Potential problems with the current legislative system with which we design, plan and deliver infrastructure and urban development have been identified. If the Government is to achieve its overall economic and environmental objectives, we need to understand the scale and size of these problems and consider options to tackle them.
Problems arising from urban planning are covered in 2.1, while 2.2 addresses those associated with infrastructure.
Questions in chapter 5, seek feedback on the problems described below, including any evidence you may have to support and/or challenge them, and whether there are other problems that we have not identified.
For those who want more detail, this is available in the technical working paper published alongside this discussion document.
2.1 Problems with urban planning
Box 1: The urban planning system – a definition
In this document, the ‘urban planning system’ is defined as the statutory and governance frameworks that incorporate decisions by councils, central government and the private sector about urban spaces.
The New Zealand urban planning system is complex. It is guided by three different pieces of legislation:Footnote 16
- the Local Government Act 2002 (LGA)
- the Resource Management Act 1991 (RMA)
- the Land Transport Management Act 2003 (LTMA).
The Historic Places Act 1993 also plays a role in urban areas.
Each Act has different legal purposes, processes and criteria, which were not actively designed to work together. They each require different statutory plans, with different timeframes and relationships with other plans. Further detail is provided in Appendix 3.
Four potential problems create barriers to achieving successful towns and cities in New Zealand. They arise from both current legislation and practice, and how well or poorly these enable beneficial urban design and planning, integrated decisions and a co-ordinated and consistent approach to planning New Zealand’s towns and cities.
Problem one: Inadequate recognition of urban environment in the RMA
Economic activity improves our quality of life and is needed for New Zealand to be internationally competitive.
Towns and cities are shaped by the patterns of economic, social and environmental activity that take place within their spaces. These change over time.
Effective planning needs to support the changing patterns of activity and be responsive to changing needs and values in urban areas.
If poorly managed, economic growth and our responses to it can have negative impacts. This poses a challenge for growing towns and cities: that is, how to enhance the positive outcomes that come from a high quality, liveable, economically productive natural and built urban environment, while mitigating or avoiding negative consequences, such as congestion or adverse impacts on the natural environment.
Good planning and urban design can play a significant role in delivering and maintaining the high quality urban services and amenities, including public space, which are crucial to cities’ long-term attractiveness and competitivenessFootnote 17 and quality of life.
However, the environmental effects-based nature of the RMA, as the primary land-use planning legislation, does not easily allow this. In an urban context, the RMA has limited capacity to adequately consider the value created by urban development and good urban design compared to what already exists, or to support positive impacts of development on the built environment, beyond effects on amenity values.Footnote 18
In particular, RMA practice emphasises the management of the effects on the natural environment. Creating and managing an urban environment which may not already exist, or is in the process of being created, is assessed in the same way as the existing natural environment. This tends to encourage a reactive, risk-averse approach that seeks to maintain the status quo, regardless of wider benefits which may be achieved from what is proposed. As such, the RMA does not effectively facilitate the achievement of long-term, efficient and integrated planning and urban design outcomes.
Problem two: Complex planning system
New Zealand’s urban planning system is made up of the RMA, Local Government Act (LGA) and Land Transport Management Act (LTMA). Figure 1 shows the relationship between different plans drawn up under these Acts which influence urban planning.
The lack of alignment and connection between the three statutes has created a complex regulatory environment, with little integration between strategies, regulation, expenditure and decision-making. For example, plans under the different Acts all have their own timeframes, processes and consultation requirements, resulting in duplication and lack of clarity, and demanding considerable time and resources from all parties involved.
The lack of alignment is a disincentive for infrastructure providers and the private sector to engage effectively with the planning system. It also makes it difficult to provide sufficient certainty about what will happen, as each process may have a different outcome. It does not promote or encourage integrated decision-making to provide the right infrastructure in the right place at the right time. It therefore makes it difficult to achieve quality urban development.
Figure 1: The current urban planning system: relationships between the plans and strategies of the RMA, LTMA and LGA
(Acronyms used in figure 1 and throughout this discussion document are explained in Appendix 1.)
Cycleway in wetlands reserve, off Bluff highway – PhotoNZ
Problem three: Lack of consistency in decisions
The current system of planning and decision-making is complex and does not readily foster agreement among multiple participants, or facilitate co-ordination and consistency. This problem is a symptom of the lack of alignment and connection between the planning statutes discussed in problem two above. A lack of clear direction from central government on cross-sectoral issues also contributes to the problem.
Multiple participants and decision-makers
Multiple parties are involved as actors and/or decision-makers in the urban planning system. The key participants are the private sector, local and central government, and infrastructure providers. Iwi/Māori, communities and non-government organisations are also important players.
There is no effective, single mechanism for facilitating engagement, securing agreement among participants and providing information for robust decision-making. Mechanisms are spread throughout the LGA, RMA, LTMA and other Acts,Footnote 19 and their use is limited to the purpose of each respective Act. This means that any agreement between participants also tends to be limited to the single elements of the urban environment covered by that Act, rather than being integrated. This leads to inconsistencies in decision-making and, as a consequence, creates uncertainty and increased risk for investors.
It should be noted that, while the complex urban planning decision-making system does not actively encourage co-ordination and consistency in multi-party decision-making, neither does it actively prevent it. There are some good examples of planning practice by local authorities that has led to agreement and greater consistency in action by participants – for example, Wellington’s Regional Strategy, the Tauranga Smart Growth Strategy and the Greater Christchurch Urban Development Strategy.Footnote 20 However, such long-term regional strategies are not statutory documents and have limited weight in decision-making, unless adopted through a statutory process. This can result in difficulties in implementing them.
Box 2: CASE STUDY: The benefits of providing greater investment certainty – New Lynn rail trenching project
Prolonged uncertainty over infrastructure investment or land-use planning decisions can delay investment in other development, or result in less than optimal outcomes. While developers may still buy land in anticipation, development often will not occur until there is certainty over infrastructure provision. This is particularly important in urban redevelopment projects, which depend on some form of ‘lead investment’ to act as a catalyst for others.
For example, developers have reportedly been keen to proceed with the kind of mixed-use development envisaged for Auckland’s Tāmaki area as a result of the Auckland Manukau Eastern Transport Initiative. However, holding costs associated with delays to this project have prompted developers to consider less optimal alternatives. These include types of development that do not depend on new infrastructure, and are less desirable for the creation of a town centre, such as ‘big box’ retail outlets with large car parking capacity, which may be unable to provide flexibility for a multitude of uses over time, and are often overly car-oriented and not at a human scale.
In contrast, the New Lynn rail trenching project demonstrates that certainty provided by a lead investment, combined with appropriate planning, can be a catalyst for development. Waitakere City Council officers report the project has been a catalyst for at least one major residential development, and has led to a “different kind of approach to decision-making” amongst other property developers.
Other positive influences also helped to create investor certainty including wider government investment in the Auckland rail network, greater certainty over the Western motorway ring route, structure planning and zoning changes for the New Lynn township, and council investment in public space and amenities.
Central government role
Central government, through its various agencies, plays a particularly important role in urban areas as a policy maker, regulator, developer, investor and capability builder, and as a provider and operator of infrastructure and services.
Central government provides the bulk of public expenditure in urban areas across a range of portfolios – such as health, education and transport infrastructure. When compared to other countries, a much greater proportion of decisions on expenditure are made by central government. In contrast, decisions on resource management are predominantly made by local government.Footnote 21
In Auckland, total central government spend (including benefit payments and operating costs) outweighs local government spend by about 8:1. In the 2007 financial year, estimated total expenditure by central government in the city was NZ$17.2 billion, or 32 per cent of its national expenditure.Footnote 22 This compares to NZ$2.7 billion spent in the same period by Auckland local authorities.
NZIER estimatesFootnote 23 show that the Government’s infrastructure investments in Auckland are concentrated in a small number of portfolios: transport ($705m), housing ($474m), education ($283m), health ($125m) and law and order ($98m). More than 40 per cent of central government’s capital expenditure for transport, housing and education, is in Auckland.
Despite the level of its investment, traditionally central government has not been explicit about what it wants to achieve across its portfolios (eg, housing, transport, education, economic development, environment etc) for New Zealand’s cities, towns and rural areas. The Government is considering mechanisms that will provide for more effective and co-ordinated engagement in planning and delivery where appropriate.
Problem four: Barriers to effective implementation
Effective implementation relies on being able to access a full range of tools and assess which is best for the job in specific circumstances. The full range of tools covers a spectrum, including the use of plans to implement national objectives and standards, provision of information, using incentives and regulatory tools.
The use, flexibility and effectiveness of tools complement the broader planning system. This in turn affects the achievement of broader objectives, such as economic growth, integrated urban and infrastructure development, value for money from investment, and well-designed urban environments that create value.
The following potential barriers to effective implementation have been identified:
- Inconsistent implementation of national objectives and standards in plans.
Variability and inconsistency between plans’ structure, format and the consent and expression of provisions can result in unclear expression of national direction. This can lead to:
- duplication of effort in resolving common issues, unnecessarily increasing the cost and time local authorities and submitters spend on the plan preparation and change process
- frustration amongst resource consent and designation applicants who have to deal with a number of different plans and having to tailor otherwise identical proposals to match those plans
- national policy statements (NPSs) and national environmental standards (NESs) having to be drafted to cater for all possible variations in plan format and provisions. This can increase the complexity of NPS and NES while reducing their clarity and effectiveness.
- Cost and time associated with preparing and changing plans
The preparation and changing of RMA plans is expensive and time consuming for local authorities, communities, businesses and the environment. Delays in updating plans reduces certainty for investors and communities and reduce the ability of plans to provide effectively for changing circumstances.
- Potential problems with tools in practice
Some of the tools currently available for supporting effective urban development may be ineffective in practice because they may:
- be inadequate – eg, metropolitan urban limits; financing and funding mechanisms for infrastructure
- need to be complemented by new tools to be effective – eg, spatial plans
- not be used to their full potential – eg, urban design panels.
2.2 Problems for infrastructure project development in New Zealand
One of the key challenges for resource management in New Zealand is ensuring that the right infrastructure is in the right place at the right time, and that the approvals processes support the delivery of projects in ways that maximise the value of investment.
Box 3: Infrastructure approvals – a definition
‘Infrastructure approvals’ for the purpose of this document is defined as the two key systems under the RMA that provide the approvals for developing and operating infrastructure projects: designations and resource consents. Appendix 4 summarises these systems. The acquisition powers under the Public Works Act 1981 (PWA) also play a role in infrastructure development and are also considered within the scope of this discussion document.
The potential problems already identified for urban planning are also relevant to urban infrastructure investment, planning and project delivery. In particular, the current planning system does not adequately provide for effective longer-term or integrated infrastructure planning. Inconsistencies in decision-making also fail to provide certainty for investment by infrastructure providers and other investors.
Five potential issues have been identified in how the planning system, both in urban and rural areas and throughout different regions, operates with respect to infrastructure projects.
Box 4: CASE STUDY: Complex processes and long timeframes for infrastructure projects – inner city bypass, Wellington
This project was a highly complex central city roading improvement. The proposal’s stated key benefits were to provide a less congested, safer and more efficient route between the Terrace Tunnel and the Basin Reserve. The project aimed to separate cross-city and central business district traffic, and provide a safe route for pedestrians and cyclists. It had a benefit cost ratio of 3.8:1 (ie, for every $1 spent, the project was estimated to deliver $3.80 of benefit).
The project attracted significant public opposition. The primary local concerns were focused on heritage values, urban form, noise, traffic, access and air quality. Opposition also expressed concerns about greenhouse gas emissions, induced traffic, car promotion and the proposal’s overall sustainability. The planning approval process took 10 years. Construction took two years.
- 1994 to 1996: Investigations.
- 1996 to 1999: Designation and resource consent process, including public council hearing. Submissions on the resource consent applications totalled 1500. Designation was approved. An appeal to the Environment Court was made and the designation was confirmed.
- 1999 to 2001: Detailed design and ancillary consents applied for.
- 2001 to 2004: Historic Places Act 1993 (HPA) approval process, including public hearing. Authorisations granted. Judicial review application to High Court on the Historical Places Trust’s (HPT) decision. HPT decision upheld. A community group sought to appeal HPT authorisations to the Environment Court. The Environment Court struck out the appeal due to the group not being directly affected. High Court appeal on Environment Court decision struck out the decision. The High Court heard judicial review and appeal from strike out together. Environment Court’s decision was upheld.
- 2004: Contract awarded following funding approval process under LTMA.
Problem one: Lack of clarity and consistency of national objectives and standards
Infrastructure projects often cross regional and local boundaries, or provide services more widely than the local area in which they are physically located. Infrastructure providers themselves often operate in more than one region. For example, central government is a key funder, provider or operator of infrastructure across the country. These factors mean that clarity and consistency of national objectives, direction and standards is important in a decision-making framework, to reduce uncertainty and risks for infrastructure providers.
The RMA provides the Government with the ability to develop resource management tools that can articulate national priorities, provide national direction and facilitate consistency and certainty in the way resource management issues will be addressed. Key tools include national policy statements (NPS) and national environmental standards (NES).Footnote 24
The following issues have been identified with the current system:
- Lack of clarity about national objectives and standards
- Insufficient central government direction about priorities for economic, social and environmental resource management leads to uncertainty for decision-makers and local government planning, and may mean Government outcomes for infrastructure are not achieved.
- Lack of clarity reduces the ability of local government and private sector infrastructure providers to integrate their investment with central government investment. Complementary private sector investment may also be delayed or reduced in its effectiveness.
- Inconsistent implementation of national objectives and standards
- It is possible that when NPSs and NESs are developed RMA plans across New Zealand will incorporate them in different ways. This would increase compliance costs and investment risk for infrastructure providers who provide networks and services across regional boundaries.
Container wharf, Lyttelton Harbour – PhotoNZ
Problem two: Mixed access to designations
A ‘designation’ is a provision in a district plan which allows a public work to be developed without the need for a land-use resource consent from the territorial authority.Footnote 25 A designation also restricts others from doing anything in relation to the land that would prevent or hinder a public work.
A designation is put in place on the request of a ‘requiring authority’ – which is defined in the RMA as a Minister of the Crown, a local authority or an approved network utility operator.
Designations provide a wider range of powers and protections for infrastructure providers than is available under a resource consent. However, not all types of infrastructure are eligible for designations; only those that are set out in Section 166 of the RMA qualify. For example, a publicly-funded school is eligible, but a private school is not, although both provide educational services. Further explanation of how designations work and the role of requiring authorities is provided in Appendix 4.
The following potential issues have been identified with the current access to the designations process:
- Definition of ‘requiring authority’ is inconsistent
- The definition does not capture all infrastructure projects that could benefit from the designation process. For example, airports are eligible but ports are not, even though New Zealand’s ports are essential to our economy, accounting for more than 99 per cent of merchandise exports and imports by volume.Footnote 26
- Some eligible infrastructure development uses the designation process when this range of powers is not necessary or proportionate to the development proposed, and an alternative RMA process may be more suitable.
- Definition of ‘requiring authority’ may not reflect future infrastructure needs
- In the future, there is likely to be an increased desire by central and local government to develop and operate infrastructure by using innovative financing vehicles, such as public-private partnerships and private financing initiatives, and alternative procurement methods, such as ‘design and build’. Footnote 27 Furthermore, delivery models for social services are also likely to continue to evolve (eg, integrated services, such as co-location of health, education and social services; Māori-Government joint service providers; cooperative arrangements between voluntary and community providers; and private sector service delivery). Some of these approaches would not be entitled to access the designations system as those involved do not meet the current model’s definition of a ‘requiring authority’, and this may act as a barrier to efficient infrastructure development.
Problem three: Complex and inflexible approval processes
Much infrastructure is characterised by significant investment costs and long asset lives. For example, Transpower’s North Island Grid Upgrade Project is estimated to cost NZ$824 million. Design of projects is also often highly complex and costly.
As set out in Appendix 4, there are a range of approval processes available to infrastructure providers. However, their complexity and inflexibility poses a range of potential issues:
- Level of detail required in requirements for new designations
- Requiring authorities and territorial authorities have identified an increasing trend to require high levels of detailed information about the potential effects of a proposal at the ‘notice of requirement’ stage.Footnote 28This means infrastructure providers have to make a significant upfront investment in detailed design, and this creates a barrier for longer-term infrastructure planning when detailed designs have not yet been developed. It may also increase the costs and reduce flexibility for innovative financing arrangements which allow for ‘design and build’ contracts with subcontractors.
- Timeframes for validity of approvals for ongoing operation of infrastructure
- The usefulness of designations as a long-term planning tool can be undermined by the relatively short five-year lapse period.Footnote 29 Much infrastructure requires resource consents for its operation – for example, hydropower stations and irrigation schemes require consents for water use and discharges. While the RMA provides a 35-year maximum duration for some consents, much infrastructure is designed and built to operate for longer periods. There is some uncertainty about the process for ‘re-consenting’ the associated permits or consents when their terms expire. The need to ‘re-consent’ activities creates risks for investment in long-term infrastructure.
- Duplication and inconsistency of processes
- The current designation system requires a two-step process by which approval is required for a notice of requirement, followed by an assessment of the detailed design contained in an ‘outline plan’ of the work.Footnote 30 (Sometimes the need for an outline plan may be waived). Outline plans are also required for minor developments, or if changes are made to the original scope. The need for the outline plan step may be adding unnecessary compliance costs to maintenance and minor upgrade activities.
- An outline plan is not subject to public participation. In many cases this lack of public input is consistent with other RMA processes, such as non-notified resource consentsFootnote 31. However, in some cases significant development is brought forward under an outline plan. In such a case, lack of public input is inconsistent. While these latter situations may be less common, the divergence from the expected opportunity for public input can be significant such as where effects on neighbours from the development are substantial. In addition, public participation can result in better outcomes, for both the infrastructure provider and the community.
- Multiple approval processes and appeal routes
- The complex nature of infrastructure developments means that it is common for a proposal to require a range of approvals under separate regimes – eg, designations, land-use approvals, regional resource consents, authorisation to access acquisition or taking powers under the Public Works Act 1981 (PWA) and approvals under other statutes, such as the Conservation Act 1987 or Historic Places Act 1993 (HPA). There are also often multiple appeal routes available because of the range of legislative approvals required. The need to engage in multiple processes increases the complexity for obtaining necessary approvals, extends overall timeframes and increases risks and uncertainty for the infrastructure provider and affected communities.
Problem four: Lack of robust and integrated decision-making
Legitimate and fair decision-making processes are crucial to ensure public acceptance and confidence in the decision-making system, and the consequences of those decisions. Different decision-making processes exist for designations and resource consents (summarised in Appendix 4), and are not always perceived as fair.
For example, decisions on most designations are made by the requiring authority, which is often also the infrastructure provider. Essentially, that means it is the applicant who decides whether to accept or reject the relevant territorial authorities’ recommendations in part or in full – which means these are not independent decisions. The exception is where nationally significant projects are referred to a board of inquiry or the Environment Court.
In contrast, decisions on resource consent and plan processes are independent of the infrastructure provider; they are made by the relevant territorial authority, a board of inquiry or the Environment Court.
The following issues have been identified:
- Legitimacy and fairness
- A requiring authority decides whether to accept or reject any of the territorial authority’s recommendations on its notice of requirement or outline plan – which means this is not an independent decision. Only limited balance is provided through the territorial authority’s or a submitter’s right of appeal to the Environment Court.
- In order to become a requiring authority, private infrastructure providers have to demonstrate that they will give proper regard to the interests of those affected and the environment. Footnote 32 However, this may conflict with their obligations and statutory duties to their shareholders. This tension is heightened by their position as decision-maker on the territorial authority’s recommendations on designations. It is important to ensure adequate safeguards are in place to protect the interests of those affected and the interests of the environment.
- Lack of integrated decision-making
- Decision-making on infrastructure development is, to an extent, separated from other planning decisions. Designations form a parallel system to plan development and resource consent processes. As discussed, the decision-maker for designations is the infrastructure provider, whereas for resource consent and plan processes, the decision-maker is independent of the applicant. This variation creates a barrier for co-ordinated and integrated planning.
- The designation system does not promote an ethic of cooperation between infrastructure providers. Providers are not encouraged to work together to find least-cost, least-disruption solutions, such as creating integrated infrastructure corridors or to co-ordinate plans for upgrading existing infrastructure to minimise disruption.
- The introduction of spatial planning to Auckland encourages co-ordinated planning for infrastructure investment to maximise the benefits. However, if decisions on designations for infrastructure remain with requiring authorities, there is little ability to ensure that the objectives of the spatial plan will be delivered or given appropriate weighting in decision-making on individual projects.
Problem five: Inefficient and inadequate land acquisition process
The PWA provides a process for land to be acquired for public works. Potential problems have been identified with the adequacy of compensation and the efficiency of processes. The current compensation provisions could be viewed as being outdated and inadequate in some ways, because:
- they do not recognise how long a person has owned a property, or the emotional consequence of losing a property regardless of whether it contains a dwelling
- they fail to provide incentives for early agreement and settlement, extending the time required for infrastructure projects
- current valuation practices within New Zealand, which are used to determine ‘fair market value’, may not form a suitably objective and reliable basis for ‘willing purchaser, willing seller’ price discussions
- the process for acquisition is cumbersome and affected landowners may not understand their rights under it.
Back to footnote reference 16 Following from the Auckland governance reforms, the Minister for Local Government is initiating a first principles review of New Zealand’s local government system – its purpose, structure, functions, status, funding, and relationships with central government, with the private and voluntary sectors, and with communities, citizens and ratepayers. The first key milestone will be the release of a public discussion document by 31 July 2011. This document will set out issues and questions about the system, and seek public feedback on those issues. .
Back to footnote reference 17 Kamal-Chaoui, L, and AR (eds) 2009. Competitive Cities and Climate Change, OECD Regional Development Working Papers N° 2. OECD publishing.
Back to footnote reference 18 ‘Amenity values’ is defined in Appendix 2.
Back to footnote reference 19 For example, Schedule 1 of the RMA, whereby, in some cases, agreement is ultimately reached through judicial decision-making.
Back to footnote reference 20 These strategies have relied on the establishment of collaborative working and governance relationships to achieve their development and implementation.
Back to footnote reference 21 Expenditure by central government accounts for 89 per cent of expenditure by all levels of government (ie, central and local) in New Zealand compared with an average 43.3 per cent of government expenditure across the Organisation for Economic Cooperation and Development (OECD) countries.
Back to footnote reference 22 Taken from a report prepared by the New Zealand Institute for Economic Research, for the Committee for Auckland. Most central government spend is on operating costs rather than capital expenditure, with the exception of transport. In absolute terms, social welfare expenditure was estimated to be the single largest area of central government spend in Auckland, at NZ$5.1 billion (roughly 70 per cent of this in benefit payments). Health and education were the next two largest areas of estimated expenditure, at around NZ$3 billion each. In 2007, transport spend was $944 million, or 38 per cent of national funding.
Back to footnote reference 23 Ibid. 2009 figures.
Back to footnote reference 24 National policy statements and national environmental standards are explained in Appendix 3.
Back to footnote reference 25 A ‘territorial authority’ can be a district or city council. Note that a ‘public work’ can be provided by the private sector.
Back to footnote reference 26 Treasury, 2010. National Infrastructure Plan. New Zealand Government. page 88.
Back to footnote reference 27 The ‘Design and build’ term is explained in the glossary in Appendix 2.
Back to footnote reference 28 ‘Notice of requirement’ is explained in the glossary in Appendix 2.
Back to footnote reference 29 A designation will ‘lapse’, that is, expire and no longer be valid, if it has not been given effect to within the specified period.
Back to footnote reference 30 ‘Outline plans’ are explained in the glossary in Appendix 2.
Back to footnote reference 31 A resource consent is ‘non-notified’ where the effects are minor or less and all written approvals have been obtained from affected parties.
Back to footnote reference 32 Section 167 of the RMA.