers generally to the development of accommodation facilities for tourists,unless otherwise specifically defined.Tourist:A person spending at least one night at a destination over 40 km from home.Tourism WA: Tourism Western Australia (Trading name of WATC from August 2004)VGO:Valuer General’s OfficeWAPC:Western Australian Planning CommissionWATC:Western Australian Tourism Commission88 Tourism Planning Taskforce Report

ReferencesReferencesAustralian Bureau of Statistics (2001). Survey of Tourist Accommodation. Australian Bureau ofStatistics, 2001.Australian Institute of Urban Studies (1990). The Impact of Permanent Living on Tourist Caravan Parksin Non-Metropolitan Western Australia. AIUS Canberra.Bureau of Tourism Research (2003). International Visitor Survey and National Visitor Survey. BTRAustralia.Department of Treasury and Finance (2002). Report of the Review of State Business Taxes.Department of Treasury and Finance, Perth, WA.Department of Treasury and Finance (2002a). Streamlining Western Australia’s Tax System.Department of Treasury and Finance, Perth, WA.Government of Western Australia (2003). Hope for the Future: The Western Australian StateSustainability Strategy. Department of Premier and Cabinet, Perth, WA.Priestly, G.K. (1995). Evolution of tourism on the Spanish coast in G.J. Ashworth and A.G.J. Dietvorst(eds) Tourism and Spatial Transformations: Implications for Policy & Planning. CAB Inter, UnitedKingdom.Salt, B. (2001). The Big Shift; Welcome to the Third Australian Culture: The Bernard Salt Report,Hardie Grant Books.Warnken, J, Russell, R & Faulkner, B (2003). Condominium developments in maturing destinations:potentials and problems of long-term sustainability. Tourism Management 24 pp155 - 168. Pergamon.Western Australian Tourism Commission (2001). Partnership 21 2001 - 2005 Tourism Industry Plan.WATC, Perth.Western Australian Tourism Commission (2003) Correspondence from Chief Executive Officer, WATCto Director General, DPI, April 2003.Western Australian Planning Commission (1997). State Planning Strategy: Final Report. WAPC, Perth.Western Australian Planning Commission (2000). Planning Schemes Manual. WAPC, Perth.Western Australian Planning Commission (2002). Residential Design Codes of Western Australia.WAPC, Perth.World Travel and Tourism Council (2003). Travel and Tourism Economic Research.http://www.wttc.org/measure/PDF/World.pdf.Tourism Planning Taskforce Report89

Further readingFurther readingAustralian beaches ‘under threat’ (2004). Australian Broadcasting Corporation - Lateline. BroadcastApril 02, 2004. Australia. Retrieved: April 16, 2004 from www.abc.net.auAustralian Securities and Investments Commission (2000) Serviced strata schemes Policy Statement140. ASIC CanberraAustralian Securities and Investments Commission (2000) [CO 00/570] Management Rights SchemesPolicy Statement 140. ASIC CanberraAustralian Securities and Investments Commission (2002) [CO 02/303] Management Right Scheme -Amendment. ASIC CanberraAustralian Securities and Investments Commission (2002) [CO 02/304] Management Right Schemes.ASIC CanberraAustralian Securities and Investments Commission (2002) [CO 02/305] Management Right Schemes -.ASIC CanberraBeilock, R & Nicolic, A (2002) Concessions for Early Development of International Tourism. Annals ofTourism Research, Vol. 29, No 3pp 852 - 856. Pergamon Press.Borooah, Vani (1999) The Supply of Hotel Rooms in Queensland, Australia Annals of TourismResearch, Vol. 26 No 4, pp 985 - 1003 Pergamon Press.Burnley, Ian & Murphy, Peter (2004) Sea Change UNSW Press, SydneyChanging Ownership Structures (2002). Hotel Topics, Jones Lang LaSalle Hotels. Issue No. 13.Australia.County of Hawaii (2001). County of Hawaii General Plan - Land Use Resort, pp. 407 - 420. Hawaii.Retrieved: February 22, 2004 from www.hawaii-county.comDain Simpson Associates (2003). APEC Tourism Impediments Study. Dain Simpson Associates. NewSouth Wales.Department of Consumer and Employment Protection (2004). Regulation of Holiday AccommodationManagers. Department of Consumer and Employment Protection. Perth, WA.Department of Industry and Resources (2004). Schedule of Government Positions on KeatingRecommendations Summary. DOIR, WA. Retrieved: March 17, 2004 from www.doir.gov.auDepartment of Land Administration (2002) A guide to Strata Titling in WA, edition 2.02. Department ofLand Administration, Perth WA.Department of Planning and Permitting (2000) Planning for Sustainable Tourism in Hawaii RetrievedFebruary 17 2004 from www.hawaii.gov.dbedtDevelopers move to the Last Resort (2004). Property Australia. March, pp. 20 - 23. Australia.Eastbourne Borough Council (2003). Eastbourne Borough Plan 2001 - 2011. Eastbourne BoroughCouncil, United Kingdom.Fenech, R (2004). Report to taskforce on percentage of floor areas and percentage of unit numbers -residential to tourist. Internal Report to CommitteeFinance Issues in Hotel Real Estate (1999). Hotel Topics, Jones Lang LaSalle Hotels. Issue No. 1.Australia.Focus On: The Return of Hotel Transaction (2002). Jones Lang LaSalle Hotels, Australia.Foreign Investment Review Board (2003). Foreign Investment Policy - Urban Land. AustralianGovernment, Department of Treasury. Canberra.90 Tourism Planning Taskforce Report

Further readingGetz, Donald (1993) Planning for Tourism Business Districts Annals of Tourism Research, Vol. 20,pp583 - 600 Pergamon Press USAGlobal Investment in Hotel Branding (2001). Hotel Topics, Jones Lang LaSalle Hotels. Issue No. 8.Australia.‘Golden era’ of sustained growth (2003). Urban Development Review, p. 18. Australia.Government of Western Australia (2002). Review of the Project Development Approvals System.Independent Review Committee, WA.Hawaii Tourism Authority (1999). Hawaii Tourism Product Assessment. HTA, Hawaii.Hotel Investment in the Global Marketplace (2000). Hotel Topics, Jones Lang LaSalle Hotels. IssueNo. 2. Australia.Hotel Sale-Leaseback Transactions (2002). Hotel Topics, Jones Lang LaSalle Hotels. Issue No. 11.Australia.Investigation into Residential Development in Tourism Zones (2003). WA Property News. Issue 30,p.4. WA.Johnstone, L. & Wismbush, N. (2002). Does Higher Latte Index Equal Greater Public Good? CentralCoastal Board, VIC. for the Australia’s National Coastal Conference, Coast to Coast 2002, pp. 220 -224.Karabuva, V. (2003). ‘We didn’t know’ - apartment investors. Media Monitors. Voice News (WA)General News, p.3.Low Cathie (2003) Rhodes Hotel Flattened for Flats. The Western Australian April 2 2003 p 57. PerthWAMacroplan Australia (2001) Mooloolaba Urban Improvements - Economic Assessment. MaroochyShire Council QLDManagement Agreement Trends Worldwide (2001). Hotel Topics, Jones Lang LaSalle Hotels. IssueNo. 7.Mayo County Council - Ireland (2002). Renewal Scheme for Traditional Seaside Resorts. MayoCounty Council, Ireland. Retrieved: November 7, 2002 from www.mayo-ireland.ieMcDonald, P. (2002). Medium and Long Term Projections of Housing Needs in Australia. AustralianHousing and Urban Research Institute. Australia.McMahon, Sean (2003) Management Rights Need Product Disclosure Statements. Syndicate NewsJanuary 2003, Mcmahon Clarke Legal e-newsletter.Office of the United Kingdom Deputy Prime Minister (2003). Planning for Leisure and Tourism: maindocument. Office of the UK Deputy Prime Minister, United Kingdom. Retrieved: January 27, 2004 fromwww.odpm.gov.ukOffice of the United Kingdom Deputy Prime Minister (2003). United Kingdom - Research of PlanningPolicy relating to Land for Tourism Use. Office of the UK Deputy Prime Minister, United Kingdom.Retrieved: February 17, 2004 from www.odpm.gov.ukPeppers, Salt Resort & Spa - Questions & Answers (2003). Salt Villa Australia - PeppersDevelopments, New South Wales. Retrieved: April 4, 2004 from www.saltvillage.com.auPortsmouth City Council (2001). City Plan First Review 2001 - 2011. Portsmouth City Council, UnitedKingdom.Property Council of Australia & Tourism Taskforce (2003). New Investment Frontiers - An IndustryAction Plan for Reshaping Hotel Investment. Jones Lang LaSalle Hotels, Australia.Public and Private Hotel Investment (2002). Hotel Topics, Jones Lang LaSalle Hotels. Issue No. 10.Australia.Tourism Planning Taskforce Report91

Further readingQuay West Resort Bunker Bay / Prospectus (2002). Mirvac Management Limited, Australia. Retrieved:November 10, 2003 from www.mirvac.com.auQueensland Resident Accommodation Manager’s Association Inc. (2003). QRAMA Code of Ethics.QRAMA. QLD. Retrieved: February 24, 2003 from www.qrama.com.auQueensland Resident Accommodation Manager’s Association Inc. (2003). ADDENDUM to PAMDForm 20a. QRAMA, QLD.Resort Investment Worldwide (2001). Hotel Topics, Jones Lang LaSalle Hotels. Issue No. 6. Australia.Ryder, T. (2003). Characteristics of Syndicates. Property Australia. February, p.11. Australia.Salt, Bernard (2004). Presentation, The Big Shift; Welcome to the Third Australian Culture. 26 MayMelbourneServiced Apartments (2002). Hotel Topics, Jones Lang LaSalle Hotels. Issue No. 12. Australia.Sewell, R. Williams, O. & Beard, J. (2003). Syndicates - The Future Landscape. Jones Lang LaSalleHotels, Australia.Shire of Broome (1999) Policy on Strata Titling of Holiday Accommodation and Tourist Development(excluding Caravan Parks). Shire of BroomeShire of Broome Town Planning Scheme N0.4 (1999). Tourism Accommodation Developments withinthe Tourism Zone. Local Planning Policies, Council of the Shire of Broome.Smart Communities Network (2003) Seaside, Florida. Retrieved November 23 2003 fromwww.sustainable.doe.govSmart Structures in Hotel Investment (2000). Hotel Topics, Jones Lang LaSalle Hotels. Issue No. 3.Australia.Smith, Russel A. (1992) Beach Resort Evolution - Implications for Planning. Annals of TourismResearch, Vol. 19, pp304 - 322 Pergamon Press USAStrapp, James (1988) The Resort Cycle And Second Homes. Annals of Tourism Research. Vol. 15, pp.504 - 516 Pergamon Press USATeys, Michael (2000) Three Classes of Strata Investments - Compliant, exempt and illegal stratainvestments under the Managed Investments Act 1998. Teys McMahon Managed InvestmentsSeminar Series 2000Teys, Michael (1995) Strata Titled Hotels - Should you Invest in Them. Equitably Sharing the Profits.Teys McMahon The Property Lawyers.Teys, M. & McMahon, G. (undated) Serviced Apartments: The application of the Corporations Law andthe requirements for a prospectus. Teys McMahon The Property LawyersThe Public Image of Resort Timesharing - Summary Report, Australia (2002). 1st ed. ResortCondominiums International (RCI).The Waterfront Resort - The Entrance / Prospectus (2003). Mirvac Management Limited, Australia.Retrieved from www.mirvac.com.auTourism and Transport Forum Australia (2003). Resorting to Profitability - Making Tourist Resorts Workin Australia. TTF Australia. Retrieved: May 2003 from www.ttf.org.auTourism Queensland (2002). Gold Coast Summary Results - April 2002. QLD. Retrieved: March 3,2003 from: www.tq.com.auTourism Queensland (2003). Sunlover Holidays - an Operator’s Guide. QLD. Retrieved: December 9,2003 from www.qttc.com.auTourism Queensland (2002). Sunshine Coast Summary Results - June 2002. QLD. Retrieved: March3, 2003 from: www.tq.com.au92 Tourism Planning Taskforce Report

Further readingWilliams, P., Penrose, R. & Hawkes, S. (1998) Shared Decision Making in Tourism Land Use PlanningAnnals of Tourism Research, Vol. 25 No. 4, pp 860 - 889 Pergamon Press USAWinchester, D. (2004). Challenges for Accommodation Investors. Travelweek, p.4. Australia.World Travel and Tourism Council (2003). Travel and Tourism Economic Research. Retrieved fromhttp://www.wttc.org/measure/PDF/World.pdfWyong Shire Council (undated) North Entrance Integrated Tourist Facility Development Control PlanNo 26. Wyong Council, NSW.Tourism Planning Taskforce Report93

Appendix 1Appendix 1PAPER ON FINANCING TOURIST ACCOMMODATION FOR “THE MINISTERIALTASKFORCE TO INVESTIGATE THE IMPACT OF COMBINING TOURIST ANDPERMANENT RESIDENTIAL ACCOMMODATION AND THE IMPACT OF STRATATITLING OF TOURIST ACCOMMODATION”BY JEFF COHENCADirector Commercial FinanceAshe Morgan Winthrop18 TH NOVEMBER 2002FINANCING OF TOURIST ACCOMMODATIONPurposeThe purpose of this paper is to provide an overview of the funding policies of the major banks withrespect to tourist accommodation (the terms tourism accommodation and hotels are interchangeablein this paper). In particular, the Ministerial taskforce is interested in understanding why developers areseeking planning approval for a residential component within these projects, and the financialimplications of the strata titling of such projects.A copy of the letter of instruction provided by the Ministerial taskforce and the Terms of Reference areattached to the rear of this paper.BackgroundTourism is not an asset class that banks are especially bullish about financing, therefore whenpresented with a tourist asset, they will take an inherently more conservative position than mightotherwise be the case. This is due to several reasons, including:• The recent history (say in the last 10-15 years) of tourism assets and particularly hotels, to trade atsignificant discounts to replacement cost. In the late 1980's - early 1990's, development finance fortourist accommodation was considerably easier to secure with lower equity requirements than isthe case today. However, this changed when the banks incurred significant losses in this sector,during the 1990's. It could be argued that it was this tightening in credit standards that has led tostrata titling developments becoming a more popular way of effectively financing tourismdevelopments, and• The ability of single events such as the 1989 pilots' strike, the 2001 terrorist attacks on the WorldTrade Centre and the collapse of Ansett, to have a material impact on the industry.Essentially when undertaking hotel developments, developers have two options, with these being:• Develop and sell individual strata units to investors, and• Develop and retain ownership of the development or sell to a single purchaser.It is important to note that the two options are completely different, with the first being a property "play"where the developer builds a building, sells the product and crystallises a development profit. In someinstances, a company associated with the developer assumes the ongoing management rights for theoperation of the hotel whilst in others they are managed by arms length hotel managementcompanies/operators. However, this represents a separate "transaction" and the developer'sobligations generally terminate once all strata lots are sold and any ongoing contractual obligations(such as minimum rental guarantees) are satisfied.94 Tourism Planning Taskforce Report

Appendix 1In the second option, the hotel is not usually strata titled. Rather it is built by the developer andretained, or sold to a single investor. The hotel is then managed by the new owner, or an independentoperator is appointed to manage or lease it (subject to an appropriate contract with the owner). Thesingle investor/developer who retains ownership of the finished product, is usually more interested in alonger term investment that generally takes a number of years' operation before it generates acommercial return.Banks would generally prefer to finance hotels developed under the first option, as in thesecircumstances they do not assume an ongoing operating risk.Option 1 - Develop and sell strata units to investorsUnder this option, developers build and strata title units, then sell the final product to investors (usuallyusing a prospectus or a similar document such as an information memorandum). To entice theinvestor to invest, the developer has usually arranged a suitable resort/hotel operator to manage thecompleted development. Examples of this in WA are the Kareelya and Seashells groups, which eachhave associated hotel/serviced apartment management companies which manage the complexes theydevelop. The management company need not be associated with the developer, as in the case of theRadisson Dunsborough which was developed by Futuris and managed by Radisson (prior to itstakeover by Kareelya Group).When financing these sorts of developments, banks are particularly interested in how their facility willbe repaid. This is generally by way of settlement of the sale of individual strata lots. Therefore before abank will agree to advance any monies to a developer to build a development, it will require a certainlevel of presales. This level will vary depending on a range of issues, including the developer's trackrecord and relationship with the lender, the location of the development, the level of borrowings etc.Generally a developer can borrow a percentage (say up to 70 per cent) of the total cost of adevelopment, with the balance to be contributed by way of equity. However, amongst other things, thepreparedness of a bank to advance this percentage (and in some cases more), will depend on thelevel and quality of presales. The higher the value of presales, the more certain the bank is of beingrepaid, and therefore the more flexible and accommodating it will be. The lower the presales the less adeveloper can borrow and the more difficult it is for developers to secure finance.Generally it is easier for developers to secure presales of residential apartments than tourist units,which means that if a development has a residential component, the developer may be able to securesome quick presales. This may in turn enable the project to commence quicker than would otherwisebe the case, which could have a positive impact on the profitability of the project.Depending on the level of presales required, there may be a residual debt owing by the developer tothe bank. The bank will be reliant on the sale of further stratas to repay this residual debt andtherefore assumes a sales risk during and post completion of construction, until its loan is repaid.Banks generally regard residential stock as easier to sell and better security than tourist based assets,due to a number of reasons, including:• the market for residential purchasers is deeper as it includes owner/occupiers and investors, whilstpurchasers of strata titled tourist accommodation is limited to investors,• the trading risks associated with short-stay accommodation, and• the banks consider there is less downside risk in the value of housing product (i.e. if the marketfalls, housing will fluctuate considerably less than tourism assets), thereby providing them withmore reliable security.Therefore banks would prefer to see a mix of residential and tourism stock, which reduces their riskprofile.Tourism Planning Taskforce Report95

Appendix 1Option 2 - Develop and retain ownership of the development or sell to a single purchaserIn some cases, developers build hotels with a view to:• selling the completed hotel to an investor who in turn manages it itself or appoints a professionaloperating group such as Hilton, Sheraton etc, or• operating the completed hotel themselves or appointing a professional operating group to manage thehotel on their behalf.Where the hotel is to be unsold to an investor, the bank would generally require that a sale agreementbe in place prior to commencement of construction. Practically speaking, the investor would then have itsown finance in place to assist with the purchase and ongoing operation of the completed hotel.In the above two scenarios, any bank that finances the completed hotel, assumes an operating risk,because operating a hotel is a real trading business. Therefore the bank needs to be satisfied that asuitably qualified operator is in place to manage the completed hotel for an investor or that the developerhas the necessary skills (if it is to become owner/operated) to manage the hotel itself.As an indication, banks will lend a maximum of 60-65 per cent of the hotel's value, although this dependsupon a range of issues, including the borrower's history, the hotel's location and trading history (or in thecase of a new hotel, its projections). When dealing with new hotels the banks usually take a moreconservative position because there is no trading history available to support profitability forecasts.Under this scenario 2, the loan is generally repaid from trading profits and the hotel's eventual sale, asopposed to Scenario 1, when bank finance is repaid from settlement of the sale of individual strata units(residential and short-stay). Therefore if there is a residential component that can be developed and soldto reduce borrowings (and therefore the gearing of the project), the banks will look upon this morefavourably than if they were solely reliant upon the trading performance and eventual sale of the hotel fortheir repayment.SummaryFinance is an art not a science and therefore the comments contained herein are, by necessity, ageneralisation. As an example Commonwealth Bank may lend money against a retail development thatANZ would not finance, whilst ANZ may fund a hotel that Commonwealth Bank would not. Banksgenerally work within a policy framework, but these are guides only and individuals have the ability toapprove transactions that fall outside of these policy frameworks, if they are satisfied with the overall riskprofile of the transaction.There is little doubt that due to the restrictions placed on short-stay accommodation, permanentaccommodation is easier to sell. Therefore, it could be argued that a project that has an increasedpercentage of permanent accommodation, would be more profitable than one with a lesser percentageand therefore easier to finance. Given these comments it is understandable that developers seek acomponent of permanent residential accommodation within their developments.With the general reluctance of banks to finance hotel development on the basis of ongoing operations,the only way for many tourist developments to proceed is if they are strata titled and sold to investors.Therefore in many cases, strata titling is effectively used by developers as a financing tool.With respect to the issue of the permanent versus short-stay accommodation requirements of the banks,most developers have already received development approval before they approach the bank forfinance. Therefore, the ability of the banks to influence the mix of short-stay and permanentaccommodation is limited. Furthermore, I would consider it most unusual for a bank to try to influence themix, as it could be argued that this would place it and its employees, in the position of acting as quasidirectors of the borrower. From my experience, a bank is most likely to question the number and value ofpresales and the impact this has on its risk profile, rather than try to influence the fabric of thedevelopment.Jeff Cohenca96 Tourism Planning Taskforce Report

Appendix 2Appendix 2List of submitters to the advertising of the report and recommendations ofthe taskforce, August 2003Mr Alan Boys* Director Hotel & Leisure Advisory P/L NEDLANDS WA 6909Mr Ted Gettingby Karrinyup Waters Resort GWELUP WA 6018Mr Paul R King Director Seashells Hospitality Group P/L SCARBOROUGH WA 6019Ms Susan NulsenMr Song Cheng MiangMr Colin R HeathA/Director Policy & Education Department ofConsumer and Employment ProtectionManaging Director Western Australia Beach& Golf Resort P/LManaging DirectorHeath Development CoPERTH WA 6850C/- Mirvac Fini, Perth WACOTTESLOE WA 6911Director Wavelength Nominees P/L BROOME WA 6725Community ServicesManagerShire of Exmouth EXMOUTH WA 6707Mr David McKenzieChairman, Canal Rocks Pty LtdCLAREMONT WA 6910Ms Annettee Harbron Koltasz SmithBUSSELTON WA 6280Tanya & John Karalthe_karals@bigpond.comMr Barry Brown* General Manager, Cape Naturaliste Tourism BUSSELTON WA 6280AssociationRussell Gibbs Hawaiian Management GroupNEDLANDS WA 6909Mr Joe Lenzo* (1) Executive Director, Property Council ofPERTH WA 6000Australia (WA)Ms Karen Fleayesfm@bigpond.comMs Jenny Judd JURIEN BAY WA 6516Mr Nobu Kawasaki Managing DirectorPERTH WA 6850Yanchep Sun CityMs Natalie C Katona*(2) Manager Planning Services, Shire of Broome BROOME WA 6725Greg & Phil Tickle Siesta Park Holiday ResortBUSSELTON WA 6280Tourism Planning Taskforce Report97

Appendix 2Mr Tony Brun Executive Manager City Development, City of BUNBURY WA 6231BunburyMs Pat Strahan* (3) Executive OfficerKARRINYUP WA 6921Caravan Industry Australia WA IncMr David Maiorana Principal PlannerGINGIN WA 6503Shire of GinginMr Angus Murray P R D NationwideBROOME WA 6725Mr Mark Newman Chief Executive Officer, City of Mandurah MANDURAH WA 6210Mr Tom McGellintommcgellin@bigpond.comMr Tim Shingles Manager Strategic Planning, Shire ofBUSSELTON WA 6280BusseltonClive & MargaretJohnsonMandalay Holiday ResortBUSSELTON WA 6280Mr Rory O’Brien Shire of Augusta-Margaret RiverMARGARET RIVER WA 6285Mr Nick HaniganCivic Northcivicnorth@bigpond.comMr Terry Posma Geographe Point Pty LtdCLAREMONT WA 6010Mr Tony Clohessy COTTESLOE WA 6011Mr Peter McMillan Director, Darwin Property Pty LtdDARWIN NT 0801Mr David Kennedy Director - Hotels & LeisurePERTH WA 6000CB Richard Ellis Pty LtdMr Glyn Crimp Kintyre Holdings Pty LtdSCARBOROUGH WA 6019Mr Richard Muirhead Chief Executive Officer, Western Australian PERTH WA 6847Tourism CommissionAlan & Janet Sammons Port Mill Bed & BreakfastFREMANTLE WA 6160Mr Brett Flugge Director Planning & Development Services, PINJARRA WA 6208Shire of MurrayMr Brian Wall Executive Manager, Shire of Wyndham-East KUNUNURRA WA 6743KimberleyMr Robert Wigley MORLEY WA 6062D A Ferguson Menelle Holdings Pty LtdNTH BEACH WA 692098 Tourism Planning Taskforce Report

Appendix 2Executive Officer*(4) REIWASUBIACO EAST WA 6008Water Corporation Land Development BranchLEEDERVILLE WA 6902Chief Executive Officer City of Kalgoorlie-BoulderBOULDER WA 6432Executive Officer* (5) Tourism Council of WABURSWOOD WA 6100Chairman Western Australian Planning Commission PERTH WA 6000Harold Hughes Abbey Beach ResortBUSSELTON 6280Bradley Woods*Executive DirectorRoss Holt & MikeGarner* (Briefing Only)Australian Hotels Association (WA)Chief Executive and Project Manager,LandCorpPERTH WA 6000PERTH WA 6000(*) These submitters also addressed the taskforce on their submissions during February 2004, seeAppendix 4 for association representatives.Tourism Planning Taskforce Report99

Appendix 3Summary of primary submission issues and taskforce response on advertising of draft report: August - October 2003IssueSummary of comment Taskforce response Outcome1 Detail required in tourismstrategy and localplanning strategy.5 Provide flexibility to allow tourismstrategy to reflect importance oftourism in area, require onlyminimum necessary to deal withissue.10Preparation of land use strategiesfor tourism supported.Comment is consistent with intent ofrecommendation, that strategy detailshould reflect the nature and scale oftourism in area, and form part of localplanning strategy. Identification ofpriority local governments forpreparation of strategies.Modification of Rec1/2 and Rec 3/6 toemphasise flexibilityand identify prioritylocal governments forpreparation of tourismplanning strategies/review localstrategies.2 Documentation requiredfor rezoning of tourismsite.2 Where rezoning proposed prior topreparation of tourism strategy,amendment report in accord withguidelines considered adequate toallow rezoning to be considered.The provision of a scheme amendmentreport that addresses the requiredissues acknowledged as providing anadequate process to achieve thetaskforce objectives.Modification of Rec2/7 to confirm optionof using schemeamendment report1a)1b)FrequencyAssessmentcriteriaAppendix 3100 Tourism Planning Taskforce Report

Appendix 33 Responsibility forpreparation of tourismstrategy and provision ofresources.4 Need to provide andretain high-value tourismsites.4 Primary responsibility should restwith local government includingdetermination of strategic sites toreflect local conditions.3 local government has inadequateresources to undertake strategypreparation and requirement atlocal government level will impededevelopment.5 Local government and State shoulddevelop strategies in partnershipwith State having lead role inidentification of strategic sites.2 Report lacks quantitative data anddoes not demonstrate need toprotect high-value tourism sites,ample supply in SW for manyyears.7 Need to provide high-value tourismdevelopment opportunities, need tolimit residential use of such sites.While local government, in conjunctionwith the industry, has the detailedknowledge of local area tourismindustry there is a role for the State inleading the identification of strategicsites, given these are ‘sites of stateimportance’. Where strategies are mostrequired is where tourism is animportant component of the economyand the allocation of resources to planappropriately for this use is aresponsibility of local government. Theresource requirement of this process onlocal government will be eased with theState leading the identification ofstrategic sites through a specificreference body. Strategy frameworkrecognises need for flexibility inarrangements across the State.Quantitative data on availability of landzoned for tourism purposes in coastallocal government shows that siteavailability is low, with lot sizesgenerally small and high-amenity siteslimited in number. This informationsupports the outcomes of analysis ofrecent development trends, whichindicated the need to establish a policyframework in respect to residential useof tourism sites.Recommendation 3/3modified to provide forestablishment ofcommittee at Statelevel to identifystrategic sites andconfirm that strategiesare to be prepared bylocal government inconjunction with DPI.Flexibility provided inarrangements toreflect significant priorwork by some localgovernments inpreparing tourismstrategies.Report text amendedto include data onanalysis of land zonedfor tourism purposesin selected coastallocal governments.1a)1d)Tourism Planning Taskforce Report101

Appendix 35 Strategy guidelinesrequire consideration offunction of caravan parks.6 Requirement forconsultation withservicing authority,specific industry groups7 Resourcing of tourismstrategy preparation2 Any proposal to limit long-stay useof caravan parks opposed.12 Need to address use and retentionof caravan parks supported2 Specific requirement should beincluded in guidelines forconsultation with servicingauthorities and specified industrygroup.10 Support for allocation of necessaryresources by WAPC and TWA towork with local government inpreparation of strategies.6 Support for preparation of exampletourism strategy.1 Recommendation should confirmthat example tourism strategy willbe prepared.The guidelines require that a tourismstrategy identify the various function ofcaravan parks from tourism to seasonaland permanent. It also proposes thaton tourism parks the local governmentmay impose through the planningscheme a maximum percentage limiton the use of sites for long-staypurposes consistent with the need toretain a range of accommodationoptions.Consultation with servicing authoritiesis not an issue specific to tourismplanning and covered in guidelines forlocal planning strategy preparation.Industry groups are acknowledged asimportant in process and identified inguidelines as required to be consultedin strategy preparationThe importance of allocation ofsufficient resources and a clear processfor the strategic site selection processwith a greater role for the State agreed.The role of the DPI and TWA in thisprocess confirmed.Recommendation for preparation of anexample strategy retained but it cannotbe undertaken until funding isconfirmed.No change proposed. 2b)No change proposed. 2b)Modification toRecommendation 3 toprovide forestablishment andresourcing of aspecific-purposecommittee toundertake this inconjunction with localgovernment for priorityareas across theState.1a)102 Tourism Planning Taskforce Report

Appendix 38 Proposed criteria for theidentification of strategicsites.9 Identification of strategictourism locations in localplanning strategy.1 Provision of examples of locationsinappropriate in criteria.2 Application of criteria will result infew sites being identified asstrategic and exclude some sitesconsidered strategic.10 Proposed criteria and frameworksupported.1 Criteria to consider infrastructureissues specifically.1 Concept supported as appropriateplanning step but opposesapplication to individual sites.11 Concept supported as appropriatefor tourism land use planning.2 Concern in respect to increasedcomplexity of system.The criteria are proposed as assistingthe process of identification of strategicsites and it is a summary of thecharacter of a site that will indicate itsstrategic nature. The process forselection of strategic sites will involvestakeholder consultation and the abilityto have nominated sites evaluated.Identification of general locationsexhibiting specific criteria is considereda valid tool in assisting interpretation ofcriteria along with access to services/infrastructure which is included.The proposal for the introduction of aplanning process for strategic locationsreflects the focus of the taskforcerecommendations on future planning fortourism. It introduces a flexiblemechanism for the identification oflocations with future tourism potential toensure that this is taken into accountwhen planing for an area is undertaken.Modification ofintroductory text tocriteria in Rec 5/4 toclarify application ofcriteria.Rec 6/8 modified toclarify intent ofdesignation and thatnot appliedappropriately to smallindividual sites wheredemand fordevelopment exists.1d)1b)1d)Tourism Planning Taskforce Report103

Appendix 310 Preclusion of residentialdevelopment on strategicsites.11 Oppose recommendation on basisthat residential required forlong-term sustainability and marketwill determine appropriate balance.3 Oppose recommendation and seekthat a revised maximum proportionof residential development onstrategic sites be imposed withflexibility to local government todetermine on a case-by-casebasis. Residential componentrequired for project financingand/or creating vitality - variety inan area.10 Support preclusion of residentialdevelopment from strategic sites.The investigation of this issue by thetaskforce identified some significantdetrimental impacts from mixing ofresidential and tourism development onhigh-value tourism sites in terms of thetourism experience and the loss ofpotential to accommodate futuretourism demand. While acknowledgingthe financial benefits of a residentialcomponent the taskforce consideredthat the sustainability of the Statestourism industry required the retentionof strategic sites for tourism purposesonly, noting limited distribution and sizeof such sites in most areas. Thepotential for a residential component tobe accommodated within strategiclocations subject to structure planningof these areas and the opportunity forthe development of integrated tourismresorts was recognised.Rec 7/9 modifiedthrough the inclusionof “integrated touristresort” as a use thatcan be considered onstrategic sites. Rec6/8 modified to clarifythat residential usecan be provided forthrough the structureplanning process ofstrategic locations.1a)104 Tourism Planning Taskforce Report

Appendix 311 Residential componenton non-strategic sites12 Recognition of variationacross state in terms ofconstruction cost,seasonality, isolation andtourism experience.13 Oppose suggested limit onresidential at 20 % as in somecases more is required for financialviability, should be flexible to reflectregional conditions, consider 40%to 50% maximum.4 Limit of residential component innon-strategic sites supported butconsider that may be basis toincrease marginally withoutcompromising tourism outcome.7 Limit of residential component innon-strategic sites to 20%supported.1 Oppose requirement thatresidential component onnon-strategic sites be designed toessentially form part of tourismcomplex.5 Oppose current policy frameworkas does not provide flexibility torecognise variations across state,ie ability to have higher residentialpercentage in some regional areas.Through its investigations the taskforceidentified a number of detrimentalimpacts from residential components intourism developments and that theseimpacts can be reduced in part onspecific and appropriately located sitesthrough design and limitations to theextent and function of the component.In recognising the industry requirementfor increased flexibility the taskforceconsidered an increase in themaximum residential componentallowable in conjunction with refinementof the design guidelines. The taskforceinvestigations confirmed the need torequire that the residential componentessentially form part of the tourismdevelopment in providing capacity forthis component to be used as part ofthe tourism facility as demandincreases and to ensure that aresidential element does notcompromise the tourism operation.Policy framework for residentialcomponent in non-strategic sites isproposed on basis of the maximum of25% being achieved throughperformance measures. A localgovernment may determine itappropriate to grant 25% generally inreflection of construction costs andother issues. Developed tourism facilityassistance schemes may reflect thesefactors for strategic sites in assessmentcriteria. Effect of these factors may beameliorated by land price differentiationin some locations.Rec 7/9 modified toprovide a maximumresidential componenton non-strategic sitesup to 25% where siteslocated appropriatelyin planning contextwith regard forresidential servicesand amenity, with localgovernment able todevelop performancecriteria in respect todetermination of theappropriate residentiallevel between 0% and25%.1b)No change proposed. 2b)Tourism Planning Taskforce Report105

Appendix 313 Flexibility required formarket-based approachto mixed residentialtourism development anduse.14 Tourism use ofgovernment-managed/owned land7 The mixing of residential andtourism uses has no detrimentalimpact, is current trend andflexibility required to facilitate this -allow market to determine mix ontourism sites - good examples ofmixed development, createsvibrancy.11 The increased use ofgovernment-managed land toensure the retention and provisionof a range of touristaccommodation options supported.1 Support proposal subject to landbeing made available to privatesector.Investigations by the taskforce indicatethat there are detrimental impacts frommixing tourism and residential uses onsome sites depending on the tourismfunction. This is reflected in the policyframework. The need to limit the extentof residential use in mixed developmentclearly is supported by the currentability of residential uses toout-compete tourism uses and the needto facilitate tourism use on high-valuetourism sites. Majority of tourist zonedsites in state are in an urban settingwhere mixed use is not required forvibrancy, ie residential/commercialdevelopment already exists adjoining orin proximity to sites.The recommendation recognises thehigh value of some tourism sites withingovernment-managed/owned land andthat these need to be considered in thepreparation of local planning strategies,and the management of this land tohave regard for those strategies. Theappropriate tenure for the land willdepend on a range of factors and willnot necessarily be freehold. Mechanismto control long term use of land alsorequired and reflected inrecommendations.Recommendations tolimit residentialcomponent in tourismdevelopment retained,flexibility provided forup to 25%.Recommendationsgenerally reviewed toreduce prescriptivenature withoutaffecting establishedprinciples of policyframework.1b)No change proposed. 3a)2a)106 Tourism Planning Taskforce Report

Appendix 315 Use of tiered system forzoning of tourism land.16 Introduction of standarddefinitions for tourismuses4 Oppose introduction of specificzones as considered to reduceflexibility for development tochange over time with demand andtourism trends, consideredprescriptive.3 Support subject to reduction to twoprimary zoning categories.8 Support introduction of frameworkas proposed.2 Proposed that local governmentpolicy framework be used insteadof zoning to differentiate usecategories.2 Introduction of standard definitionsopposed as overly restrictive,prescriptive.9 Standard definitions supported3 Suggest additional uses for whichdefinitions required and minorchanges to existing definitionsThe proposed framework is consideredprimary to the retention of a range oftourist accommodation across the Stateand access by the general populationto areas of high tourism amenity. Thestructure also reflects the variablecapability of tourist zoned land toaccommodate specific developmenttypes. The full zoning structure will notbe required to be applied in all areaswith those zones suitable to the rangeof land capability and planing context inan area used.The introduction of standard definitionsis seen as providing for improvement tothe approvals process for tourismdevelopment, providing consistencyand certainty in how proposals can beassessed and development types thatwill be considered in a specific zone.The definitions are not considered toact to restrict development options.Suggested proposals for additionaldefinitions have been assessed andincorporated where considerednecessary.No change toRecommendation 9proposed, introductorytext clarified in respectto application of zonesbeing as required toreflect various sitesthat may exist in ascheme area.Rec 10/14 modified toinclude additionaluses as required.2b)3a)1d)Tourism Planning Taskforce Report107

Appendix 317 Length of occupancy oftourism facilities18 Standard provisions anddesign guidelines forresidential components intourist developments onnon-strategic sites.4 Oppose introduction of standardlength of occupancy restriction atthree months in 12 months asoverly prescriptive, needs toprovide flexibility for regionalconditions, consider up to 6months with local government todetermine. Policing is an issue ofconcern.6 Support introduction of standardlength-of-occupancy restriction ofthree months in 12 months fortourism uses.7 Proposed guidelines supported,retention of high value land fortourism purposes emphasised.3 Use of gross floorspace incalculation of percentageresidential component opposed aslimits flexibility of design2 Recommendation to be specific inrespect to Residential DesignCodes not being applicable totourism development.4 Introduction of guidelinesconsidered prescriptive and willlimit potential to achieve bestoutcomes for sites.Schemes across the State currentlycontain a range of restrictions onoccupancy of tourism development.These range from specific periods to areliance on a definition of use asshort-stay. Introduction of a cleardefinition of what constitutes tourismuse was considered necessary by thetaskforce to ensure availability oftourism developments for tourism useand in assisting compliance. In respectto comments seeking flexibility forspecific extensions of use the taskforceconsidered that the benefit provided bythe inclusion of up to a 25% componentof development with no-occupancyrestriction in non-strategic sites wouldlargely meet this need. Standardisedoccupation limits will also assistmanagement and policing, includingstrata restrictions.The introduction of standard provisionsand guidelines for this type ofdevelopment are seen as essential bythe taskforce if tourism function of suchsites and developments is to beretained, refer 10 above. The taskforcehas noted concerns in respect to theGross Floor Area limit that wasdesigned to ensure that the scale of theresidential component did not dominatethe tourism facility, and recognised theneed for increased flexibility.Prescriptive components of therecommendations relate to thepercentage of residential development.local governments have the ability toassess proposals on merit subject tocompliance with principles.No change proposed -retention of a standardthree month in12-month occupancylimit for touristaccommodation uses.Rec 12/10 modified todelete requirement formaximum Gross FloorArea of residentialunits to meetpercentage limit.Design principle forthe scale of residentialto be clearlysubsidiary to tourismuse included.Non-applicability of Rcodes to tourismdevelopment clarified.2b)3a)1b)1d)108 Tourism Planning Taskforce Report

Appendix 319 Managementarrangements for tourismdevelopments understrata schemes.5 Requirement for integratedmanagement opposed asconsidered likely to restrictdevelopment as will reduceinvestment due to MIA implications.3 Integrated management, singlemanager of tourism facilitiessupported, but need to provideflexibility so as not to reduceinvestment.10 Integrated managementrequirement supported.Investigation of the use of strataschemes for tourism developmentsshowed that it was the primarymechanism for generating funds forprojects. It also showed that undersome arrangements, these projectswere being driven essentially by realestate demand as opposed to tourismdemand, and there was a need toensure such development operated asbona fide tourism facilities. It wasdetermined that this could mosteffectively be achieved through arequirement for integrated managementof such facilities. In noting theimplications of integrated managementfor compliance with the MIA thetaskforce investigated options availableto achieve management objectiveswithout limiting the options available forstructuring of schemes. The primaryfocus of the taskforce was necessarilyon achieving appropriate land useoutcomes on tourism sitesRecommendation14/12 modified toprovide flexibility forowners of units towithdraw fromcommon letting ofunits on non-strategicsites and wheregreater than 20 units.Further associatedmodifications toincrease reportingrequirements on useof units.1b)Tourism Planning Taskforce Report109

Appendix 320 Use of survey strata andvacant lot strata schemesfor tourism development.21 Establishment of interimpolicy position.2 Restrictions on the use of strataschemes prior to developmentopposed.3 Support position that requires thatsubdivision occurs concurrent withor after development not before.2 The restriction on use of strataschemes on land designated withincabin - chalet and lower-densityzones opposed.2 Introduction of interim policyposition opposed until reviewcomplete, opposed due torecommendations on residentialpercentage.6 Introduction of interim policyposition supported.In investigation of this issue, it wasdetermined that the use of survey strataschemes and vacant lot strata schemesto provide for the sale of vacant stratalots that then were to be developed aspart of an integrated tourism facility hada number of practical outcomes andmanagement implications that weredetrimental to development of asustainable tourism facility.In review of this issue and subject tothe requirement for integratedmanagement of strata developments, itwas determined that the managementissues could be addressed adequately,and through the imposition ofconditions, detrimental implicationsassociated with staging andconstruction could be reduced.Interim policy position is not designedto take effect prior to completion ofreview but to provide guidance to theWAPC following final adoption ofrecommendations, but prior to localgovernments modifying their planningschemes and local strategies. Thisreflects the strong reliance in therecommendations on the planningstrategy process and recognition of thelong time frame for review of these.Rec 14/12 modified toprovide for the use ofsurvey and vacant lotstrata schemessubject to specificrequirement forintegratedmanagement and theimposition ofconditions to addressissues of constructionimpacts and provisionof common facilities.1a)No change proposed 2b)110 Tourism Planning Taskforce Report

Appendix 322 Land Tax. 7 Support for review of land taxsystem as it applies to tourismdevelopment to reduce impact onlow-cost tourism facilities.2 Support recommendations,consider general review of land taxwarranted / tax concessions fortourism development warranted.23 Tourist use of residentialdwellings7 Need for review of this issuesupported, affects tourismdevelopment.2 Tourist use of residential dwellingssupported and does not requirereview.Taskforce identified that high land taximposts on low-cost touristaccommodation on prime land was acontributing factor in redevelopment ofthese sites and that system requiresreview to reduce impact. Introduction oftiered zoning structure also will havebeneficial effects in this area inreducing the increases in land tax likelyto be experienced in low intensityzones.The taskforce received a number ofcomments on the implications oftourism use of residential dwellings fortourism facilities and the quality of thetourism experience provided. Whilenoting that dealt with by localgovernment in a variety of waysacknowledged to be outside terms ofreference but important to be reviewedin the short term.Rec 17-18/ 19-20updated otherwise,maintained withoutchange.2a)No change proposed 2a)Tourism Planning Taskforce Report111

Appendix 324 Corporations Act 2001. 3 Support pursuit of changes toCorporations Act 2001, ASICpolicies to reduce compliancerequirements of managedinvestment schemes for stratatitled tourism development1 Any requirement for integratedmanagement should be subject toachieving changes to MIArequirements as recommended.1 Ability to influence legislationconsidered limited, useagreements with developers formanagement as an alternative.25 Management rightslegislation.1 Introduction of management rightslegislation not seen as necessaryin WA.5 Management rights legislationsupported/ will contribute toincreased professionalism inindustry.26 Development of StatePlanning Policy “LandUse Planning for TourismDevelopment”.7Development of an SPP forintroduction of taskforcerecommendations (subject toresolution of other submissionissues) supported.The objective of the taskforce is toachieve integrated management oftourism facilities so a sustainabletourism product can be provided.Recommendations do not require thatschemes are Managed InvestmentSchemes, but it is acknowledged as animplication under some structuringoptions. The Taskforce did notconsidered it appropriate that therequired management framework besubject to achieving legislativechanges. Agreements with developersthat gave rise to managementrequirements were not seen asnecessarily resolving legislativeimplications if providing for mandatorycommon management.Management rights industry consideredlikely to grow in state and legislationwhich requires training for tourismmanagement may be beneficial.Recommendation is for a more detailedreview of the need for legislation andregulation of holiday accommodationmanagers.The development of an SPP for tourismland use planning will provide the mosteffective mechanism for the introductionof the taskforce recommendations andprovide the profile to tourism in theplanning framework relative to itscurrent and future economic importanceto the State.No change proposed 3a)3c)No change proposed 3a)No change proposed. 3a)112 Tourism Planning Taskforce Report

Appendix 327 Review period fortaskforcerecommendations.6 Requirement for review at fiveyears, or earlier if required inresponse to implementationsupported.28 Issues of a minor nature. Generally suggested additions andminor clarifications ofrecommendations and report text.The suggested review period of fiveyears considered appropriate given thatimplementation of significantcomponents of the taskforcerecommendations will occur through thelocal planning scheme and planningstrategy process which will takeconsiderable time.These suggested changes andmodifications have been assessed inaccord with the criteria attached andamendments to report andrecommendations made consistent withthis where required.No change proposed. 3a)Minor modifications totext andrecommendations.Tourism Planning Taskforce Report113

Appendix 4Appendix 4List of briefings received by the taskforceDate Presenter Representing TopicMeeting 211 October 2002Cr Jamie McCallShire of Augusta-Margaret RiverAugusta Margaret River TourismPolicyMeeting 325 October 2002Jeff CohencaDirector CommercialFinance.Ashe Morgan WinthropFinancial Conditions for fundingtourism developmentsGraham O’NeilManager PropertyFinanceBankWestBankWest funding conditions fortourism developmentsPaul KingSeashells HospitalityGroupA developer / operator perspective ontourism developmentMeeting 41 November 2002Duncan Rutherford Valuer General’s Office Implications of strata schemes andresidential components on valuationof tourist zoned landBob Johnston &Mark ExeterWestern AustralianTourism CommissionAn overview of tourism in WesternAustralia and developmentrequirementsBen Charnaud Property Council WA Financial feasibility analysis fortourism developmentsMeeting 1110 March 2003Charles NobleDepartment of LandAdministrationApplication of strata schemes totourism developmentBriefings onSubmissions. 9 &10 February 2004Sally HollisIan SimmonsTourism CouncilWestern AustraliaOverview of submission, greater rolefor industry in policy frameworkRoss HoltMike GarnerLandCorpLandCorp project experience,importance of finance in regionalprojectsBarry BrownCape NaturalisteTourism AssociationOverview of submission, importanceof variety in tourist accommodationPauline Tew, BrettDraffen, GeoffCooper, Joe Lenzo,Nick Allingham.Property Council ofAustralia (WA)Overview of submission, projectexperience and potential impact ofMIA requirements114 Tourism Planning Taskforce Report

Appendix 4Bradley Woods,Karen Connell,David BornmannAlan BoysAustralian HotelsAssociationHotel and LeisureAdvisory Pty LtdOverview of submission, importanceof short-stay vs permanent residentialdistinction in planning systemOverview of submissionDon Ferguson,David HollandJoe White,Lino IacomellaCaravan IndustryAssociationReal Estate Institute ofWestern AustraliaOverview of submission, recommendpolicy based approach to varioustourism usesOverview of submission, need forincreased flexibility in systemNatalie Katonna,CouncillorsShire of BroomeImportance of residential componentsin regional situationsList of consultation meetings with taskforce or Taskforce Chair and individualmembers following release of draft report.Pauline TewNeil StevensIan Murchinson, Barbara WeissAdrian Fini, Darren CooperTerry PosmaTerry MartinJeremy DawkinsBoard MembersRichard Muirhead, Paolo Amaranti, David EthertonSteve PalmerCr Nick DornanBrett JacksonBill MitchellMark HohnenChris PyeKelly CassidyProf. Dominique FischerDr Jan WarnkenPeter GleedGreg HolmeMike BignellLarry HelberIan HuxleyFrank PoetaJewell HospitalityNeil Stevens ConsultingTourism InvestmentMirvac FiniGeographe PointAs Chair WAPCChair WAPCWestern Australian Tourism CommissionWestern Australian Tourism CommissionProject ProponentShire of Augusta- Margaret RiverKareelya Property GroupProject ProponentProject ProponentQuest PropertiesGriffith UniversityCurtin UniversityGold Coast UniversityKoltasz SmithPrevelly Caravan ParkBignell DevelopmentsHelber, Hastert and FeeWestshore Property GroupFreehillsTourism Planning Taskforce Report115

Appendix 5Appendix 5STRATA TITLE TOURIST ACCOMMODATION DEVELOPMENTSATTRIBUTES OF SUCCESSTourism Western Australia has been examining the effect of strata titles on tourism developments forsome time. While being supportive in principle of strata titles as a means of financing touristaccommodation developments, Tourism WA shares the concerns of many local governments and theForeign Investment Review Board of the Federal Treasury that most strata title tourism developmentscan easily be converted to residential use after the expiration of the term of the leaseback or otherarrangement, or the failure of the complex manager. Local governments are particularly conscious thatlocal government by-laws requiring a maximum stay of three months (short-stay occupation only), aretime consuming and expensive to enforce if unit owners and complex managers choose to ignore them.The following table shows the attributes that a successful strata title tourist accommodationestablishment needs to have. The consequences of the establishment not having the attributes are alsoidentified.Tourism success(A) Building design and constructionConsistent architectural and building standardsare established by the developer. In resorts wherethere are different classes of accommodation,rooms and facilities in each particular class are ofthe same standard.Survey strata and vacant lot strata developmentsshould be structured to avoid each unit beingdesigned and/or constructed by different architectsor builders, with construction comprehensivelyprogrammed over a short time period.The design of any new or redeveloped units ofaccommodation should facilitate tourism use byensuring that it meets the needs of visitors to thearea rather than have the look and feel ofresidential accommodation. Designs that includededicated car spaces, games rooms, laundries, orthe like, and/or excessive floor area that moreresembles residential premises should be avoided.Tourism failureInconsistent standards result in tourists comparingeach other’s facilities, either favourably orunfavourably. If tariffs do not exactly reflectdifferences, complaints arise from irate guests whobelieve that they have not received the same valuefor money as their neighbours.Inconsistent design of units creates managementand fitout problems and encourages ownerparticipation in unit management and maintenance,with consequences as outlined above. Managedconstruction is required to ensure that a viablenumber of units are available when the resortcommences trading, and building activity does notcontinue over an extended period with detrimentalimpacts on guests and the ability of the resort totrade.Units that are residential in nature may not providethe holiday atmosphere provided by units designedfor short-stay and promote an owners perception ofthe unit as a holiday home. The financial return(per m2) on “residential style” units may not be ashigh as “tourist style” units due to higherconstruction costs, which may result in ownerdissatisfaction.116 Tourism Planning Taskforce Report

Appendix 5Unit owners are not able to fit out units to higherstandards or with additional facilities.For staged developments, ample public facilitiesare constructed in the first stage such asrestaurants, bars, swimming pools, golf courses,etc.(B) Separation of ownership and resortmanagementThere is a management agreement between allunit owners and the complex manager to provideviability for adequate management/serviceprovision. For large developments, observance ofASIC legislation covering prescribed interests ishighly desirable.The management agreement between owners andthe complex manager must bind successive unitowners.The management agreement between owners andthe complex manager must be for a substantialperiod.Termination of one tourism manager/operator mustbe followed by the immediate appointment of areplacement operator.If unit owners fit out their units individually,complaints arise from guests who believe the unitsthey are staying in are fitted out with inferiorfixtures, fittings and equipment compared to theirneighbours’ units. Complaints commonly arise fromthe size and quality of televisions and soundsystems, air-conditioning versus noair-conditioning, dishwashers versus nodishwashers, double beds versus king size beds,etc.Guests will be reluctant to book into establishmentsthat do not have public recreational and otherfacilities expected of establishments that describethemselves as “resorts”. Those who do book willbe disappointed and will pass the information on tofriends and relatives.A lack of management separation between unitowners and guests results in unit owners beinginvolved in day-to-day decisions on matters suchas replacement of cutlery, crockery, beds,mattresses, furniture and the upgrade of publicareas. This means that different units will havedifferent standards of fit out. Complaints arise fromguests who are in a unit with aged, worn-outfurniture and equipment that visit friends in a unitthat has new furniture and equipment.Without all unit owners using the managementservice the per unit cost is high and if numbersdecline over time the cost for those remainingincreases, or the level of management/servicedeclines. This will affect returns and can precipitateongoing withdrawal of owners and collapse of themanagement service.If the management agreement does not bindsuccessive unit owners, the problems with differentstandards of furniture and equipment arise asoutlined in the preceding paragraph.Short term agreements between unit owners andcomplex managers will result in the early possibilityof unit owners having day-to-day involvement inthe letting of their units, or not letting them at all.The complex can quickly lose the appearance andlevel of service associated with being a touristaccommodation establishment.The consequences of this not happening havebeen identified above.Tourism Planning Taskforce Report117

Appendix 5Units are either leased back to a tourism managerfor an agreed return to unit owners, or form part ofa collective investment scheme that falls underAustralian Securities and Investment Commissionregulation in which revenues are pooled,expenses (including the tourismmanager/operator’s remuneration) are shared andthe resulting profit is distributed to unit owners.Refurbishment is managed by the complexmanager resort-wide. An annual mandatory levyand the establishment of a replacement reservecontrolled by the complex manager, or similarmechanism, is essential.Occupation of units is controlled by the resortoperator. Unit owners have limited rights ofoccupation consistent with local governmentby-laws, and have no control over guest use oftheir units. All units within a development arerequired to be available for tourist letting when notoccupied by owner.When units are not under the exclusive control ofthe complex manager under a poolingarrangement, the manager is obliged to let units ona basis that has each physical unit occupied for anequal period so that there is equal revenuedistributed to each unit owner. This can result inthe more appealing units being left empty whilevisitors wanting these units are informed that onlythe less appealing units are available. Visitorseither book into alternative accommodation, orarrive and become disappointed with the operationof the resort.The consequences of this not occurring arecomplaints from guests regarding differingstandards of furniture and equipment. There is alsothe difficulty of negotiating with unit owners. Oneresort manager identified the difficulty of obtainingagreement for replacing all ironing boards in a112-unit complex.Occupation controlled by unit owners results in asubstandard operation that does not have theappearance or behaviour of a touristaccommodation establishment. Some units may beleft empty when not occupied by the owner or hisfamily and friends, while potential guests areturned away as units in the letting pool are full.(C) Resort managerThe complex manager has experience and a goodreputation in the tourism industry.The complex is operated as a single resort.Users of the resort have no visible evidence thatthe resort is owned by separate unit owners.Some smaller complexes do not have anexperienced manager onsite and complaints arisewhen basic facilities are not available or are not inworking order, such as missing light globes,refrigerators malfunctioning, pilot lights not workingin gas cylinders, insufficient number of glasses andplates, etc. If a visitor locks himself out of his room,there is no one available to let him back in.Identified aboveIdentified aboveSeveral examples of poorly developed strata titled tourist facilities exist in Western Australia. Some havebeen blatantly developer-profit motivated, and “tourism” has been used as the vehicle to gain the requiredplanning and development approvals. This has left a negative feeling and resentment in some localgovernments, and Tourism WA has become concerned that an acceptable method of financing tourismdevelopments is threatened with not being supported by some local governments because the method hasbeen exploited by those wanting a quick return and no long-term responsibility. Compliance with theattributes of tourism success as outlined above will assist strata titled tourism developments to operate asresorts and provide the level of experience that guests are seeking.118 Tourism Planning Taskforce Report