Plans to build a $125 million retail complex on industrial land at Kembla Grange, which would create almost 2000 jobs, have been scuttled by NSW Planning Department bureaucrats.The Wollongong company behind the project had sought approval under provisions that allow the minister for planning to consider fast-tracking major infrastructure projects deemed socially and economically important.But the department rejected the project out of hand, telling the company the site fell within designated "employment lands" zoned industrial and could not be used for retail purposes. EDITORIAL: Rules needn't stymie DFO developmentIt also said the site would potentially lead to significant traffic congestion and that public transport access to the site is also poor.The Department of Planning's latest decision comes as the Illawarra's unemployment rate threatens next week to rise above 10.5 per cent and more than $1.2 billion of construction projects earmarked for the region have been scrapped or postponed indefinitely.Total Recycling Pty Ltd wants to develop the region's first Discount Factory Outlet (DFO) and a Homemaker bulky goods retail complex on the 18.7ha site. It would provide 24,000sqm of leasable factory outlet retail space and 12,800sqm of leasable bulky goods retail floor space, as well as hundreds of parking places. "We are asking why the NSW Government won't support this project when it will create so many jobs, particularly with the region's unemployment rate so high," company spokesman Bill Bartlett told the Mercury yesterday."The site has no residential neighbours, good infrastructure and no environmental constraints. Surely the employment provided by this project is more important than an arbitrary zoning of industrial use."The benefits which would come with approval of the project stretch beyond the creation of 800 construction jobs with 1000 permanent retail jobs to be filled by 2011. The Illawarra does not have a DFO and the nearest similar outlet is at Homebush in Sydney.Mr Bartlett said independent analysis showed that the project would generate $140 million in retail spending and recapture about $37 million in escape spending to other regions."The department's lack of support is particularly frustrating, because under the current zoning we could build a warehouse that would provide a fraction of the jobs we are offering," he said."In these tough times, isn't a retail job as good as an industrial job?" Terry Wetherall of DAB Urban Planning, who prepared the preliminary environmental assessment and concept plan required under Part 3A, said the department's refusal was not logical given the overwhelming economic and social benefits for the region.Mr Wetherall said negotiations with planning authorities had been going on for almost three years.He said the Department of Planning had suggested 10 alternative sites but a review had found all of them unsuitable for a variety of reasons.Under the regional strategy, employment lands guidelines include the encouragement of retailing within existing centres and the discouragement of retailing in industrial zones.The strategy also seeks to consolidate retailing in existing centres and preserve industrial-zoned land for industry and warehouse-related uses. "Planning authorities have said our proposal should be around a commercial centre and we agree on that principle," Mr Wetherall said."But nowhere in this region is a retail precinct able to incorporate a proposal of this size. At the end of the day we believe the overall benefit to the region is considerable and this should ... be taken into account during the planning assessment process."