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22-01-2015

Overhauling the Resource Management Act

The lecturn and backdrop for this, my 20th annual speech to Nelson Rotary is the 80,000 pages of council resource management plans and rules.  If in a single pile, it would stand ten metres tall and probably require a resources consent for breaching local height restrictions.  This mountain of red tape well illustrates the need for an overhaul of the Resource Management Act.

The Act is not working for New Zealand or New Zealanders. It is making housing too expensive. It is hampering job and export growth. It is stymying much needed infrastructure. And it is not doing a particularly good job of managing vital natural resources like freshwater and the coastal environment.

The purpose of this speech is to build a broad constituency for considered but substantial reform of the RMA this year. I want to give some political and historical context to the Government’s plans. I am releasing the latest research on the impact it is having in areas like house prices and giving some practical examples of how the Act is failing. I want to outline the direction and timetable for reform but announcements on the detail will come at a later date.

First, some reflections on 2014. The election result was a stunner. It is more than 100 years since a governing party has increased its parliamentary numbers at three consecutive elections. John Key has to get the bulk of the credit for this result.

I’ve worked with National’s last seven leaders, back to Muldoon and none match John’s all-round skills. He has the charisma to connect with world leaders and truck drivers, business leaders and toddlers. He has a huge intellect and is all over the detail of Government policy. He is an avid nationalist, as reflected in his ambition for a more distinct New Zealand flag. But the Prime Minister’s greatest strength is his determination to do what is right for New Zealand, even when the politics is hard-going as illustrated by his firm approach late last year on national security.


It is not just John Key’s leadership that gives National a serious chance of securing a fourth term in 2017. I don’t believe New Zealand has seen before such a tight, complementary set of skills in the kitchen Cabinet of Bill English, Steven Joyce, Gerry Brownlee and Paula Bennett. Bill’s skills are not just managing the finances, but in getting the very best out of the public service. Steven’s skills as a campaign and political strategist are world class. Gerry’s smooth running of the Parliament ensures the Government’s business gets done. And Paula’s sharp political instincts keep the Government connected to middle New Zealand.

The role I enjoy is down in the policy engine-room of Government, particularly in areas related to my professional background in natural resources and building.

The big challenge in the environmental area is finding a path that better manages New Zealand’s water, air, oceans and native flora and fauna while enabling our economy to grow and prosper. Key priorities this year will be passing a new Environment Reporting Act to give greater clarity to New Zealand’s important clean, green brand. We will also be advancing work on a new Marine Protected Areas Act to enable better management of our oceans and the establishment of recreational fishing-only areas. A sensitive issue will be working with the Pike River disaster families on the long-term management of the mine now it is the final resting place for their loved ones when it returns to the Department of Conservation later this year.

The focus in the building and housing area is to increase the supply, affordability and quality. On 1 April we will be introducing the new HomeStart scheme that will help 90,000 KiwiSavers pull together a deposit for a new home. We have a huge housing programme of work in Christchurch and Auckland and new initiatives in the pipeline. Another challenge will be finalising the legislation on earthquake-prone buildings, a difficult issue that will have major implications for thousands of older buildings in provincial areas like Nelson.

However, the most challenging of my jobs this year will be the reform of the Resource Management Act. The Act, in governing the use of water, land, air and the coast, and which is responsible for protecting heritage, native plants and animals is so wide-ranging that it has implications right across the economy and into almost every facet of life.

There is not a single official anywhere who understands this huge pile of RMA plans and rules. Even at a local level, only a few individuals working in council or in planning consultancy will fully understand how the rules work in their city or district.
The problem with this complexity is that it is difficult to make the connection between the labyrinth of RMA rules and the significant decline in housing affordability and home ownership over the past 25 years.

Today I am releasing a Treasury-commissioned report by Motu Research and respected economist Arthur Grimes and property researcher Ian Mitchell titled, The Impacts of Planning Rules, Regulations, Uncertainty and Delay on
Residential Property Development. The report identifies that a significant number of housing projects were abandoned because of the delays and uncertainty of the RMA. It estimates that for projects that proceeded, the RMA added $30,000 extra cost to each apartment and at least $15,000 per section. It also says that RMA rules reduced development capacity of homes by 22 per cent. If you extrapolate this study over the past decade, the RMA has reduced housing supply by 40,000 homes and added $30 billion in cost.

This research is consistent with the work of the Productivity Commission. It made plain that tight land regulation under the RMA with rules like the Auckland Metropolitan Urban Limit was the single greatest factor in driving house prices to all-time highs. The example of a 29-hectare block of unimproved rural land in Flat Bush just inside the Council’s urban limit appreciating in value from $890,000 to $112 million in just over a decade shows how RMA regulation is helping make land speculators rich at the expense of young aspiring home owners.

And it is not just housing developments that are frustrated by the bureaucracy of the RMA. The Government’s Small Business Advisory Group cites the RMA as the biggest single regulatory frustration for those small enterprises trying to grow and create wealth for our country. Business New Zealand last week cited RMA reform as their most important legislative issue this year for maintaining New Zealand’s economic and employment growth.

The concern is backed up by international research. The OECD published in November a comparative study of its 34 member countries on the cost burden of environmental regulation. In most OECD reports New Zealand ranks very well as a good place to do business and create jobs. We ranked bottom when it came to the administrative burden of the Resource Management Act. I have no problem where there are costs to achieve good environmental outcomes. The OECD study actually showed that many countries had more stringent environmental policies than New Zealand but a far lesser administrative burden.

A key difference of the New Zealand system of environmental regulation under the RMA is that we have a very fragmented system where there are differing rules in every district and region, and secondly that we require consents for most activities when most other countries simply had national standards that had to be met.

Examples can be more powerful than national or international studies. I get inundated with hundreds of complaints from all corners of New Zealand and from people from all walks of life with frustrations over their experience with the RMA.

My first example is the Stoke Medical Centre, a typical suburban GP clinic on Main Road Stoke, employing 15 full-time staff. Three years ago the practice wanted to expand its staff and extend its permissible opening hours. This required a change to their resource consent which Council ruled under the Act had to be notified. Six months and $57,000 of bills later the amended consent was granted with the requirement that they had to provide seven new bike stands. And this cost excluded the time doctors and practice staff had spent on the process. The bike stands cost $35 each but the bureaucratic paper associated with each meant they ended up costing over $8000 a stand. The tragedy of this case is that the $57,000 consent cost will ultimately come out of the health budget and people’s GP charges in an area where there are many low income struggling families and retirees.

It is not just health dollars that are being wasted under the RMA. The resource consenting process for Nelson’s new Young Parents’ School officially opened by the Prime Minister last year was a fiasco. The new school is smart social policy aimed at supporting teenage mums by enabling them to continue their education, while also ensuring their pre-school children are engaged in education from an early age. The school is sited at Auckland Point School where the roll is a lot less than the school’s capacity. The Principal and Board of Trustees fully supported the initiative being on their school site.

The problem was that the school is designated under the RMA for “primary education” and the Young Parents School was about providing education for secondary school age mums and early childhood education for their children. This meant under the RMA a change of designation, notification of neighbours and a full Commissioner hearing at a direct cost of $64,000. There would have been no change out of $100,000 if you included the considerable staff time of the Education Ministry, Kindergarten Association and school. This process also delayed the Young Parents School’s opening by more than a year. More was spent on the RMA bureaucracy than on the facility for the specialist teachers, young mums and their babies.

The nonsense of this case is that the RMA is meant to be about protecting the environment and whether Auckland Point School has primary, pre-school or secondary students, makes not a jot of difference. The early childhood regulations and building consent requirements are separate and ensure the facilities are safe and appropriate. More good would have been achieved for the environment had the $64,000 of cash been deposited in the school’s composting bins.

I could give hundreds of examples of the RMA wrecking Kiwi family dreams of building their own home. I choose this Nelson example because it illustrates how far council planners under the RMA are now intruding into people’s lives.

A couple in their 60s bought a 630 square metre flat section in Sanctuary Drive in the Marsden Valley. Their architectural designer produced plans for their dream home that included an internal access garage in the front corner to minimise the portion of the section used for the driveway and located their living area so as to maximise the sun. The orientation was similar to 14 other homes in the subdivision. They were gobsmacked to have their consent application declined on the basis of a new RMA rule that had just come into effect in late 2012. They were told they had to relocate the garage out the back and have their living area face the road.

The RMA justification for rejecting the design was that the house failed to provide for a “positive private to public space relationship”. In plain language they wanted the living area to face the road so the residents would keep a safe eye on the street. The couple abandoned the section at a cost of many thousands of dollars. So much for a person’s home being their castle. The RMA is being used to micro-manage building designs down to the extent of what direction people should look.

This sort of madness has been repeated in Auckland and had property magnate Bob Jones venting his spleen late last year. He owns a 17-storey CBD building and wanted to re-establish a ground-floor shop window that had been blocked off by a previous tenant. Not only did this minor work require a $4500 resource consent, but because it would have people looking out on a designated heritage site, the consent required a cultural impact statement and consultation with 13 iwi. This is all for permission to replace a window!

My final example is to illustrate the connection between jobs, export growth and the RMA. It has long been recognised that Golden Bay has substantial aquaculture potential. RMA consents were lodged 20 years ago, prior to the turn of the century, for new marine farms, but are still unresolved. I have had lawyers joking to me that the battle over where the farms might be located has got at least another five years of legal machinations and fees to play out. There has to be a balance between water space for nature, recreation and export production but the main winners in these protracted and expensive court wrangles are the legal fraternity.

When National came to office in 2008 we set out a two-phase process for reforming the RMA. We completed the first phase of reform in our first term. This involved setting up the Environmental Protection Authority as a nationwide agency to deal with nationally significant consents. Previously major infrastructure consents took many years. They are now being processed in the required nine-month timeframe. It has enabled projects like the $1 billion Tauhara geothermal power station, the $2 billion Waterview motorway in Auckland and the $1 billion Transmission Gully highway in Wellington to be progressed at pace.

We introduced specific provisions banning the RMA from being able to be used for limiting trade competition that has seen an end to our two giant supermarket chains blocking each other’s developments. The Bill also banned general tree protection rules that required people to get a consent to trim their own trees. This reduced the number of consents in Auckland by 4000 per year.

This Bill also tightened enforcement and increased fines that has seen a doubling in the number of prosecutions for discharge breaches and a 50 per cent increase in the average fine imposed. We also introduced tighter provisions requiring councils to process consents in a more timely way that has seen the number of late consents reduce from 14,000 a year to under 1000 a year.

The second phase of RMA reform was always going to be more challenging. We commissioned in 2010 technical reports on infrastructure and urban planning leading to a discussion document called Building Competitive Cities. We also sought an expert report on the purposes and principles of the Act that included Nelson Mayor Rachel Reese, whose work I acknowledge.

I subsequently slipped on a banana skin as occurs sometimes in politics in 2012, resigning as Environment Minister and passing the baton on to colleague Amy Adams. Amy did a huge amount of work in pulling together this second phase of reforms but in 2013 was unable to secure the Parliamentary numbers to advance a Bill. The Maori and United Future parties pulled the plug out of concern that the proposed changes went too far.

With Amy’s promotion post the election to the Justice portfolio, I am relishing the challenge of finishing the RMA job I started in 2009. The numbers in Parliament have changed such that National and ACT have the numbers. My preference is to build a broader base of support.

The Resource Management Act is New Zealand’s most significant and important environment law. We more than any other developed country depend on our natural resources in industries like farming, tourism, forestry and fishing for our national income. Our environment is at the core of our national character and the beach, river and mountain holidays we have all enjoyed over summer. I want to get these reforms right and ensure we have got a balance that enables New Zealand to grow and prosper without compromising the great kiwi lifestyle.

But let me equally be plain that tinkering with the RMA won’t do. The Act has some fundamental design flaws that require substantial overhaul. The purposes and principles are out-dated and ill matched with the reality of the issues it manages like housing development. The plan making process is too cumbersome and slow. The Act needs re-engineering away from litigation towards collaboration. Property owners need stronger protection from unnecessary bureaucratic meddling. We need stronger national consistency and direction. We need to redesign the paper based planning and consultation systems for today’s age of the internet.

To read the full speech go here

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