Submission on Natural & Built Environments Act (Exposure Draft)
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
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
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
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 to
exploit 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
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
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
ix) any protections against entrenchment of iwi-nominated representatives
without any relevant qualifications and nothing to contribute to land use
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
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
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
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
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
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
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
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
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.
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.