New Zealand: Productivity Commission raises sights in final land use report

Brief Counsel

The Productivity Commission, emboldened by recent signals from the government that it has significant reform in mind, has abandoned a key recommendation in its draft report on Using land for housing to instead recommend "a deeper and more substantive review of the planning framework".

We summarise the Commission's key recommendations.

Scope of reform

The inquiry Terms of Reference stated that a fundamental review of the Resource Management Act (RMA) was out of scope. So the Commission proposed an "alternative legislative pathway" which would combine elements of the RMA, the Local Government Act (LGA) and the Land Transport Management Act (LTMA) and would be available as a voluntary option to assist councils in high growth areas to accommodate housing demand.

However, this was always a make-do proposal. The Commission has now set its sights higher and is advocating a much wider ranging review across all three Acts. Recent hints by Finance Minister Bill English, reported in our September issue of Ground Cover, indicate that the Commission may get its wish.

The developments which the Commission says led it to "reconsider" its earlier recommendation are:

  • recent announcements that the next phase of RMA reforms will include provision for standardised templates in RMA plans, removal of the need to obtain a resource consent for "minor activities" and measures to streamline the plan-making process, and
  • the planned National Policy Statement (NPS) on urban development. The Commission recommends that the NPS should introduce a common terminology for residential land – zoned, zoned and serviced, zoned, serviced and consented.

Features of a possible new framework

The Commission has identified a number of features which would be "desirable" in a new framework. These include:

  • greater legislative weight for spatial plans aligned with requirements that they be tightly-specified, evidence-based and include clear growth and housing demand paths
  • a greater role for central government in longer-term infrastructure and urban planning, including the development of common datasets and closer monitoring of performance
  • more use of land price signals in making planning decisions over factors such as overall land supply, the allocation of different land uses within a city and the need to review planning policies
  • stronger controls on the quality of land use regulations, informed by an evaluation of the Auckland and Christchurch Independent Hearing Panels, and
  • room for more responsive rezoning so that planning controls can adjust quickly to specified triggers (e.g. the installation of key infrastructure, population densities passing a certain threshold or evidence of scarcity-based price pressures).

One idea is that councils must release further land when the price discontinuity between land which is available for residential development and land which is off-limits reach a certain cap. The Commission suggests this would "assist" councils to confront the trade-offs inherent in the compact urban form model and would promote the release of land currently being held in expectation of future price increases.

The Commission considers that central government's relative absence from the planning system (compared to most other countries) gives rise to a number of weaknesses, in particular:

  • a failure by local authorities to consider the national implications of their land use decisions
  • attempts to address issues at the local level which are better addressed nationally – e.g. greenhouse gas emissions
  • inconsistent standards and planning definitions among councils, and
  • lack of any countervailing force against the influence of NIMBY-ism.

Key recommendations

Most of the other final recommendations were foreshadowed in the draft report, Chapman Tripp's commentary on which is available here.

They include:

  • basing rates on land values rather than capital values because of the stronger incentives this would create for land to flow to its highest use and against land banking
  • removing central government's exemption from rates, including on land used for health and education purposes, and making all council-owned land rateable
  • requiring that councils which implement urban limits have mechanisms in place to enable prompt review in response to market developments
  • requiring councils to remove balcony requirements for apartments and minimum parking provisions, to lift current building height limits where it cannot be proved that the benefits outweigh the costs and to undertake robust cost-benefit analyses before introducing a height limit
  • requiring councils to review existing heritage and special character protection policies and to restrict them to specific structures or items of high, genuine and significant historical or cultural value
  • requiring councils in high-growth cities to review any explicit limits they may have on housing density with a view to removing them
  • reducing the proportion of landowners required to agree covenant changes from all to a super-majority, and introducing a statutory sunset period on restrictive covenants of 25 to 30 years
  • supporting local urban development authorities to de-risk development and lead urban regeneration, with the support of central government
  • supporting a further legislative regime, similar to the Special Housing Area legislation, to bring forward housing development
  • recommending that urban development authorities be given specific compulsory acquisition powers for housing and urban regeneration projects, and
  • making available and incentivising the use of alternative funding sources such as user pays charging (e.g. volumetric water charges, road tolls and congestion charges).

Next steps

The government is now considering the report. It has not given a timeline for its response, saying only that it will come back "in coming months". This would seem to indicate next year rather than this year, although this is an area in which Ministers are keen to make progress.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

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