Publishing his review of the effectiveness of local planning authorities in Wales, Welsh auditor general, Adrian Crompton, said "complexity of the planning system, reducing capacity and variable decision making" had contributed to poor performance in recent years.
The auditor general found planning services had seen budgets slashed by 50 per cent in real terms since 2008/9. Development control budgets saw the biggest cuts, with spending down 59 per cent.
Crompton found "planning officer capacity is stretched and skills are decreasing", adding: "The number of trainees entering planning has fallen in recent years which raises concerns over the long-term sustainability of services."
While the number of planning applications has remained stable at around 24,000 in each of the last four years, Crompton found fewer cases are being processed on time.
In 2017/18, he said only 20 per cent of major planning decisions were made within statutory timescales.
Crompton said that while the best performing planning authorities deal with enforcement cases within a week, on average it takes authorities more than 37 weeks to investigate and deal with breaches and the worst performers take over a year.
The auditor general said the proportion of decisions made by members against officer advice "remains high" at just under nine per cent in 2017/18. In the same period he found that just over 37 per cent of appeals were upheld.
A survey of residents across the country conducted by the Wales Audit Office found that over half felt it was not easy to access information on planning and 70 per cent said local planning authorities are not good at engaging with stakeholders about planning proposals.
Crompton called on the Welsh Government to review development control fees to "better reflect the actual cost of providing these services" and recommended that local authorities seek to improve capacity by integrating services to address skills gaps and developing joint plans and supplementary planning guidance.
The auditor general recommended that schemes of delegation - documents prepared by councils setting out the decisions that can be delegated to officers by members - should be reviewed to ensure planning committees are focused on the most important strategic issues.
Reporting templates should also be revised to "ensure they are clear and unambiguous" to improve standards of decision making, he said.
Crompton’s recommendations to improve engagement with residents included "holding planning meetings at appropriate times, rotating meetings to take place in areas which are subject to proposed development, webcasting meetings and providing opportunities for stakeholders to address committee meetings".
Published in December last year, the latest version of Planning Policy Wales states that planning should contribute to "the cultural wellbeing of Wales". Crompton said local authorities should set "appropriate measures" to judge the impact of planning decisions on the wellbeing of residents and should publish annual performance updates.
He said: "Good planning is essential for more vibrant and sustainable communities, but clear vision is needed in order for Wales to thrive. I am concerned that most local planning authorities have not clearly defined how planning services contribute to the wellbeing of people and communities.
"My recommendations are designed to help improve capacity and resilience, work towards better engagement with the public, and set a clear, ambitious vision that shows how planning can help to improve wellbeing."
The Welsh Government recently published its response to a Law Commission review which concluded that planning legislation in Wales was "unnecessarily complicated and, in places, difficult to understand".