New Zealand’s poor productivity statistics are less puzzling if you understand the country’s land use planning and consenting system.

It isn’t much of an exaggeration that, for many activities, anyone’s “no” can block anyone else from doing anything. It is hardly productive.

The government has promised to reform land use planning to make property rights the system’s foundation.

That system will take some work, but there is an obvious and more minor place to start: the country’s heritage regulations. It could help set the tone for the more systematic reforms to follow.

We all know the problem. Putting a heritage designation on buildings in a council’s district plan is relatively simple. The property’s owner does not even need to agree to the listing. Once listed, maintaining the building, changing it, or demolishing it becomes almost impossibly cumbersome.

Wellington’s Gordon Wilson Flats are the most obvious example. The owner wanted to make better use of the site. Wellington Council and its Councillors wanted to de-list the building to enable change.

So did the Minister. Just over two months ago, Minister Chris Bishop told the Local Government New Zealand conference that “the continued existence of Gordon Wilson Flats is an ugly scar on the Wellington skyline.”

But under the current system, nobody can say yes without a tortuous process – including the Minister.

The problem is hardly limited to that one building. After the Christchurch earthquakes, the Bishop of Christchurch wished to demolish the ruined cathedral to make way for a church that would both be more affordable and better suited to more modern needs.

Heritage afficionados could block that effort but could not come up with the funding needed to rebuild the Cathedral as they wished it to be.

And so, the building sits and will continue to sit in ruins, a testament to the country’s failed approach to heritage preservation.

The Minister promised to reform the heritage rules and take a more permissive approach.

Little has been announced. The policy is presumably still under development at the Ministry for the Environment and the Ministry for Culture and Heritage.

But it can be useful to think through what a system grounded in property rights might look like, since failure to respect property rights is at the root of the current system’s problems.

To begin with, no building would face a heritage listing without the willing consent of its owners. Some would wish designation as mark of pride; others to protect the building against future changes. Ideally, such designations would be time limited and subject to future re-ratification as unforeseen circumstances, like earthquakes, can intervene.

Some owners might be willing to have their buildings designated only if the public contributed to the cost of preserving and maintaining the building’s heritage amenity. Heritage designation otherwise is like a partial ‘taking’.

When the government wants land for a public purpose, like building a road, it can compel owners to sell at a price it considers fair. There’s a reasonable case for increasing compensation so that more of those transactions involve willing sellers.

But when it comes to a regulatory encumbrance on the use of one’s property, like a heritage designation that adds extra process for changes to the building, the government considers that no compensation is due at all.

Failure to compensate for partial takings results in worse outcomes. The government saves money by forcing the cost of providing public benefits onto private owners. But it leads the government to use regulation even when spending money would be the more effective way of achieving the public purpose. This means that regulation becomes insensitive to cost.

If the government had to pay owners for heritage encumbrances, it would have reason to be more pragmatic when owners need to strengthen buildings.

From where we are, a National Policy Statement could invite owners of listed buildings to apply for de-listing. Councils would be authorised to de-list by a simple majority vote after providing a relatively brief notice period.

Objectors, including councils, could be invited to purchase the building themselves or to contribute funds to encourage owners to maintain the building’s listed status. The Minister could sign off on requested de-listings, with only the Minister’s decisions subject to judicial review, and that only on process. Refusal to de-list would be considered an offer by the Crown to purchase the property.

And de-listed properties would be deemed to have no special amenity, character, heritage, or other special value in any future resource management process. The owner’s property rights would be restored. Valuable heritage amenities would still be provided, but the cost would be shared among the community that enjoys them rather than foisted on the property’s owners.

It would be a worthwhile move in its own right. And it would be a useful first step toward a more productive resource management system.

To read the full article on The Post website, click here.