The government's Resource Management Act (RMA) reform is shaping to be a tale of two approaches: one necessary but potentially problematic, the other more fundamental and promising.

Last weekend, Ministers Chris Bishop and Shane Jones unveiled a long-awaited list of 149 projects that will be included in the government’s controversial Fast Track Approvals Bill.

A few weeks before, Bishop and Simon Court announced the plan to replace the Resource Management Act with legislation that better respects property rights.

These two pillars of RMA reform will unblock planning processes and reduce the time and cost of consenting. Both are necessary, but one offers a more sustainable path forward.

There is no doubt the RMA needs major reform.  It is an important reason for New Zealand’s housing shortage and its unaffordability. According to the Infrastructure Commission, the RMA contributes to a worsening infrastructure deficit by increasing the time and cost of approving projects – $1.3 billion per annum.  

The problems are not just about stymying big projects. Farms and businesses are subject to thickets of green and red tape to go about their day-to-day activities, harming productivity, exports and economic growth.

Meanwhile, there is plenty of dissatisfaction that the RMA has not protected or improved the environment.

There is almost universal agreement that the RMA is broken. The previous government’s fix was to replace it with a Natural and Built Environment Act (NBEA) and Spatial Planning Act.  The NBEA emphasised environmental importance and lacked prioritisation of its multiple ‘systems outcomes’. Many criticised it for being even worse than the RMA.

The new government quickly repealed its predecessor’s legislation and has worked hard on a new approach.

The Fast Track Approvals Bill was introduced in March and is before a select committee. It is highly contentious with environmentalists describing it as a ‘war on nature’. Other commentators – the New Zealand Initiative included – expressed concern about it giving too much decision-making power to Ministers.

While acknowledging the need for much quicker approvals, The New Zealand Initiative submitted that the powers of Ministers be constrained and the life of the proposed Act subject to a ‘sunset clause’, making it temporary.

The Bill is due to be reported back to the House next week. The government has indicated a softening to some of the Bill’s provisions on Ministerial powers, including that expert panels will have the final say. That is good, but it is unclear whether the Bill will be temporary or permanent.

Hopefully, it will be temporary. Why?

The biggest problem is the opportunity for ‘rent seeking’ – manipulating the political environment for private benefit. Getting projects on the fast-track list could be incredibly valuable for proponents. While projects should have strong economic benefits, the process heightens the risk of bad outcomes—ranging from misallocation of resources reducing economic efficiency to encouragement of corruption and cronyism. The risks might be small initially but may increase over time.

For all its issues, the Fast Track Approvals Bill is a much-needed immediate response to unclog a broken system.  

However, the government aims to introduce a more ambitious plan to replace the RMA with an improved system that would eventually eliminate the need for fast-tracking.

The goal is to establish property rights a fundamental principle for resource management.

The RMA has failed in good part because of two fundamental flaws from a property rights perspective: first, it allowed anyone to object to a changed land use; second, it denied compensation for the lost value from a successful objection.

Both flaws are bad for New Zealanders’ wellbeing - as demonstrated by unaffordable housing, infrastructure deficits, and weak economic growth.

Some will scoff that a property rights approach is ideological. But that is misguided thinking. Security in one’s possessions is essential for dignity and prosperity. A lack of property rights was a key reason the Soviet Union was a poor country despite rich natural resources. And a country with a dreadful environmental record.

Property rights determine the degree to which legal owners can determine the best use of their property, retain income from it, and dispose of it. Those rights affect owners’ incentives, which should make them amenable to price-based solutions to protect biodiversity, conserve water and reduce pollution.

Property rights are not absolute, but government over-rides should be restrained and principled. Regulation should be workable, with benefits exceeding costs. Takings should be compensated. Sadly, neither is a feature of the current system.

The RMA’s disregard for property rights is not an anomaly but part of a historical pattern.  A 2009 study by Victoria University’s Institute for the Study of Competition and Regulation claimed that New Zealand has “among the weakest protection of private rights in the OECD, a history of confiscation of private property rights, and a long-standing failure to recognise the protection of the basic human right of property rights”.

A better resource management system based on respect for property rights would provide a more sustainable and efficient approach to land use and environmental protection.

This should mean no long-term need for a special, fast-track approvals process.

To read the full article on the NZ Herald, click here.