Is splitting a a room a strata concern?

A NSW State Environmental Planning Policy (exempt and Complying Development Codes)2008 states in subdivision 26 Minor building alteration (internal) that,( in part), a development must not include a change to the configuration of a room.

To do so requires council approval.

An owner in our block has added a wall to change a one bedroom unit to a two bedroom unit without approval. Our manager said that it is not a strata concern.

So why not a strata concern? Surely the change (if approved) should be registered with LPI and their unit entitlement increased to fall in line with a two bedroom unit.