Infrastructure providers spend $1.29 billion annually obtaining resource consents, 70% of which is just consultant and legal fees, says New Zealand Infrastructure Commission Chief Executive Ross Copland
The report by Sapere Research Group found that:
- of the estimated $1.29 billion each year spent on infrastructure consenting, nearly 70% is spent on consultants (planners, landscape architects, ecologists etc) and lawyers,
- on average, 5.5% of total project costs are spent on obtaining consent,
- for projects worth less than $200,000, consenting averages 16% of total cost,
- consenting costs have risen by 70% in the last seven years,
- the time taken to get a consent decision nearly doubled within a recent five-year period.
The results of this study are quite concerning. To see annual consent costs escalating by half a billion dollars since 2014 is evidence of the ‘arms race’ of experts we have seen unfolding – with council planners demanding that infrastructure providers pay for as many expert reports, peer reviews and independent studies as they deem necessary.
Worst of all, the system disproportionately penalises smaller communities and projects. For projects under $1m, the cost of consents is approximately three times the proportion paid by bigger projects, and that simply isn’t fair.
It means the intersection safety upgrade at the end of your street, or the upgraded electrical transformer required to future-proof your neighbourhood for electric vehicle chargers costs a lot more than it should.
Slow decision-making increases risk to infrastructure providers which tends to increase project financing costs, prevents contracts being awarded to contractors, delays the procurement of critical materials with long lead times and acts as a barrier to new market entrants looking to invest and build infrastructure in New Zealand.
The old adage ‘time is money’ holds true for infrastructure projects, unfortunately we have a planning system that has little respect for time or money.
This study has given us a sound basis for setting a deliberate and bold cost target for reform. Just as environmental bottom lines are viewed as essential to these reforms, so too are hard targets for the cost and time performance of the new system.
There are low hanging fruit everywhere we look if we’re prepared to challenge the status quo; we relitigate the same effects and regurgitate the same consent conditions rather than adopting agreed national standards for infrastructure. It’s important that these reforms deliver the cost and time efficiencies of the magnitude needed.
The New Zealand Infrastructure Commission, Te Waihanga, is working across government and infrastructure providers to ensure the current reform of the resource management system delivers better outcomes for infrastructure. The report findings have also been used in developing the Draft New Zealand Infrastructure Strategy.
Commissioning this research was an essential step as we had very little hard data to support the anecdotes we hear about the duration and cost of obtaining consents.
It will also allow us to benchmark the new system against what we have now to ensure it delivers the cost and time savings we desperately need.