The reform is part of the Government’s plan to facilitate infrastructure delivery. Minister Christopher Penk has said:
Removing barriers to make it faster and more affordable to build the homes Kiwis need, creating jobs through new projects and providing infrastructure to support better public services is a major part of the Government’s economic growth agenda.
The overhaul promises to modernise and streamline the compulsory acquisition process, and to reduce the time taken to complete compulsory acquisitions while ensuring fair compensation is paid to landowners.
The Public Works Act 1981
The PWA empowers the Crown and local authorities to acquire private land for delivery of public works and new infrastructure, such as roads, railways and water services. The PWA prescribes the process which must be followed to acquire land, whether by agreement with the landowner or compulsorily, to ensure that the rights of landowners are considered and protected and so that fair compensation is paid to the affected landowner. The regime is intended to balance the public interest in acquiring land when reasonably necessary for public works with protections that are appropriate to recognise the serious intrusion into property rights that is involved with a compulsory acquisition.
The result is a series of consultation and negotiation obligations that provide for landowners to object to, and if necessary litigate against, both the acquisition itself and the amount of the compensation to be paid for the acquisition.
Outdated and inefficient processes under the PWA
The essential elements of the acquisition process have not changed for many years. The Government has identified that the application of that process in the modern environment can become a time-consuming and costly process, with acquisitions taking up to a year on average, and compulsory acquisitions generally taking up to two years with at least another year added if objections to the Environment Court are made.
Those estimates appear to relate to standalone acquisitions. The implications for large infrastructure projects can be materially longer if there are a significant number of acquisitions required before work can begin. The cost and time involved in compensation disputes can be longer still.
Extensive policy changes signalled
The Government has promised that “extensive policy changes” will be announced over the coming weeks. In particular, the first tranche will:
- Delegate land acquisition responsibility: Empower government agencies like the New Zealand Transport Agency, which regularly use the PWA, to enter into acquisition agreements with landowners. The Minister for Land Information will remain responsible for compulsory acquisition by the Crown.
- Enable collaboration between agencies: Allow government agencies to work together when acquiring land for connected public projects. Instead of each agency acquiring land separately, they will be able to coordinate acquisition of land as needed to make the process smoother.
- Enable relocation of infrastructure: Allow both the government and local authorities to acquire land when they need to move existing infrastructure (like powerlines or pipes) that are in the way of new public works.
- Refine the role of the Environment Court: Clarify the factors that the Environment Court can consider when reviewing objections to land acquisitions for public works, with a renewed focus on individual property rights, removing overlap with the Resource Management Act.
- Require mediation for compensation disputes: Require that parties try to resolve disputes over compensation through mediation or alternative dispute resolution before going to the Land Valuation Tribunal, to avoid lengthy court proceedings where possible.
- Allow Transpower to bypass standard processes: Enable Transpower, the State-Owned Enterprise managing New Zealand’s power grid, to use the PWA to acquire land by agreement. This would streamline their process for building energy infrastructure.
The effect of these changes will, as always, depend on the detail. Changes that simplify and modernise the acquisition framework will be welcome for an Act that has not undergone a fundamental re-examination in many years. The challenge will be to establish a framework that is effective in achieving those goals, by targeting issues in the PWA that lead to unjustified complexity or delay, without undermining the fundamental protections in the PWA for landowners whose land may be desired for public projects.
The changes that the Minister has identified for the first tranche of reforms include inter-agency collaboration, and additional procedural steps such as compulsory mediation processes before disputes are commenced. These types of changes have the potential to affect some acquisitions, but are unlikely to fundamentally reduce the timing or cost of either routine or complex acquisitions. Compulsory alternative dispute resolution processes in particular risk adding both time and cost in cases of genuine, informed compensation disputes, and may have mixed results if the parties are otherwise unwilling to engage voluntarily.
More generally, one of the largest contributors to both the length of the acquisition process and the amount of compensation can be uncertainty as to the criteria for acquisition or the basis of compensation. The reform will need to balance carefully the benefits of proposed changes with any potential loss of certainty to principles which have been established and are applied by the Courts in the application of the PWA.
There will be an opportunity for public comment on the Bill during the Select Committee process. Bell Gully will monitor the reform over the coming weeks and provide a further update.
If you have any questions about the matters raised in this article, please get in touch with the contacts listed or your usual Bell Gully adviser.