Friday, April 15, 2011

Owen McShane: Why isnt the economy doing better – Part Three

This column presents some of the actions available to councils to reverse the declining residential build rate. If councils do nothing we shall continue the drift into ongoing recession. Central Government action is not enough.

Many Local Authorities’ Annual Plans claim to promote economic growth and development, yet their RMA Plans tend to regard growth as something to be avoided. Indeed, any pockets of growth are assumed to be “out of control” and requiring interventionist “ growth management” to restrain them.

This conflict between the two planning processes possibly reflects Councils’ greater accountability to their ratepayers for the financing and delivery of services compared to the RMA planning process which is increasingly dominated by large consulting firms or burgeoning bureaucracies. Both groups are more concerned with protecting their own employment and remuneration than with the wellbeing of the communities they claim to serve.

Councilors, and residents throughout New Zealand should carefully examine their current planning documents and assess their attitudes to growth and change. All too many District Plans make any innovative development subject to massive quantities of DURT. (Delay, Uncertainty, Regulation and Transaction Costs.)

For example, a District Plan that focuses on “preserving rural character” is a recipe for economic decline. Innovation necessarily brings change. For example, we can change rural land use without detracting from amenity (e.g. pasture to vineyards) but any change in rural use will change rural character, and will be stopped for this reason, if Council allows it.

Councils should begin the detailed analysis of their plans with an electronic search for the word “character”. The more hits, the harder to raise the build rate.

Councils also enforce the late Aaron Wildavsky’s original “rule of thumb” which held that any plan thicker than his thumb has no relationship to the real world.

Early plans used to meet this rule and hence were comprehensible and subject to consistent interpretation. The amount of DURT increases exponentially with the thickness of the documents.

Of course one of the main obstacles to growth and development, and the build rate in particular, are excessive compliance costs. Councils can take many initiatives to reduce these costs if they are prepared to show some backbone and stand up to their advisors.

Stick with the two adages: “Never ask your barber if you need a haircut,” and “The drainage inspectors’ world is full of blocked drains.”

Here are a few effective initiatives that require no changes to the RMA or the LGA.

1. Provide an independent RMA Mediation Service to resolve conflicts between applicants and officials prior to granting of consent. My files contain countless examples of abuses of power by bureaucrats who take positions like “I know this is not a legal requirement but I won’t write a favourable report if you don’t do it” or “If you don’t build the driveway out of gold marbles I won’t issue the 224(c) certificate and you won’t ever get a title.”

The mere presence of a local RMA Mediation service would prevent many such abuses of power.

2. Councils should allow title for new lots to be issued “as-is-where-is” and record this status on their LIMs. Caveat Emptor then applies. Most councils now require all manner of reports about site suitability from the applicant. Many lots will have had three reports on sewage disposal by the time a building consent is issued. Sellers and purchasers should have the same choice as they do with motor vehicles.

3. Require objectors to pay a charge to cover their contribution to the costs of applications.

Surely “user pays” means that “the beneficiary pays”. Those who object to proposals are always seeking a benefit, but bear none of the consequent costs of their action. An objection to a discretionary or non-complying activity can open the door to a host of costs and delays including advertising, reporting, hearings, and of course the right of appeal. Yet those who open this Pandora’s box pay none of the costs at all. A simple charge of say $100.00 per submission would surely introduce some discipline into the procedure. Almost every District has its citizen or group of citizens who are famous for “objecting to everything”. The costs they impose on their community are massive.

4. Introduce competition at every stage of the plan-writing and consenting process. In particular:
(a) allow the applicant a choice of any planning and engineering consultants required by Council.
(b) do not let the notification decision be made by a consultant responsible for the substantive recommendation.
(c) do not let the plan writers write the Section 32 analysis of their own plans.
(d) do not let the those who administer the Engineering Standards write or review the Engineering Standards.

Council’s own staff should make the notification decision for the majority of routine applications and consultants should be used only to give advice on large and complex applications.

5. Allow local Residents’ Associations to write and administer their own Plans.

In The Rise of Sublocal Governance, Robert Nelson reminds us that the legal form of the condominium did not exist in the United States until the early 1960s. But about 20% of Americans now live in such Community Associations. Business Improvement Districts, and Historic Districts, are also multiplying rapidly.

In most parts of the United States, groups who want to live in an Eco-village, an Intentional Community, a hamlet based on Living Building solutions, a Transition Town, or a GE Free Zone operate totally outside the Council planning framework (or anyone else’s) provided they comply with regional or federal regulations protecting the soil water and air, and other health and safety matters.

Why should people who live above each other in high rise apartments be allowed to organize their own “Body Corporates” while those who happen to live alongside each other on the ground should be subject to bureaucratic rule by a remote, and expensive, local authority?

The first national meeting of “Residents 2020”, in Wellington, March 2010, set many new goals and aspirations for member Associations, and should be encouraged. However, they have a battle on their hands.


These are just a small sample of changes Councils can make to stimulate growth and development in their territory.

It’s time for them to act.

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