Tim Hazledine: RMA needs more economists

The Government has been able to intervene and allow roading projects to go ahead because of changes to transport regulations. Photo / Greg Bowker

Opinion

Tim Hazledine says extreme changes to our environmental planning laws miss the point.

Submissions on proposed changes to the Resource Management Act close next Tuesday. The RMA has since 1991 been the controlling legislation guiding the protection and development of our land, water and atmospheric resources. It works through a system of ad hoc tribunals or hearings, in particular before a specialist judicial body, the Environment Court.

Resource management issues are steadily pushing themselves to the forefront of the NZ policy arena. Is the system able to cope, and if not, what should be done to improve it? The Ministry for the Environment has issued a discussion document and invites our response.

A reasonable summary of the Government's proposals might be this: generally, the system comes up with the right decisions but it takes too long to reach them. I half agree. Truly, the process needs streamlining and speeding up. For example, we have hearings held at considerable length and expense by tribunals constituted by regional authorities, the outcome of which is almost invariably appealed by the losing party to the higher Environment Court, where the whole process is repeated de novo. The discussion document proposes limiting the court to appeals on matters of law, so that the substance of the case would, hopefully, only get argued once.

I've been involved in half a dozen or so RMA cases, as an "independent economic expert" engaged by an interested party. I understand the frustration about the time and resources sucked up. Occasionally, during humdrum spells in the proceedings (there are plenty of these), I've amused myself by doing an informal tally of all the time meters ticking over - the barristers, QCs, experts and commissioners, plus staff from councils and other parties. I can easily find $50,000-100,000 in daily salaries and fees in the court room. And there may be several of these hearings going on at once, around the country, each lasting for some weeks. It is costly.

I do have sympathy with the idea of simplifying matters. But the Government wants to take it to the extreme. Why go through all this legal, democratic stuff at all? We can really streamline the process by eliminating it, by allowing central government to intervene, to "direct" the decisions of councils, for "matters that are nationally important".

There is a precedent for this, and it is quite scary. In New Zealand, proposals for roading projects have to go through careful social cost-benefit analyses, within the template of the NZ Transport Agency's 400-page Economic Evaluation Manual. Projects with low ratios of benefit to costs are (correctly) deemed to be relatively inefficient uses for scarce investment funds. But, over the past five years or so, the Government has brought in the concepts of "Roads of National Significance" (RoNS), which in turn is related to "Strategic Fit", and used these to simply trump the efficiency score. And what do "National Significance" and "Strategic Fit" mean? They mean, in effect, whatever the Minister of Transport wants them to mean, and we have hundreds of millions of dollars of economically dodgy new motorway projects as a result.

I suggest we should be going in the opposite direction with the RMA reforms - less Nanny State central government intervention, not more. We have a good existing model for this: competition policy, which is built around the NZ Commerce Commission, a permanent professional secretariat that is statutorily independent from ministerial control. When state-owned Air New Zealand was trying to form a cartel with its competitor Qantas, in 2003, it was known that Treasury and the Minister wanted this to go ahead. But they, properly, did not interfere, and the Commerce Commission denied authorisation to the cartel - thank goodness.

We have the skeleton of a similar authority to replace tribunals and boards in handling RMA matters (subject, to appeal to the higher courts): the Environmental Protection Authority. An independent EPA should be fleshed out with technical competence and institutional memory so it can deal, crucially, with the economics of resource management issues.

You cannot expect to get a good decision about, say, the appropriate amount of irrigation water going in and effluent going out of a dairy farming development on the basis just of the science of the matter. You need the science but you also need a cogent procedure for weighing up all the costs and benefits of the development, on and off the farm and even at the national level, in the case of exported commodities such as dairy products.

This is why I disagree that the present long-winded RMA processes do in general deliver good decisions in the end. They cannot be expected to. None of the judges and commissioners are economists. They have to rely on the invariably opposing views of economic consultants of varying competence, trundled out before them for adversarial cross-examination by counsel. There is no core competency, no institutional memory available to the process, such as is provided by the Commerce Commission in competition matters.

Environmentalists may flinch at the idea of more economics in the RMA. They shouldn't. Good economics is not about money, it is about well-being. It is not about unbridled economic growth, it is about long-run sustainability. Dear Minister, I respectfully submit that economics and economists can be our resource management friends.

Tim Hazledine is a professor of economics at the University of Auckland Business School.