Sunday, July 25, 2010

Owen McShane: Being Business Friendly

The Government is wanting to encourage growth and development if only because it is the only way to increase tax revenues to pay off the debt and raise incomes to fund all the welfare programmes and superannuation for the baby boomers. So unsurprisingly Government and its agencies are trying to promote the efficient use of our resources, from pasture, to minerals, and to the scenery through tourism.

However, having resources is not enough. Many District and Regional Plans wax on about "productive land" overlooking the obvious fact that there is no such thing.

Land becomes productive only when a human being or beings applies their knowhow, labour and capital to make it productive.

They frequently confuse productive land with fertile land even though some of the most productive land in New Zealand is the least fertile. Don't bother planting truffle-inoculated oaks and hazel nuts in your fertile back yard.

So there is no point in identifying resources if we do not provide an environment that encourages people to invest their capital and build the properly structured business to exploit the resource.

Unfortunately, government is not helped by the fact that a surprisingly large number of people, and an especially large number of our commentators, are openly hostile to business if only because they seem to resent the idea that anyone, anywhere, might actually make some money.

The traditional opponents of business based their antipathy on the assumption that business exploited labour.

They are still around but are now being crowded out by the greens and the watermelons who assume that business is exploiting the Earth Mother. Mining of course is unadulterated rape.

Even subdivision, which is no more than drawing legal lines to define title, has been described by the former Parliamentary Commissioner for the Environment as "death by a thousand cuts".

What, or who, is being killed and who is committing the murder?

Anyone involved in trying to build a new business in New Zealand today finds an incredibly hostile environment, and one in which cost is piled on cost.

Our District and Regional Planning systems have produced an army of bureaucrats and consultants whose main aim in life is to extract as many tolls and charges from applicants before they can even think about starting any constructive activities. These charges are collected to help control rates but the strangling of the supply of rateable activities means that rates must keep rising.

Every day another entrepreneur tells how it has taken say 12 months to get resource and building consents for a simple project that should have required only a few weeks, and even though it will take only a few months to complete the construction. Complex projects such as resorts can take years and then get turned down because they are in locations replete with "natural character". The only safe place to apply for a resort is a location in the bottom of a quarry.

These projects are loaded up front with near endless demands for engineers' reports, council fees, GST and so on.

The most enthusiastic entrepreneurs end up deciding "never again" because councils have taken all the fun and profit out of such projects.

When government seeks to simplify and streamline these processes Councils and their consultants simply corrupt the process further.

For example the last round of amendments brought in rules to ensure that new rules in proposed plans took no effect until the plan (or that part of the plan) became operative.

Consequently, Councils have renamed their "Engineering Standards" as "Environmental Engineering Standards", and simply adopt them and enforce them immediately on the grounds they are standards not rules.

For example, Whangarei District Council includes in its new Engineering Standards a rule that says on lots of 10,000 sq ms or more only 5% of the land can be covered with impermeable surfaces. That is only 500 sq ms which means houses will tend to be sited close to roads to cut down the length of the driveway. They assume drives are impermeable and presumably a gobi block or mussel shell drive will require a full resource consent to be exempted from the calculation.

In Kaipara District a rule that says a private road that serves more than four lots must be vested in council is adopted as an engineering standard even though it is a massive intervention in the existing rights written into the Operative Plan.

Also, our immigration laws do not encourage business people to visit here to simply "do the business".

The US rankings of States as "Best for Business" place great weight on business costs, the "business-friendly" environment, and the cost of living.

Any prospective investor in New Zealand must soon realise the grass must be greener elsewhere.

1 comment:

Anonymous said...

It is a fact of life that those from the environmental lobby are naturally attracted to both working for and serving on councils in order to do their bit to save the planet. This leads to a gradual take over of the councils by the environmentalists until they reach a point where any form of progress and development becomes almost impossible.

This is the situation that culminated in the Government sacking the elected representatives of Environment Canterbury in order to get some much needed progress in the development of Canterbury's water assets. How can well intentioned but vastly inexperienced and left leaning people get themselves elected to these positions and then expect to make sensible, long term decisions about such important matters.

Maybe all councils should have their elected members sacked on a regular basis and experienced, hard nosed and quailified people be installed for a reasonable period to clean out the most rabid "greenies" and get the ship back on course.