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Chapter 2: Principles

Introduction

22. The principles set out below provide a basis for the cost recovery policy and guide the application of these policies in specific instances. The use of principles can also be useful for informing applicants about likely costs, or in the event of a formal objection under section 357B.[A person can object to a requirement to pay costs under any of subsections (2)–(4) of 149B.]

Charging must be lawful

23. This principle is met by virtue of the fact that actions being undertaken on proposals of national significance (sections 140–150AA) are linked back to the section in the Act on charging (section 36).

24. The key section providing this authority is section 149B which covers the cost of the process. [Section 149B includes: (2) A local authority may recover from the applicant the actual and reasonable costs incurred by the authority in complying with section 143 (a section where local authorities are directed to undertake certain actions). (3) The Minister may recover from the applicant the actual and reasonable costs incurred by the Minister in exercising the Minister’s powers under sections 140 to 150 (the provisions relating to interventions). (4) The Minister may recover from an applicant the actual and reasonable costs incurred by a board of inquiry in exercising its powers under sections 147 to 149. ] Section 149B(5) states that sections 36(3A) and (4) apply to the recovery of costs under subsections (2) to (4), with the necessary adjustments.

25. In section 36(4), key subsections are 4(b)(i) and (ii)[See Appendix B for the full description.] which relate to recovering costs where:

  • the benefit is obtained by the applicant as distinct from the community as a whole
  • the need for the local authority’s actions are the result of the actions of the applicant.

26. This is in effect providing that, by applying for a consent or other matter, the applicant is setting in train certain activities and processes and may be charged for them.

27. The cost recovery policy set out in this document takes the approach that a cost incurred in connection with certain interventions will be recovered from the applicant unless there is a clear decision to do otherwise. The policy does, however, recognise several instances where costs should not be charged or where costs may be amended or reduced.

Costs must be actual and reasonable

Establishing actual costs

28. To meet the test of a cost being actual, the following needs to apply:

  • It is established the costs have been incurred. For disbursements, the cost will be based on invoices paid. For the time incurred on a task, this will need to be documented and signed off by the relevant manager.
  • The cost of the time for the task must be established. Hourly rates have been calculated from audited financial information and put into salary bands, including an appropriate allocation of overheads. This is further detailed in Appendix A.

Establishing reasonable costs

29. The cost to be met by an applicant should be made up from the task, the time for the task and the charge applied to that time. It normally should be recovered (ie, invoiced) at 100 percent. It is the task and the time for the task that are the key to decisions on cost recovery.

30. The task must be suitably described so that a decision on who should carry the cost of the time involved can be made. If it is a task that relates to the exercise of the Minister’s powers under section 140–150, or to the board of inquiry exercising its powers under sections 147–149 the costs may be recovered. If the tasks fall outside of this scope, it cannot be recovered under this policy.

31. Reasonable costs are appropriate costs incurred when dealing with the matter and that reflect accurately the work being undertaken. Tasks need be carried out efficiently. This includes using appropriate persons for any task. It would generally not include costs or time that might be incurred by, for example, on-the-job training where that training resulted in tasks being carried out inefficiently from a time perspective.

32. Charging costs that are actual does not by itself make them reasonable. For example, costs that are considered to be governance are generally not costs to be charged.[See Chapter 3 for more information about governance components.]

33. Nor does having some arbitrary apportionment such as a set percentage reduction (eg, 30 percent of costs) make them inherently reasonable. Further, making a cost more palatable is not the same as making it reasonable.

34. Finally, a cost does not become reasonable just because:

  • the applicant is a large entity and can afford to pay
  • the applicant’s costs (eg, for processing the consent) are a relatively small proportion of the total project costs incurred in a large capital project.

Costs should be transparent

35. This principle is easily met if:

  • a cost recovery policy is publicly available
  • there are clear descriptions for each invoiced task.

Costs should be predictable

36. To meet the test of being predictable, the applicant needs to be able to obtain information on the charges that may be incurred. This can be achieved by:

  • having the cost recovery policy publicly available
  • providing estimates of likely costs on request[To enable the receivers of the estimate to fully understand it and its implications for their budgets, the estimates should provide a total, information on the key large tasks, the rates for those tasks and the assumptions behind the estimate for each key cost/task.]
  • providing revised estimates of costs before major previously unidentified costs are incurred or there are to be significant changes in the quantum of a major previously identified cost.

37. However it is recognised that all future cost levels may not always be able to be estimated in advance as the need for and the scope of tasks involved in processing a matter are likely to emerge or change during the process.

Actions of the Minister

38. The Minister can decide to intervene or can act upon requests from an applicant or a local authority.[Section 141A(1).] It will generally make no difference, however, to the recovery of costs; that is, applicants should not face more or less costs solely because they have requested an intervention. This approach should ensure that considerations by the applicant, the Minister or the local authorities about whether or not the Minister should intervene (especially the use of the call-in powers) are not distorted by this cost recovery policy.

39. Chapter 3 details the types of interventions.

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