New Zealand: A blue skies planning system from the Productivity Commission

Brief Counsel

True to its "blue skies" brief, the Productivity Commission is proposing radical change in its final report on the reform of New Zealand's planning and resource management framework.

At the heart of its analysis is that the needs of the natural and the built environment are so different as to require distinct regulatory approaches. But it believes these can be accommodated by providing two separate sets of principles within a single Act.

Expect action on the Commission's reform agenda after the general elections, whoever is in government.

Problem diagnosis

The Commission considers that the current system is failing to cope with either the challenges of high growth cities or with resource pressures in the natural environment.

It attributes these failures in large part to "underlying political dynamics" – pressure from "some sectors" not to regulate pollution stringently and from existing residents to constrain new development.

Specific weaknesses it identifies are:

  • a bias in the Resource Management Act (RMA) toward the status quo because of its emphasis on avoiding or remedying the adverse effects of change
  • ambiguous language in the RMA and in the Local Government Act (LGA) which has led to regulatory overreach in urban areas and a lack of stringency in how the natural environment is regulated
  • an under-representation of the national interest in RMA decision-making, leading to decisions which serve local, concentrated interests but have harmful wider effects – e.g. rising land and housing costs
  • insufficient guidance in the RMA as to which environmental effects councils should focus on
  • a lack of responsiveness due to slow and uncertain decision-making processes around changes to land use rules and multiple avenues to re-litigate them in the courts.

High growth urban areas

The Commission's prescription would have sharpest effect in high growth urban areas as it is here that the RMA is perceived to be failing most conspicuously. Broadly, the Commission has sought to design a model which can accommodate change more easily than the current one, is less vulnerable to NIMBY-ism and can better align the costs and the benefits of development.

Recommended changes include:

  • clearer direction from central government regarding its expectations, including through better use of National Policy Statements and National Environmental Standards
  • introducing price-trigger mechanisms in which central government would establish specific thresholds for the price difference between developable and non-developable land, with councils obliged to release additional greenfields capacity when the threshold is activated
  • broader "development envelopes" within which low risk and mixed development is either permitted or is only subject to minimal controls
  • giving councils a greater ability to impose user and congestion charges and allowing them to use targeted rates to capture some of the increase in values created by development. Over time, the Commission would like rates to be based on unimproved value to reduce the incentives for land banking
  • enabling councils to auction development rights to achieve increased (but not excessive) inner city density, and
  • creating competitive land markets that open opportunities for the private sector to invest in out-of-sequence community developments (to sidestep land bankers' "stranglehold" on land supply and avoid additional burdens on councils for infrastructure).

Broader recommendations

As stated above, the Commission is recommending a single statute with two sets of principles. The regulatory emphasis in the built environment would be on recognising the benefits of and allowing development. The emphasis in the natural environment would be on setting standards for resource protection.

Other recommendations include:

  • requiring the adoption of Regional Spatial Strategies (RSS) which would define corridors for future infrastructure, future public open spaces and areas of outstanding cultural or conservation value. All land outside these allocations would be available for development. RSSs would be expected to look over a 30 to 50 year horizon in high growth areas. Territorial authorities, central government, iwi, developers and infrastructure providers would participate in the RSS design
  • a requirement to produce Regional Policy Statements for the Natural Environment (RPS-NEs). These would sit alongside the RSS and would set ecologically sustainable bottom lines for the region. They would also give effect to any relevant NPSs or NESs but could set more stringent limits than called for in these instruments
  • A RSS, RPS-NE and district plans would be subject to a one-step merits review by an Independent Hearings Panel that would treat them as a package and would have the final decision on plans, plan variations and private plan changes, with appeal only on points of law to the Environment Court
  • Maori would have a statutory role in the stewardship of the planning system through a National Maori Advisory Board on Planning and the Treaty of Waitangi and through a new NPS on the recognition and active protection of Treaty interests, and
  • Councils would have more flexibility over how to fulfil their consultation requirements rather than having to follow the RMA's prescriptive Schedule 1 process.

Chapman Tripp comments

The Commission's report has been generally well-received across the spectrum, including from the Environmental Defence Society and the Property Council. And although Infrastructure New Zealand was less enthused, its principal criticism was that the Commission had not gone far enough.

All of this reflects a widespread view that the current structure is not performing well.

The Government will deliver its formal response to the 64 recommendations "in due course". However, at the outset of the inquiry, Bill English indicated that National was looking for a policy to take into the election rather than to implement in this term.

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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