Legislative impediments to infrastructure development in New Zealand

Tom Bennett, Partner | Friday 22 May 2009

First published in New Zealand Local Government magazine, May 2009.

Last year, the New Zealand Council for Infrastructure Development (NZCID) issued a discussion paper entitled Policy Priorities for Advancing Economic Infrastructure Development in New Zealand.

The NZClD report recognised that the quality of New Zealand's infrastructure has a key role to play in raising national productivity levels, enhancing community services and enabling sustainable growth. The report's principal conclusions are that the provision of public infrastructure in New Zealand is well behind the levels found in comparable global economies, that constrained infrastructure capacity is inhibiting New Zealand's growth potential, and that the delivery of national infrastructure is constrained by, among other things, an unnecessarily complex regulatory and legislative framework which further inhibits effective delivery of infrastructure.

The NZCID report provides a very useful analysis of these legislative impediments. Broadly, it considers reforms of the following legislation:

• Land Transport Management Act 2003 (LTMA);

• Resource Management Act 1991 (RMA);

• Public Works Act 1981;

• Local Government Act 2002; and

• Corrections Act 2004.

This article summarises the key issues on legislative reform from the NZCID report. The NZCID report also proposes specific reforms to resolve these issues.

LTMA

The LTMA was intended to improve the flexibility of land transport funding and to enable new roads to be built on a tolled or concession basis. The NZCID report concluded that there are too many unnecessary restrictions concerning tolling and concession agreements that have stymied the development of such projects, in particular:

• Restricting tolls to new roads prevents road users from potential benefits of using revenues from tolls on existing roads to fund increased capacity, provide an overall improved level of service and balance traffic demand to best effect.

• The 35 year maximum term permissible under the LTMA may limit value for money for the public sector by reducing the extent of risk transfer that might otherwise be possible and may require the government to provide additional subsidies that might not otherwise be necessary.

• The unnecessarily complex criteria and doubling up of approvals for toll roads and concession agreements.

• The predominance of local interests over national and regional interests in decisions about toll roads and concessions.

The NZCID proposed a number of amendments to the current provisions of the Act to alleviate these restrictions including:

• An amendment to section 5 of the LTMA to broaden the definition of "affected community". This would allow the views of the wider regional community and users of the proposed road to be taken into account and balanced against those of the local community who live, work and study in close proximity to the road.

• The repeal of section 48(l)(d)(ii) of the LTMA to reduce the weight given to views of "affected communities" in approving toll proposals relative to considerations of regional and national benefits.

• An amendment to section 56(3) of the LTMA to allow concession agreements to upgrades and maintenance of existing roads. The current drafting of the section clearly contemplates that concession agreements would only apply to a new road. The provision as currently worded unnecessarily restricts innovative approaches that would otherwise be of benefit to the public, such as requiring concession agreements to include provision for the upgrade and operation of existing roads.

• Repeal or amendment of section 56(6) of the LTMA to remove or clarify the requirement that concession agreements must not provide any disincentive for a person to pursue other "sustainable transport options" (i.e. public transport or the implementation of demand management strategies). The provision as currently drafted requires the private sector to assume an increased transfer of risk, which will necessarily be reflected in the amount tendered for a project. While the public sector may wish to retain the option to develop other competing services within the transport corridor, it would be better to consider and provide for such issues on a case-by-case basis.

RMA

The NZCID report noted that the RMA is often cited as a major impediment to infrastructure delivery in New Zealand, and that the following factors contributed to this view:

• Lack of specificity in terms of the purpose, principles and language of the RMA.

• Lack of express recognition of the national significance of essential infrastructure and/or the importance providing critical infrastructure supporting community needs within the RMA purpose and principles section (particularly under section 140 - Decisions on matters of national significance).

• While the provision exists, until recently Ministers have been reluctant to 'call in' major projects. The inclusion of boards of inquiry in addition to Ministerial call in provides for a more extensive range of consenting processes (although this provision was seldom used in the past and has only just been applied to four projects in 2008).

• The emphasis in the RMA on adverse environmental effects needs to be better balanced with the positive wider economic, social and environmental effects of improved infrastructure provision. This is largely a matter of interpretation, particularly in regional policy statements.

• Lack of sufficient leadership at the national and regional levels to promote infrastructure development. Regional policy statements generally reference the importance of infrastructure but concentrate on avoiding adverse effects rather than giving specific direction to address trade-offs between the economic, social and environmental outcomes. The 2005 amendment to the RMA now enables regional councils to take greater responsibility for the integration of essential infrastructure and land use. This is an important step, but it remains to be seen how this function will be translated through second-generation regional policy statements currently under development.

• The lack of national guidance of standards (NPS and NES) on issues such as noise, stormwater, run off, erosion and sediment control, construction-dust controls or vibration.

• The requirement for RMA consents to be approved by both regional councils and territorial authorities for most major infrastructure projects, and the consequent inevitable overlapping of the effects considered by each authority. In addition, regional resource consents must be considered against the adverse effects criteria, instead of being counterbalanced by consideration of the broader objectives of the public work.

• Inconsistencies in approach and interpretation across different local authorities. There remains insufficient resourcing and experience within some territorial authorities and regional councils to enable effective management and development of major infrastructure.

• Lack of knowledge, experience and consistency of hearing commissioners (especially councillor commissioners) and concerns about of conflicts of interest.

• Carrying out consultation in relation to preparation of applications and assessments of environmental effects can be costly. 'While it is important to ensure that a project proponent meets its wider environmental responsibilities, often, complex issues need to be assessed, reported on, and resolved before environmental approvals can be gained. In addition, a two-stage process, involving consideration by council following by a court process, can add large costs as well as delays.

• The role of often-vociferous public interest groups and "nimbys" using environmental concerns as a proxy for self interest.

• Time delays. An urban project such as the Wellington Inner City Bypass took more than a decade to progress from inception (in 1993) through to construction in 2004. A significant proportion of the time was expended in the two-stage RMA process involving consideration by council followed by a court process can add large costs as well as delays.

• Lack of monitoring of RMA effectiveness (particularly for major projects).

Other legislation

The NZCID report also identifies that, unlike other jurisdictions that have implemented one stop shop approval processes for critical infrastructure, New Zealand has a number of laws in addition to the RMA that often must be traversed. These include:

• The Historic Places Act 1989. Archaeological authorities are required under the HPA for a number of projects. These are normally sought after RMA approvals. The Wellington Inner City Bypass for example required two Environmental Court processes, one under the RMA and one under the Historic Places Act.

• The Reserves Act 1981. Where a project requires land from a reserve under the Reserves Act, the specific approval of the Minister of Conservation is required. This effectively could prevent implementation of a project, even though consents may have been grained through the RMA.

• Local Government Act 2002. A road may need to be stopped in order to implement another transport solution. The stopping of a road outside of the relevant designation, requires a roadstopping process under the Local Government Act. This process has an appeal right to the Environment Court. The Local Government Act also places a constraint on private sector partnerships for water infrastructure and limits service contracts to a maximum of 15 year terms.

• The Public Works Act 1981. A potential cause of project delay is land assembly. With the relevant Minister's consent, certain authorities have the ability to compulsorily acquire land. Even though the designation may be in place, there is still appeal rights regarding compensation.

• Foreshore and Seabed Act 2004. Where foreshore or seabed is required for a project, there may be specific approvals required.

• Reserves and Other Land Disposal and Public Bodies Empowering Act 1915. In the case of the SH20 Mount Roskill extension currently under construction it was found that this historical Act was relevant to implementation. Further cost and delay was added to the project in order to resolve this anomaly.