Writing a regular column can occasionally be hard work. It is not enough just to know a topic in detail; it also requires insight and an angle to make any piece of writing meaningful. At other times it just lands in your lap – as if Christmas has come early.
This is one of those times, and I should thank Rachel Hunter for it.
The former supermodel, actress and television host recently took to social media to express her outrage that an Auckland developer was looking to cut down a large kauri tree. This is the same tree that made headlines several months ago, when thousands of protestors objected to the tree being felled on private land. It even involved one protestor spending three nights in the tree and quite a few hours in court.
For those who advocate for stronger property rights, such as myself, it is a perfect illustration of the kinds of disputes that arise when the law does not sufficiently recognise property rights. The law in question is the Resource Management Act (RMA).
So, what is a property right and why does it matter?
Simply put, property rights are the formal and informal rules that govern access to, and use of, property. Key categories include the rights to exclude, to determine the use of, to appropriate the income from, and to dispose of, property.
Sounds complicated, but even small children intuitively understand it. Just watch them play with their toys in a sandpit.
Property rights may be separately assigned or traded, though the exercise of these rights is limited by the obligation to avoid imposing private or public nuisances on others.
Well-assigned and enforced property rights provide the basis for individuals to trade for mutual benefit. These rights also facilitate prosperity, reduce waste and act as a constraint on the state.
Unfortunately this is not a view that is reflected in the RMA. This legislation favours an interventionist approach. This is the view that property rights are conferred by the government, which can alter them at whim and without compensation.
As a piece of environmental and planning legislation, the RMA, to quote Richard Epstein, “is not directed toward ownership and retention of property but toward limiting its use.”
Under the purposes and principles of the act, councils are required to “protect” things like significant indigenous vegetation, outstanding landscapes, cultural values and heritage. Authorities are also obliged to have regard to “intrinsic values of ecosystems.” To achieve this, land use has to be restricted.
This is where the planning comes in.
The RMA prohibits any land use that contravenes the relevant district or regional plan. Where plans make changes to existing land uses, the act explicitly states compensation is not payable for controls on land. Farmers, for example, can have sections of their land rendered commercially unusable without any compensation because it contained “significant indigenous vegetation” or an “outstanding landscape.”
Meanwhile, authorities can impose costs on private landowners by requiring them to put in erosion controls for example, with little regard for whether the benefits exceed the costs from this imposition.
Change of land use is, of course, allowed but only with a resource consent. A common interpretation of these provisions is that they allow any change so long as it is not prohibited. But here again the RMA erodes the security of property rights by allowing anyone to object to a notified resource consent, not just affected parties.
Whereas the property rights approach confronts the owner with the costs of their land use decisions through changes in value, the RMA ensures that objectors are not confronted with the costs that their preferences seek to impose on the community.
The RMA essentially engenders the “tragedy of the anti-commons.” This is where anyone has a legal right to object to any use of someone else’s property that they do not like and so nothing gets done.
This is clearly illustrated in the kauri case. Rachel Hunter effectively wants to tell a private property owner what to do with their property. Under a more defined property rights regime, Ms Hunter, who has an estimated net worth of $US60 million, would be confronted with the costs of her action, for example by buying the property or paying the owner not to cut it down.
Yet under the RMA these concerned parties can, and do, tell landowners what they can and cannot do on their property without spending a cent. The philosophy that seems to underpin the RMA is that the landowner has no land use rights in such cases but must meet all the costs of achieving the “protections” laid out in the purposes and principles of the act.
In short, the RMA fundamentally sees the owners of land as holding it in the public interest – as determined by political processes.
If the principles underpinning the RMA were applied to private cars, the neighbourhood would have a say in when you bought a new car, what specifications it would have and who could sit in the passenger seat. I am certain most New Zealanders would not stand for this type of meddling and yet this country seems prepared to swallow the planning equivalent without question.
This interventionist system contributes to the high cost of land in New Zealand. As the Productivity Commission recently noted, “property rights help to ensure that the market for land functions well.” Looking at urban places like Auckland, it is clear that land markets are not functioning well.
Can we fix it?
Leaving political considerations aside for now, one remedy would be to require that compensation be paid to a property owner where their rights have been stripped from them. This mechanism, and recognition of property rights, already exists in the Public Works Act.
This piece of legislation allows land to be compulsorily acquired if it is required for a public work. Objections are heard by the Environment Court, which must investigate alternatives and determine whether the taking is fair and necessary.
This act provides for full compensation where land is compulsorily acquired and also for injurious compensation, where applicable, to alleviate the suffering of having property forcibly taken. Where compulsorily acquired land is no longer needed, the act requires it to be offered back to the original owner at current market value.
In short, the Public Works Act enshrines the principle that those who take ownership rights should be confronted with the costs of doing so.
Requiring objectors like Ms Hunter and those concerned with the fate of this particular kauri tree to face the true costs of their actions would be an important step to restoring property rights.
My Christmas wish is that this be extended to the RMA. That said, I do not believe in Santa, and if the past 24 years have taught us anything, it is that this is an enduring piece of regulation. Let us just hope it will not live as long as a kauri tree.