The ACT's chief planner says the current territory plan forces the territory's planning authority to approve unsuitable developments and gives developers a "clear pathway".
Ben Ponton told an estimates hearing on Thursday that he hoped a new planning system would be implemented next year.
The government is undertaking a major review into the territory's planning system in an effort to simplify the ACT's existing strict, rules-based system.
The new planning system would be focused more on outcomes, Mr Ponton said.
"As a result of a very rules-based system, people are just going through and ticking off each of the rules," Mr Ponton said.
"What that is driving is that people aren't stopping and looking at their site and really thinking about what is the best outcome for this site, they are not thinking about the site in the context of the street or the block or the suburb.
"What we then find is that as we are going through that process that the planning authority may be almost forced to approve a development that we know is not ideal and the community doesn't particularly want.
"The developers know they can get a clear pathway, particularly if they comply with all the rules and there is less chance of a tribunal appeal and that's driving the development that we are seeing."
The territory government published a series of discussions papers late last year that flagged possible changes to the territory plan.
Mr Ponton said the directorate was currently working through the legislation to see what changes would need to be made. He said this could either be an amendment to existing laws or an entirely new planning act.
Mr Ponton said the scope of the planning review had been widened from when the government started the review in early 2019.
"In terms of the project ... it is more than a territory plan review that's where it started but we have gone beyond that to looking at the entire system," he said.
"Now we refer to it as the planning system, review and reform project because we have gone through the process of reviewing what needs to be done and we're now in the reform stage."
The planning committee also heard the government had yet to decide whether it would build a residential development on nine rural properties in west Canberra that were controversially acquired between 2014 to 2017.
The blocks were bought for a total of $43 million, this was despite a lack of evidence land on the western edge of the territory was suitable for a greenfield development.
When asked if residential was intended to be built on the farms, Planning Minister Mick Gentleman said: "A decision has yet to be made."
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