Appendix A: Estimate of Costs to Central and Local Government

Introduction

• these cost estimates only cover implementation costs − there will be additional costs for central and local government as a consequence of the NPS (eg, more expensive water supply costs, additional catchment protection costs)

• no account has been taken of implementation or other costs for non-government parties (eg, the full costs of hearings, once non-government costs are taken into account, are likely to be a multiple of government costs).

In the estimates below the cost of employing a full-time equivalent staff member has been assumed to be $150,000 per annum. This includes salary and staff overheads, including equipment costs. This may seem high, but since much of the costs estimated below are for initial costs over only a one- to two-year period, rather than ongoing costs, this reflects the likelihood that consultants will be engaged for a number of tasks.

Central government

The costs associated with the development of the proposed NPS are not included, because these will largely be incurred whether or not the NPS is eventually implemented or not.

The implementation of Policies 1–3 would require some form of central government support for local government in the form of planning guidance notes, estimated to cost $250,000.

It is not considered that Policies 4−8 will result in any costs to central government that have not already been included in the assessment of Policies 1−3.

Policy 9 involves an independent review of the NPS, and this cost is estimated at $2 million at year 10 and then repeated 10 years later. This has a present value of $0.9 million, assuming a discount rate of 10 per cent and a 25-year life.

This gives a total estimated cost (ie, initial plus ongoing costs) in present value terms of $1.15 million for central government’s implementation of the policies under the proposed NPS.

Local government

The costs for local government derive primarily from Policies 1−3 and from Policy 8.

Policies 1–3

Identification of freshwater resources as outstanding and degraded

2 x FTEs per regional council = 2 x 16 (councils) x $150,000 = $4.8 million

Alteration of planning provisions to give effect to the NPS

1 x FTE per regional council + 2 hearings at $50,000 each⁸ = ($150,000 + $100,000) x 16 = $4 million

0.5 x FTE per territorial authority + 1 hearing at $50,000 = ($75,000 + $50,000) x 81 = $10.1 million

Increased levels of reporting and monitoring

1 x FTE per regional council = $150,000 x 16 = $2.4 million per annum ($21.8 million present day value)

0.25 x FTE per territorial authority = 0.25 x $150,000 x 81 = $3 million ($27.2 million present day value)

Policy 8

Iwi and hapū registers and consultation

Initial cost of $150,000 per regional council and territorial authority + $20,000 per annum ongoing

$150,000 x 97 = $14.6 million

$20,000 per annum per local authority = $17.6 million (present day value)

Total cost in present day value = $14.6 million + $17.6 million = $32.2 million

Table A1: Summary of central and local government costs

a Present value terms; per annum the cost is $2.4 million.

b Present value terms; per annum the cost is $3 million.

c The present value of two reviews at $2 million each after 10 years and again after 20 years.

This gives a total cost to central and local government of $101.25 million.