Infrastructure funding requires trillions of dollars every year. Here’s how investment firms Morrison, Macquarie & KKR are making the most of it. Video / Carson Bluck
OPINION
New Zealand is facing enormous challenges.
We’re mired in recession. GDP has fallen in four of the past five quarters, with the per-person figures even worse. Inflation remains stubbornly high, prolonging the cost of living crisis and keeping interest rates higher for longer.
The Government has afix, but it requires some refinement.
Transport, energy, telecommunications and water systems all need substantial investment to replace ageing networks and support our growing population. We have a shortage of housing, especially the affordable kind. Businesses, particularly in primary industries, are hamstrung by thickets of rules and labyrinthine processes.
There are many contributing factors to the red tape. One is resource management law. Put simply, it takes far too long and costs far too much to consent new infrastructure and development.
Research for the Infrastructure Commission by consultancy company Sapere showed consenting costs $1.3 billion per year and it sometimes takes years to process approvals.
Infrastructure Minister Chris Bishop says we’ve become an obstruction economy. He’s right. It’s become too hard to get things done.
The bill provides a streamlined “one-stop shop” for projects of significant regional or national benefit to get consents across multiple acts, including the Resource Management, Conservation, Wildlife and Crown Minerals Acts.
Under the bill, projects will become eligible for fast-tracking in two ways. Around 100 projects will be listed in a schedule to the bill and automatically referred to an expert panel. Ministers will refer others to an expert panel upon application.
Expert panels will include people with knowledge of environmental law, technical expertise, and understanding of the Treaty and te ao Māori.
They’ll consult with ministers, Māori, councils and landowners as they assess applications. Panels won’t be able to decline projects referred to them, but they’ll be able to recommend consenting conditions to ministers, including how to manage environmental requirements.
Final decisions will be made by a trio of ministers representing the Infrastructure, Regional Development and Transport portfolios. They’ll either approve projects, with or without conditions, or decline them. Appeal rights will be limited to points of law.
Infrastructure needed urgently
The New Zealand Initiative supports the bill as a pragmatic interim solution. We must find ways to quickly approve and deliver desperately needed infrastructure.
We simply can’t afford to spend billions and wait years longer than necessary to complete essential work. Nor can we wait to fix our housing crisis or get greater value from our primary industries, which collectively comprise the engine room of the economy.
That’s not to say the bill is perfect. Ministerial decision-making risks real or perceived politicisation and is vulnerable to lobbying.
The compressed consultation and rushed policy process to meet the Government’s 100-day plan was not ideal for such significant legislation. And while the bill’s emphasis on economic factors is welcome, stronger cost-benefit analysis is needed to prioritise projects objectively.
Environmentalists have slammed the bill for putting the economy first and weakening environmental protections. They have a point. Even so, current legislation and associated policies and plans have imposed massive costs and delays. We need a better balance. Where we can responsibly speed things up, we should.
Contractors working on the Brynderwyn Hills resilience roading project. Nick Clark argues a fast-tracking bill to fix and improve the country's infrastructure could be enhanced in several ways. Photo / Michael Cunningham
The bill still requires adverse environmental effects to be managed, with the expert panels able to recommend consent conditions. Our most treasured land areas for conservation, like national parks, remains protected from fast-tracking.
A drawback of the fast-tracking bill is that it isn’t consistent with local decision-making.
But a plethora of national policy statements and national environment standards have eroded local decision-making in any case. Furthermore, Sapere’s report to the Infrastructure Commission argues those statements and standards have added to, rather than reduced, complexity.
The bill can be enhanced in several ways.
First, economic efficiency should be added to eligibility criteria to prioritise projects with the highest benefits relative to costs. That would also provide assurance low value projects won’t be advanced for political reasons.
Secondly, the expert panels should require economic expertise. That is important when they’re expected to assess projects against economic criteria.
Thirdly, either expert panels should make the final decisions or, if ministers remain decision-makers, disclosure should be beefed up. Ministers should have to give reasons for not accepting panel recommendations.
There should be compulsory reporting of contact between ministers and applicants, and of political party donations from applicants. Sunlight is the best disinfectant.
The Minister for the Environment should be one of the decision-makers to ensure environmental issues are considered.
Finally, the bill should be temporary and made so by way of a sunset clause.
Notwithstanding these potential enhancements, the bill represents an improvement on the status quo. It deserves support.
In the long run, a new Resource Management Act is required. It should enable infrastructure and other major projects, respect property rights, and appropriately weigh net benefits. This approach should appropriately balance economic, social and environmental considerations.
But until then, fast-tracking for infrastructure and development is needed to unclog the pipeline and get things moving.
Nick Clark is a senior fellow at the New Zealand Initiative.
