The Government acknowledges that the proposed National Policy Statement on Urban Development Capacity (NPS) is not a “silver bullet” to dispense with New Zealand’s land supply issues.

Although the NPS has been presented to the public as “requiring” councils to provide development capacity, it is in fact process-orientated and not particularly directive – and most councils are already doing many of the things that the NPS will require.

However, with some improvements and associated guidance material, we think the NPS can be a useful tool to reduce any contribution planning is making to shortages of available land for business and housing use.

A range of other initiatives will be necessary, reflecting the reality that the issues behind the housing shortage in particular are multifaceted.

Key aspects of the NPS

The NPS addresses four key areas.

  • Outcomes: providing sufficient residential and business development capacity to enable urban areas to meet demand.
  • Evidence: ensuring plans are based on a robust, accurate, and frequently-updated evidence base.
  • Coordination: promoting coordination within and between local authorities and infrastructure providers, and integrated land use and infrastructure planning.
  • Responsiveness: ensuring that local authorities adapt and respond to market activity.

The NPS uses a tiered approach, imposing progressively stronger requirements according to the strength of population growth.

  • In all urban areas, local authorities would be required to:
    • provide for the efficient use of resources, and enable the competitive operation of land and development markets, and
    • provide sufficient development capacity consistent with maximising the positive and minimising the adverse effects of development.
  • In medium-growth urban areas (over 5% population growth) and high-growth urban areas (over 10% population growth), local authorities would also be required to:
    • prepare a Housing Assessment and Business Land Assessment that estimates demand and supply, including for different types and locations
    • monitor a range of indicators, such as house prices, rents, and the number of resource and building consents granted
    • consult with other local authorities and infrastructure providers to coordinate land use planning and infrastructure provision, and
    • provide further development capacity, where supply is insufficient (i.e. less than 20% over the projected short and medium-term demand or 15% over the projected long-term demand).
  • In high-growth urban areas, local authorities would also be required to:
    • set minimum targets for the supply of sufficient residential development capacity, and
    • prepare a future land release and intensification strategy, which identifies the location, timing and sequencing of future development capacity.

Chapman Tripp comments

The NPS is strongly process-orientated but not particularly directive. It does not “require” councils to provide additional development capacity. Instead, it requires councils to set targets and consider using existing planning tools to realise those targets. Accordingly, it could be substantially condensed and simplified without losing the intent.

  • It does not direct how sufficient development capacity for housing and business (which is widely defined and includes industrial uses) must be provided, meaning local councils will still have the power to decide whether to build up or out. For example, it does not expressly prohibit planning tools such as metropolitan urban limits which, in Auckland’s case, have been a popular target of political criticism.
  • The options it suggests to enable development capacity are fairly vague – e.g. through the conditions imposed on resource consents and through ensuring that consenting processes “are customer-focused and coordinated within the local authority”. These directions will be very much open to local interpretation and we anticipate council consenting decisions will remain reasonably conservative to ensure they meet the relevant RMA tests and guidance in existing plans.
  • Although the NPS requires councils to carry out some actions by 2018 (such as preparing a Housing Assessment and setting targets for the supply of sufficient residential development capacity), it does not set a deadline for when changes to plans must occur.

Those comments aside, we expect the NPS will ensure councils take a longer term planning perspective, using a robust evidence base, which should be positive overall.

There have been some suggestions that the NPS will act as an “insurance policy” if Auckland Council baulks on providing for increased density through the Unitary Plan.1 The Government itself has said, for example, that the NPS “will be important to any [Environment Court] appeal in ensuring the Unitary Plan provides sufficient development capacity”.

That may be overstating the position, however. Although it might be possible to give effect to a new NPS during the appeal process, some case law suggests that it will be given little weight if it comes into force when a plan is well advanced.

Also, the Unitary Plan process has had a strong evidence focus on whether the provision of development capacity is adequate - including a significant amount of capacity modelling – so the NPS is unlikely to markedly change the discussion.

Effect on infrastructure providers

The NPS’s attempt to link development capacity with infrastructure provision is reasonably weak, reflecting the limited ambit of the RMA to coerce infrastructure decisions. It is also limited to water, wastewater, stormwater and transport infrastructure providers, so key infrastructure (such as electricity, phone and internet) would not be considered, which seems an odd omission.

The NPS would require councils in medium-growth and high-growth urban areas to “consult with” infrastructure providers and coordinate land use planning and infrastructure provision. In general, councils and infrastructure providers are already seeking to achieve those outcomes. The question is how to achieve that efficiently and effectively, which the NPS does not address.

Further, the NPS effectively puts the management of reverse sensitivity in the ‘too hard basket’ (i.e. effects resulting from sensitive new housing developments being developed too close to existing infrastructure). It would have been helpful to get some national direction on that issue, particularly where the proposed RMA reforms and NPS are effectively promoting faster planning and consenting processes with fewer limitations.

Conflict between existing infrastructure assets and new housing development is more likely to occur in those circumstances.

Effect on business land

The business land market has some lack of capacity, although not as pronounced as in the housing market, but this is not always aligned with market needs for type or location. Reverse sensitivity is also a key issue for industrial land users, but no guidance is provided by the NPS on that topic.

Submissions on the NPS close on Friday 15 July. Recommendations will then be developed by the Ministry for the Environment with the final document likely to be completed in October 2016.