Resource Legislation Amendment Bill

This debate includes schedule 6.

I want to make two main points with regard to Part 3. The first of those you may or may not like, Mr Chair, and that is that in looking at the changes being made to the Public Works Act, as a member who was not on the Local Government and Environment Committee, I have to say that—and I am sure many members in the Committee will be in the position that I am in, where from time to time we find ourselves dealing with matters in our electorates that are about the acquisition of land under the Public Works Act. It is never without controversy and it always has confusion, I believe, built into it, because of the understanding of what exactly a public work is, and then the roles of different public entities in that.

This is the bit you might not like, Mr Chair, so I want to divert on to an example, just briefly, which is one that I am dealing with right now in Wellington City. This actually involves something that the member in the Chair, Trevor Mallard, is quite familiar with, which is the teachers college in Karori, which is currently subject to a Public Works Act disposal process. The question has been raised about the entity that is disposing of it, Victoria University of Wellington, and other public entities, including the Ministry of Education and the Wellington City Council, and what their roles are. My problem with reading the changes in the bill here, and I suspect the answer is relatively simple, is that these look like the kinds of tinkering changes that are being made because there have been some interest issues around the way in which compensation is paid, but they do not get to the heart of the issues in the Public Works Act itself.

I do note that submitters, including the Auckland District Law Society’s resource management law committee and Vector, all argued that these changes should only really be occurring as part of an overall review of the Public Works Act. My strong view is that that is what is needed, and I do not have confidence in the changes contained in Part 3 because that review has not taken place. We are now going through yet another example of this up at Victoria University of Wellington. There is considerable confusion as to what the role of public good is and how we decide whether or not another public entity has an interest in land or has an interest in buildings, and for me I think it is disappointing to see the legislation come through in what I would regard as a relatively piecemeal way. So I just make that point; Minister Smith may choose to respond on that or not. I do note from the departmental report that there is no intention to review the Public Works Act in total, and, as I say, I think the changes that are in the bill here now sit on their own. Perhaps they are useful, perhaps they are not, but they certainly do not address those wider issues of the operation of the Public Works Act.

Perhaps to endear myself somewhat more to the Chair than I did in that intervention, I do want to raise the question of clause 172 and the changes to the way in which compensation will be determined, and the process and the use of Orders in Council to do that. This did attract the attention of the Regulations Review Committee, because, as is its right, it looks at other pieces of legislation that are coming before the House—

💬 Chris Bishop: That’s right.

—and asks itself—a very good committee, is it not, Mr Bishop? It is well chaired, at the moment, by our David Parker. I do not know about some of the other members—they are really just time servers, many of them—but it is certainly well chaired by David Parker and, indeed, by David Cunliffe before him.

What that committee was concerned about was whether or not there was adequate justification for this particular regulation-making power. This is around the consideration of how we determine whether or not there should be a change in the level of compensation and, clearly, that is an important consideration. The problem that—and I would like, perhaps, the Minister to explain to us—is the process that will now be gone through, which is contained in an amended section at the end of clause 172, which would be new section 72E, I think, in the Public Works Act itself.

Firstly, I am concerned about the drafting, which is phrased in the negative, which makes it quite hard to understand. So it is phrased as “The Minister must not recommend the making of an Order in Council under this section unless the Minister is of the opinion that it is necessary or desirable to do so having regard to the following:”—so that is just a drafting point but, more specifically, are the criteria that are then used there, and whether or not they are going to create a fair and equitable process for deciding upon what levels of compensation there are—Mr Chair? “Ding”—Mr Chair?

The CHAIRPERSON (Hon Trevor Mallard): Oh! Grant Robertson. I am sorry. I was captivated.

Ha, ha! This happened to me last night, as well. There is obviously something about my style of speaking that is leading—ha, ha—people into a kind of existential trance around the subject of the Public Works Act. I could just go on for days here and no one would notice.

The CHAIRPERSON (Hon Trevor Mallard): Only once.

Yes, thank you. Exactly, Mr Chair. The concern I have got is whether or not this will actually lead to a fair and equitable way of deciding upon compensation. Compensation, in these matters, is very rarely ever easily comparable, in that the level of damage or the level of need for compensation can be extremely variable even in very similar circumstances.

Recently in Wellington we had people having their land acquired for a road that is now never going to be built—using the Basin Reserve flyover as an example. And within that there were quite different experiences for the people who were getting compensation. You had some people who had lived in properties for a very, very long period of time, who had a great deal more—and this is specifically about the costs of moving, this clause. They had particular and deeper roots and bigger levels of change. On the other hand, you had people who had only been there a short period of time—perhaps, owned a smaller parcel of land.

The point I am making and the question that I am asking the Minister is whether or not this has been thought through properly. I do not think it is a particularly bad provision; I am just concerned that, in the context of my earlier comments, the Public Works Act itself is actually ripe for a big review, and this could well be an example where we are tinkering around with a piece of that Act, as a result of another piece of legislation, which actually may or may not make the situation better.

Then there is the issue of doing it through Order in Council, and I would invite the Minister in the chair, Nick Smith, to be able to stand up and tell us whether or not this is the correct way to go about it. I certainly understand the point—and I think most submitters did—that at the moment section 72 has a figure of $2,000. That has not changed since 1975. I think we all understand that there probably needs to be change there. The question is: do the criteria that are now contained in new section 72E(2) actually give us the right process for doing that and take into account a broad set of circumstances?

So I am not going to prolong my intervention, other than to say that I would seek some guidance from the Minister as to both the broader point of other changes to the Public Works Act that might be being considered and also, specifically, the basis on which this process has been chosen and whether it will actually allow for the diverse circumstances of people affected by it.

Can I follow on from my colleague Grant Robertson. I did sit on the Local Government and Environment Committee. I am also aware of some of the background to this. Some of the background to this actually goes way back to the time when the Hon Richard Worth was a Minister here, and he was the Minister responsible for the Public Works Act. He had a view—and I think he was right—that the compensatory provisions under the Public Works Act presently, other than a very small $2,000 payment, are purely compensatory for financial loss. The inconvenience and uprooting of people’s lifestyles, and the effect on people’s individual lifestyles, as a consequence of something that has been done for the public good through the Public Works Act, meant that the provisions under the Public Works Act, which go back a long, long time, were not sufficiently generous. We are now a sufficiently wealthy country to actually be able to say: “Actually, we’ve got to go a little bit further than pure compensation and give people a little bit of compensation not just for their financial loss but for the change that has been forced upon them in the name of the public good.”

There are lots of examples overseas where that is done, and the experience, I think, of those overseas jurisdictions and the view of officials was that if there was just a little bit more generosity in the system, there will be a bit less conflict, there will be a bit less money wasted on the argument about the last percent or two of the valuation, and there will be more acceptance of the need to do this for the public good, with a wee bit more generosity shown by the Crown. And I think that is the essence that lies behind these provisions, and for that reason, notwithstanding the questions that are rightly raised by Grant Robertson, this is actually the only part of this legislation that we are actually voting for, even though we will eventually be opposing the overall bill.

That said, can I address one of the issues that was raised by Grant Robertson, which is that the Regulations Review Committee recommendation was that the amount of that generosity ought not to be changed by regulation. In the end, the Regulations Review Committee is concerned to ensure that people do not lose rights through regulation, and so the committee changed the provision to say that the amount of that discretionary payment can be increased by regulation, but it cannot be decreased. That is where the committee got to, and I think that that is a fair enough answer.

The question that I am left with—and I would like the Minister’s answer to this, because I do think that overall this is an advance in the law, which is why I can support it. But those who are entitled to these payments for effect on their lifestyle are only the owners of the property, and any residential tenancy is excluded. We are actually at the point now in New Zealand where half of the people in New Zealand live in rented accommodation. Let us say it was the Waterview connection where it is that a house is acquired for a public purpose—all of the compensation goes to the owner and none of it goes to the occupant. And I wonder whether that should be reviewed. I know we cannot do it in this bill because it is actually a reasonably substantial piece of policy work, but I would be interested in the Minister’s view about clause 170 of this bill, which inserts new section 59, which defines the owner as being the person who occupies the land, but then it excludes someone who is on a weekly tenancy agreement, a monthly tenancy, or a tenancy to which the Residential Tenancy Act applies. It seems to me that even if someone has been in the same property for 20 or 30 years, being a good tenant, putting down roots, I am not sure, if my reading is correct, whether they are entitled to compensation.

It may be that I am missing something here, but I would appreciate a response from the Minister on that point. That said, I think that there are some good provisions in this part of the bill.

It has been interesting reading Part 3 of the piece of legislation, because I think it is part of this bill that we can support because what it will do is compensate people who, for public works, have their homes taken from them. I found an interesting piece of research titled: “Solatium Payments for Public Works - An International Comparison” by Mike Todd and John McDonagh, Property Group, Lincoln University. So their definition of “solatium” is “compensation awarded for injury to the feelings as distinct from physical sufferings and pecuniary loss. It is derived from the concept of ‘solace’, defined as something that gives comfort or consolation in misery, disappointment or distress.”

So I think it is great that we are actually addressing a piece of legislation that has not updated the compensation amount since 1975. The original compensation amount—just for everyone’s interest—was a 1970 amendment to the Public Works Act of 1928, and it was set at $500. And the interesting thing about that when you look at the average price of a house at that time, which was $12,000 if you lived in Auckland—so, essentially, it was 4.2 percent. And the reason I bring up that percentage is that the next change happened in 1974 and it went to $2,000, and at that time houses were valued at $25,000. So, essentially, it became 8 percent compensation.

When I looked at the research I just quoted earlier, it seems that jurisdictions internationally, in providing this solatium payment or a premium on the market value of properties, either do it by virtue of the market value or they set an amount. In New Zealand we have had this amount, $2,000, since 1975. In Australia, its Commonwealth Parliament sets it at $10,000, but if you look at the states it is actually 10 percent of the market value. That is how they determine it. So depending on the value of the property that the Government takes for public works, their premium is then 10 percent. That is so for Western Australia and for Victoria. ACT and New South Wales are pretty much like the Commonwealth: they set an amount, which is $15,000. When you go to Canada—the jurisdiction is really interesting—the Federal Government does not compensate or provide this premium, but British Columbia, Manitoba, and Alberta provide 5 percent of market value. The UK is 10 percent, and the most interesting jurisdiction is India, which provides a 30 percent premium, which I find really interesting.

So I guess, from my perspective, when I look at how we have set it, the average value of a property in New Zealand, based on the figures I obtained from December 2016, was $515,000. So when I look at the actual compensation package that is contained in this legislation, it seems that we are averaging about 10 percent, which I find quite interesting. So everyone will get $35,000 but—based on your negotiation—within 6 months of the Government approaching you, we will give landowners another $10,000, and possibly another $5,000, depending on their circumstances. So if the average property in New Zealand is $550,000, they are going to get $50,000 compensation or premium, then it kind of averages out at 10 percent.

So I am just wondering whether the Minister will be able to explain whether that was deliberate, because from some of the contributions from my colleagues earlier it seems that the Order in Council might not be the appropriate way to do it. So maybe just benchmarking it at 10 percent—although I guess it depends on the value of the properties that you will end up taking—might be a better way forward. But in saying that, I think what the Order in Council will do is provide the opportunity to update the amount, as opposed to it being set up at a particular amount. Obviously, when we look back from 1975 to today, $2,000 is an inappropriate compensation.

So I do want to say that I absolutely support the intention of this part of the legislation, but I am now curious about how we came up with those figures, whether we looked at just making it a percentage, and I know that the percentage would be difficult if we look at the April 2017 value of a property in Auckland, because it is nearly a million dollars. Obviously, compensating 10 percent of a million dollars increases the liability for the Government. So, if the Minister wants to elucidate, I would really appreciate it because I found it really fascinating looking at this research. Thank you.

Thank you to my colleague Louisa Wall. I learnt some interesting facts in that contribution. The Minister, Nick Smith, might like to, when he is responding to that point—the 10 percent extra, if you like, has a maximum set at $25,000. I can understand why there is a need for some maximum, because we are, in addition to the 10 percent, properly compensating people for their losses. So this is in addition to the compensatory payment they are due. They are getting something extra. And I would not like to think that someone who has got a $100 million property could get another $10 million from taxpayers, because that is going too far in the opposite direction, because they are already getting compensation for their $100 million property. You should not be giving them $10 million extra.

The question as to whether $25,000 is sufficient is something that I would like the Minister’s response to, because, of course, the difficulty for a person whose property is acquired is that the date at which they settle their compensation might be some months before they can purchase a replacement property. And when we have periods of house-price inflation—this is not a reference just to current house-price inflation in Auckland; it is a recent occurrence, but it happens periodically through time—there are times when house prices increase quite quickly, and if you are out of the market for 3 months because you have agreed your payment but you have not got your money and during that period house prices rise, you could be behind through no fault of your own. So I would like some information from the Minister as to what the period generally is between when compensation is set and when it is paid out, because it is not until it is paid out that the person who is receiving the compensation has the opportunity to buy a replacement property.

I am happy to respond to some of the questions that have been put. I welcome the broad support in Parliament for being more generous in the Public Works Act. I think every member of this House would see that $2,000, which was set in 1975, as pretty raw for the disruption to a property owner and the impacts of the Public Works Act of taking a property.

There are three things that are done in this part. Firstly, that amount is lifted to $35,000. Secondly, there is a further incentive payment that is set for settling quickly. Thirdly, there is an Order in Council power to adjust that into the future so that it is not so out of date. I do want to comment that this is actually a really important provision aligned to the infrastructure challenges that New Zealand faces—so often infrastructure projects are held up, sometimes for years, because of very strong disputes over the levels of compensation and the fairness of either a local authority or a Crown agency acquiring someone’s property.

There is nothing magical about the $35,000 increase from the $2,000 that was set in 1975. It is related to what we think is being fair to both the taxpayers as well as the property owner. I do not agree with those who say that it should be proportional to the value. The impact of that would be that if someone has got a $2 million property, it is a lot more generous than if somebody has got a half-million-dollar or a million-dollar property. My view would be actually that there is a disruption to the person’s life as a consequence of compulsorily requiring them to sell their property and to move, and the actual cost of that disruption to their life is not much different, in my view, as to whether the house is a house for that family. So I think a fixed sum is appropriate.

I am particularly enthusiastic about there being a time incentive. I, like most members of this House, have dealt with dozens of constituents who have been through the Public Works Act. I have seen people—for instance, on the new highway between Motueka and Māpua in the Nelson region—who were involved in 10 to 15 years of disputes, and in my view that was incredibly disruptive and stressful for their lives. Actually putting some extra money on the table and getting these things resolved more quickly is in the interests of the public authority to be able to get on and build the infrastructure but also for the families who are affected to be able to get on with their lives.

Why we hold the view that it is appropriate by Order in Council to adjust these amounts in the future is, frankly, because we do not want to be sitting here in 20 years’ time thinking that the $50,000 that we have set today with the extra premiums for the increase and the time frames—that at some time in the future they equally become out of date. So the Order in Council mechanism and the fact that Parliament has not looked at this since 1975, when I was in primary school—actually being able to have a mechanism to look at it more frequently through Order in Council makes good sense.

In respect of the issue as to why it does not cover residential tenancies, the average period of residential tenancy in New Zealand is between 18 months and 2 years. It is interesting that a large number of the property settlements that are done through the Public Works Act have deferred settlements and deferred occupation. The reason for that is that often the public agency needs the security that they have got a property so that they can build a road, but actually by the time they get through all the other mechanisms it is many years down the track from when they actually acquire it, and often they lease it back to the tenant. So I do not think that case is strong.

Mr Robertson asked for a broader review of the Public Works Act. I think there are some issues that are incredibly difficult, and it is no coincidence that the Public Works Act has not been touched for a long time. I believe, in terms of the powers of this Parliament to take people’s private property, as essential as it is, that it raises a whole lot of really difficult questions. Our Government is not in a hurry to do so. We think this is a useful tweak. If other parties want to drive an earlier reform of that bill—

💬 Phil Twyford: You were going to for the UDAs, weren’t you?

Oh no, there are provisions in the urban development authority proposals that make change to the Public Works Act, but we do not have it on our schedule at the moment. We think these are useful amendments, and I think there is actually pretty broad consensus across the Parliament that these provisions are useful.

I understand that when we are discussing issues in the Public Works Act, the problem of compensation and the rate is important, and I appreciate the contributions that have been made by a number of members tonight. But that is not the particular clause I want to address in my contribution—or my first contribution. Anyway, I would just say to Minister Nick Smith, though, that I think the Public Works Act was 1981, so he would have graduated to secondary school by the time this was last debated in Parliament, rather than being at primary school.

I want to address the provisions that are in clause 169. It is one of the few provisions in the whole of this Resource Legislation Amendment Bill that was not amended at all by the Local Government and Environment Committee. It is quite unusual—clause 169 was just completely intact. When I read through the submissions on this clause I expected that all submitters would have been in support of it. I thought if it has not been touched then the submitters must have all thought it was a jolly fine thing. Actually, they did not.

One submission I was particularly interested in was from the Resource Management Law Association. That is a group that is specifically interested in the law that we are debating right now. It supported the intention of the clause—perhaps I will go back a step. Clause 169 amends section 24 of the Public Works Act and puts in a new subsection. That subsection allows for the Environment Court to accept evidence that has been presented at a previous hearing, on a related inquiry or an appeal, by the court. So you do not have to go through, you know, repetition of the same issue, even though it is being heard by different jurisdictions. That is the intent of this.

The Resource Management Law Association supported that intent. It said “This is a good idea.”, but, and this is the important bit, I want the Minister to explain, in a way that I can explain to my constituents, why he did not agree with its remedy to fix what it saw as a fundamental flaw in this clause, and that was that it does not achieve the purpose that it is intended to achieve. You cannot get much more fundamental than that. That is the intention—reducing the duplication between the various jurisdictions so the hearings can just be heard again on the same basis, rather than a new regime having to be invented for the next hearing—but the association said that alignment does not occur through this clause 169.

If people who are involved in resource management law ask us, as members of Parliament—this is what the association said; this is what the law association said, and they are the experts in this area. Why did the select committee not change it? Why did the Committee of the whole House not change it? Why did the Minister block a suggested fix to a problem presented by a group of people who agreed with his solution but just said: “This clause won’t not achieve it.”? That is the question that I am really keen on having answered by the Minister.

Not only did the Resource Management Law Association say that this is not going to fix the problem, but it actually suggested ways of doing it. It was really the icing on the cake. All the Minister had to do—and I understand the Minister was very heavily involved in the detail of this work, even though it was being heard by a select committee—was pick up its suggestions and move it across. I am keen on hearing directly from the Minister as to why that identification of a fundamental problem was not accepted, and, if it was accepted, why the solution was not acted on.

I want to ask the Minister one more question before I finish my contribution on this clause, and that is: in what other situations does he consider that this parallel process would be appropriate? In what other areas is there duplication where this fix might be applied to? I agree with reducing bureaucracy. I agree with reducing duplication. I agree because it means that more members of the public are likely to have access to situations where they can have their voices heard. But if reducing bureaucracy and lowering access to justice mean that more members of our community are denied that opportunity to have their voices heard, then I oppose it with every strength in my body. Too many people are being locked out of having their voices heard. Too many people hear about decisions after they have been made. Too many people are restricted—

The CHAIRPERSON (Lindsay Tisch): We are on Part 3.

That is exactly what this provision does. Too many people are restricted, and I want to see what other processes—

I want to make a contribution to Part 3, particularly clause 172, inserting new section 72E, and it might just be a question of clarification, which the Minister for the Environment may be able to respond to. I want to congratulate him for, I guess, bringing it up to date, in which land is acquired under the Public Works Act.

As a member for, pretty much, the East Coast, I have a real live situation on my hands that I too would like some advice on from the Minister. We have a railway line—the one from Wairoa to Gisborne. It is a beautiful railway line. It has been closed, and there are discussions, obviously, around reopening, potentially, this railway line sometime in the near future. The issue with this particular railway line is that it is on land that is quite subject to erosion. There is the possibility with this opportunity that we may need to acquire adjacent land if we are going to open that railway line.

That then leads me into the question I would like to pose to the Minister: in looking through his clauses on the public works and the compensation, am I right to assume that public works that require land from Māori land owners for, for example, railway infrastructure, are covered by this clause that we are debating in Part 3? I do not see it specifically, but I just wanted some clarification from the Minister about whether it does include multiple-owned land. If not, what would happen in the example I have given if Ngāti Rangiwaho, for example—which is the hapū, as part of Ngai Tāmanuhiri, that owns much of that land in the northern part of the electorate of Ikaroa-Rāwhiti. If, as part of opening the railway, the land of the iwi and hapū will be required—does this clause that we are debating in Part 3, the adjustment of the compensation payable under clause 172, extend to multiple-owned Māori land? If not, then I would respectfully ask the Minister: in this real live example that I have given you, where would the owners of the Ngāti Rangiwaho estate turn to if their land is acquired for the opening up of that particular rail line?

That is a short contribution, but I still believe it is an important point that we put this on the floor of the Committee, and perhaps get some guidance or assurances from the Minister. Does this cover multiple-owned Māori land? If it does not, where do multiple-owned or freehold Māori land owners turn to if their land is acquired for, for example, the building of a rail line? Thank you.

I move, That the question be now put.

Motion agreed to.

Members, we move then to Part 3. The question is that Part 3 stand part. Those of that opinion will say “Aye”, to the contrary “No”—

💬 Hon David Parker: I raise a point of order, Mr Chairperson. I think it is Part 4 that you are putting.

The CHAIRPERSON (Lindsay Tisch): No, we are on Part 3. We are voting on Part 3.

Part 3 agreed to.

Part 4 Amendments to Conservation Act 1987