Councils will get a share of $1 billion GST income
Venkat Raman
Auckland, September 10, 2023
Property owners and developers, construction companies and others involved in the infrastructure industry will take heart over the sweeping changes that ACT Party Leader David Seymour has proposed today (September 10) as a part of his promise to end government dominance.
In what can be seen as a major election push, he has released a major document that will allow people to develop their property the way they deem fit, with the only exception that their action should not infringe on the rights of others or harm their property.
Scrapping the Resource Management Act (RMA), which is perceived as the villain of the piece for all the ills of the construction industry, is at the centre of Mr Seymour’s proposal.
Option to exit RMA
“Builders can opt out of the consent regime in order that they can use more innovative techniques and materials to improve affordability and quality,” he said in a preamble to his Policy Statement.
As in most proposals, the devil rests in the details but prima facie, given the ACT Party’s penchant for taking the government off the people’s back, there is reason to believe that it means business and again given the ‘absolute possibility’ of the ACT Party being in government with National (based on current Polling) after October 14, 2023, the Proposal is worth a read and analysis.
Mr Seymour has also wielded the carrot in front of the Councils with a bid to share more than $1 billion in GST revenues, based on their ‘building consent activity.’ This grant will allow the Councils to fund infrastructure for new developments.
Any move towards liberalisation of the building industry should be mindful of quality, durability and sustainability but ACT and its Leader are aware that a new piece of legislation as drastic as this will undergo thorough vetting through Parliament and its Steering Committees. However, the thought that the regressive RMA will at last see its end is alluring.
The Labour government has tried to tinker with it and replace it with the Natural and Built Environments Act (NBE), which as Mr Seymour said, “is as bad as its predecessor, with a dose of Co-Governance thrown in for good measure.”
Reinstating the rights of people to deal with their property the way they deem fit is in the gist of ACT’s proposal. Mr Seymour said that his Party believes that the expectations of property owners, established through years of law and practice, should be respected.
The Subsidiarity Principle
He said that the Medium Density Residential Standard (MDRS) should be replaced with Auckland’s Mixed Housing Suburban (MHS) Zone.
The MHS allows more intensification than the MDRS, but with design standards that are sympathetic to existing neighbourhoods and property owners. ACT’s RMA replacement will also clarify who should get a say in the community about managing common resources.
“ACT believes in the principle of subsidiarity, in which the communities of the people most directly affected should be the ones in charge of those decisions. Private negotiations and markets are usually a better way to resolve conflicts between property owners and between economic development and environmental protection than rulings from unaccountable officials. If disputes do go to Court, for claimants to have standing they must show that the action will directly affect them or their property economically and/or physically or impede their substantive right,” he said.
Reiterating ACT’s belief in minimal regulations, the Party’s new proposal incorporates a framework for Neighbourhood Negotiation, which will ‘replace central and local government bureaucracy with a presumption in favour of development.’
“The number of people who could object to projects would be sharply limited, but those with a direct stake would be compensated for the costs that a new project might impose on them. ACT’s policy would enable property owners to increase the development potential of their property, without having to rely on what is allowed within Council plans,” Mr Seymour said.
Three Pathways
According to the ACT Policy, there will be three pathways to increasing the development potential of a property beyond the plan: 1. Multilateral Pathway: Development will be allowed if 70% of the titles along a street/block approve the change in zoning rules 2. Bilateral Pathway: A property owner will be allowed to negotiate with neighbours who are directly affected by the development and 3. Unilateral Pathway: This will allow property owners to ask a Planning Tribunal (which will be equivalent to the Disputes Tribunal) to exempt them from certain planning restrictions, in exchange for Tribunal-determined compensation to be paid to their neighbours.
“Enabling pathways for neighbours to negotiate amongst themselves would ensure that more buildings get done. It is also a fairer way of ensuring that those directly affected by new developments can be compensated for any losses that they may experience. Currently, there are major hurdles in the way of linking building with infrastructure,” Mr Seymour said.
According to him, a typical New Zealand infrastructure project requires a firm to spend, on average, 5.5% of their total project budget seeking resource consent.
Under ACT’s alternative to the RMA, resource consent will be needed for only the most complex and high-risk activities in the environment.
Most infrastructure projects would instead simply need to comply with the nationwide codes and rules for environmental management, similar to the Building Code.
“Reducing the need for consents will save developers spending months or even years in court, debating consent conditions for common activities,” Mr Seymour said.
Insurance as an alternative
Mr Seymour said that the current building regulations are burdensome and hold back innovation without providing any security to homeowners.
Councils, because of the joint and several liabilities imposed on them, are very risk averse in approving buildings and because of their monopoly position as building inspectors face no countervailing incentives encouraging them to allow construction.
“ACT would enable an alternative pathway to building consent. The scheme would require builders to purchase insurance for all new dwellings from an insurance company regulated by the Reserve Bank. Insurance companies could choose not to cover a given builder if they used risky materials or were otherwise too risky of a client for them to take on.
“With no insurer, a builder would not be permitted to build. Similarly, insurers could adopt risk-differentiated premia to account for the different risks imposed by different materials or building techniques,” he said.
Mr Seymour called on the insurance sector to develop a product to provide insurance for a comparable level of building quality to the criteria enforced by the building consent authorities.
“ACT will then enable such insurance to serve as an alternative pathway,” he said.
