According to Greek legend, the Chimera was a monstrous fire-breathing creature with three heads. It is usually depicted as a lion with the head of a goat protruding from its back and a tail with the head of a snake.
“Chimeric” may prove an apt description for the trifecta of new statutes Environment Minister David Parker proposes as successors to the existing Resource Management Act.
Introduced into Parliament last week, the proposed new statutes are, respectively, a new 810-page Natural and Built Environment Act, a modest 46-page Spatial Planning Act, and a yet-to-be-released Climate Adaptation Act. These statutes will be supported by detailed National and Regional Plans that must comply with a yet-to-be-developed National Planning Framework.
Taming the country’s planning laws is a monster of a task. And Parliament has spent more than five decades unsuccessfully attempting it.
But none of the reforms over the last half-century has addressed the underlying problems with the country’s resource management laws. Indeed, rather than solving the difficulties with the former Town and Country Planning Act 1977, 1991’s Resource Management Act created worse problems.
Unfortunately, Parker’s behemoth looks set to repeat this mistake.
Like the RMA they are intended to replace, the new statutes provide no coherent means of discovering the optimal allocation of resources. And they do nothing to change the incentives local councils face to facilitate urban growth. At the same time, they introduce a raft of new problems.
It is understandable, nevertheless, that the Minister’s suite of reforms has received muted support. The RMA is one of the country’s most hated legislative regimes. Its processes are slow, cumbersome and costly. In combination, these problems have contributed to the housing affordability crisis. By creating a handbrake on commerce, the RMA has also constrained productivity growth and, therefore the country's prosperity and community well-being.
The RMA was not supposed to work this way. Conceived by the Fourth Labour Government and implemented by Jim Bolger’s National Government, the RMA was to herald a new era of simplified planning laws. The RMA replaced the former Town and Country Planning Act’s “needs-based” approach to the grant of planning permission with an “effects-based” approach. No longer would development depend on the central planning nightmare of persuading an official that a new commercial development was “necessary.” Instead, new developments would depend on satisfying officials that the “effects” of development on the environment were satisfactorily mitigated.
Just over three decades – and a couple of dozen amendment Acts later – virtually no one disputes that the RMA has failed. Little wonder there is cross-party agreement that it has to go.
Unfortunately, the Minister for the Environment has prescribed the wrong medicine to treat the planning-failure disease.
At their heart, planning laws offer solutions to two vexing economic problems: the provision of public goods (like some transport infrastructure) and controlling externalities (like pollution) that free markets can struggle to address.
However, the RMA aspired to much grander goals than dealing with these problems. Instead, it invented a new concept of “sustainable management,” and for three decades armies of lawyers and consultants have had a field day arguing about what this means.
Rather than sustainable management, the outcome has been one of the world’s most unaffordable housing markets.
Unfortunately, Parker’s suite of new planning reforms promises more of the same but worse. Where the RMA required adverse environmental impacts from development to be at least mitigated, the new regime proposes hard-and-fast environmental “bottom lines.”
Unfortunately, real life is not that simple. Almost all decisions involve trade-offs. Fortunately, economists have developed tools to enable these trade-offs to be assessed. “Cost-benefit assessments” allow a reasoned analysis of the gains and losses from development. To its credit, the RMA permitted such assessments, even if in practice the discipline has been described as a farce. Parker’s proposed new regime provides no such safety net.
Commendably, the new reforms introduce the concept of “efficiency” as one of three resource allocation principles (alongside “sustainability” and “equity”). However, nowhere in the suite of proposed new laws is efficiency defined.
The drafters doubtless mean economic efficiency. Yet other aspects of the proposed new laws disclose a complete lack of understanding or commitment to the prerequisites for economic efficiency: clearly defined property rights and the use of the price mechanism to discover optimal allocations.
The “equity” principle further adds to the incoherence. Equity is an important principle – at least in relation to the fair and impartial application of laws. But here equity is proposed as a principle of allocation. This will invite planners to impose their own judgments on the use of resources regardless of the economically efficient outcome.
Quite apart from the objection that equity issues are better handled through the tax-and-transfer system, such an approach will promote arbitrariness in planning decisions. It is also antithetical to the rule of law requirement of predictability. The resulting uncertainty will harm productivity growth and therefore well-being.
Perhaps nowhere in the reforms is this so stark as in relation to water rights. Under the new approach, the former first-come-first-served approach will end. But, in its place, there is to be no “market allocation” (i.e.one based on the price mechanism) of water. Instead, planning committees will decide between competing allocations “on merit.” This trust in the “wisdom” of planners is what Nobel prize-winning economist Frederick Hayek called the fatal conceit. It is the belief that central planning is a substitute for markets. Whenever this conceit has been applied in practice, history tells us it has failed.
Adding to the quagmire is a new fundamental principle of Te Oranga o te Taiao. The Bill’s Explanatory Note states this is a te ao Māori concept that “speaks to the health of the natural environment… [and its] capacity to sustain life, and the interconnectedness of all parts of the environment.”
The principle is defined to include the relationship between iwi and individual hapū and the natural environment. This places unspecified, undefined and unpredictable race-based considerations at the centre of the planning framework. It takes little imagination to predict how the new three-headed regime will play out in practice.
In Greek mythology, the Chimera devastated the countryside and was “the bane of many.” According to Homer, it was ultimately slain by the hero Bellerophon riding the winged horse Pegasus.
Few could doubt Minister Parker’s good intentions in proposing his new planning monstrosity. But, before it is unleashed on an unsuspecting public, it needs to be tamed. If not, the sequel to the country’s RMA nightmare will be even scarier than its predecessor.