4. Options for change: Social and economic infrastructure development

The 31 options in this chapter reflect the ITAG’s recommendations, along with additional options to address the problems identified by officials (set out in chapter 2). A full list of the ITAG’s recommendations is available in its report to the Minister.

The full set of options is grouped into five categories that broadly match the problem issues identified in chapter 2:

• 4.1 Greater national direction and consistency
• 4.2 Improved access to the designation system
• 4.3 Improved approval processes: increased streamlining and flexibility
• 4.4 Enhanced decision-making framework
• 4.5 An efficient compensation process under the Public Works Act 1981 (PWA)
• 4.6 Transition issues.

 

Wairakei Geothermal Power Station near Taupo – PhotoNZ

The options are numbered consecutively, from 1 to 31. Where an option specifically reflects the ITAG’s recommendations, this is indicated in brackets after the description of the option. As with the urban planning options, the Government has not yet identified its preferred option or package of options from the range presented in this discussion document. Your submissions will help inform this decision.

The Executive Summary sets out some of the ways infrastructure supports our national, regional and local economies. Because of its fundamental importance, the options in this chapter recognise that infrastructure projects need particular treatment under the planning process, and may require additional powers and protections beyond those offered to other types of development. Integrated decision-making is also important to maximise the value of the investment that is being made.

In determining the options, we have considered how they will work together as a coherent approval system. Figures 3 and 4 provide summary diagrams of how the options could fit together to provide for designations for projects at both a conceptual stage and once detailed design is available. Appendix 4 provides a summary of the current approval processes for infrastructure projects.

4.1 Greater national direction and consistency

Options to prioritise nationally significant issues

Any use of national instruments needs to be considered in the context of each specific case, balancing the arguments for national consistency on a particular issue with the potential benefits of local autonomy and discretion. The Minister of Local Government has recently announced a review of the function and structure of local government which will address the appropriate roles of local and central government.

Three options are put forward to improve the clarity and consistency of national objectives and standards for infrastructure, building on existing tools and mechanisms. These options could also play a role in the ongoing maintenance, operation and upgrading of infrastructure once built:

1. Using NPSs, NESs^{Footnote 43} and other forms of national standards in a more systematic way across Ministerial portfolios, focusing on the Government’s priority areas of economic, social and environmental significance under the RMA. This could include:
   1. developing an agenda of proposed NPSs and NESs to provide greater certainty to sectors and industries about the Government’s objectives and the future regulatory environment they are likely to face
   2. developing a greater number of nationally-consistent standards that decision-makers can refer to when approving the parameters for an infrastructure project. This could involve development of NESs as well as other standards such as those produced by Standards New Zealand
   3. allowing certain aspects of infrastructure construction and operation to be conducted without the need to apply for approval, as long as it meets nationally-consistent standards
   4. taking into account where ‘reverse sensitivity’^{Footnote 44} issues are, or could be, an issue [ITAG recommendation].
2. Making use of the options in Chapter 3 to support the efficient delivery of infrastructure:
   1. enabling the development of combined NPS and NES documents to communicate national priorities, so councils can more easily incorporate national direction into plans
   2. introducing a national template plan for local and regional plans.
3. Amending sections 6 or 7 of the RMA to explicitly refer to the importance of infrastructure and the benefits that derive from it [ITAG recommendation].

   Some of the potential issues associated with amending sections 6 or 7 are set out in chapter 3.

4.2 Changed access to the designation system

Options to change eligibility for ‘requiring authority’ status

The designation system,^{Footnote 45} and the powers to acquire land under the PWA, arose at a time when public organisations were exclusively responsible for infrastructure investment and operation. These powers were based on the view that infrastructure played a particular role in the economic and social life of New Zealand, which justified these extraordinary powers.

Since then, the private sector has played a greater role in providing infrastructure, reflected in the expanded eligibility to become a requiring authority. This has created some concern about whether the use of designations by requiring authorities is always consistent with the original intent for designations. At the same time, future trends in public sector delivery, such as innovative financing and ownership arrangements, suggest it is timely to consider whether the current system can meet the future needs of infrastructure provision.

Any changes to the system to accommodate a greater variety of infrastructure providers will need to consider the impacts on individual landowners’ rights and the transparency and clarity of the decision-making framework.

Five options have been identified to change access to the designations system to ensure it is available for projects that may benefit from the additional protections and powers it provides, while providing the appropriate safeguards to use of the system that is not consistent with the original intention. It is important to consider whether any of these options should make a distinction between public and private financing, ownership, operating and construction models. Where PWA powers are sought by the infrastructure provider, appropriate safeguards already exist to protect the interests of the original landowner, such as caveats on the underlying land title that require return of the land should the planned works not go ahead.

4. Extend eligibility for designations to a broader range of infrastructure types, particularly to providers of ports and electricity generation [ITAG recommendation].
5. Define eligibility based on the ‘nature of development’ rather than the type of infrastructure. The operational requirements of infrastructure generally dictate a particular location and/or shape of development. Criteria could include: being part of a non-divisible network (such as electricity transmission, or a broadband network); requiring development next to existing infrastructure (eg, to provide for expansion of existing ports or airports facilities or existing school or defence facilities) and/or requiring access to a particular natural resource (eg, renewable energy resources such as wind or water). Note that it is possible that not all developments currently eligible for designations would remain so under this option.
6. Narrow eligibility for full ‘requiring authority’ status^{Footnote 46} and establish a new status of “limited requiring authority”
   1. eligibility: a ‘limited requiring authority’ would make more of a distinction between public and private benefit of the infrastructure and/or whether the ownership or financing is publicly or privately provided
   2. approval process: approve ‘limited requiring authority’ status on a project-specific basis only, to reflect the purposes of each particular project [building on ITAG recommendation]
   3. powers: a ‘limited requiring authority’ would have access to a lesser range of powers than available to a full requiring authority. Limits could be applied on one or more of access to compulsory acquisition; protection against incompatible development; and removal of decision-making rights. ^{Footnote 47}

Two options have been identified to improve consistency to the treatment of infrastructure and requiring authorities under the RMA:

7. Change all references in the RMA from ‘network utility operator’ to ‘infrastructure provider’ to better reflect the range of development that is eligible for designations [ITAG recommendation].
8. Amend the definition of ‘infrastructure’ in the RMA so that it reflects the full range of eligibility for requiring authority status [builds on an ITAG recommendation].

4.3 Improved approval processes: Increased streamlining and flexibility

Complex and lengthy approval processes for projects lead to increased uncertainty, risk and cost for infrastructure providers. They also extend the period of uncertainty for local communities and private landowners. Delay in delivering infrastructure projects means a delay in realising their potential benefits and services, such as reduced congestion, improved security of supply, or greater capacity in public services such as extra classrooms. This means continued problems and costs for businesses and individuals who could otherwise benefit.

Options to support longer-term infrastructure planning

Long lead-in times for some infrastructure development can cause issues around secure access to land and finances, as set out in chapter 2. These problems can spill over into increased risks and costs for other investors, where their investments depend on upgraded infrastructure.

To address these potential problems, the ITAG recommended introducing a new optional ‘concept designation’ process into the RMA, to provide an alternative process that:

• catered for projected infrastructure demands by enabling corridors and sites to be protected for future development (‘concepts’), even where funding and final designs are still far off being finalised
• supported greater innovation in how infrastructure is financed and delivered, because concept designations are compatible with using a ‘design and build’ approach.

Formal pre-application consultation requirements and public hearings would apply.

The ITAG’s option draws on the original use of ‘notices of requirement’ to approve a concept, with the ‘outline plan’ process providing for the detailed design of a project.^{Footnote 48} Chapter 2 sets out how, in practice, the distinction in the level of detail required for a notice of requirement and an outline plan has become increasingly blurred, which creates additional costs and, in some cases, may act as a barrier to strategic investments.

There are several dimensions to ‘concept designations’ – including what projects would be eligible; what level of detail would be required; and what they offer the infrastructure provider. These can be addressed in several ways, and some of these are described in options 9–11 – some are discrete; and in some circumstances more than one option could be chosen.

9. Eligibility for concept designations: Either:
   1. all infrastructure projects eligible for designations should be able to make use of concept designations or
   2. only a subset of projects eligible for designations should be able to make use of concept designations. They should be limited to nationally significant projects only and/or
   3. concept designation status should be conferred on any future infrastructure identified in a statutory spatial plan.
10. Level of detail required with application: Either:
    1. sufficient detail is required to identify a comprehensive envelope of future impacts. This will allow ‘controlled activity’ status^{Footnote 49} to automatically apply to any subsequent resource consent applications [ITAG recommendation] or
    2. sufficient detail is required to identify high-level impacts only. A further application would be required at the detailed design or project stage, when detailed impacts can be identified and options to avoid, mitigate or remedy can be considered. Later decisions on specific approval would seek to give effect to the concept.
11. Powers, protections and obligations provided to infrastructure providers:
    1. infrastructure providers would have the full range of powers currently provided through notices of requirement, including access to Public Works Act powers or
    2. infrastructure providers would have a more limited range of powers currently provided through notices of requirement, given the lower level of detail identifiable in proposals. This could include restricting access to PWA powers, except where a potentially affected landowner wished to require the purchase of their property and/or
    3. a maximum lapse period^{Footnote 50} of 10 years would apply [ITAG recommendation] or
    4. a longer maximum lapse period, such as 20 to 30 years, would apply to align with the timeframes for regional land transport strategies and the Auckland spatial plan.

Figure 3 provides a summary of how the options could fit together to provide for designations for a project at the conceptual stage.

Figure 3: Concept designations: Providing for future strategic priorities

In the option identified, this would be an optional process for an infrastructure provider. Under some options, a further application for a project designation would also be required (see figure 4). Note that this diagram does not cover the PWA process, except for eligibility.

 

The diagram illustrates the processes for concept designations.

 

Dowse Interchange during construction, Hutt Valley – PhotoNZ

Options to streamline approval processes

Four main themes have been identified for options to address the problems identified with the duplication and inconsistency of existing approval processes. These aim to reduce uncertainty and risk for infrastructure providers and reduce the time for approvals to be granted. Some of the options work within the existing system. Other options would involve more significant reform.

12. Integrate current multiple approval processes into a single process. Create a single approval process for a nationally significant infrastructure project which provides all the necessary approvals under the RMA and other statutes, and a single point of appeal (a ‘project designation’). This would replace separate requirements to apply for: a designation; access to compulsory acquisition powers under the PWA; and any other necessary consents and approvals under the RMA and other statutes. [This option is derived from the ITAG recommendation for a new approval process called a ‘project consent’].
13. Remove duplicated processes:
    1. provide for designations to be automatically ‘rolled over’ into updated district plans when provided for in a spatial plan^{Footnote 51} and/or
    2. remove the current two-stage process (‘notice of requirement’ and ‘outline plan’) for approving development. Instead, establish the development’s limits when the initial designation is approved. These would be applied and managed by referring to relevant rules in a district or regional plan, as well as conditions on the designation (including conditions to comply with management plans) and/or
    3. where a concept designation is in place, ‘controlled activity’ consent status^{Footnote 52} would automatically apply to any subsequent resource consent applications [ITAG recommendation].
14. Establish consistent processes:
    1. require clearer and earlier notification for individual landowners who may be affected by a compulsory acquisition, specifying the amount and location of their land likely to be affected to the extent that this is known; and the type of interest to be acquired and/or
    2. introduce pre-application consultation requirements for concept and project designations and/or
    3. require public hearings for any concept designation and/or
    4. provide non-statutory guidance to inform ‘notice of requirement’ and ‘outline plan’ processes [ITAG recommendation] and/or
    5. apply consistent statutory timeframes to all project designations.

Figure 4 provides a summary of how the options could fit together to provide for designations for a project at a detailed design stage, and how this could fit with the concept approval set out above (options 9 to 11) and summarised in figure 3.

Figure 4: Project approvals: Providing for a specific project’s construction and operation

Under the options identified, projects would have to seek approval through one of these routes. The only exception would be where they have had a ‘concept designation’ approved under option 10(a) (see figure 3). Note that this diagram does not cover the PWA process.

 

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The fourth option to streamline approval processes focuses on improving the application of resource consents. This would impact on the regional resource consents that are required for infrastructure, such as water take or discharge.

15. Improve investment certainty for resource consents:
    1. Introduce a new process for re-consenting with the following features [ITAG recommendation]:
       1. confer rights to apply for an existing consent holder
       2. expressly allow renewal applications well within the existing consent term
       3. provide for the consented scale of activity to continue while the re-consenting application is being processed
       4. limit the scope of the new consent to the existing scale of activity within the same ‘effects envelope’^{Footnote 53}, where practical
       5. constrain the information required in an application to the effects of the existing operation, emerging/new effects, or emerging values or expectations. Applicants would not be required to provide information about the effects of the existence of a physical structure, such as the existence of a dam occupying a river bed
       6. constrain notification and consultation requirements to directly affected parties, rather than the public at large.
       7. take account of Treaty settlement issues where they are relevant.
        

       

       Roxburgh hydro dam – PhotoNZ

        

    2. When deciding on re-consenting applications, consider either:
       1. requiring consent authorities to confine their concerns to the effects of the existing operation, emerging/new effects, or emerging values or expectations. Consent authorities would not be permitted to consider the effects of the existence of a physical structure, such as the existence of a dam occupying a river bed [ITAG recommendation] or
       2. allowing a consent authority to consider any matter it considers relevant and reasonably necessary to determine the application.

4.4 Enhanced decision-making framework

Options to reform the decision-making framework

The options in chapter 3 to improve the planning system for urban areas would also affect the planning for infrastructure projects.

Five options have been identified to help make decision-making more independent, transparent and integrated. These options seek to provide greater clarity around what issues should be taken into account by decision-makers and to ensure that decisions support the integration sought by planning documents, such as spatial plans and growth strategies.

Independent decision-making for designations

Under the current system, decisions on most designations are made by the requiring authority. ^{Footnote 54} In these cases, they are also the infrastructure provider. This means that decisions on different infrastructure projects are made by different decision-makers in isolation from each other. It also means that, in many cases, both public and privately owned infrastructure providers are decision-makers with respect to their projects. This system does not promote the consideration of integrated infrastructure corridors (such as shared land space for compatible development, eg, water pipes and underground cables) that could provide less disruption in construction or ongoing operation and maintenance.

16. For “limited requiring authorities”^{Footnote 55} only require a decision-maker for designations to be independent of the infrastructure provider:
    1. for notices of requirement, remove the decision-making role from requiring authorities to make the decision-maker independent from the infrastructure provider [building on an ITAG recommendation]
    2. if the option to remove the outline plan stage is not adopted (option 13), consider retaining decision-making for outline plans with the infrastructure provider [building on an ITAG recommendation] and
    3. the decision-maker for concept designations, if sought by limited requiring authorities would also be independent of the infrastructure provider and
    4. the significance of the project should determine the most appropriate decision-maker. Nationally significant projects would be considered using existing processes available under the RMA; for example, by a board of inquiry. Non-nationally significant projects would be determined by a territorial authority, or through existing RMA processes, including the ability to request independent commissioners or direct referral to the Environment Court.

This option would not affect the decision-making role of a current requiring authority, except where they were classified as a “limited” requiring authority.

Establish a clear decision-making framework

A clear decision-making framework for designations adds transparency and increases certainty for investors and communities. This is relevant whether the decision-maker is the requiring authority, as under the status quo, or if an independent decision-maker were to be introduced for “limited requiring authorities”.

A clear framework will ensure that the public benefits of infrastructure and the wider economic and social needs that it provides for are recognised. It also provides an opportunity to recognise that imposing conditions on a project to mitigate either the impacts of construction or the operation of the infrastructure can add significant costs and may undermine achieving the project’s objectives. Any decision-making framework also needs to integrate with the spatial planning options in chapter 3 to achieve the benefits of greater co-ordination.

To these ends, the following options have been identified:

17. Ensure the objectives of infrastructure investment are appropriately recognised: Decisions on designations (both concept and project) should be based around the following considerations:
    1. whether the project is consistent with the purpose and principles of the RMA
    2. the extent to which the project is consistent with any relevant NPSs, NESs, regulations and/or other nationally consistent standards
    3. the extent to which the infrastructure provider’s objectives are delivered by the project – guidance on these matters could be provided by relevant NPSs
    4. the extent to which any adverse effects of the option have been avoided, remedied or mitigated
    5. the benefits of the project
    6. the impacts of any conditions that are imposed on the delivery of the objectives of the project
    7. the extent to which the proposal is consistent with other planning documents such as a spatial plan, regional policy statement, national infrastructure plan, growth strategy, etc, and the need for consistency in approach across council boundaries
    8. the extent to which realistic options for co-location of infrastructure could be appropriate and have been considered.
18. Ensure that national consistency is achieved where appropriate by making use of the identified options to provide greater national direction on the objectives and standards set out above.
19. Amend the RMA in relation to projects called-in by the Minister, to give greater status to the reasons for ministerial call-in. [UTAG recommendation]

Decision makers on projects subject to call-in by the Minister for the Environment are required to “have regard to” the Minister’s reasons for calling it in. The UTAG has identified that the expression “have regard to” is a very “low weight” term in law, having limited influence. They consider that the present terminology does not serve to accord central government policy objectives any primacy or priority.

20. Support integration with spatial planning:
    1. decisions about individual project or consent designations should seek to ‘give effect’ to infrastructure that is consistent with an existing spatial plan, where the effects of the development are reasonable given the scale of the project
    2. any applications for designations that are not consistent with an existing spatial plan would need to provide additional justification.

4.5 An efficient compensation process under the Public Works Act 1981

The Infrastructure TAG report recommended changes to the levels of compensation to improve the timeliness of infrastructure investment and to better reflect the impact of acquisition on private property owners. It also recommended changes to improve the acquisition process.

Any changes to increase compensation provisions may lead to financial implications for infrastructure providers, including local and central government.

Options to provide for adequate compensation

The following options seek to provide adequate compensation for land acquired under the PWA to address the potential problems identified in chapter 2:

21. Increase the current solatium^{Footnote 56} of NZ$2000 [ITAG recommendation].
22. Link the value of the solatium to the length of time an affected landowner has owned the property [ITAG recommendation].
23. Widen the solatium provision to provide for a discretionary payment when acquiring land that does not include a dwelling used as a private residence.
24. Introduce a hardship payment mechanism that provides for a discretionary payment to enable landowners vacating low-value dwellings to, where possible, buy a home that is of a similar standard and in a similar location.
25. Undertake further research into the accuracy, objectivity and reliability of current New Zealand valuation practices used to determine ‘fair market value’ based on the average ‘willing purchaser, willing seller’ price settlement [ITAG recommendation].
26. Authorise requiring authorities to pay a premium of up to 10 per cent where there is demonstrable benefit to the requiring authority in securing early settlement. The percentage premium paid and the required time limits for early settlement would be at the discretion of the requiring authority taking account of the urgency and immediacy of the infrastructure project. [ITAG recommendation].

Any findings from research carried out into current valuation practices (option 25) would also be relevant to option 26.

Options to improve the acquisition process

The following options have been identified to address the potential process problems identified with the PWA acquisition process in chapter 2.

27. Allow a requiring authority to take early possession of a property by paying an affected owner the amount specified in the valuation it obtained. Any shortfall between this initial payment and the value subsequently determined by the Land Valuation Tribunal should be paid, along with any interest [ITAG recommendation].
28. Require the requiring authority to obtain a further valuation on the affected landowner’s behalf if the affected landowner has not done so after a reasonable period. This would be in addition to the valuation obtained by the requiring authority, and would enable compensation to be based on more than one valuation.

4.6 Transitional issues

There are a large number of existing designations and plans in place throughout New Zealand. These vary in the level of detail provided and the extent to which conditions on development are attached. Any changes to the existing process should therefore carefully consider what transitional provisions may be needed to manage the change, and to ensure that investment in existing infrastructure is maintained and continued, where appropriate. It also needs to recognise that changes to requirements for district plans could, in the short term, impose significant costs on local authorities, while minimising the costs of transition where possible.

The following options have been identified to manage some of the risks around transition:

29. Introduce a sunset clause on existing designations that have not yet been used.
30. ‘Grandfather’ existing designations into any new system for minor improvements or maintenance.
31. Recognise existing sunk costs of infrastructure investment by ensuring that the next generation of district plans give due account to existing designations, where development and investment has taken place in accordance with the designation.

At this stage, no preferred option has been identified, and further input through this consultation exercise is welcome.