2. Planning and Urban Design

2.1 Introduction

Cities concentrate economic activity by bringing together sectors and businesses along with the universities and research institutions that support innovation, growth and specialised skills. That means well-functioning cities are central to our social, cultural and economic wellbeing.

Many of New Zealand’s major urban areas have experienced rapid population growth. This growth has implications for how these urban areas develop, including housing supply and affordability, land supply, infrastructure provision and resource use. In contrast, some other urban centres have static or declining populations. In these places there may be underuse of existing resources and falling land prices.

New Zealand’s high level of urbanisation, together with the central role that cities play in our economy and society, mean that improving how our cities develop and function is a critical component in delivering the Government’s overall objectives – economic as well as environmental, cultural and social. There is an opportunity to use our urban planning system to better:

• drive productivity
• enable development
• get value for money from infrastructure investment
• deliver a quality built environment for a improved quality of life
• achieve desired social, cultural and economic outcomes.

This is in line with current international experience. For example, governments in Australia, the United Kingdom and United States of America are increasingly using their planning systems to achieve these outcomes. This approach sees improved planning and urban design as an important contributor to developing competitive cities and providing business with greater certainty and support.

This chapter outlines possible problems with New Zealand’s current urban planning system, and provides a qualitative description and assessment for each. It is anticipated that evidence to quantify their relative scope and magnitude may arise through submissions. Box 1 summarises the components of New Zealand’s current urban planning system, which is explained in further detail in Appendix 3.

What do you think?

Your response to these questions is welcomed:

• Do you agree/disagree with the list of potential planning and urban design problems identified in this chapter?
• Can you provide any evidence that supports or questions the assessment of these problems?
• Are there any other problems you think need to be considered?

2.2 Planning and urban design problems

Four potential problems have been identified that may create barriers for successful urban places in New Zealand. They arise from current legislation and practice, and impact on the ability to facilitate and implement quality urban design and planning, integrated decisions and a coordinated and consistent approach to planning New Zealand’s towns and cities. These problems are:

• inadequate recognition of the urban environment in the RMA
• complex planning system
• lack of consistency in decisions
• barriers to effective implementation.

Each problem is discussed in detail below, and references to the supporting evidence are provided.

Urban problem 1: Inadequate recognition of urban environment in the RMA

A critical challenge facing growing towns and cities is how to enhance the positive outcomes of a high quality, liveable and economically productive urban environment (both natural and built), while also managing the negative impacts of growth. High quality urban services and amenities, including open space, are crucial to cities’ long-term attractiveness and competitiveness^{Footnote 3} and quality of life. Urban planning and design has a significant role in delivering and maintaining these attributes and outcomes.

There are growing concerns and evidence that the RMA does not facilitate the delivery of these outcomes.^{Footnote 4} The RMA was designed to be a statute that enables infrastructure and development but is also based on the management of environmental effects. While the definition of ‘effect’ in section 3 of the RMA includes ‘positive effect’ and ‘future effect’, the Act does not explicitly recognise the positive economic, social and cultural contribution that high quality urban design and planning can make. The RMA tends to focus on the environmental effects of specific developments rather than on their nature, scale and timing. It was not designed to provide for desired development outcomes, or to support integration of strategy or investment.

In particular, as the primary land-use planning legislation, RMA practice has emphasised the management of environmental effects and the protection of the natural environment.^{Footnote 5} Under the RMA, the creation and management of the urban environment (which may not already exist or is in the process of being created), is assessed in the same manner as the natural environment (as it already exists). The urban environment is under constant change and improvement by planning, design, and development processes,^{Footnote 6} often over short time frames. However, the RMA focus on effects tends to encourage a reactive, risk-averse approach that seeks to maintain the status quo as a starting point, regardless of any wider benefits which may be achieved from what is proposed.

RMA practice in New Zealand tends towards a prescriptive style of planning practice. This practice has evolved over time, partly in response to uncertainty and a lack of national guidance on priorities and environmental standards, and partly because of the need for plans to be legally sound to be certain and enforceable. The RMA is intended to be enabling by focusing on managing the adverse environmental effects of activities and recognising positive effects. The ‘enabling’ characteristic of the RMA is one of its greatest assets, but in practice retaining it is difficult

In practice, plans have a tendency to take a rules-based approach involving a conservative and protectionist process of avoiding, remedying or mitigating adverse effects on the existing environment. This includes the urban environment. Plans generally take this approach in order to give as much certainty as possible to local government, the private sector, communities and property owners about which activities are allowed under what conditions.

Certainty is achieved by using rules to set agreed environmental bottom lines and using these rules as trigger points for further assessment. When environmental bottom lines are set high, they increase the thresholds for assessment and reduce the types of activities that can be undertaken in certain locations. This can result in protectionism and a focus on compliance.

For the urban environment, this can mean that what an activity is trying to do is lost sight of. For example, the desire may be to provide housing close to necessary transport to link people to jobs and services, but the focus instead goes on assessing the effects of component elements and whether they comply with rules.

As stated previously, under the effects-based RMA, the creation and management of urban and natural environments are assessed in the same way. Its effects-based policy framework for decision-making relies on clear, objective and scientific information to determine what effect activities have and appropriate environmental bottom lines. However, this does not lend itself particularly well to addressing the cumulative effects of development in subjective areas such as urban design, where the link between activities and their effects are not well defined.^{Footnote 7}

RMA case law^{Footnote 8} has confirmed that urban design-related matters can be considered in decision-making at a site-specific level. However, it can be challenging justifying quality urban design in planning decisions where policies, and sometimes decision-makers, are focused on quantitative scientific-based decision-making. An example is where a residential, retail or commercial development is required to mitigate adverse environmental effects by providing pollution control devices (eg, stormwater ponds) or car parking, but is not required to recognise the qualitative factors required to deliver a well-designed built environment or functioning city or town.

Overall, it is considered that the RMA’s emphasis on managing effects on the natural environment, and its definition of the environment, does not adequately address the complex social and economic processes which produce and maintain urban environments. The definition excludes critical aspects of the constructed urban environment from receiving the serious consideration they deserve. Essentially, in relation to urban development and the built environment, the RMA is being asked to do a job it is not explicitly designed to do.

Urban problem 2: Complex planning system

New Zealand’s urban planning system (namely the RMA, LGA and LTMA) lacks alignment between strategies, funding, regulation and decision-making to integrate land use and transport, set spending priorities and manage growth. Duplication of some powers and processes and lack of alignment between the RMA and other legislation was also identified in the Phase One Resource Management Reform.^{Footnote 9}

The three planning Acts were never designed to work together as a complete urban planning system. Each Act, its plans and decision-making are all subject to different legal purposes, processes and criteria, and operate over different time frames. This results in duplication and lack of clarity, and demands considerable time and resourcing from all parties involved.

While there are legal links^{Footnote 10} between plans and decision-making under each Act to help them align, these have various statutory weightings and are often not consistent between the Acts. For example, a Regional Land Transport Strategy is ‘required to be consistent with’ a Regional Policy Statement, but the Regional Policy Statement has a lesser test of ‘having regard to’ a Regional Land Transport Strategy.

Across the system as a whole, the links therefore create an inconsistent hierarchy of legal weightings which is not always clear or easy to determine. Together with the number of plans, this creates complexity, fragmentation and confusion. Figure 1 illustrates the number of plans and the legal links that create the complexity and fragmentation in New Zealand’s current planning system.

Figure 1: New Zealand’s urban planning system: relationships between the plans and strategies of the RMA, LTMA and LGA

(Acronyms used in figure 1 and throughout this discussion document are explained in Appendix 1.)

 

Read a description of this image

This image graphically presents the hierarchy of plans and strategies of the RMA, LTMA and LGA in the urban planning system, the relationships between them and the complex and fragmented nature of New Zealand’s current urban planning system.

A further issue is that the current urban planning system does not facilitate the implementation of growth strategies or enable the resolution of specific issues (such as housing affordability), in an effective and consistent manner.^{Footnote 11} In fact, the current system requires that the individual components of a growth strategy or issue be broken up by type (eg, environment, social, infrastructure, economic, finance and funding). These components are then addressed by the relevant Act. This creates a fragmented and overly complex approach to resolving an issue. There is also a missed opportunity to use a number of policy levers across multiple Acts to implement a strategic direction in a consistent manner.

The complex urban planning system also creates a lack of alignment between spending, policy, regulation and development. This means the current planning system is not able to effectively engage or provide signals or sufficient certainty to infrastructure providers and the private sector. This undermines integrated decision-making that will provide the right infrastructure in the right place at the right time.^{Footnote 12} It does not support quality urban development and value for money.

Within the existing system there are few mechanisms to support the implementation of projects and broad objectives across the various plans under the RMA, LGA, and LTMA. For example, there is only a weak legal relationship between growth strategies and long-term council community plans (LTCCPs) developed under the LGA and other plans, including RMA plans, decision-making and funding plans.

To date, parties have relied on memoranda of understanding (MoU) and establishing collaborative working and governance relationships. However, implementation has not always been successful – eg, the Auckland Regional Sustainable Development Forum has successfully developed cross-party strategies for the Auckland Region, but implementing these strategies and delivering results on the ground has been challenging.

As a result, the implementation of growth strategies developed under the LGA is weak^{Footnote 13} with a requirement only to ‘have regard to’ in plan development^{Footnote 14} and in resource consent assessment.^{Footnote 15} There are often disconnections between LTCCPs and decisions under the RMA.^{Footnote 16} In the context of Auckland, the Royal Commission noted that in particular there has been a failure to align the land-use side of growth management with the funding and provision of city-shaping infrastructure^{Footnote 17} (roading, public transport, regional waste and wastewater networks and open space).

To summarise, RMA decision-making has little recognition of infrastructure investment decisions and priorities decided under the LGA. Where an LTCCP provides for a council’s contribution to the achievement of community outcomes, the RMA is not directly involved in the delivery of outcomes. Its focus is managing the environmental effects of activities, which may or may not assist in the delivery of outcomes. This disconnect leads to gaps between funding and the demand for services, and limits the alternatives to fund infrastructure.

Urban problem 3: Lack of consistency in decisions

This problem is a symptom of the lack of alignment and connection between the planning statutes (problem two, above).

Quality urban development requires effective coordination and alignment in decision-making and action across local and central government, infrastructure providers and the private sector. It also requires effective interaction and engagement with key participants affected by urban development, including iwi/Māori, communities and non-government organisations.

“Most development is a private sector function. This means that private sector developers and communities must have buy-in to and involvement in metro and local strategies.”^{Footnote 18}

In this context, key findings from a review of urban growth management in the United States^{Footnote 19} concluded that:

"A critical ingredient in a successful strategy is that it is built politically from the bottom up and technically from the top down.

The bottom up approach involves genuinely searching for community and private sector views and, ideally, consensus on development choices and directions. ... private sector investment usually works from the bottom up and initially at a micro scale. Thus the development sector (housing, retail, industrial) needs to be tapped into (and) alongside the political community. Both need to have input into strategies.

The top down bit involves providing good political leadership and listening skills. It also involves articulating ideas and subsequently a clear vision and directions. It must be supported by professional analysis (based on good information and careful monitoring) of urban trends and the impacts of various options. And having built the strategy, it is very important to keep it live. Strategies require ongoing investment in information and monitoring, and updating through reviews.

Metro strategies fail when they become technocratic and directive.

Things fall apart when metro authorities start directing and controlling development and imposing ideas without seeking cross-sectoral political mandates and without communicating with and involving affected communities, the private sector and local government."
 

In practice, in New Zealand, there are two key aspects to this problem, each discussed further below:

• multiple parties with an interest in urban planning
• the role of central government.

Multiple parties with an interest in urban planning

Multiple parties are involved in decision-making and action in the urban planning system. The lack of coordination and consistency between these parties is a practice issue, and is also a symptom of the complex urban planning decision-making system.

Some good examples of planning practice and/or design leading to agreement and greater consistency in decision-making and action by participants do exist – for example, the Tauranga Growth Strategy and Greater Christchurch Urban Development Strategy.^{Footnote 20} However, such strategies are not statutory documents and have limited weight. In other areas, there is difficulty in implementing the long-term strategies developed at the regional level by local authorities.^{Footnote 21}

No effective, single mechanism exists to facilitate engagement, provide the full range of relevant information needed to inform robust decision-making, or secure agreement between participants and create certainty for investment. Currently, mechanisms are spread throughout the LGA, RMA, LTMA and other Acts (eg, Schedule 1 of the RMA, whereby agreement is ultimately reached through judicial decision-making).

Under this situation, the scope and aspects of the urban environment considered are limited to the purpose of the relevant Act. Agreement between participants also tends to be limited to single elements of the urban environment (eg, natural environment, transport) or the particular interest or values of particular groups, rather than integrated.

One symptom of the fragmentation is the difficulty in implementing long-term strategies developed at the regional level by local councils. These strategies are often aspirational and not grounded in the realities and funding constraints faced by central and local government and the private sector. They are also often not based on robust analysis of market preferences, or demand for location and development types. Development pressure from the private sector in areas not identified for growth is also a symptom of poor cross-party agreement. It is important that long-term plans and strategies are realistic and responsive to changing circumstances and have the support of participants.

An example is the development of the Auckland Regional Growth Strategy 1999, and its concept for growth management. This set out areas for growth and intensification, but did not have the support of the development sector as to the location or economic feasibility of the areas identified for intensification and development. Nor did it have the full endorsement of central government, although agencies were involved and aware of its development. Findings of the review of the Auckland Regional Growth Strategy raised the need for closer relationships with key partners in the future implementation of the Strategy, including private-sector infrastructure providers and the development industry, as well as central government.^{Footnote 22}

Central government’s role

Central government plays critical roles in urban areas as a policy maker, regulator, developer, investor and capability builder, and as an implementer and deliverer of infrastructure and services. Infrastructure is a key priority of the Government because it helps to shape places, to connect people within and between places, provide services to locations and influence people’s choices and behaviour.

Central government provides the bulk of public expenditure in urban areas across a range of portfolios. When compared to other jurisdictions, New Zealand’s Government spend is highly centralised, whereas resource management is highly decentralised.^{Footnote 23} Total central government spend in Auckland (including benefit payments and operating costs) outweighs local government by a factor of around eight to one. In the 2007 fiscal year, estimated total expenditure by central government in Auckland was NZ$17.2 billion, or 32 per cent of national expenditure by central government.^{Footnote 24} This compares to NZ$2.7 billion spent in the same period by Auckland local authorities. Despite the level of its investment however, central government has not been explicit about what it wants to achieve overall for town, cities or rural areas.

New Zealand Institute of Economic Research estimates^{Footnote 25} show that the Government’s infrastructure investments in Auckland are concentrated in a small number of portfolios: transport (NZ$705 million), housing (NZ$474 million), education (NZ$283 million), health (NZ$125 million) and law and order (NZ$98 million). More than 40 per cent of central government’s capital expenditure for transport, housing and education is in Auckland.

Its level of investment means central government needs to be involved in agreements on urban growth management.^{Footnote 26,Footnote 27} The Government is considering mechanisms that will provide for more effective and coordinated engagement in planning and delivery where appropriate. Its 20-year National Infrastructure Plan,^{Footnote 28} released in March 2010, will help coordination by creating a clear outline of the nature, scale and timing of significant national infrastructure investment over the life of the plan.

At present, urban land-use planning in New Zealand (under the RMA) is often disconnected from infrastructure spend decisions (under the LGA) and this can undermine return on investment. To get better value for money from infrastructure and productivity gains, spend needs to be targeted to deliver the highest possible return on investment. Central government will therefore need to have a clear view about what it wants to achieve in a location, along with:

• quality and relevant information about places – eg, environmental conditions and constraints, migration, growth areas, and locations that have a demand for housing and business activities
• an understanding of what is needed and agreement with other parties to provide other critical factors – eg, land-use plan changes, and/or complementary investment by local government in other infrastructure or development
• appropriate means of protecting critical routes and sites.^{Footnote 29}

Urban problem 4: Barriers to effective implementation

Effective implementation of planning and urban design outcomes relies on being able to access a full range of appropriate tools and assess which is best for the job in specific circumstances. The full range of tools covers a spectrum, including the use of plans to implement national objectives and standards, provision of information, using incentives and regulatory tools.

The use, flexibility and effectiveness of tools should complement the broader planning system, allowing the achievement of broader objectives, such as economic growth, integrated urban and infrastructure development, value for money from investment, and well-designed urban environments that create value.

Three potential barriers to effective implementation have been identified, and are discussed further below:

• inconsistent plan structure and format
• cost and time associated with preparing and changing plans
• potential problems with tools in practice.

Inconsistent plan structure and format

There are 85 local authorities in New Zealand, and each has adopted one or more plans with a structure, format, and set of provisions that are virtually unique to that local authority.

This variability and inconsistency can result in:

• duplication of effort in resolving common issues, unnecessarily increasing the cost and time local authorities and submitters spend on the plan preparation and change process
• frustration amongst resource consent applicants who have to deal with a number of different plans and have to tailor otherwise identical proposals to match those plans
• national policy statements (NPSs) and national environmental standards (NESs) having to be drafted to cater for all possible variations in plan format and provisions. This can increase the complexity of NPS and NES while reducing their clarity and effectiveness
• unexpected costs for those carrying out, or on the receiving end of, enforcement action brought about because of misunderstandings over unexpected and subtle differences between the provisions of plans
• limited ability to transfer case law lessons from one plan to another (such that some local authorities are forced to obtain legal advice or face legal action in relation to matters that are essentially the same as those encountered by other local authorities).

Variability in the meaning of ‘residential zone’ highlights the issues. Most district plans have at least one or more residential zones. However, a quick analysis of 230 residential zones contained in RMA plans suggests that no two are exactly alike – even when many have similar names and broadly similar purposes, the rules and standards that apply vary.

Similarly, a separate study of plans associated with the eight largest territorial authorities found 123 different terms defined, of which there were more than 450 variations.^{Footnote 30}

Very little quantitative information is available on the effect of plan variability on costs and time.

Notwithstanding the shortage of quantitative information, several businesses and industry groups have repeated calls for greater consistency within and between plans.^{Footnote 31}

One problem caused by the lack of consistency is the difficulty in expressing national direction clearly and unambiguously through plans:

• Variability in plan structure, terminology, expression and format means that NPSs and NESs are either very complex, or generalised, in an effort to reflect plan variability. In other instances, national instruments have relied on local authorities’ use of RMA plan change processes to try and reflect national direction (with the resultant cost and variability in how well individual plans reflect the national direction).
• The absence of a common process to produce NPSs and NESs that relate to the same matter on a single timetable makes it difficult to produce a fully integrated national direction policy and standards package on a given topic that can be reflected in RMA plans with minimal effort on the part of local authorities.

Compounding this, NESs all but prescribe rules to be included in RMA plans, but require a plan change process to achieve this. That means the costs fall on local authorities and communities if they want to fully integrate the NES into their plan.

Compared with some other countries (Australian states and the United Kingdom), New Zealand has relatively few environmental standards and national policy statements in force. At present there are:

• NESs on four topic areas
• at least five new NESs under development
• two NPSs – including the first generation New Zealand Coastal Policy Statement
• up to four NPSs in various stages of development.

Where insufficient national direction is provided, this can be seen as a problem where local or regional differences are too costly or inappropriate. However, a multitude of national instruments can create other problems.

Experiences in the United Kingdom demonstrate the potential risks of not having an integrated and simple approach to dealing with national policy direction. Articles in the Royal Town Planning Institute journal of 13 November 2009 noted that more than 3000 pages of interrelated and sometimes conflicting national policy and rules existed, resulting in a fog of targets, quotas and structures.^{Footnote 32,Footnote 33}

In the New Zealand context, a similar potential risk exists, particularly as more NPSs and NESs are prepared. The Government has received a number of requests and suggestions in recent years for specific NPSs or NESs.

Cost and time associated with preparing and changing plans

Compared with other forms of local authority planning, the preparation and changing of RMA plans is expensive and time consuming. This can impact on local authorities, communities, businesses and the environment through:

• direct costs in time and resources for local authorities
• indirect costs of money and resources that could have otherwise been spent on other local authority works and projects
• direct costs to businesses and communities in making submissions and resolving appeals in the Environment Court
• indirect costs to businesses and communities through downtime for key people, and money and resources being diverted to submitting on plans and resolving disputes through the Environment Court
• costs to businesses associated with delays in fixing unnecessary, inappropriate or out-of-date rules
• costs to the environment if plan provisions that may benefit the environment are delayed or diverted.

Costs to businesses and other stakeholders (such as those in forestry and agriculture) can also arise from the need to educate, or provide information to local authority staff who have limited knowledge about the sector and its activities. Without such information, plan provisions may become unnecessarily precautionary in approach, with additional plan and consent administration and compliance costs over and above those reasonably expected.

The costs of educating and informing local authority staff can also be exacerbated by long plan and plan change development time frames as, within that time, staff may leave and be replaced (sometimes twice over). Costs to businesses and stakeholders providing such education and training may be financial (cost of employing researchers, trainers, or printing publications for example) time, or a combination of both (for example, business owners or farmers sacrificing time that may otherwise have been devoted to running their business or farm).

Time:

Studies of local authority experiences with the first generation of plans under the RMA^{Footnote 34} showed that, on average, it took local authorities 8.2 years to prepare a plan and make it operative. However, this figure does not take into account first generation plans that were still not operative at the beginning of 2010 (of which there are still at least four). The two largest contributors to time were plan preparation before notification (30 per cent) and appeals (40 per cent).

Information on time frames for plan changes and variations is less comprehensive but suggests that it takes nearly three years to prepare and make a plan change operative.^{Footnote 35} The overall distribution of time for each task of the plan change process suggests around 30 per cent is being spent in preparing the plan change and the RMA section 32 analysis; 35 per cent in the submission and hearings processes; and a further 35 per cent in resolving appeals.^{Footnote 36}

A survey^{Footnote 37} of plan changes in Auckland and Franklin found it could take between 18 months and six years for a plan change to be prepared, notified, go through the submission process, go through the hearing process, and have decisions released (the average being close to three years). More than half (51 per cent) of the time was taken in the pre-notification and plan change drafting stages of the plan change process, with the second biggest contributor being the hearings process (23 per cent). However, several of the plan changes surveyed were still subject to appeals that would extend their time frames beyond six years.

Similar survey work^{Footnote 38} was carried out for plan changes by local authorities in the Bay of Plenty in 2008. The overall time for plan changes was approximately half that of the Auckland local authorities (79 weeks on average if appeals were excluded). Of note was that the average time spent resolving appeals in the Bay of Plenty added 29.4 weeks to time frames (nearly seven months).

Cost:

The average cost of producing the first generation of plans under the RMA has been estimated at more than NZ$1.9 million.^{Footnote 39} The greatest contributor to costs is the first stage of plan preparation, including initial plan preparation, the section 32 report, and pre-notification consultation. This first stage contributed 37 per cent of the total costs.^{Footnote 40}

At the upper end of the scale, the cost of developing a number of first generation RMA plans produced by larger local authorities, and those facing significant growth pressures, is known to have exceeded NZ$7 million (with at least two local authorities spending more than NZ$15 million).^{Footnote 41}

The costs of preparing changes to plans and making them operative vary considerably with scale. Surveys of plan changes in four local authorities in 2008^{Footnote 42} found a cost range of NZ$18,500 to NZ$601,000. The mean for the survey was NZ$109,000. The cost of resolving appeals made up nearly half the costs of the more expensive plan changes.

Mean costs for the main stages of plan changes (excluding appeals) from the studies in Auckland, Franklin and the Bay of Plenty^{Footnote 43} found that, for those plan changes studies, the highest proportion of costs (55 per cent) was associated with the hearing process, with the pre-notification plan change preparation stage being the second highest source of costs (22 per cent).

Little data has been collected about the cost of plan change appeals for local authorities. Some local authorities are known to include a contingency of NZ$50,000 into their plan change budgets but actual figures tend to vary considerably according to whether appeals are withdrawn, settled before a hearing, or proceed though to a hearing and are further appealed.

Potential problems with tools in practice

Our international competitors have adopted strong planning systems that are flexible and responsive to new challenges and market forces, forward looking, and focused on economic growth and fostering value. They are designing their urban planning systems and tools to be more enabling, rather than focusing on just complying with rules and ticking boxes.

Increasingly, governments are focused on using their planning systems to drive productivity, enable development and get better value for money from infrastructure investment (eg, the United Kingdom, United States of America and Australia). Attention to places and improved planning and urban design is seen by some countries as part of the answer to having competitive and productive cities, providing business with certainty, and creating a quality regulatory and physical environment (eg, infrastructure). Spatial planning is often being used as the tool to enable this shift. A comparison of different types of planning is provided in Appendix 4.

The Australian Federal Government is moving fast to use its planning systems to harness growth and improve competitiveness. Australia has launched a new reform of its urban planning system and the Federal Government is now providing strong national leadership for major cities, and delivering on its objectives through practical partnerships with states, territories and local government.

The Organisation for Economic Cooperation and Development (OECD) also has a focus on the role of cities and regions in economic performance and growth. The OECD recognises that attention to the design of places and improved planning is part of the answer to having competitive and productive cities and towns and quality environments.

“There is considerable evidence that a good and attractive environment, including well performing urban infrastructure, are not alternatives to metropolitan urban success but in fact fundamental to its continuation.” ^{Footnote 44}

Trends and tools in international urban planning include:

• clear statements of national objectives for towns and cities
• priorities and criteria for plans, and nationally or regionally significant development (eg, projects of national/regional significance)
• using regional spatial plans as a mechanism for negotiating and agreeing overarching objectives and development patterns, and also to provide information to the private sector and enable public-private partnerships
• using national spatial plans (eg, Ireland, Scotland, Wales, Denmark, the Netherlands) to inform and augment national infrastructure plans and investment. In these cases, national spatial plans provide the context for the development of regional spatial plans by local government
• recognising the need for partnerships across each level of government (central and local governments) and with the private sector (often implemented through spatial planning)
• using complementary tools to support good urban planning and design including: housing market assessments, urban design commissions and capability building, value capture instruments, innovative financing instruments, master-plans and specialised zoning, urban regeneration/development agencies, and instruments to enable land assembly in strategically important areas, such as compulsory purchase.

As our competitors and our trading partners move to use their urban planning systems to deliver economic growth alongside environmental and social objectives, we are at risk of being left behind. We have to benchmark ourselves against our competitors and assess not only the regulatory costs of our urban planning system but also the opportunity cost. Where we have high regulatory or opportunity costs and/or low benefit we must review and consider reforming our approaches to keep up with our competitors. This is as much about delivering a better regulatory environment for business, as it is about maximising the opportunities for improved economic performance and environmental outcomes.

For New Zealand, some of the tools currently available for supporting effective urban development may be ineffective in practice because they may:

• be inadequate – eg, metropolitan urban limits; financing and funding mechanisms for infrastructure
• need to be complemented by new tools to be effective – eg, spatial plans
• not being used to their full potential – eg, urban design panels.

It is important to note that tools to implement urban design and planning generally need to be implemented as a package as each has particular limitations and characteristics. Implementation tools should therefore cover the full spectrum from information, incentives, to regulatory tools.

Development tools can complement broader urban planning systems and improve the ability to achieve broad outcomes sought in urban areas, such as economic growth, integrated urban and infrastructure development, value for money from investment and well-designed urban environments that create value.

New Zealand’s existing tools are discussed below.

Metropolitan Urban Limits (MULs)

The use of MULs, rightly or wrongly, has been accredited with contributing to housing un-affordability by limiting land supply and thereby raising land prices. Although there is evidence of a strong zoning boundary effect on land prices,^{Footnote 45} there are a number of other factors which influence locational demand and therefore land prices:

• a market that favours new, large floor area, large lot detached homes which increase return on investment in land, and the lack of alternatives to these
• incentives associated with property investment which are not available with other forms of investment
• population growth, immigration policies and workforce composition.
• the quality and availability of transportation options
• the locations of business areas and the workforce skills required by those businesses
• the willingness of owners of large land holdings, both on the urban fringe and in existing urban centres, to develop their land for residential or business purposes
• the responsiveness of the rental market to housing supply (including apartments) and house price increases
• surrounding amenity levels, including school zones, and views
• time taken to journey to work or access services
• possible future increases in energy prices
• priorities for infrastructure provision and costs of delivering and maintaining infrastructure.

Any discussion on MULs needs to consider these other factors; in particular the effect on infrastructure provision where there is no MUL. There are many unanswered questions that need future analysis by officials and discussion with other parties, particularly infrastructure providers.

For instance, to manage and avoid rate increases, councils need to think about where best to provide for development. Considerations need to include the cost of infrastructure provisions. Various locations will have different associated costs and will require a critical mass of development to make them affordable. Smaller developments may be able to provide some of their own infrastructure. Although, as WaterCare Services^{Footnote 46} has noted, this can result in a proliferation of small plants which a public service provider often has to take over. This can also push up the cost to the rate payer through lack of economy of scale and poor environmental performance.

The use of MULs in New Zealand is a blunt instrument when compared to international uses of MUL. They tend to be applied rigidly and do not consider the social and economic benefits and costs of their use. For example, the objective of the Auckland MUL is simply to protect rural and coastal environments.^{Footnote 47}

MULs are used effectively as a tool elsewhere in the world (eg, Melbourne and Portland) because they are one part of a broad suite of tools, including ongoing monitoring of land supply,^{Footnote 48} and are kept under review. This is central to their effective use.

If urban limits or tight regulation severely restrict land supply and related choice, especially of housing, then prices rise and land speculation becomes a big problem. Regulatory restraints become strained as pressure comes on and litigation starts to replace strategic planning as a way of making decisions.^{Footnote 49}

The conditions under which an MUL should or could be moved, the process for deciding on a move, and the method for implementing a move, are also essential factors.

Current finance and funding mechanisms

Existing finance and funding mechanisms have particular limitations, including poor allocation of current and future costs and benefits, and where they fall. For example, development contributions impose long-run costs of infrastructure development upfront on the developer, rather than on the property user over the life of the infrastructure (100+ years). They are also often applied early in the development process when developers may have tight cashflow.

The current system of finance and funding mechanisms has limited ability to create an incentivised system that encourages private sector development in areas of greatest benefits (public and private). This could include the ability to provide discounted contributions in designated growth areas, while providing certainty and reducing risks for the developer and council.

Urban design panels:

These panels provide expert advice on design proposals, including significant new buildings, open space, transport projects, master plans and infrastructure. However, where urban design panels are in place, their recommendations have limited influence on decision-making under the RMA due to a lack of legal support or status. In addition, good urban design is not prioritised by some councils, possibly due to limited capability and resources.^{Footnote 50}

Spatial planning

A comparison of spatial planning against other forms of planning is contained in Appendix 4. A brief overview of spatial planning is provided in Box 2 below.