Councils in Wollongong and Sydney are set to be stripped of the power to consider development applications worth between $5 million and $30 million under new rules mandating the use of independent planning panels.
NSW Planning Minister Anthony Roberts announced on Tuesday that so-called Independent Hearing and Assessment Panels (IHAPs) will become mandatory for all councils in Wollongong and Sydney.
The panels are already used by Wollongong council and 15 Sydney metropolitan councils on a voluntary basis.
The government has been considering whether to set a minimum value that would automatically trigger a referral to an IHAP.
On Tuesday Mr Roberts said it would be mandatory for panels to consider development applications worth between $5 million and $30 million.
Those over $30 million will be dealt with by the regional Sydney Planning Panels whose threshold is presently $20 million.
Mr Roberts told parliament the government's primary concern is "inappropriate" relationships between councils and developers.
"It is essential the government has a transparent and accountable process in place when assessing DAs of significant value, when there is a conflict of interest for the council or developer, or when they are of a sensitive nature," he said.
"By making IHAPs mandatory, local councils will be able to focus on providing community services, strategic plans and development controls for their local area."
Mandatory use of the panels would "guard against corruption and lead to better local planning decisions".
Fairfax Media first revealed in June that Mr Roberts was seeking cabinet approval for the move, but it resolved to conduct further consultation before making a decision.
The government consulted with developers, the Independent Commission Against Corruption and council representatives.
It is understood cabinet supported the change at its most recent meeting last Thursday.
The Property Council of Australia has called for independent planning panels to be made mandatory before council elections on September 9.
However, the president of Local Government NSW, Keith Rhoades, has said mandatory planning panels had the potential to "reduce the accountability and transparency of planning decisions".
"Councils are accountable to the community where [local planning panels] are not," Cr Rhoades said.