Natural and Built Environments Act (RMA Replacement)

Don Brash was Reserve Bank Governor from 1988 to 2002, and National Party Leader from 2003 to 2006

Submission on Natural & Built Environments Act (Exposure Draft)

August 2021

Overview

1. I would have liked to help refine a Bill that would comprehensively puncture our catastrophic house price bubble. Alas there is almost nothing in this Bill likely to repay such effort. There is almost nothing in this Bill to be studied with legal precision. It is a set of slogans drafted to look like statute. But it foreshadows an extended grant of decree powers over land use, to the Minister and some regional panels, yet to be appointed.

2. Our rule of law is supposed to ensure that citizens can know what is lawful and what is not, in advance, from written rules. Discretionary powers under the RMA have always breached that principle – allowing the property rights promised by Article 2 of the Treaty to be subject to the whim of neighbours or planners or courts, or even NIMBY activists who are nowhere near your backyard and suffer none of the consequences of their interventions.

3. I note that the Committee’s scope of inquiry is specifically limited to providing feedback on the exposure draft and the material in the parliamentary paper that provides rationale for the clauses in the exposure draft. In other words, it seems you are directed to ignore submissions on what is missing from the draft. Accordingly I will not describe what is missing, to avoid wasting my time and yours in trying to detail how to remedy the deficiencies.

The critical reform task

4. Our house price bubble is a daily tragedy for many families. My generation and Generation X now in power are directly responsible for the despair of many hard working young parents. How can they not be outraged and disillusioned as they bear the burden of grotesque undeserved wealth gains for preceding generations? Is it any wonder that our productivity performance is disgraceful, when for two decades vast sums in bank borrowings have been flung into inflating property prices, instead of valuable business development? How can anyone in Parliament who has been part of delaying the end of planner blight hold their head up as housing costs drive more and more into state dependency, and our welfare costs blow out to meet rental burdens that are an unprecedented proportion of the household incomes of the poor.

5. Everyone associated with the introduction of the RMA should be ashamed. Despite its worthy intentions, it was plainly naïve from the beginning about human nature and how people would respond to getting power to interfere in decisions on land use changes. A hostility to individual right to decide how one’s own property should best be used, without compensation from those who’d benefit from stopping change, was baked into the RMA.

6. I admit to not recognising the scale of the disaster that was building when I was Governor of the Reserve Bank. I warned people against investment in what we at the Bank believed was likely to be bubble. I warned that property prices could go down as well as up. That simply has not happened. None of us in the Reserve Bank then realised how devastating bad law can be. None of us realised how entrenched with self-interest it would become. None of us realised how hard it can be for productive people to find ways around bad law.

7. There were big headlines when I urged people to stop treating houses as a riskless investment. In all New Zealand’s previous history when prices signalled shortage, our builders and land-owners would promptly provide more dwellings. And prices would settle at levels that largely reflected the actual costs of building, plus the costs of creating serviced sections.

8. My advice on house buying was absolutely sincere. We could not imagine that an entire generation of politicians would connive to prevent the normal responses to demand that had previously kept median house prices around the long run average of a bit over three times the median household income. And I am sure none of us would have predicted a Bill like the one before you, after all this experience, doubling down on what was wrong from the start.

9. If I had been asked I’d have said it was inconceivable that Labour and National would allow thousands of hard working families to incur debts they could never repay from income, to blow out welfare costs in paying artificial scarcity rents to landlords.

10. But here we are. I submit that this Select Committee should refuse to waste time on this Bill. It should tell the Government immediately to come back with a fresh start that actually addresses the problems.

11. There is no point in pretending to treat seriously a Bill that is little more than a series of conflicting aspirational claims, dressing up an intention to control future land uses by Ministerial and Planning Committee decree.

No excuses for the feeble distraction which is this Bill

12. The drafters of the RMA had faith that wise planners and ‘community’ input (aka. political veto power) would manage land use changes better than the countless decisions of individual owners responding to changes in need (shown by prices). The RMA was always bound to interfere with housing supply. The RMA deliberately subordinated supply decisions to planners/lawyers, propelled by NIMBY selfishness.

13. But I could still excuse the original drafters’ good intentions and lack of interest in economics, scarcity and perverse incentives. The RMA promoters were probably blinded by their own noble environmental protection objectives.

14. The last five Governments in power don’t have that excuse. It has long been very obvious that environmental protection has been a spurious excuse for endless interference in routine land use decisions with little or no benefit for the natural environment.

15. The Bill is remarkable for omitting nearly everything that might end the damaging power of NIMBYs and planners, and the green idealists who have empowered them. The Bill contains more puffy slogans, lists of competing, unranked and contradictory purposes, goals and weasel words than the RMA. The lawyers, planners and other vested interest beneficiaries of the status quo rely on the powers they get from the naïve “principles” of the RMA. They will be even more confident of being able toexploit the regime foreshadowed by the Bill.

What the Bill lacks

16. It is inexcusable that your committee is asked to review a Bill that shows:

a) Continuing political paralysis after the adverse consequences of the RMA became increasingly clear, from around 15 years ago;

b) No removal of the discretionary powers that have got us to our current predicament;

c) Foreshadowed repetition of the same environmental protection slogans to justify doubling down on pretty much all the mistakes built into the RMA – that is political and administrative control of land use decisions by people without:

i) any skin in the game;

ii) any obligation to apply disciplined analysis of costs against benefits;

iii) any requirement for understanding economics or even knowing opportunity costs to the parties, or communities;

iv) any effective personal cost for imposing decision delay, or wasteful information and other requirements;

v) any requirement for people who benefit from preventing change, or imposing costs on their neighbours, to compensate;

vi) any obligation to compensate the generation of younger New Zealanders locked out of fairly priced housing, by people imposing their own aesthetic preferences;

vii) any discipline or restriction on temptations by iwi to impose their superstitions and resuscitated cultural prejudices on the communities to be ruled by their nominees;

viii) any protections against self-dealing or corruption by persons with power to control land use decisions and who are not susceptible to removal in elections; and

ix) any protections against entrenchment of iwi-nominated representatives without any relevant qualifications and nothing to contribute to land use decision-making.

17. All that can be deduced from the current draft is negative. It shows that:

a) The Government’s work is behind schedule;

b) There is no explanation of how current restrictions on intensification and greenfield land availability will be removed;

c) There is nothing to give the highest priority to ending the price catastrophe for young people trying to get into their own houses. Instead it looks as if the highest priority is to add new Maori veto powers and privileges to centralised versions of current processes;

d) There is nothing to show how the regime will mitigate the incentives and root causes of the use of planner powers to block and delay development. In particular the draft shows;

i) no recognition of the need to establish priorities among competing objectives in land use control;

ii) no understanding of the behavioural dynamics that both drive planners toward ‘kick for touch’ prohibitions without regard to cost, and justify or excuse normal human exploitation of power over others; and

iii) no assistance to planning law decision-makers who want guidance on how to establish cost/benefit and trade off disciplines.

e) Despite jargon talk of ‘outcomes’ and bottom lines, there is nothing to restore reasonable predictability and certainty in the application of rules so people can know what constraints will apply on land use changes within rational environmental protections.

18. Instead of respecting Article 2 of the Treaty, the Bill cements in new de facto powers to make up the law as we go, with reference to the fake so-called principles of the Treaty, some of them directly contrary to the actual words of the Treaty.

19. Instead of reinforcing respect for rule of law principles, the Bill states an intention to require subservience to undefined matauranga and other resuscitated relics of religion.

20. Operatively, the Natural and Built Environments Bill and the proposed Strategic Planning Bill are interdependent. Properly informed response on one is not possible without seeing drafts of both Bills.

21. I note that the Select Committee has been asked to pay particular attention to objective (e) – “improve system efficiency and effectiveness, reduce complexity, while retaining appropriate local democratic input”.

22. The NBA draft does not provide anywhere near enough detail or specificity to merit comment on such matters, other than general exhortation. People charged with applying the RMA, and working under it, have suffered more than enough exhortation, including from National Policy Statements and sections 5-8 of the RMA. Despite over six months since the delivery of the Randerson Report, the Bill takes no further:

a) Introducing democratic and accountability elements to the planning committees;

b) Providing clear legislative criteria for planning bodies to resolve contradictions between competing slogans/objectives;

c) Imposing the discipline of compensation rights for people harmed by misuse of the powers;

d) Stating the relative priorities of the outcomes listed in section 8;

e) Defining all important words and concepts to give a reasonable minimum of legislative certainty;

f) Delivering on the promise to take into account the positive outcomes of development. The easiest way to do so is a requirement for cost-benefit analysis;

g) Making it clear who pays, what cost is to be tolerated and the scale required if the Bill is going to require that the current environment is not just maintained but “enhanced”. Enhanced in whose eyes? That of insects, who presumably would like fewer insect predators? The eyes of humans, many or most of whom show by their actions that they prefer substantially human modified environments, with many non-indigenous plants and buildings. In the eyes of people who need to house their families, who might well seek a typical suburban environment.

h) Similarly, if “restoring” is maintained as a necessary outcome under clause 8, to what state must the environment be restored. To a pre-human condition, the preference of ‘restore Eden zealots’, who imagine a mythical pre Maori landscape of indigenous forests and birds. To maximum diversity? That might require dumping standards that require clear streams in favour of water with much more biological enrichment, for example from farm animals. To talk casually of “restoring” is to condemn the next generations of New Zealanders to endless argument, as courts slowly create definitions from the negligent use of empty slogans to masquerade as law.

23. Ambiguity in law delivers power and profit to lawyers. Lawyers notoriously resist normal cost disciplines. They believe that what they do is all about “justice” so that it is improper to demand that they trade off their Rolls Royce procedures for economy speed and certainty. They can be indifferent to the costs borne by the rest of the community.

24. The scant information in Schedule 3 on the planning committees indicates that there will be no elected representation on the committees or any skill-based appointments. Significant powers have been delegated to these people. But there are no mechanisms to ensure this will not cause further delay or protection from corruption or nepotism. This undermines basic principles of the rule of law and they conflict with our basic democratic principles.

Conclusion

25. The Select Committee should not pretend to address the causes of the house price catastrophe with comment on this Bill. An attempt at genuine reform should start by recommending the inclusion of all the many elements that have been omitted from the Bill. If anything like the current Bill proceeds, it will do more harm than good.

Don Brash

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