False claims for net benefits from RMA replacement Bills

Dr Bryce Wilkinson
NZ Herald
22 February, 2023

Parliament’s Environment Committee is currently considering the Government’s woeful replacement Bills for the Resource Management Act.

Eric Crampton and I appeared before the Committee last week to speak to the New Zealand Initiative’s submission on the Natural and Build Environment Bill and the Spatial Planning Bill.

The Initiative submitted that the government should withdraw both Bills. While the existing Resource Management Act is demonstrably bad both for the environment and development, in our view the government’s proposals will likely make matters worse.

I expected the Select Committee to ask how we could reach this conclusion when the Minster for the Environment is saying “for every $1 spent the new system is expected to deliver $2.58 to $4.90 in benefits”.

Unfortunately, no one on the Committee asked us to answer this question. It deserves an answer.

The Minister is not making figures up. His figures are directly from a published assessment by the Ministry for the Environment.

The first step in assessing the merits of any proposal is to determine whether it identifies the causes of the unsatisfactory effects. The second step is to develop options aimed directly at those causes. The third step is to assess which of those options best enhances the wellbeing of those affected.

The official analysis fails at each step. First it does not consider deep causes. Instead, it simply assumes that the remedy is to double up on prescriptive central government direction. Second, it fails to identify any options other than the government’s proposal. This means it cannot take the third step.

To claim net benefits relative to a failed RMA is not a test of how to best address the situation.

One cannot justify shooting oneself in one foot on a regular basis by asserting that it is better than shooting both feet on a regular basis. The option of not shooting either foot has to be considered.

The Ministry need to show instead that the preferred proposal beats the best alternative option.

The Minister’s claims of positive net benefits compared to an unchanged RMA rest primarily on three sources of benefit: lower net process compliance costs, better coordination of public infrastructure, and more housing.

The case that net process costs will be lower is debatable. Economic consultancy, Castalia, estimated in a 2021 report that RMA process costs are running at a staggering $1.2 billion a year. It considered that the government’s proposals at that time would increase this by $75.5 million a year. The MfE’s report estimated that a more amalgamated structure could reduce net process costs by $87 million a year. Such numbers are both problematic and relatively small.

Nor are the other two sources of benefit compelling justifications. Land supply for housing can be freed up without the Bills and public sector infrastructure can be improved independently by those directly responsible for it.

To fail to put other options on the table is to seriously mislead the public.

What would a proper diagnosis look like? Particularly glaring symptoms of problems under the RMA are polluted streams and unaffordable housing. What are the causes?

Unduly polluted streams illustrate the tragedy of the commons – over-exploitation because those doing the polluting are not confronted with the cost to others. Unaffordable housing illustrates the tragedy of the anti-commons. Land is under-developed because successful “not-in-my-backyard” objectors to housing projects are not confronted with the costs to those who need housing.

In each case, the problem would be reduced if private property rights could be tweaked so as to symmetrically confront the contending interests with the cost to others of getting what they want. Dairy farmers need to be confronted with the cost of polluted streams (and vice versa, those wanting less polluted streams need to be confronted with the costs to the community of getting what they want). Similarly, housing developments need to be confronted with what objectors are prepared to pay to prevent development (and vice versa).

In essence, where feasible, those wanting to dictate land use should buy the land in a willing buyer/willing seller situation. The purchase via public subscription of private seaside land in Awaroa in 2016, Abel Tasman National Park, illustrates this process.

The RMA crippled this venerable and very civil system for resolving disputes over the most valuable use for a scarce resource. In its place it put a regime where those who win a dispute over a resource-use consent are not confronted with the cost to the community of the lost opportunity.

The RMA thereby produces the twin problems of over-exploitation and under-exploitation. (As our submission explains, the problem is compounded by conflicts of interest for those issuing the resource consents. Those conflicts produce a bias against permitting housing developments.)

The Bills’ ‘solution’ to the above problems is more central government direction, gutting local government autonomy in the process. Conflicts of interest will abound in the decision-making bodies. Delays due to hold-out by partisan interests seem inevitable.

The Bills are basically a list of conflicting aspirations. They propose no methods for assessing how much weight to put on which aspiration. That makes purposeful decision-making impossible. A decision one way today could as easily be reversed by different personnel tomorrow.

People who own land will not be able to make long-term decisions about its use with any confidence. The rule of law is undermined when no property owner really knows what the law means, today or tomorrow.

At the Bills’ heart is the fiction that environmental bottom lines exist that can be achieved regardless of the cost to New Zealanders’ wellbeing. In reality, there are only trade-offs. Resources are scarce. More of one thing means less of something else.

The same fiction underpinned the RMA back in 1991. Thirty years later agreed bottom lines have yet to be revealed. They will not be revealed in the next thirty years because they do not exist. There are only contentious trade-offs.

The proposed pursuit of agreed bottom lines independently of costs is a perpetual motion machine for dispute and discontent. A cost is a negative benefit. People care about benefits.

These Bill essentially deny private property rights in land use. Your land use rights are blowing in the political wind. The Minister’s claims of net benefits have no merit.

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To read the submission, click here.

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