Chapter 5. Sustainable urban development1

This chapter discusses the economic and environmental conditions of New Zealand’s urban areas, with a particular focus on Auckland. It examines the main challenges of cities to advance sustainable urban development, and reviews the main policies and measures in place to address them. This includes urban policies for land use, sustainable transport and buildings, and waste and water management, as well as the role of multi-level governance, investment and finance.


1. Introduction

Cities play a disproportionately large role in the economic and environmental performance of countries. As hubs for productivity, job creation and innovation, they generate about 80% of global gross domestic product (GDP). At the same time, cities account for roughly 70% of global energy use and related greenhouse gas (GHG) emissions (New Climate Economy, 2014). The environmental impact of cities on their residents and countries is shaped by a range of factors, including their geographical setting, citizens’ lifestyle and by the way urban growth is planned and managed. For example, uncontrolled urban sprawl and outmoded transport systems can exacerbate pollution and associated environmental risks and socio-economic costs. In turn, environmental quality such as clean air and green spaces are key for cities’ overall liveability and longer-term competitiveness. Policy and investment decisions in urban areas thus have a strong influence on achieving national environmental and green growth goals.

New Zealand is one of the least densely populated countries in the world, but also one of the most urbanised. While environmental quality of life of the urban population is relatively high, sustained population growth in all major cities is putting pressure on infrastructure and the environment, particularly in Auckland, the country’s largest city. The challenge for New Zealand cities is, therefore, to accommodate larger populations while making more efficient use of space and infrastructure, and enhancing environmental sustainability and well-being. Many cities have committed to sustainable urban development2 and established environmental performance goals. For example, Auckland adopted a vision of becoming the world’s most liveable city, while Wellington aspires to become an eco-city with an environmental leadership role. Several cities adopted the vision of a more compact form, with the aim to reap economic and social benefits from agglomeration and to reduce potential environmental impacts of urban sprawl. However, institutional fragmentation, a complex urban planning system with poor linkages between land use, transport and infrastructure policies, and lack of community support have prevented significant progress towards this objective.

2. An overview of New Zealand cities: Socio-economic trends and environmental performance

2.1. Population and socio-economic trends

New Zealand is a highly urbanised country, even though it hosts few large cities by international standards. In 2014, 86% of the population lived in urban areas, a share projected to reach 90% in 2050 (UN, 2014).3 Auckland is by far the largest city, accommodating 1.45 million people in 2015, or one-third of the New Zealand population. The two second-biggest cities – Wellington, the capital city, and Christchurch – accommodate nearly 400 000 inhabitants, respectively. Most other cities are significantly smaller (Figure 5.1).

Figure 5.1. Population in New Zealand’s largest cities and towns is growing

All major cities (with population over 50 000) saw their population increase since 2000 (Figure 5.1). Together, they have accommodated nearly 80% of the country’s total population growth. Growth has been unequally distributed and concentrated primarily in the wider Auckland region (Auckland and its two neighbouring cities of Hamilton and Tauranga saw their population increase by roughly 30% each since 2000; see Figure 5.3). Growth has been driven by a mix of natural population increase (excess of births over deaths) and migration, which reached a record high of nearly 1% of the total population in 2014 (Chapter 1). Auckland’s population is expected to increase by more than 40% over the next 25 years (to reach 2 million in 2040), accommodating 55% of the country’s total projected population growth (Statistics NZ, 2016, 2015).

Sustained population growth has led to bottlenecks in transport, water and social infrastructure, and it has contributed to an overheated property market, notably in Auckland. House prices in Auckland have increased by 52% since mid-2012 (the beginning of the recent upswing), compared to 11% in the rest of New Zealand (Kendall, 2016). Rising house prices are eroding affordability and raise financial-stability risks (OECD, forthcoming). The current housing shortage in Auckland is estimated at about 20 000-35 000 homes. An estimated 13 000 new dwellings would be needed per year to accommodate rising demand from population growth and immigration over the next 30 years – more than twice as much as what is currently built (Auckland Council, 2012a).

Housing and infrastructure bottlenecks may become a barrier to economic growth, by restricting labour mobility, reducing incentives for firms to locate in the city and, ultimately, curbing productivity benefits from scale and agglomeration economies that larger cities usually offer (NZPC, 2016; OECD, forthcoming, 2015a). Auckland is New Zealand’s economic powerhouse, accounting for more than one-third of national gross domestic product (GDP) (Figure 5.2). It is home to the country’s major commercial and manufacturing centres, and serves as the largest logistics node for imports and exports by both air and sea. Productivity levels are higher than in the rest of the country and per capita income is above the national average (Figure 5.2). However, the Auckland premium in terms of GDP per capita has fallen over the past decade (OECD, forthcoming). The city’s annual GDP growth (2.7%) has been above the national average (2.5%) since 2000, yet not growing as fast as a number of rural municipalities and other major cities (i.e. Christchurch, Hamilton and Tauranga) (MBIE, 2016).

Figure 5.2. Auckland is New Zealand’s economic hub

Despite these pressures, quality of life in New Zealand’s cities is generally high. Most dwellers (78%) agree their city is a great place to live, mainly for the good lifestyle provided, easy access to vast green areas and the beauty of the natural environment (Colmar Brunton, 2016). Per capita income is higher than the national average in most cities (Figure 5.2), at levels similar to those of major Australian cities. Wellington (which is home to the central government) stands out, with income levels that are almost three times higher than the national average and roughly twice that of Auckland and Christchurch (Figure 5.2). Spatial inequalities are also evident within cities: wealthier and more educated people cluster in inner suburbs and suburbs with natural amenities, while those who earn less and who are less educated tend to live in the outer suburbs (NZPC, 2016).

2.2. Urban expansion, density and urban form

Most New Zealand cities are expanding to accommodate their growing populations. The built-up area of the three biggest cities (Auckland, Wellington and Christchurch) increased by about 10% over 2001-13, and even faster in Hamilton (+16%) and Tauranga (+25%) (Nunns, 2014a). In the fastest-growing cities, the rate of urban expansion was slower than population growth, meaning that average population density (the number of residents per square kilometre of urbanised land) has increased. However, urban expansion outpaced population growth in a number of smaller cities, including Dunedin, Nelson and the Napier-Hastings urban area. Christchurch experienced the strongest decrease in population density, which reflects strong population growth outside the former city boundaries due to resettlements following the 2011 Canterbury earthquake.4 In Auckland, average population density increased by 11% over 2001-13 (Nunns, 2014a).

Even though some cities have become denser overall, New Zealand cities remain relatively low density by global standards. As in many “new world” countries, New Zealand cities have largely developed in tandem with the expansion of motorisation and cheap energy, which has favoured dispersed settlement patterns, with spread-out buildings and large areas devoted to roads and parking. This adds to a strong preference among New Zealand dwellers for stand-alone houses over apartments (more than 80% of dwellers prefer to live in a stand-alone home), and a high valuation of space as compared to a shorter commuting time (Howden-Chapman et al., 2015). Auckland features the highest average population density in the country (at about 2 700 people per square kilometre), similar to that of Melbourne in Australia (Nunns, 2014a). However, as shown by Figure 5.3, the urban form of the two cities differs; Auckland has a small, high-density central business district (CBD) and some other small employment centres with elevated population densities, while Melbourne features a significantly larger and continuous high-density centre. Wellington also has a small single centre; Christchurch’s city districts are equally low density.

Many New Zealand cities have adopted policies to increase their population densities (including Auckland, Wellington, Hamilton and Christchurch), motivated by economic benefits from agglomeration, as well as environmental benefits associated with denser development (Box 5.1). However, as in many cities in the OECD, most urban growth has occurred at the city fringes, rather than in inner-city areas and growth corridors targeted for development (OECD, 2012). In Auckland, nearly 70% of urban growth between 2006 and 2013 occurred in the suburbs (more than 10 km away from the city centre), with about 40% occurring in the outer suburbs (more than 20 km away) (NZPC, 2016).

Figure 5.3. Auckland has a polycentric structure with few small high-density areas
Population densities in selected OECD cities
Box 5.1. Density, environmental sustainability and the dilemma of new world cities

Rapid increase of urban sprawl (i.e. uncontrolled and fragmented low-density urban expansion) in many countries worldwide has become a major concern because of its detrimental effects on the environment. Low-density development may be appealing for the private parking spaces and large backyards and a relatively “green” urban ambience. However, low-density and sprawling cities are often associated with heavy reliance on private motor vehicles (with associated GHG emissions and local air pollutants); higher costs for infrastructure and public service provision; and greater demand for open space and farmland to the detriment of biodiversity.

OECD (2012) makes an important distinction between dense cities (which have a high number of residents per square kilometre) and compact cities. The latter encompasses a wider set of characteristics, such as dense and proximate development (e.g. close or continuous urban agglomerations, distinct borders between urban and rural land use, and secured public space in the urban area), linkages to public transport systems and accessibility to local services and jobs (e.g. mixed land use and accessible local services by foot or public transport). A compact urban form can bring about economic benefits (e.g. labour productivity, reduced infrastructure costs, more efficient land use), social benefits (e.g. greater access to services and improved health) and environmental benefits (e.g. lower air pollution and GHG emissions from transport, lower energy consumption, and conservation of farmland and ecosystems). If proper account of externalities to air, water and land can be incorporated in the cost of services from the outset, the sustainability of urban environments can be significantly improved. However, it is a much more difficult task to retrofit existing urban settings.

Growing concern about air pollution, climate change and pressure on scarce environmental resources has caused many city authorities to question the long-run sustainability of their urban form. In addition to managing urban sprawl, several cities try to improve resource efficiency and reduce environmental pressure by changing residential densities in certain areas. However, ex post densification can be politically difficult because changes to regulatory requirements effectively alter the bundle of property rights and expectations of homeowners. Increasing residential density thus needs to be approached carefully to ensure buy-in from the affected population. In addition, simply doubling the population of a given area without changing any other parameters can intensify negative factors such as ambient air pollution, congestion or lack of green open space. Indeed, many cities feature high population densities without experiencing any of the economic, environmental or social benefits ascribed to the compact city. Empirical research questions the longstanding wisdom that denser cities are greener (Fruits, 2011; Gaigné, Riou and Thisse, 2012). Notwithstanding, many of the principles and policies underlying compact development policies – such as co‐ordinated land use and infrastructure planning, mixed use, transit-oriented development, careful planning of green spaces, avoidance of leapfrog development – can help improve cities’ socio-economic and environmental performance, be it in compact or lower-density urban settlements.

2.3. Urban mobility

Urban mobility in New Zealand is characterised by an overwhelming reliance on private car use. With the exception of Wellington, dwellers in major cities travel more than 90% of total distance travelled in motor vehicles (Figure 5.4). Large roads and plentiful parking spaces make it easy to use cars in urban settings; meanwhile, the favourable tax treatment of company cars and parking lots encourages private car use and long-distance commuting (Chapter 3). The level of public transport has increased in all major cities (except Dunedin) since 2002, but it remains low compared to other countries (Ministry of Transport, 2014; NZPC, 2016). The level of active transport modes (e.g. walking and cycling) is on the rise in some cities, notably in Wellington (26% since 2000), Auckland (29%) and Dunedin (40%). Wellington features the highest share of distance travelled in public transport (Figure 5.5); it also has the largest proportion of commuters travelling by active transport modes. This has helped congestion levels remain relatively static over 2005-10 (MBIE and LGNZ, 2012). The uptake of electric vehicles in New Zealand has been limited to date (about 1 800 vehicles) (Chapter 3).

Figure 5.4. Urban mobility heavily relies on private car use, yet public and active transport is on the rise

In the Auckland region, the increase in population has prompted a 25% surge in the total vehicle kilometres travelled since 2000 (Ministry of Transport, 2015). Investment in the road network has helped accommodate increased road use and maintain congestion levels at roughly the same levels over the 2000s (Auckland Council, 2016). However, congestion remains high: Auckland is considered to be the second most congested city in Oceania after Sydney, despite its relatively small size (TomTom, 2016). Congestion is estimated to cost Auckland NZD 1.25 billion annually (Wallis and Lupton, 2013). The city’s geography means that transport demand is focused into narrow corridors, which increases congestion and limits opportunities for further road extension. Alternative transport modes (e.g. public and active transport) increased over the past decade (Figure 5.4). Upgrades of the rail network helped increase rail patronage from 2.5 million to nearly 14 million trips per year between 2003 and 2015; total public transport boardings increased by 60% over 2005-15 (Ministry of Transport, 2016; see also Indicator 7). Still, nine out of ten Aucklanders drive to work and public transport use per capita is noticeably lower than in other cities in the region, such as Melbourne, Brisbane or Perth (Auckland Council, 2014a; Nunns, 2014b).

2.4. Key environmental trends

Greenhouse gas emissions

While lack of long-term data and differences in reporting methods impede a detailed analysis and benchmarking of urban GHG emissions in New Zealand cities, available data suggest that the three largest cities (Auckland, Wellington and Christchurch) emit fewer GHG emissions per capita than a number of cities in Australia, Canada and the United States (Figure 5.5). The transport sector accounts for the bulk of urban GHG emissions (roughly 40% of emissions in Auckland, 50% in Wellington and 60% in Christchurch), which reflects New Zealand’s relatively clean power sector (which lowers emissions from non-transport energy use; see Chapter 1), as well as urban forms that favour private motor vehicles as the primary way to travel within cities. The transport sector has also driven much of the increase in total GHG emissions since 2000 in these three cities (or counteracted emission reductions in other sectors).5

Figure 5.5. Urban greenhouse gas emissions are lower than in a number of cities in Australia, Canada and the United States

Some city and regional councils have developed strategies and policies on climate change. Auckland aspires to halve GHG emissions by 2050 from 1990 levels, which aligns with New Zealand’s national target (see Chapter 1). According to internal analysis, this target could be reached if all the abatement measures listed in Auckland’s Energy Resilience and Low Carbon Action Plan were implemented (Auckland Council, 2014b). Christchurch aspires to halve emissions by 2050 from 2008 levels; Wellington seeks to reduce emissions by 80% by 2050 from 2001 levels. The New Zealand Productivity Commission noted the need for a better understanding of factors shaping GHG emissions in New Zealand’s cities to develop adequate policy responses (NZPC, 2016). Given the role cities play in achieving national climate change targets, this should also involve improving the quality, timeliness and comparability of urban GHG emissions for New Zealand’s major cities.

Air emissions and air quality

New Zealand’s cities measure up well in air quality against many other cities in OECD member countries; and they generally remain below the guideline for annual average particulate concentrations (PM10) established by the World Health Organization (WHO). Christchurch registers the highest average annual concentration levels among New Zealand cities (Figure 5.6). This is related to the city’s geography and climate (which traps air pollution at low altitude above the city) and the prevalence of burning wood or coal for domestic heating. Other cities, including Auckland and Wellington, have more favourable climatic conditions, benefiting from strong winds that help disperse air pollutants. Average annual PM10 concentrations declined in all of New Zealand’s five biggest cities over 2000-12, driven mostly by lower emissions from wood and coal burning from domestic heating. However, several cities still fail to meet the national standard of short-term PM10 exposure each year (MfE, 2014). Exceedances occur typically in winter, when emissions from wood and coal burning for domestic heating are high, as well as in areas close to state highways and arterial roads (which are heavily used by diesel-power heavy vehicles).6

Figure 5.6. Urban air quality is good compared with many other cities in the OECD

In Auckland, air quality has improved significantly due to a shift away from coal and wood for both domestic heating and industrial use (which contributed to a slight reduction in PM10 and PM2.5 emissions), as well as more efficient vehicle technology and cleaner fuels (which drove down CO, NOx and SOx emissions) (Auckland Council, 2014c). However, the increase in vehicle numbers, kilometres travelled and the age of the vehicle fleet have somewhat offset better environmental performance of vehicles, with transport remaining a major emission source of air pollutants (Figure 5.6). Air pollution is estimated to cause 300 premature deaths and impose a social cost of NZD 1.1 billion per year in Auckland, of which 120 deaths and NZD 466 million stem from transport-related pollution (Auckland Council, 2015c, 2014c). The Auckland Low Carbon Action Plan aims for a 50% reduction in PM10 emissions by 2016, compared to 2006 levels, and a further 20% reduction by 2040 (Auckland Council, 2014d). This target will be challenging to achieve given projected increases in vehicle PM10 emissions.

Waste generation and management

A number of cities started implementing policies to reduce waste generation and encourage recycling. However, lack of comprehensive data impedes benchmarking of cities and the tracking of progress towards locally defined objectives. Auckland estimates that 1.2 million tonnes of waste were landfilled in 2010, of which 80% was commercial and industrial waste and 20% household waste. On a per capita basis, this suggests municipal waste generation in the order of 160 kg per person (this compares to an OECD average of 520 kg, reflecting the partiality, and hence incomparability, of data) (OECD, 2016a). The 2012 Auckland Waste Minimisation Plan aims to reduce household waste per capita by 30% by 2018 and sets an aspirational target of zero waste by 2040. Monitoring progress towards these targets will require significant improvement in data collection and reporting. The Wellington region has implemented recycling requirements, which helped reduce the total amount of waste to landfill by about 15% between 2005/06 and 2009/10 (Morrison Low, 2011). Some cities use the polluter pays principle to manage waste collection and disposal, with some evidence showing this has encouraged more efficient use of resources (Indicator 6.4).

Water quality

Freshwater quality is generally lower in waterways running through urban areas (NZPC, 2016). This is because many New Zealand cities are located near the coast and hence downstream of freshwater streams, where nutrient and sediment pollution from agriculture accumulate. Urban activities add to this pollution through municipal wastewater discharges; stormwater discharges; sediment loss and stream modification from land development; industrial discharges; and contamination from roads and vehicle use. In Auckland, more than half of freshwater streams (54%) are in a degraded or poor state, mainly due to discharges from urban sewage and stormwater systems (Auckland Council, 2015c). Auckland’s estuaries and harbours are pressured by high and increasing nitrogen loads from nearby agricultural activity (mostly from dairy farms in the neighbouring Hauraki plains), contamination from heavy metals (with most hotspots being near ports, marinas, landfills and industrial activity), as well as high levels of sediment from both agricultural and urban sources (Hauraki Gulf Forum, 2014). Only 25% of Auckland’s marine waters were rated to have good or excellent water quality, while 44% registered fair and 31% poor quality (Auckland Council, 2015c).

Urban water supply and consumption

Urban drinking water quality is good and compliance with national drinking water standards has increased over the past few years, reflecting tighter regulation and more investment in water treatment. An estimated 96% of the urban population is now connected to wastewater treatment services (NZPC, 2016). However, sewerage and stormwater infrastructure have not kept pace with population growth and are operating at capacity limits in several fast-growing cities (including Auckland and Hamilton). This leads to frequent overflows of (largely) untreated wastewater and stormwater into watercourses and harbours, with severe impacts on water quality.

In 2014/15, several cities issued water restrictions (including Wellington), suggesting there is pressure on the availability of water for urban supply (Water New Zealand, 2016). Freshwater abstraction for public water supply (in per capita terms) is one of the highest in the OECD (Chapter 1). However, per capita water consumption varies significantly across the country. Cities charging by volume (e.g. Auckland, Tauranga and Nelson) register significantly lower consumption levels than those that do not (e.g. Wellington and Christchurch) (see Figure 5.9 and Indicator 6.4).

Biodiversity and access to green open spaces

New Zealand cities have some significant remnant habitats. The Auckland region alone contains at least 37 distinct types of land and freshwater ecosystems and hosts over 20 000 plant and animal species, including several endemic ones (Auckland Council, 2016b). However, loss and fragmentation of native habitats from urban growth and invasive species put many species under threat. Despite covering only 2% of national land mass, the Auckland region is home to about one-fifth of nationally threatened terrestrial vertebrates and plants. By contrast, Auckland and some other cities have better birdlife than some rural areas. This is due to major pest eradication programmes and pest-free bird sanctuaries (such as the Karori Sanctuary in Wellington and on some islands in Auckland harbours), as well as better control of national pests like possums (Meurk, Blaschke and Simcock, 2009; Auckland Council, 2015c).

New Zealand’s urban areas are generally green and city parks and forests more accessible than in cities elsewhere. In three out of four neighbourhoods, some kind of park is generally accessible in less than three minutes by car (Meurk, Blaschke and Simcoe, 2009). Within Auckland’s urban areas, green open spaces (including urban forest, wetlands, parks and sports fields) occupy 25% of land (Auckland Council, 2015c). However, urban green spaces often have low levels of indigenous biodiversity, limited to lawns, shrubs, trees and potential pests (Meurk, Blaschke and Simcoe, 2009). Native ecosystems within Auckland’s urban area have increased by 4 km2 since 2001; this is due mostly to forest planting around the margins of larger native remnants and the replacement of exotic forest and scrub with native species on islands in the Hauraki Gulf. Parkland has decreased by 3% since 2001 (Auckland Council, 2015c).

3. The institutional framework for urban planning

Institutional and governance arrangements have important consequences for the economic, social and environmental performance of cities. The better governance arrangements work for co-ordinating policies across policy fields and jurisdictions, the better the outcomes in the three above-mentioned areas. Co-ordination is particularly important where local administrative borders do not match the functional reality of the city, which is the case for most cities in New Zealand and other OECD member countries (OECD, 2015b).

3.1. Local governance

New Zealand has a centralised unitary form of government, in which the central government has delegated certain regulatory powers to sub-national authorities (Chapter 2): regional councils, territorial authorities (city and district councils) and so-called unitary authorities (which combine the function of local and regional governments).7 Local institutional arrangements vary; some city councils govern the entire urban area (e.g. Hamilton), some govern the entire urban area plus the surrounding rural area (e.g. Dunedin) and other cities spread over the administrative boundaries of several territorial authorities (e.g. Wellington and Auckland until 2010). The mismatch of administrative and geographical boundaries creates governance challenges, particularly for managing development in peri-urban areas and city- or region-wide infrastructure planning and investment. The city of Tauranga, for example, has traditionally managed growth at the city fringe by moving the local authority boundary. In this way, new suburbs over the border all fall within the same jurisdiction (NZPC, 2015). The Environment Court has to resolve quite a few inconsistencies between regional and district land-use plans.

The make-up of Auckland’s institutions changed significantly in 2010 with a national law bringing the region’s seven city and district councils and the regional council into a unitary authority, called Auckland Council. This decision aimed to overcome weak regional governance and institutional co-operation, which had previously constrained effective urban planning and management (Box 5.2). The new body inherited all the regulatory and budgetary powers from the local councils and regional council. As such, Auckland is one of the few OECD metropolitan areas with a governance body that can impose binding regulations across the entire urban area.8 Agglomeration improved co-ordination across the region, as well as with the national government, providing it with a clear interlocutor for the whole of Auckland. It has enabled the council to tackle issues beyond the capacity of previously individual councils, such as advancing network investments in the area of sewerage and wastewater management.9

Box 5.2. Reforming local governance: The creation of Auckland Council

In response to demands for a more strategic approach to urban planning in Auckland, the central government established a Royal Commission of Inquiry to review Auckland’s local government arrangements in 2007. The commission’s report recognised a number of challenges, including inefficient public transport, congestion, delays in consenting processes and poorly co-ordinated urban growth (RCAG, 2009). The commission linked these challenges mainly to fragmented governance and weak regional leadership, as well as poor community engagement. The national government responded with the 2009 Local Government (Auckland Council) Act, which amalgamated Auckland’s eight sub-national authorities into a single body. The new Auckland Council, elected for the first time in 2010, has the same powers and functions as other councils in New Zealand, yet significantly greater scale and capability. With about 10 000 employees, it is now the largest local authority in Australasia. The mayor was given unprecedented powers, including to prepare the budget, set committee structures and appoint advisory boards. Key functions and assets were placed into fewer council-controlled commercial organisations (CCOs) to improve service delivery, integrated planning and fiscal performance.a

In 2015, a Sustainability Office was created within the Auckland Council to mainstream sustainability within the council and its associated agencies. The council also established Development Auckland as a new CCO to increase the city’s urban development capacity, addressing barriers to brownfield redevelopment and regeneration of town centres.b There is also a statutory provision for an independent Maori advisory board and the council has several advisory panels, including one focused on environment, climate change and natural heritage. Auckland Council engages in different international city networks related to sustainable urban development. These include the C40 Initiative, the Compacts of Mayors and a group of ten leading cities as part of the Global Lead Cities Network on Sustainable Procurement.

a. CCOs deliver a significant service on behalf of Auckland Council, or own or manage public assets. The 2009 reform reduced the number of CCOs from 40 to 6.

b. Urban development authorities have also been (or are becoming) developed in other major New Zealand cities to manage big infrastructure projects, co-ordinate planning and infrastructure provision for greenfield development, and/or to redevelop or intensify inner city sites, including through eco-districts.

Following the Auckland reform, local authorities began to realign themselves throughout the country, but no similar unitary structure has yet been formed. New Zealand’s second- and third-largest cities, Wellington and Christchurch, have no dedicated governance body for the metropolitan area, although their regional councils provide some typical functions of metropolitan authorities (e.g. provision of water and sanitation services). Nevertheless, weak regional governance and leadership continue to undermine coherent region-wide urban planning. Several city and district councils have formed groups to ease co-operation and joint planning for the common urban area; Wellington and the regions of Canterbury and Waikato, for example, have established mayoral forums. Some neighbouring cities have also developed joint development visions, strategies and spatial planning documents to guide urban development; yet these groups sometimes struggle to implement these strategies effectively (see Box 5.5 and Indicator 5).

The New Zealand government should encourage municipalities to overcome institutional and land-use planning fragmentation. This could be done by customising the Auckland institutional reform to other larger urban areas or by building partnerships among municipalities, under various institutional forms. In mid-2016, the government presented a bill to Parliament aimed at facilitating local collaboration.10 Improved governance and inter-municipal co-ordination in spatial planning can lead to better outcomes, including a more efficient urban form, better targeted investments and improved quality or reduced costs of service provision (by virtue of economies of scale) (OECD, 2015b, 2015c). For example, over 2000-06, metropolitan areas that have governance bodies such as the Auckland Council experienced a decline in urban sprawl and feature, on average, lower concentrations of fine particulate matters in the air. This may be the result of more efficient transport policies in combination with better land-use planning (OECD, 2015c).

3.2. National institutions and multi-level governance

Central governments play a decisive role in urban development, setting policy direction through legislation and national strategies and programmes. They also influence urban development via the funding and policy decisions of its agencies. In New Zealand, the central government most directly and most regularly influences urban development through investment in local land transport (it co-finances about half of local transport infrastructure; see Indicator 7). The government also has significant leverage to influence local land-use planning through its power to set National Environmental Standards and develop National Policy Statements (see Indicator 4); however, it has not used these powers much to date (see also Chapter 2). Nonetheless, there has been a trend towards tighter central government control over local government, reduced local discretion and exemptions from key legislation in some regions.11

At the national level, no dedicated ministry or unit is assigned to deal with cities; responsibilities are split across a range of ministries and national authorities.12 The fragmentation of administrative mandates, and insufficient co-ordination among them, limits an integrated approach to urban planning and complicates vertical co-ordination with city governments, which lack a clear interlocutor at the national level. In the early 2000s, a new portfolio of Urban Affairs was created, but this received no separate resourcing and was abolished when the current administration came to office. While few OECD member countries have dedicated ministries to urban development, an increasing number use formal mechanisms to improve both horizontal and vertical co-ordination. Germany, for example, has established an inter-ministerial group to share information and co-ordinate policies of spatial and urban development; this group has also developed urban development principles and guidelines.

New Zealand uses several processes and institutions to ease local-national policy co‐ordination. These include the Auckland Policy Office (established in 2005 by the Ministry of Economic Development and reformed in 2014 to become a multi-agency office for central-local government co-ordination), as well as ad hoc groups like the Auckland Joint Officials Group and the Auckland Social Sector Leaders Group. The Auckland Policy Office has been effective in ensuring vertical co-ordination during the development of Auckland’s first spatial plan (Indicator 5.2). However, ad hoc governance arrangements between Auckland and the national government have often lost momentum and commitment over time, in part due to limited mandate and insufficient resources to commit to joint initiatives (McKay, 2014). The lack of adequate governance mechanisms has hampered the identification of, and agreement on, large-scale infrastructure projects (e.g. in the area of land transport), which has led to several years of jockeying between local and central government over the size, nature and funding responsibilities related to these projects (NZPC, 2016). In recent years, ad hoc collaboration between the national and Auckland governments to resolve long-standing tensions in transport and housing has had some success (see Indicator 5.2). Notwithstanding, the national government could consider establishing more formal structures to co-ordinate major urban infrastructure projects.

4. The legislative framework for urban planning

4.1. Main legislative acts

Three major pieces of legislation govern New Zealand’s urban planning system: the 1991 Resource Management Act (RMA), the main statute for natural resources management and the primary legislation for land-use planning; the 2002 Local Government Act (LGA), which governs infrastructure provision by local governments; and the 2003 Land Transport Management Act (LTMA) (see Box 5.3 on the main provisions of each act). The three acts create a system based on a comprehensive and systematic hierarchy of plans from the national to the local level (Figure 5.8). The central government provides the broad policy framework, while regional and local authorities develop plans that must implement and give effect to national strategies and plans. The system delegates significant responsibilities to local councils, including land-use regulation and the provision of local services related to water supply and sewerage, local transport, and the management of waste, local parks and nature reserves, among others. Regional councils are responsible for issues including water management, soil conservation, natural hazards management and regional transport.

Box 5.3. RMA, LGA, LTMA – the three major legislative acts in urban planning

Three major pieces of legislation set the governance framework for regional and urban planning:

  • The 1991 Resource Management Act (RMA) governs land use through a hierarchy of planning documents, splitting responsibility between the central government, regional councils and territorial authorities. The central government develops National Environmental Standards (NESs) and National Policy Statements (NPSs), which must be implemented by local tiers of government through regional plans and district plans (see also Chapter 2). District plans are the main tool to regulate urban land use. They are usually hybrid instruments that combine policy goals with enforceable zoning codes and development standards.

  • The 2002 Local Government Act (LGA) defines the duties and responsibilities of local government, including processes related to the provision of infrastructure. It requires local communities to conduct strategic planning, for example, through: i) development of long-term community plans (of at least ten financial years) that set out planned activities, pursued outcomes, expected performance, and forecasted revenue and expenditure; ii) infrastructure strategies to plan investment in maintenance, improvement and expansion of infrastructure assets over a 30-year timeframe; and iii) annual plans and reports on planned activities, revenue and expenditure.

  • The 2003 Land Transport Management Act (LTMA) sets out the requirements for the operation, development and funding of the land transport system. Through the National Policy Statement on Land Transport, central government sets the overall objectives and long-term results sought over ten years, as well as expenditure ranges for each class of transport activity. The New Zealand Transport Agency (NZTA) then develops a three-year National Land Transport Programme that outlines activities that will receive funding from the National Land Transport Fund. These activities are selected from proposals prepared by regional land transport committees. Activities proposed for funding must form part of a ten-year Regional Land Transport Plan.

The RMA, LGA and LTMA create a complex web of separated planning and decision-making processes. With land use, transport and infrastructure being subject to separate legal frameworks, plans and decision-making procedures required under the acts are all subject to different legal purposes, processes and criteria, and operate over different timeframes. This has created parallel planning systems with a proliferation of planning documents, overlaps and duplication of efforts, creating significant resource demands on local authorities.13 There are some linkages between the three planning statutes (Figure 5.7), but they have no coherent framework to guide activities towards common goals. National, regional and local governments have struggled to align interests on when, where and how development should occur, leading to misalignment and inconsistencies in urban planning and investment. In the meantime, as discussed in the following sections, lack of clarity and focus of the legislations, coupled with limited national guidance, has led to regulatory overreach in urban areas. Changes to existing regulation, in turn, tend to be slow and cumbersome.

Figure 5.7. The statutory planning framework: Urban planning under the RMA, LGA and LTMA

Overall, the urban planning system has responded poorly to the challenges and opportunities arising from urban development. The system has been a substantial barrier to increasing housing supply and providing network infrastructure in Auckland and other fast-growing cities. As such, it has contributed to rising house prices, missed benefits from agglomeration and increased environmental pressures from infrastructure bottlenecks. At the same time, the system has complicated the delivery of locally defined development objectives, including residential densification (MfE, 2010; NZPC, 2016). The broad frustration with the urban planning system has led to successive legislative amendments in recent years, including a speeding up of plan-making processes, provisions to avoid lengthy appeals and changes to local governance arrangements. However, these amendments have tended to increase the statute’s complexity and reduced its coherence, making it harder for councils to apply them and harder for the public to engage (Jenkins, 2015; NZPC, 2016; see also Chapter 2).

The New Zealand Productivity Commission – an independent Crown entity that advises the government – undertook several inquiries and analyses on local land-use regulation, housing supply and ways to improve the urban planning system. In its report Better Urban Planning (published in draft format at the time of writing), the commission proposes wide-ranging reforms to tackle the underlying weaknesses of the legislative planning framework, giving priority to clearly separating planning legislation for the natural and urban environments (NZPC, 2016).14 Such a wide-ranging reform would help eliminate inconsistencies from recurrent legislative amendments and provide an opportunity to establish clearer linkages between urban land use, protection of natural resources, and transport and infrastructure planning and investment. However, these benefits need to be carefully balanced against the uncertainty and potentially high transaction costs associated with an overhaul of the current planning system, governance arrangements and jurisprudence (Jenkins, 2015; Palmer and Blakeley, 2015).

4.2. Implementing urban planning legislation at the city level

The highly devolved nature of New Zealand’s planning system gives local councils significant autonomy to set their own rules and make decisions on land use in their respective area. Yet lack of clarity of the legislations (notably the RMA), coupled with limited national guidance, has made it difficult for local councils to implement planning objectives efficiently and effectively (also see Chapter 2). The RMA focuses on managing adverse effects of development of the natural environment, but is virtually silent on the urban environment (where natural landscapes are already highly modified). As such, the RMA has limited capacity to recognise and promote the positive economic, social and environmental contributions of high-quality, sustainable urban design and planning (e.g. compared to what is already built or “business-as-usual” development). Benefits of sustainable urban design are missed because quantitative issues (e.g. parking space numbers or wind speeds) sometimes take precedent over qualitative concerns (Duffell, 2010; MfE, 2010). The suitability of the RMA in the urban context has also been questioned due to its reactive character (managing negative effects rather than promoting positive ones) and limited capacity to deal with cumulative effects (NZPC, 2016).

A number of local authorities have developed urban design goals or criteria, use urban design assessments when deciding on resource consents, or have established urban design panels to review proposals and provide advice. However, urban design goals or criteria are often vaguely worded and rarely relate to environmental externalities (or address them inefficiently). Urban design requirements or assessments vary significantly across councils and sometimes lack robust analysis of economic implications. This results in uncertainty and costs for both local governments and businesses. In the meantime, broad room for interpretation has allowed councils to subsume a broad range of issues under the banner of sustainable management, making land-use regulation increasingly far-reaching and prescriptive (NZPC, 2016; see also Indicator 6.1).

More guidance from the national government on implementation of the RMA would help councils develop land-use rules that conform with environmental goals under the RMA, improve consistency across local decisions and practices, and enhance transparency and certainty for developers and residents. New Zealand is one of the few OECD member countries without some form of a national urban policy framework that would guide actions by national institutions, sub-national governments and other stakeholders.15 The first national-level urban planning initiatives were launched in the early 2000s, with one major outcome being the 2005 Urban Design Protocol, a voluntary initiative in which several public and private institutions committed to specific urban design criteria and initiatives. Most councils refer to the protocol in their city or district plan; however, its actual application and effectiveness are not clear. The government plans to review the protocol and clarify the role of regulation on the quality of urban design.

Legally binding mechanisms to improve efficiency, effectiveness and alignment of urban planning have been underused to date. A step in the right direction, the government announced that a National Policy Statement (NPS) on urban development capacity would come into effect in December 2016. However, the NPS is narrow, limited to providing for sufficient housing and business development capacity.16 It pays no attention to how planning can, or should, promote urban systems and outcomes that would improve cities’ environmental performance. Nor does it provide guidance with respect to densification (e.g. supporting infill development), management of natural resources within the urban area and the resilience of new (or existing) development against natural hazards or climate change. The government should therefore consider broadening the scope of the NPS or developing other legally binding measures that would clearly outline what standards and outcomes local plans and developments should achieve. At the very least, New Zealand should review and assess the usefulness and effectiveness of looser forms of guidance, such as the Urban Design Protocol.

4.3. Stakeholder engagement and responsiveness of the planning system

The planning system has been criticised for being insufficiently responsive to development needs in New Zealand’s fast-growing cities. The process of changing land-use rules and regulations tends to be lengthy, with district or regional plans taking more than eight years on average to become operational (since their first notification). In some cities, their development took nearly a decade. Updates and amendments usually take three to four years (and high-growth councils take longer on average). About one-third of the time needed to change a land-use plan is due to action in the courts (Blakeley, 2015; Jenkins, 2015; NZPC, 2016).

These long time periods are in part related to extensive participation and appeal rights under the RMA, which stakeholder groups have used to thwart development of wider public interest (even though these rights have narrowed over time; see Chapter 2) (OECD, 2015a; NZPC, 2016). While high levels of public participation are an asset of New Zealand’s public governance, vested interest groups sometimes have disproportionate influence in local council processes, including consultations on budgeting and land-use plans. One out of three councils believes local interest groups drive local planning decisions (NZPC, 2016). Resident associations often appeal changes to city land-use plans, fearing that urban development could affect the value of their properties and the character of their neighbourhoods. Indeed, many changes to land-use plans effectively protect the interests of property owners, creating biases towards maintaining the status quo (NZPC, 2015).

To speed up development of Auckland’s new (region-wide) land-use plan, the national government passed special legislation that combined enhanced stakeholder engagement at the early stages of the plan’s development with limited possibilities for appeals to the Environment Court at later stages (Indicator 5.2). An Independent Hearings Panel has been set up to review stakeholder submissions, thereby potentially limiting disproportionate influence of selected stakeholder groups. The New Zealand Productivity Commission (2016) proposed replicating such a model in a future urban planning system, in addition to limiting notification requirements and appeal rights to those directly affected by proposed plan changes. While the involvement of a non-political panel can increase objectivity of planning decisions, any limitation of public participation needs to be approached with caution to ensure the public is not disproportionately deprived of oversight and recourse options.

A better defined policy framework for sustainable urban development may help address some of these challenges. For example, well-defined national urban design principles or outcomes (see Indicator 4.2) can provide an objective baseline against which urban plans (and the reasonableness of objections) can be assessed, thereby limiting the risks of appeals to publicly beneficial development. Similarly, robust cost-benefit analyses of proposed changes, and strategic assessment of their potential environmental impacts, would make development planning more transparent, thereby helping to avoid conflict and opposition. OECD (2012) identified a number of other strategies that city government can use when public opposition against a more compact urban form is high; these include provision of affordable housing, investment in green open space, greening of built-up areas, information and education, and demonstration projects that showcase attractive medium- and higher-density development. The city of Vancouver, Canada, for example, turned the acronym NIMBY (not-in-my-backyard) into QIMBY (quality-in-my-backyard) to demonstrate that residential intensification can be based on high-quality urban design and amenities.

4.4. Monitoring and evaluation

Auckland has long-standing experience in environmental reporting: it has published four region-wide environment reports since 1999, the latest of which was released in 2015 (Auckland Council, 2015c), covering climate, air, land, water and biodiversity. Other cities collect and publish data on their own sets of environmental indicators. Wellington has furthermore developed indicators to track the development of urban form, including a set of indices to assess whether the city is becoming more compact (e.g. building density and the proportion of houses located within 100 metres of public transport). No data on cities’ environmental performance (or urban form) are compiled at national level.

The limited use of indicators, the choice of different indicators and inconsistent methodologies make it difficult to benchmark cities, identify best practices and assess progress towards urban development objectives. New Zealand should work towards a common framework for city-level monitoring and reporting by, for example, defining a common set of key urban environmental and economic indicators (e.g. housing density, housing quality, waste management, water and wastewater management, access to green spaces). These could be included in the new National Monitoring System for the RMA (Chapter 2). The government could also provide methodological guidance and enhance local technical capacity and collaboration for the development urban inventories (e.g. city-level GHG emissions inventories). This would allow environmental, economic and social impacts of urban policies to be better identified, thereby supporting decision making and allowing better evaluation of urban development and planning.

5. Spatial planning

5.1. Linking land use, transport, infrastructure and environmental sustainability

Ideally, the policy framework for urban planning should respect the linkages and mutual effects of land use, housing, transport, infrastructure and environmental sustainability. Spatial planning (Box 5.4) is a tool commonly used in OECD member countries to provide for integrated planning and to better balance the demand for socio-economic development with the need to protect the environment. As its overriding benefit, spatial planning can encompass the cumulative impacts of development on the city, its residents and the environment by considering the “whole” of development decisions. Such impacts are difficult to identify in the assessment of individual projects or sectoral policies and plans (TEEB, 2010).

Box 5.4. Spatial Planning

Since the 1990s, the term spatial planning has been used globally to refer to different governance practices and systems to influence the location, timing and form of development. However, there has been little common understanding of what it means in practice. In many cases, the term is used interchangeably with land-use planning, urban planning and regional planning. Silva and Acheampong (2015) identified four key objectives commonly pursued by spatial planning: i) co-ordination of the spatial dimensions and impacts of other sectoral policies; ii) integration and functional organisation of land uses and their regulation; iii) balance of demand for socio-economic development with the need to protect the environment; and iv) balance of distributing the gains of economic development between regions, particularly in cases where the free market has failed to do so. Auckland Council (2012a) defined spatial planning as “a form of planning for cities, regions or countries that seeks to provide long-term direction for development and the achievement of social, economic and environmental well-being”.

Spatial planning is not mandatory in New Zealand, with the exception of Auckland (see next section). Notwithstanding, a number of councils have developed strategic (or spatial) documents for their city, often jointly with neighbouring councils. These aim to set development goals and improve alignment of land use, housing, transport and infrastructure planning (see examples in Box 5.5). While a positive step, the lack of effective implementation mechanisms has often made it difficult to deliver these planning frameworks. The translation of often high-level or aspirational goals in those plans into a coherent and comprehensive set of regulations (e.g. in district plans under the RMA) and budgets (e.g. under the LGA or LTMA) is often a lengthy process that requires separate public consultations and depends on the continued commitment of participating councils.17 Their limited legal weight means that plans lack formal links with planning and budgeting processes under the RMA, LGA or LTMA. Where inconsistencies arise, spatial plans do not prevail. Some spatial plans have been developed without central government involvement, hampering implementation.

Box 5.5. Examples of voluntary spatial planning in New Zealand cities

The Hamilton Urban Growth Strategy (2010) provides the spatial vision for the city and surrounding region over the next 50 years. It was developed jointly by Hamilton City Council, Environment Waikato, and Waipa and Waikato District Councils. The national government created financial incentives for horizontal co-operation, making infrastructure funding conditional on a joint sub-regional growth strategy. The strategy explicitly aims at achieving “a more compact living environment that (would) proactively limit sprawl and manage (the) city’s urban footprint”.

Dunedin Towards 2050, a high-level, non-statutory document adopted by the Dunedin City Council in 2012, aspires to guide and align land use, transportation planning, and infrastructure and services provision, as well as to protect the city’s extensive rural and natural areas from “inappropriate development”. As the plan notes itself, it will need to be implemented through existing and future strategies and plans, and can be subject to change and refinement through processes used to develop those documents.

SmartGrowth is a collaboration between Tauranga City Council, Western Bay of Plenty District Council, Bay of Plenty Regional Council, Tangata Whenua and other partners. It was established in 2004 primarily in response to rapid population growth. An updated document, SmartGrowth 2013, has evolved the collaboration into a spatial plan that includes greater involvement of communities and other agencies outside of local government.

The Wellington Urban Growth Plan 2014-43 incorporates two of the council’s earlier strategies (the Urban Development Strategy and the Transport Strategy), thereby encouraging integrated planning. The strategy aims to improve walking amenities and public transport and increasing medium-density housing. It is complemented with a funded implementation plan for the first ten years.

Source: DIA (2013b); Early, Howden-Chapman and Russell (2015); several local council websites.

The government should support spatial planning by providing greater recognition (i.e. legal weight) to spatial plans, while clarifying (and simplifying) the relationships with planning processes for land use, infrastructure and transport. Spatial planning could be made mandatory for major urban areas (e.g. with more than 100 000 people); and it should be facilitated and encouraged in smaller cities, including through greater guidance on the development and implementation of spatial plans. Where conducted, spatial plans should undergo strategic environmental assessment. Such assessments provide for a systematic evaluation of likely impacts of urban development on the environment and can set standards about how such impacts should be minimised or reversed. This can improve the environmental outcomes of urbanisation, while increasing certainty to the community and developers. It may also help limit the scope of appeal by vested interests and facilitate planning approval processes by setting a baseline against which proposed development can be judged. In Melbourne, Australia, for example, the strategic assessment of the urban development strategy identified matters of environmental importance (e.g. threatened species or wetlands) and stipulated how impacts on these matters must be mitigated; major development projects (e.g. transport corridors or the designation of land for development) can then be approved without further federal government assessment or approval, as long as they are in accordance with the assessed plan. Auckland’s spatial plan (see next section) outlines a number of specific sustainability goals (see Box 5.6), which would provide a good basis to assess impacts.

Box 5.6. Selected quantified sustainability goals in the Auckland Plan

Transport: Double the number of public transport trips (from 70 to 140 million per year) between 2012 and 2022; reduce congestion levels to (or below) 2006-09 levels by 2021; increase the share of people living in walking distance of frequent public transport from 14% to 32% by 2040.

Biodiversity: Ensure no extinction of indigenous species; reduce the number of threatened or at-risk species by 50% (from 2010 levels) by 2040; establish marine protected areas identified in regional marine spatial plans by 2018.

Climate change: Reduce greenhouse gas emissions by 40% by 2040 (based on 1990 levels).

Waste: Reduce waste by 30% by 2018; achieve zero waste to landfill by 2040.

Water: Reduce gross per capita water consumption by 15% by 2025 (based on 2004 levels).

Housing: Retrofit 40% of the housing stock in need of retrofitting by 2030.

Air: Reduce air pollutant emissions (PM10) by 50% by 2016 (compared to 2006 levels) and reduce emissions by a further 20% by 2040.

Source: Auckland Council (2012a).

5.2. Spatial planning in Auckland

The Auckland Plan

The legislation implementing the 2010 institutional reform (Indicator 3) specifically mandated the development of a spatial plan. This spatial plan, later known as the Auckland Plan, was developed by the mayor and the new Auckland Council within 17 months. It sets the long term (30-year) direction for the region, covering land use, transport, housing and infrastructure in an integrated way for the first time. As New Zealand’s first-ever spatial plan with statutory weight, it serves as the framework for all other planning documents prepared in the region.

The Auckland Plan envisions transforming Auckland into the world’s most liveable city and identifies four “transformational shifts” to achieve this: move to an outstanding integrated public transport system; strongly commit to environmental action and green growth; improve the quality of urban living; and accelerate the prospects of Auckland’s children and young people. The Auckland Plan sets out the council’s vision of a “quality, compact city”, mirroring the council’s long-time aspiration to increase urban density with a high-level strategy for implementation. It includes several goals and principles relevant for environmental sustainability, many of which are accompanied with quantified targets that allow for tracking progress (see Box 5.6).

A number of plans and documents will help deliver the objectives outlined in the Auckland Plan. The main mechanism is the Auckland Unitary Plan, the land-use planning document under the RMA, which is discussed in the following section. Others include the dedicated Auckland Transport Programme,18 Auckland’s Economic Development Strategy, place-based strategies (such as the City Centre Masterplan or the Waterfront Plan), and financial strategies and asset management plans developed under the LGA (such as the Long-Term Plan, which outlines intended activities, programmes and a budget for a ten-year period). Local boards set their own priorities and projects.

Land-use planning under the RMA: The Auckland Unitary Plan

Following adoption of the Auckland Plan, Auckland Council developed the Auckland Unitary Plan (AUP), the statutory land-use planning document under the RMA and one of the main tools to deliver the Auckland Plan. The AUP combines the functions of a regional policy statement, regional plan, regional coastal plan and district plans; it will be the region’s single land-use regulation plan, replacing the existing regional policy statement and 13 district and regional plans from the legacy councils.

To circumvent the traditionally lengthy process of changing land-use plans (see Indicator 4.3), Auckland Council proposed an additional round of stakeholder engagement in the early stages of the plan development (which is not required under RMA legislation) in return for limited possibilities for appeals to the Environment Court at later stages. The government agreed, enacting the Local Government (Auckland Transitional Provisions) Amendment Act in 2013. The act established that a non-political Independent Hearings Panel, headed by an Environment Court judge, would hear and consider submissions from stakeholders on the draft AUP, and make recommendations on the final plan for consideration by Auckland Council. An appeal to the Environment Court would be allowed on matters where the council disagreed with the panel’s recommendations. Where the council agrees, appeals can only be made to the High Court on a point of law.

The draft AUP, published by Auckland Council in early 2013, included extensive re‐zoning of residential areas across Auckland to permit the intensification of residential density. Following strong public debate, the proposed AUP, publicly notified six months later, was significantly less ambitious regarding intensification: the number of new houses allowed outside the city limits increased from 25% to 40%. A large part of Auckland suburbs near the city centre would not be eligible for infill development. The proposed plan continued to attract strong opposition: communities opposed intensification; the central government argued the proposal was still too strict with respect to housing regulation and would not adequately address Auckland’s housing pressures; others criticised the proposed land-use rules as too restrictive and costly, driving development towards greenfield areas and hence creating more urban sprawl (Early, Howden-Chapman and Russell, 2015). A three-year process was established for the Independent Hearings Panel to consider about 10 000 public submissions, which has led to some 1.4 million changes.19 Once the process is finalised, New Zealand should evaluate its effectiveness and study whether similar settings could be used to facilitate land-use planning in other cities. From an environmental point of view, the absence of clear standards or goals for urban environmental outcomes makes it difficult to determine to what extent the process has altered likely environmental impacts of planned development.

Addressing Auckland’s housing pressures

The question of how land regulation and supply should respond to Auckland’s rising housing prices has long created tension between the Auckland Council and central government.20 The government has emphasised the need to release more land for residential development on the urban periphery, while the Auckland Council favoured urban intensification. In 2013, the two parties concluded the Auckland Housing Accord to supply additional land for development until the Auckland Unitary Plan becomes operative (a similar accord was later developed for Wellington). The accord aims to establish some 100 Special Housing Areas (SHAs) – designated areas for predominantly residential development where special consenting and approval processes would speed up development. The legislation implementing the accord increased the central government’s role in local land-use planning by empowering the Minister of Housing to override local government planning regulations and to directly permit plans for residential developments (Murphy, 2015).

The identification of SHAs in Auckland is based on a number of criteria, including the existence (or likely future existence) of adequate infrastructure, demand for housing in the proposed SHA, yield and contributions to housing affordability. Environmental considerations (e.g. ecological value of greenfield land where an SHA is considered, or connectivity to public transport) were not listed and given little weight in practice. This reflects the legislation’s focus, which prioritises targeted housing numbers over the Auckland Plan’s aspiration to achieve a more compact city (Auckland Council, 2016c). The Housing Accord gave developers the possibility to choose between greenfield and brownfield development, while ensuring that sufficient greenfield land was available for development to meet the target. The first SHAs were to increase the urbanised area by 16% (by 8 000 ha) over 3 years rather than the 30 years envisaged in the Auckland Plan (Early, Howden-Chapman and Russell, 2015). Indeed, most dwelling sites would be greenfield sites outside the existing built-up area, expanding the future urban zone.

6. Policy instruments for sustainable urban development

OECD (2013) identifies four main types of policy instruments for sub-national authorities to stimulate sustainable urban development: regulation, incentive-based instruments, public spending and procurement, and information and convening (see Table 5.1). From an economics perspective, incentive-based instruments can guide land and resources use more efficiently. Many such instruments (e.g. user charges and fees, development contributions, etc.) also generate revenue, which can help cities finance the large investment needs resulting from urban growth (Indicator 7). On the other hand, regulation can set upper limits to pollution, which can be effective in cases where the environmental costs of land conversion are high (e.g. in ecologically sensitive areas) or uncertain (e.g. where land-use changes evoke cumulative or irreversible effects). Environmental and socio-economic urban development objectives can thus best be achieved by a combination of regulatory and economic instruments.

Table 5.1. Main instruments for sustainable development in cities


Economic or incentive-based instruments

Public spending and procurement

Information and convening

Land-use regulation (e.g. urban growth boundaries, zoning, land-use rules)

Development contributions

Investment in public transport, water, wastewater and waste management

State of Environment report

Building codes

Financial contributions

Green public procurement

Car-pooling facilitation website

Dynamic regulation (selling development rights)

Property taxes


Educational recycling programmes

Road charges and parking fees

Waste charges

Water tariffs

Payments for eco-system services

Tradable development rights

Source: Based on classification used in OECD (2013).

In New Zealand, as in other OECD member countries, urban development policies rely mainly on regulation. In line with recommendations from the OECD Environmental Performance Review in 2007, some cities have expanded use of economic instruments to encourage more efficient water and waste management, for example. However, the application of economic instruments remains limited. Regulatory instruments can, if poorly designed, curtail development and lead to unintended and detrimental environmental outcomes. For example, several cities in New Zealand and other OECD member countries apply land-use rules that restrict development capacity within urban areas, lowering land-use density and forcing cities to move outwards (see Table 5.2 for examples of such regulations). Policies therefore need to be carefully integrated. Strong regulatory containment policies (such as urban boundaries) should be accompanied by policies that aid development inside the urban fringe (e.g. relaxed building height limits), so as to offset negative impacts on housing supply. Regulatory instruments should also be monitored and regularly assessed against their effectiveness in managing land use and their contribution to urban environmental objectives (e.g. their effect on private vehicle use). Ideally, regulatory instruments should be reserved for addressing environmental and social externalities that economic policy instruments do not capture.

Table 5.2. Examples of regulatory policies that can promote urban sprawl



Minimum parking requirements

Reduces the land available for other potential uses (including housing), lowering land-use density; encourages car ownership and use.

Minimum apartment size requirements

Limits the ability of dwellers to trade-off private space for location; limits the supply of smaller and cheaper dwellings.

Building height limits

Reduces building capacity per urban land plot, forcing cities to move outwards.

Density controls (e.g. density limits)

Reduces building capacity per urban land plot, forcing cities to move outwards; limits the supply of smaller and cheaper dwellings.

Minimum lot sizes

Produces the same effect as density limits.

6.1. Land-use regulations

Urban growth boundaries

Urban growth boundaries are a common land-use instrument in cities in the OECD, and used in a number of high-growth cities in New Zealand. They consist of officially mapped dividing lines around urban areas used to prevent urban development in surrounding rural areas. The effectiveness of strict containment policies (i.e. urban growth boundaries or greenbelts) is debated; if set too loosely, they tend to be ineffective in limiting urban sprawl; if too narrowly defined, they may lead to rising house prices in the containment area, land speculation and high prices on the urban fringe, and underestimation of future land and infrastructure needs. The effect on housing supply can be particularly strong when other land-use policies constrain development within the urban area. In some cities (e.g. London and Seoul), strict containment policies actually aggravated urban sprawl, as development “leapfrogged” to highly undesirable places beyond the restricted areas.

Auckland’s urban growth boundary, the Metropolitan Urban Limit (MUL), has been in place since the mid-20th century; first to sequence growth (so that infrastructure could be delivered more efficiently); later, following enactment of the RMA, primarily to protect rural and coastal environments from peripheral growth and to achieve containment and urban densification (Hill, 2008; Blakeley, 2015). While the MUL contained development within its defined limits, much urban growth occurred through “filling up” greenfield capacity within the MUL (Hill, 2008). In other words, it did not significantly contribute to achieving Auckland’s objective of becoming a more compact city. In the meantime, the MUL has contributed to rising house prices, with land prices just inside the MUL around ten times higher than those just outside the MUL (Zheng, 2013). This effect was particularly strong among cheaper dwellings, amplifying effects on housing affordability. There is evidence that the land-price differential has increased since then, indicating the MUL has become more binding as housing demand intensified (NZPC, 2012).

The Auckland Plan takes on a new, potentially more effective approach towards the urban growth boundary. The new Rural-Urban-Boundary (RUB) aims to provide for 30‐years’ growth and is located well away from the existing urban boundary (the AUP will define the exact location of the new boundary). Greenfield land between the RUB and the current MUL is zoned “future urban” until being rezoned in staged releases to meet future housing demand. By the time land is rezoned, network infrastructure would be in place (Blakeley, 2015). This approach should offer markets certainty and hence reduce the risk of land speculation, while enabling policy makers to better manage urban expansion. To enhance transparency and ensure urban expansion is sustainable, Auckland should establish clear rules on who decides where and when areas will be developed, and on the type of environmental assessment land release plans should undergo. Land release plans should, in addition to identifying scope for expansion, also clearly identify restrictions for urban expansion (for environmental or other reasons). A careful approach to land supply seems advisable, given that urban sprawl is an almost irreversible process with lock-ins that may severely degrade the environment.

Zoning and land use regulation

Zoning of land, and regulations on how to develop land within each zone, is the main regulatory instrument for land use in New Zealand, as in other OECD member countries (Silva and Acheampong, 2015). Zones and land-use rules are set by local authorities in their district plans. However, in the context of limited legislative clarity and limited national guidance (Indicator 4.2), many councils have tended to develop land-use rules that are overly prescriptive, complex and costly (NZPC, 2016, 2015). Specific requirements on new developments (such as car parking spaces, balconies or minimum apartment sizes) can impose high costs on developers, thereby constraining development without supporting sustainability or densification objectives.21 For example, car parking requirements, which favour less-dense housing development and may encourage car use, were found to have a cost-benefit ratio of 6:1 in Auckland (MRCagney Pty Ltd, 2013). Wellington and Auckland have eased parking requirements in their city centres, which helped revitalise these areas; however, parking requirements remain for most other cities and districts in Auckland and Wellington (NZPC, 2015).

Rigorous cost-benefit analysis can help cities identify land-use regulations that hamper the achievement of urban development objectives, including the impact of such regulations on transport choices, resource requirements and urban form. Cities aiming to limit urban sprawl should prioritise identification of land-use rules that encourage extensive spatial expansion or that restrict denser development in city centres (see Table 5.2). The latter is particularly important where growth boundaries are used to control urban sprawl. Auckland is setting a positive example, having commissioned several cost-benefit analyses on rules potentially encouraging urban expansion.

6.2. Property taxes (rates)

Rates are a form of property tax charged by local and regional authorities annually on landowners. As in most OECD member countries, rates are the primary funding source for local government activities in New Zealand, accounting for nearly half of local government revenue (Figure 5.8). The 2002 Local Government (Rating) Act provides a number of options for setting rates, including: i) general rates that are related to property value (each council decides if property value will be assessed based on land value, capital value or value of improvements); ii) targeted rates that relate to the cost of a given service (e.g. water supply); and/or iii) uniform annual general charges (a flat charge per property, regardless of the property’s value). A combination of these rates can also be used (DIA, 2016). In practice, local authorities generate most of their rate revenue through general rates. In Auckland, general rates accounted for 87% of total rate revenue in 2012 (Auckland Council, n.d.). The bulk of local rate revenue is used to finance infrastructure such as roads and water infrastructure (NZCID, 2015a).

Figure 5.8. Property taxes are the main source of local revenue

High reliance on general rates for infrastructure finance may discourage cities to accommodate or promote growth, as it implies that dwellers cross-subsidise infrastructure they do not necessarily benefit from. Councils are therefore reluctant to provide network infrastructure (such as sewerage and public transport) if they think this would push up the rates bill of the local population (NZIER, 2015). Indeed, approximately half of New Zealand’s local authorities perceive the main barrier to funding infrastructure is that they have reached the limit of rating increases (NZPC, 2015). Local authorities can address this issue by shifting the burden of financing growth to those who benefit from it (applying the user-pays principle), rather than making everyone pay through general rates. In one positive example, Christchurch imposes targeted rates on properties near new cycleway projects and some that are connected to specific water and sewerage schemes (NZPC, 2016). Similarly, the former Auckland Regional Council used targeted rates to help fund public transport, with the level of the rate varying across the region to reflect differences in transport services improvements (e.g. the inner urban area paid about 1.25 times more than the wider metropolitan area). Similar approaches could be envisioned to finance infrastructure expansion and upgrades planned by the new council. Beyond these examples, however, the application of targeted rates has, however, been limited and relatively unsophisticated in New Zealand (NZCID, 2015b).

Targeted rates can also be used to capture windfall gains accruing to landowners from property price increases resulting from the rezoning of land for urban use (land-value capture taxes) or the improvement of local infrastructure (betterment taxes); an example would be increasing them for a defined period.22 The potential for the tax system to capture such windfall gains is large in New Zealand, particularly in Auckland where infrastructure upgrades and expansions are significant and changes to land-use regulation (under the AUP) are substantial. Revenue raised through this mechanism could then be used to help fund infrastructure upgrades and expansions needed to service new land (OECD, 2015a), especially where development and financial contributions are not applicable.

In addition to financing infrastructure, property taxes affect land use and urban sustainability by changing the relative cost of the location and types of development. For example, a tax design that is based on buildings and other land improvements (rather than on land value) can incentivise greenfield development to the detriment of infill development, encouraging urban expansion and, at worst, urban sprawl. In most cases, however, the effect of property taxes on land use and urban sprawl is not clear-cut (Box 5.7). In New Zealand, most local councils have shifted from setting rates on the basis of land value in favour of capital values, which they perceived would better reflect the ability to pay (NZPC, 2015). However, much of the recent increases in property values reflect rising land values rather than improvements; this suggests that land values may be the more appropriate basis for the tax. There are also indications that land taxes are more progressive in New Zealand (Cheung, 2011). The country may therefore review whether property taxation is aligned with objectives of the urban planning system and, if not, consider shifting towards stronger land taxation.

Box 5.7. Property taxes and sustainable land use: Theory and empirical evidence

The impact of property taxation on land use depends on the tax design. A pure land tax increases the cost of hoarding land and provides incentives to put land to its most valuable use. As such, it may encourage denser development. By contrast, a property tax levied on land improvements (rather than land value) can reduce incentives to develop land and to extend or renovate buildings, as this would increase the tax burden (particularly in urban areas where house prices are high). This may contribute to looser forms of development and urban sprawl. The effect of traditional two-tier taxes (that tax both land and improvements) have different, countervailing effects on sprawl (Brueckner and Kim, 2003):

  • The improvement effect suggests that, all else being equal, a property tax based on market value is expected to reduce density. Where the tax is levied on the assessed value of property (land and improvements), any investment (such as a building) that increases the value of the property increases its assessed value and thereby its tax. Higher property taxes are thus expected to provide an incentive for less densely developed projects – scattered single-family houses rather than apartment buildings.

  • The dwelling-size effect would lead to a reduction in urban sprawl. If the tax is partially shifted onto consumers, house prices increase, increasing the demand for smaller housing units and thereby population density.

Which effect dominates is an empirical question, yet few empirical studies have been undertaken. Recent available research suggests that in the United States moving from a property tax to a land tax would reduce urban sprawl (Ermini and Santolin, 2015; Wassmer, 2016). The question about the desirable structure of property tax rates remains, however, when the city structure is not monocentric (as is the case in Auckland), i.e. it is not clear whether densification should be encouraged in business/residential dense areas at the periphery.

Source: Based on Brandt (2014), “Greening the property tax”.

Some local governments, particularly in the United States, have started to use the property tax as an explicit environmental policy instrument to promote investments in energy efficiency or renewable energy through tax exemptions or reductions (Brandt, 2014). The Czech Republic, Italy, Norway and Spain are further examples of countries that provide property tax relief for renewable energy installations. The efficiency and effectiveness of such reductions would have to be weighed against their costs in terms of a narrower tax base, and hence, less tax revenue. In addition, many policy areas will have instruments that allow for addressing negative social and economic effects more directly.

6.3. Development and financial contributions

Development contributions

Development contributions are one-off levies imposed by territorial authorities on developers to finance parts of the capital costs associated with new development, notably the provision of trunk infrastructure. Their cost is commonly passed onto the purchasers of new houses or commercial premises as part of the sale price. Development contributions account for a small part of revenue of territorial authorities (Figure 5.8) and typically fund a relatively small part of local public infrastructure investment (about 2% of local capital expenditure nationwide, although they reach up to 20-50% of expenditure for some individual councils) (DIA, 2013a). Recent amendments to the LGA (under which development contributions are levied) have restricted the use of development contributions for “community infrastructure” such as libraries and swimming pools. This change may limit the capacity of urban authorities to harness a much-needed revenue stream for infrastructure provision, making local government even more reliant on rates (RPH and NZCSC, 2015).23

Development contributions are an important instrument to stimulate efficient use of land and infrastructure, and to promote better environmental outcomes. If they reflect the true cost of providing infrastructure to a particular area, they encourage developers to focus on areas with lower costs of infrastructure development (e.g. closer to existing infrastructure), while making leapfrog development, or other forms of urban sprawl, more expensive. In Auckland, the cost of providing infrastructure in low-density or greenfield areas was found to be roughly 50% higher than in high-density or infill areas (CIE, 2015). Development contributions can also promote more sustainable buildings, if they consider dwelling characteristics that influence demand on the infrastructure network and associated costs (e.g. water or energy efficiency). They should therefore differ according to the location and type of development. A uniform charge would mean that low-cost areas subsidise high-cost areas; small lots subsidise large lots; and smaller residential units subsidise larger ones. Ultimately, this approach subsidises inefficient uses of land (OECD, 2013).

In New Zealand, development contributions do not generally reflect the true underlying costs of infrastructure supply. However, some cities have moved towards differentiated pricing, for example by imposing lower contributions on smaller or affordable housing (Auckland) or infill development (Hamilton) (Auckland Council, 2013; Russell et al., 2015). Wellington recently introduced a “green building remission” (of up to 50%) for developments with strong environmental performance (i.e. for buildings achieving a high score in the Green Star certified building rating system; see Box 3.4) (Wellington City Council, 2015). These discounts reflect the likely lower demand such development will place on council infrastructure; they could be adopted by other cities, too. A rationale for discounts also exists for developments with wider positive social and environmental effects (e.g. water-sensitive infrastructure that reduces infrastructure demand, while providing recreational value and habitat for biodiversity). Contributions could also be adjusted to account for social costs of land development (e.g. to discourage development on land of higher environmental value), where other instruments (e.g. financial contributions) cannot capture such costs. However, the costs and benefits of discount should be carefully assessed to avoid shifting the burden onto other sources of infrastructure funding, including less-efficient general rates.

Financial contributions

Local and regional governments levy financial contributions on parties intending to subdivide or increase existing land use to reflect the environmental costs of new development. They are imposed under the RMA on new development and can take the form of money or land (which is then used to remedy adverse environmental impacts). Regional and district plans set out the exact purpose. However, principles on how, and on what, financial contributions are to be applied are not clear. This has resulted in a wide variation of approaches and inconsistencies in implementation, reducing certainty and predictability of compliance costs for developers (DIA, 2013a). Like development contributions, financial contributions do not appear to be used to influence the location of development in New Zealand. In many cases, they are charged as a fixed rate based on the type of development, rather than on the marginal damage on the environment (Cheung, 2011), which would improve the economic efficiency of the instrument and, ultimately, encourage better environmental outcomes.

The 2015 Resource Legislation Amendment Bill (Chapter 2) proposes to remove the ability of local authorities to charge financial contributions. This raises the question of how environmental effects of new development would then be accounted for. Environmental offsetting would still be possible under the RMA, but only on a voluntary basis. In addition, removing financial contributions is estimated to reduce local authority revenue by NZD 10 million per year (NZPI, 2016). The alternative of development contributions is unlikely to fully offset the lost revenue. New Zealand should therefore carefully consider the removal of financial contributions and, if implemented, ensure that alternative mechanisms are in place to remedy or offset environmental effects of development.

6.4. User fees and charges

User fees and charges are among the key revenue sources of territorial authorities (Figure 5.8). The extent to which they help finance infrastructure and service provisions varies significantly across sectors: they cover more than half of councils’ expenditure on waste management, yet only relatively modest shares of the costs associated with water supply, wastewater management and road infrastructure (LGNZ, 2015), suggesting that there is significant scope to makes greater use of this instrument. About half of local authorities see the need for greater use of user charges (NZPC, 2015). If properly designed, such instruments can make important contributions to urban environmental sustainability objectives. Yet current legislation limits the ability of local authorities to apply volumetric use charges for wastewater services and increase road use charges. These legislative barriers should be removed.

Road pricing

As pointed out by OECD (2015a), better mechanisms are needed to manage transport demand, particularly in Auckland where congestion levels are high (Indicator 2.3). Road pricing (that would internalise negative externalities associated with road use), combined with better mass transit service would help improve efficiency of the transport network, while reducing GHG emissions and air pollution. The introduction of tolls and congestion charges has proven effective in a number of cities in the OECD, including Stockholm, Oslo, Singapore and London (OECD, 2013). Charging tolls on major routes can also encourage more compact urban development by creating incentives for residents to relocate into the city or close to employment. Advanced technology has decreased administrative costs associated with this policy measure, as well as inconvenience to motorists (e.g. through real-time information and automatic payment). Many cities in the OECD use revenue from road tolls to finance public transport, thereby reducing the fiscal pressure of raising revenue from other, less cost-efficient forms of taxation (OECD, 2015d).

In New Zealand, road pricing is limited to three toll roads (two in Tauranga and one in the Auckland region); no congestion pricing is currently applied (NZPC, 2016). Revenue from road pricing covers only 5% of the costs associated with road infrastructure (LGNZ, 2015). Current legislation restricts the application of road pricing to new roads where an alternative toll-free route is available. Tolling on existing roads would require central government legislation, an issue under discussion for some time. In 2015, the government and Auckland Council set up the Auckland Transport Alignment Project to reach a consensus over the future of the Auckland transport system and its financing, which may involve road pricing. In the meantime, Auckland Council introduced a special, targeted interim transport levy on ratepayers in early 2015 to advance the transport programme.24 Ideally, road pricing should be combined with other demand-management measures and promotion of alternative transport modes such as public transport, walking and cycling. Zoning regulations that limit vehicle access (or access of certain types of vehicles, such as heavy trucks) in congested zones could also be considered.

Water charges

The LGA enables councils to charge for use of water by volume, which encourages better use of resources by sending consumer price signals about the cost of what they consume. Volumetric charging is widely used for non-residential properties, but its application for residential consumers varies widely across the country. Many cities apply flat charges for water through rates, which provide little or no incentive for more efficient use. Councils that introduced water metering and charging have seen significant behavioural change. In Auckland, for example, per capita water consumption by households decreased by about 30% since the introduction of volumetric charging in the late 1990s. Other cities that charge for water (e.g. Tauranga and Nelson) have improved efficiency by a similar magnitude (Lawton et al., 2008; NZPC, 2015). Meanwhile, cities that do not charge on a per unit basis (e.g. Wellington and Christchurch) have significantly higher water consumption levels (Figure 5.9).

Figure 5.9. Cities charging for water consume less water

Experience has shown that volumetric charging can yield a high rate of return if savings in capital expenditure on infrastructure expansion (e.g. due to lower demand) are accounted for. In Tauranga, the net present value of metering (introduced in the early 2000s) was estimated at NZD 53 million in 2009 (DIA, 2013b). Irrespective of the charging regime, water tariffs should be sufficiently high to cover the costs associated with service delivery. Nationally, on average, 36% of water supply and 15% of wastewater management costs are met through charges (LGNZ, 2015). In Auckland, water charges recover more than twice the operating costs of water services (Figure 5.9), allowing part of the revenue to be invested in infrastructure maintenance and expansion. By contrast, Hamilton recovers less than 70% of operating costs through revenues (Figure 5.9), implying that service needs to be cross-subsidised through the public budget.

Waste charges

Waste management practices also differ across New Zealand cities. Some cities apply quantity- or volume-based waste charges, which provide incentives to households to reduce waste, while others finance waste services through flat charges included in rates. Nationally, on average, waste charges cover 51% of councils’ expenditure on waste management (LGNZ, 2015). In Auckland, waste management was fragmented across the seven local authorities until 2010, with different charging schemes applying in different parts of the city. Available data suggest that districts applying the polluter pays principle send nearly half of the volume to landfills than do districts charging through rates (Auckland Council, 2012b).

In a welcome step, the first Auckland-wide Waste Management and Minimisation Plan (adopted in 2012) introduced a coherent funding model for household waste management, which features the polluter pays principle as a key component. The proposed model charges by volume for collection of unsorted household waste; recycled household waste would be financed through rates and/or other funding sources. The rationale behind this scheme is to encourage households to recycle the maximum possible (since using recycling services would imply lower waste charges). The amount of funding sourced through rates is expected to remain equal to current levels (Auckland Council, 2012b). Waste charge revenue will partly feed the Auckland Waste Minimisation and Innovation Fund, a major initiative under the Waste Management and Minimisation Plan. To date, NZD 1.4 million has been awarded to 162 projects across four priority areas (resource recovery, commercial waste, organic waste, and community action and behaviour change).

7. Investing in environment-related infrastructure and services

Infrastructure plays a critical role in improving cities’ environmental performance and delivering green growth. For example, green infrastructure and transformation of the built environment are estimated to deliver the greatest reduction in Auckland’s GHG emissions among all policy measures considered in the city’s Low Carbon Action Plan (Auckland Council, 2014b). In addition, provision of adequate transport, water and sanitation infrastructure is critical to minimise traffic congestion (and associated environmental and socio-economic impacts) and release of waste- and stormwater into water streams. The lack, or inadequacy, of storm and wastewater infrastructure also remains a constraint on housing supply, despite important advancements in Auckland since the 2010 agglomeration (OECD, 2015a).

New Zealand’s local councils have important investment responsibilities, notably for environment-related infrastructure and services such as water, waste and transport, which account for the bulk of local government expenditure (Figure 5.10). However, compared to other OECD member countries, sub-national governments in New Zealand play a minor role in public finance;25 and their flexibility to fund infrastructure is limited by their strong reliance on property taxes (Figure 5.8). About 40% of local councils report that lack of funding is a significant barrier to expand and upgrade infrastructure, including environment-related ones (NZPC, 2015). Meeting cities’ significant investment needs from growing populations may therefore require a focus on diversifying funding sources.

Figure 5.10. Local governments spend nearly one-third of their budgets on transport

As revenue sources can be tied to many aspects of land use, transport, waste or water consumption, cities’ choice of mechanisms to finance infrastructure investment can stimulate better or worse outcomes of urban sustainability performance (Merk et al., 2012). As Indicator 6 discusses, there is significant scope in New Zealand to improve the design of development contributions, financial contributions and property taxes, and to expand the use of user fees and charges to improve the financial sustainability of urban development and promote sustainable use of resources and land. Given its outstanding role as New Zealand’s largest city and centre of economic activity, Auckland may need to give broader consideration to new financing instruments in the medium- or longer term. This could include making stronger use of debt financing (especially where benefits are inter-generational); sharing in a revenue base linked to local economic activity;26 greater use of public-private partnerships, including at the city level (Chapter 3); or taxing windfalls gains that occur to landowners following infrastructure development or rezoning of urban land (Indicator 6.2).

7.1. Investing in transport and water infrastructure in Auckland


Transport accounts for the largest proportion of local government spending. In 2013, it accounted for nearly one-third of local government’s operating expenditure (17% targeted roading and 13% public transport); and nearly half of Auckland’s 2012-22 budget (Figure 5.10). Compared to other countries, investment in transport infrastructure is highly centralised. The central government directly subsidises local road and public transport development through the New Zealand Transport Agency (NZTA), which allocates funding through the National Land Transport Fund based on population size (i.e. Auckland is guaranteed 35%). Transport subsidies are the largest source of central government funding assistance for local government infrastructure. Funding is split into two regimes: the NZTA finances 100% of state highways and major arterial roads; while it co-finances with local authorities on average half the cost of urban, suburban and rural roads, as well as public transport. This funding scheme provides municipalities with an incentive to opt for state highways – which are effectively free for the council – rather than local roads or public transport. Indeed, local traffic heavily uses major motorways running through some cities (including Auckland) (PCE, 2016). Asking councils to co-finance at least a small share of state highways could encourage them to better consider alternative options, including mass public transport.

The focus of national transport investment has been on road development, with fewer resources devoted to public and active transport. That said, public transport saw greater investment in the second half of the 2000s, driven mostly by investment in metro rail in Auckland and Wellington (see also Chapter 3).27 This resulted in greater public transport patronage and helped control congestion, despite population growth and associated increases in demand for road use (Indicator 2.3). However, Auckland’s congestion levels remain high and geography limits how much the network can be expanded. Auckland Council proposes major investment in public transport, walking and cycling infrastructure in the Auckland Transport Programme under the Auckland Plan (Indicator 5.2). Full implementation would require additional resources in the order of NZD 10-15 billion over 30 years, largely exceeding Auckland’s funding capacity. Traditional funding methods should therefore be complemented with user-based funding methods, such as road tolls and congestion pricing. These would also improve demand management of urban mobility. In addition, New Zealand could explore new mobility options arising with the advancement in telecommunication technologies. For example, car-sharing and demand-responsive public transport can be flexible, efficient solutions to expand and improve sustainably mobility in small or low-density cities (OECD/ITF, 2015).

Given New Zealand’s largely decarbonised power sector (Chapter 3), electric vehicles (EVs) represent a major opportunity to reduce emissions of air pollutants and GHGs, notably in cities where public and active transport options are limited. A large-scale transition to EVs would need to be supported by government policy and adequate investment in infrastructure. Experience in Norway and the Netherlands shows that combining battery-charging infrastructure, rebates on purchases and priority lanes on main access roads can lead to very quick uptake (OECD, 2015d). Public procurement could facilitate this process by leading by example and committing to purchase EVs for its own fleet; a number of regional councils are considering this option. An electric car sharing scheme (such as the “Autolib” system in Paris) can also increase uptake of EVs in urban areas, while displacing the need for personal vehicles.

Water and sanitation

Expenditure on water and wastewater infrastructure in Auckland is significant and reflects the need to accommodate growth. The water supply network has spare capacity for 45 000 dwellings in the Auckland metropolitan area, although the network is at capacity limits in some locations. City-wide, water supply is expected to hit capacity in 15 years. To provide capacity for urban growth, Auckland’s water provider plans for capital expenditure of about NZD 490 million annually over the next ten years (2017-26), significantly above investment over the 2000s (about NZD 100 million on average per year) and the first half of the 2010s (roughly NZD 200 million). Nearly 60% of projected capital expenditure will be directed towards wastewater provision and about 40% towards water supply. The investment will be funded from a combination of revenue from water charges (47%), Infrastructure Growth Charges (21%)28 and loans (32%). By contrast, operational expenditure, estimated at NZD 260 million per year for 2017-26, is completely funded through revenue from water charges (Watercare, 2016). In the meantime, urban growth (and associated expansion of the impervious urban area) will increase demand on the stormwater network. Auckland Council foresees expenditure in the order of NZD 1.8 billion for stormwater management over 2015-25.

Moving towards a sustainable approach to water management and infrastructure investment, Auckland Council initiated the Greenways programme, which aligns government actions and investment across a range of planning and operational units to deliver multiple objectives from the same investment. These objectives include freshwater, biodiversity, transport, urban design and stormwater-related outcomes and amenities. The Healthy Waterway project commits to the implementation of water-sensitive design. For its part, the Healthy Waterway Acceleration Fund aims to enable catalytic investment in degraded catchments; these focus on “pinch points” affecting water quality that cannot be addressed without significant public expenditure.

7.2. Improving the environmental performance of the building stock

New Zealand’s building stock is often poorly insulated and frequently damp, cold in winter and mouldy. This has detrimental effects on both environmental performance and public health. The government has taken significant action to improve the residential sector’s performance through public funding, voluntary targeted rates, awareness-raising campaigns and voluntary labelling. The flagship programme Warm Up New Zealand (“Heat Smart” and “Healthy Homes”) had contributed to retrofit nearly 300 000 homes (or nearly 20% of the housing stock), about half of which were occupied by low-income households (Chapter 3). Households that do not qualify for grants under this programme can use Voluntary Targeted Rates (VTR) to finance their retrofits, by adding the cost to their rates bill and paying it off over a certain period (often ten years). However, despite progress, an estimated 30% of the housing stock remain uninsulated and a large segment of the existing building stock (80%) without incentives for retrofitting (IEA, forthcoming; also see Chapter 3).

Auckland has offered a VTR scheme since 2011 under the Retrofit Your Home programme, in part motivated by a desire to promote uptake of Warm Up New Zealand. Since 2011, the programme has retrofitted 11 000 homes (Birchfield, 2012). According to an evaluation, the social value of the programme exceeded total cost by a return of NZD 3.1 per each dollar spent (Auckland Council, 2014e). The city could consider expanding the programme’s scope from heating and insulation to embrace broader sustainability dimensions targeted in the Auckland Plan. These could include household energy and water efficiency, indoor air quality and wider public benefits such as reduced air pollution, energy and water conservation, and climate change and natural hazard resilience. This would allow Auckland to promote best practice urban design and encourage sustainable housing principles, also in the absence of national guidance or standards.

Recommendations on sustainable urban development

The policy and planning framework

  • Examine how to improve procedures, criteria and timeframes for planning and decision making to allow for more integrated and timely management of natural resources and urban environment while preserving the ability for effective local participation.

  • Consider making spatial planning mandatory for all urban areas with population over 100 000, while simplifying infrastructure and transport planning requirements; provide greater recognition and legal weight to spatial planning initiatives in smaller urban areas, and guidance on how spatial planning should be conducted; at the very least, clarify the hierarchical relationships and linkages across planning instruments for land use, infrastructure and transport and, where possible, align planning horizons and review periods.

  • Broaden the scope of the National Policy Statement on Urban Development Capacity, or develop other legally binding measures to ensure that local planning processes and instruments i) recognise and encourage good urban design outcomes and principles for sustainable urban development; ii) identify and appropriately manage important or sensitive environmental systems; and iii) incorporate climate change mitigation goals and resilience against climate change and natural hazards.

  • Facilitate the decision-making process to change existing land-use plans and reduce the scope for vested interests to thwart development of wider public interests (e.g. by front-loading public consultations and ensuring an independent expert review of proposed plans and suggestions from the public).

  • Create a common set of urban environmental and economic indicators to increase transparency on cities’ environmental performance, facilitate benchmarking and identification of best practices, inform decision making and allow for better policy evaluation.

Institutional framework and multi-level governance

  • Establish a national co-operative structure comprising national institutions with responsibilities for urban-related matters (e.g. on the model of the Natural Resources Sector), with a view to improving horizontal and vertical policy co-ordination.

  • Consider replicating the Auckland institutional reform in other major urban areas, with the necessary adjustments, and encourage partnerships among smaller municipalities with a view to overcoming institutional and land-use planning fragmentation.

Regulations and economic instruments for sustainable urban development

  • Ensure that regulations in land-use plans pass robust cost-benefit analyses that consider environmental outcomes (including effects on transport, green spaces, etc.), as well as economic and social outcomes (including distributional consequences and intergenerational equity).

  • Make more systematic use of development contributions and rates to guide efficient and sustainable urban land use by: i) differentiating development contributions along the location and type of development to reflect the true cost of development on infrastructure and service provision; and ii) considering adjusting development contributions and rates where development yields positive effects on the environment; consider maintaining financial contributions or develop other instruments to reflect the environmental costs of developments.

  • Remove barriers to road pricing (e.g. road tolls and congestion charging) and encourage councils to introduce volumetric charging for drinking water supply, with a view to foster efficient use of infrastructure and resources, while reducing the burden on local government budgets.

  • Consider the use of betterment levies (e.g. through targeted rates) as an additional cost-recovery mechanism for infrastructure and services provision, especially where development and financial contributions do not apply; and explore alternative instruments to finance urban infrastructure, including taxing windfall gains occurring to landowners following rezoning of urban land (value capture).

  • Review whether the current design of property taxation is aligned with land-use objectives and assess the potential benefits of shifting the property tax structure towards a land tax or to split rates.

  • Assess the environmental, social and economic implications of the funding model for roads and public transport; promote innovation encouraging alternative options for public transport (e.g. car-sharing, demand-responsive transport in small or low-density cities), while continuing to expand and improve conventional public transport services.

Sustainable housing

  • Improve the environmental performance of the building stock to reduce health impacts from poor insulation and the emission of air pollutants from inefficient heating by: i) modernising and strengthening national building standards; ii) establishing supplementary incentives to promote investment in insulation and modern heating in rental buildings; and iii) encouraging new housing to meet best practice urban design and sustainable housing principles.

  • Ensure that areas of fast-track residential development (notably those created under the Special Housing Act) are screened against environmental impacts, especially against cumulative and irreversible impacts.


Auckland Council (2016a), Auckland Transport Alignment Project – Foundation Report, Auckland Council, Auckland.

Auckland Council (2016b), Biodiversity in Auckland website, (accessed 11 September 2016).

Auckland Council (2016c), Managing Water for Future Cities – Auckland Council Case Study, Auckland Council, Auckland.

Auckland Council (2015a), Low Carbon Auckland: A Year in Action, Auckland Council, Auckland.

Auckland Council (2015b), “Auckland’s greenhouse gas inventory for 2013”, Technical Report, No. 2015/031, Auckland Council, Auckland.

Auckland Council (2015c), State of Environment Report 2015, Auckland Council, Auckland.

Auckland Council (2014a), “Future trends in motor vehicle emissions in Auckland”, Technical Report, No. 2014/028, Auckland Council, Auckland.

Auckland Council (2014b), Assessing the Carbon Abatement Reduction Potential in Auckland’s Energy Resilience and Low Carbon Action Plan, March, Auckland Council, Auckland.

Auckland Council (2014c), “Auckland air emissions inventory for 2006”, Technical Report, No. 2014/015, Auckland Council, Auckland.

Auckland Council (2014d), Low Carbon Auckland: Auckland’s Energy Resilience and Low Carbon Action Plan, Auckland Council, Auckland.

Auckland Council (2014e), “Auckland Council retrofit your home financial support programme: A social return on investment (SROI) evaluation”, June, Technical Report, No. 2014/020, Auckland Council, Auckland.

Auckland Council (2014f), Submission to the Local Government and Environment Committee Local Government Act 2002 Amendment Bill (No. 3), Auckland Council, Auckland.

Auckland Council (2013), Submission to the Department of Internal Affairs: Development Contributions Review Discussion Document, March, Auckland Council, Auckland.

Auckland Council (2012a), Auckland Plan, Auckland Council, Auckland.

Auckland Council (2012b), Auckland Waste Management and Minimisation Plan. Getting Auckland’s Waste Sorted, June 2012, Auckland Council, Auckland.

Auckland Council (n.d.), Long-term Plan 2012-2022, Auckland Council, Auckland.

Birchfield, D. (2012), “Retrofit your home programme: Retrofitting for a more resource efficient and healthier housing stock for Aucklanders”, presentation at the Beacon pathway housing symposium, Auckland, 11 September 2012.

Blakeley, R. (2015), “The planning framework for Auckland’s ‘super city’. An insider’s view”, Policy Quarterly, Vol. 11/4, Institute for Governance and Policy Studies, Victoria University, Wellington, p. 3.

Brandt, N. (2014), “Greening the property tax”, OECD Working Papers on Fiscal Federalism, No. 17, OECD Publishing, Paris,

Brueckner, J.K. (2007), “Urban growth boundaries: An effective second-best remedy for unpriced traffic congestion?”, Journal of Housing Economics, Vol. 16/3, Elsevier, Amsterdam, pp. 263-273.

Brueckner, J. and H. Kim (2003), “Urban sprawl and the property tax”, International Tax and Public Finance, Vol. 10, pp. 5-23.

Cheung, C. (2011), “Policies to rebalance housing markets in New Zealand”, OECD Economics Department Working Papers, No. 878, OECD Publishing, Paris,

Christchurch City Council (n.d.), Climate Smart Strategy 2010-2025, Christchurch City Council, Christchurch.

CIE (2015), “Cost of residential servicing”, report commissioned by the Auckland Council, January, Centre for International Economics, Canberra and Sydney.

Colmar Brunton (2016), Quality of Life Survey 2016: Topline report, report prepared on behalf of Auckland, Wellington, Christchurch and Dunedin City Councils.

DIA (2016), Council Funding website, (accessed 13 April 2016).

DIA (2013a), Development Contributions Review Discussion Paper, Department of Internal Affairs, Wellington.

DIA (2013b), Report of the Local Government Infrastructure Efficiency Expert Advisory Group, Department of Internal Affairs, Wellington.

DIA (2008), Building Sustainable Urban Communities Discussion Document, Department of Internal Affairs, Wellington.

Duffell, S. (2010), “Urban design panels: A national stocktake”, report commissioned by the Ministry for the Environment, Wellington.

Early L., P. Howden-Chapman and M. Russell (2015) (eds.), Drivers of Urban Change, Steele Roberts, Wellington, 2015.

FPIC (2014), “Future proof submission on The New Zealand Productivity Commission’s using land for housing”, Issues Paper, Future Proof Implementation Committee, Auckland, December 2014.

Fruits, E. (2011), “Compact development and greenhouse gas emissions: A review of recent research, Center for Real Estate Quarterly Journal, Centre for Real Estate, Portland University, Vol. 5/1, pp. 2-7.

Gaigné, C., S. Riou and J.F. Thisse (2012), “Are compact cities environmentally friendly?”, Journal of Urban Economics, Vol. 72, Elsevier, Amsterdam, pp. 123-136.

Hauraki Gulf Forum (2014), “State of our Gulf 2014”, Hauraki Gulf State of the Environment Report 2014, Hauraki Gulf Forum, Auckland.

Hill, G. (2008), “The effectiveness of the Auckland Metropolitan Urban Limit – Ring-fencing urban development”, presentation to the Environmental Defence Society conference, Auckland, 11-12 June 2008.

Howden-Chapman, P. et al. (2015), “Survey of sentiments about cities”, in Early L., P. Howden-Chapman and M. Russell (2015) (eds.), Drivers of Urban Change, e-book, Steele Roberts, Wellington, 2015.

IBNET (2016), IBNET Database, International Benchmarking Network for Water and Sanitation Utilities, (accessed 22 June 2016).

IEA (forthcoming), Energy Policy Review, IEA/OECD Publishing, Paris.

Jenkins, M. (2015), “A ‘blue skies’ discussion about New Zealand’s resource management system”, report commissioned by Local Government New Zealand, December.

Kendall, E. (2016), “New Zealand house prices: A historical perspective”, Bulletin, Vol. 79/1, January, Reserve Bank of New Zealand, Wellington.

Lawton, M. et al. (2008), “Best practice water efficiency policy and regulation”, report commissioned by Beacon Pathway Ltd.

LGNZ (2016), Local Government in New Zealand website, (accessed 6 April 2016).

LGNZ (2015), Local Government Funding Review, Local Government New Zealand, Wellington.

MBIE (2016), Modelled Territorial Authority Gross Domestic Product (database), Ministry of Business, Innovation and Employment, Wellington, (accessed 22 August 2016).

MBIE and LGNZ (2012), New Zealand Core Cities – Research Summary Report, Core Cities Project, Ministry of Business, Innovation and Employment and Local Government New Zealand, Wellington.

McKay, D. (2014), “Review of central government policy, implementation, strategy and leadership effectiveness in Auckland”, report commissioned by Chief Executives Governance Group.

Merk, O. et al. (2012), “Financing green urban infrastructure”, OECD Regional Development Working Papers, No. 2012/10, OECD Publishing, Paris.

Meurk, C., P. Blaschke and R. Simcock (2009), “Ecosystem services in New Zealand cities”, in J.R. Dymond (ed.), Ecosystem Services in New Zealand – Conditions and Trends, Manaaki Whenua Press, Lincoln.

MfE (2014), 2014 Air Domain Report, New Zealand’s Environmental Reporting Series, Ministry for the Environment and Statistics New Zealand, Wellington.

MfE (2010), Building Competitive Cities: Reform of the Urban and Infrastructure Planning System – a Discussion Document, Ministry for the Environment, Wellington.

Miller, C. (2011), Implementing Sustainability, The New Zealand Experience, RTPI Library Series, Abingdon, Routledge.

Ministry of Transport (2016), Metro Rail website, (accessed 26 April 2016).

Ministry of Transport (2015), Transport Volume: Vehicle Travel (database), (accessed 26 April 2016).

Ministry of Transport (2014), New Zealand Household Travel Survey Regional Results 2003-2014 (database), (accessed 10 July 2016).

Morrison Low (2011), Wellington Region Joint Waste Assessment Report, March, Morrison Low, Auckland.

MRCagney Pty Ltd (2013), “The economic impacts of parking requirements in Auckland”, report commissioned by the Auckland Council.

Murphy, L. (2015), “The politics of land supply and affordable housing: Auckland’s housing accord and special housing areas”, Urban Studies, Urban Studies Foundation, Glasgow,

New Climate Economy (2014), Better Growth, Better Climate, World Resources Institute, Washington, DC.

Nunns, P. (2014a), “Population-weighted densities in New Zealand and Australian cities: A new comparative dataset” (dataset), Transportblog,

Nunns, P. (2014b), “Population-weighted densities in New Zealand and Australian cities: A new comparative dataset”, Working Paper, 14 September 2014, MRCagney Pty Ltd, Auckland.

NZCID (2015a), Integrated governance planning and delivery: A proposal for local government and planning law reform in New Zealand, New Zealand Council for Infrastructure Development, Auckland.

NZCID (2015b), International best practice in mega project delivery: Lessons from Australia and the UK, New Zealand Council for Infrastructure Development, Auckland.

NZIER (2015), Land-use regulation in New Zealand: Improving the evidence base, New Zealand Institute of Economic Research, report commissioned by the New Zealand Productivity Commission, Wellington.

NZPC (2016), Better Urban planning: Draft Report, New Zealand Productivity Commission, Wellington.

NZPC (2015), Using Land for Housing, New Zealand Productivity Commission, Wellington.

NZPC (2012), Housing Affordability Inquiry Final Report, New Zealand Productivity Commission, Wellington.

NZPI (2016), “Remove Financial Contributions for New Developments”, webpage, New Zealand Planning Institute, (accessed 5 October 2016).

OECD (forthcoming), OECD Economic Surveys: New Zealand 2017, OECD Publishing, Paris.

OECD (2016a), “Municipal Waste, Generation and Treatment”, OECD Environment Statistics (database),

OECD (2016b), “Sub-national Government Structure and Finance”, OECD Regional Statistics (database), (accessed 24 August 2016).

OECD (2015a), OECD Economic Surveys: New Zealand 2015, OECD Publishing, Paris,

OECD (2015b), Governing the City, OECD Publishing, Paris,

OECD (2015c), The Metropolitan Century: Understanding Urbanisation and its Consequences, OECD Publishing, Paris,

OECD (2015d), “Opting for low-carbon urban mobility”, in Aligning Policies for a Low-carbon Economy, OECD Publishing, Paris,

OECD (2013), Green Growth in Cities, OECD Green Growth Studies, OECD Publishing, Paris,

OECD (2012), Compact City Policies: A Comparative Assessment, OECD Green Growth Studies, OECD Publishing, Paris,

OECD/ITF (2015), International Experiences on Public Transport Provision in Rural Areas, July 2015, OECD and International Transport Forum.

Palmer, G. and R. Blakeley (2015), Submission on New Zealand Productivity Commission’s Better Urban Planning Inquiry, March, New Zealand Productivity Commission.

PCE (2016), “Emissions Trading Scheme Review 2015/16: Other matters”, Submission to the Minister for Climate Change Issues, Parliamentary Commissioner for the Environment, Wellington.

RCAG (2009), Auckland Governance Report, Royal Commission on Auckland Governance, Auckland.

RPH and NZCSC (2015), Submission on New Zealand Productivity Commission’s Better Urban Planning Inquiry, New Zealand Productivity Commission, Regional Public Health and New Zealand Centre for Sustainable Cities, Lower Hutt and Wellington.

Russell, M. et al. (2015), “Hamilton”, in Early L., P. Howden-Chapman and M. Russell (eds.), Drivers of Urban Change, New Zealand Centre for Sustainable Cities, Steele Roberts, Wellington.

Silva, E. and R. Acheampong (2015), “Developing an inventory and typology of land-use planning systems and policy instruments in OECD countries”, OECD Environment Working Papers, No. 94, OECD Publishing, Paris,

Statistics NZ (2016), “Estimated resident population for urban areas, at 30 June (1996+) (Annual-Jun)”, Estimates and Projections (database), projections.aspx#estimates (accessed 18 August 2016).

Statistics NZ (2015), “Urban area unit population projections, by age and sex, 2013(base)-2043”, Population Projections (database), (accessed 15 June 2016).

TEEB (2010), The Economics of Ecosystems and Biodiversity, Earthscan, London and Washington.

TomTom (2016), TomTom Traffic Index, (accessed 18 July 2016).

UN (2014), World Urbanization Prospects: The 2014 Revision, United Nations, New York.

Wallis, I. and D. Lupton (2013), “The costs of congestion reappraised”, NZ Transport Agency Research Report, No. 489, Ian Wallis Associates Ltd, Wellington.

Water New Zealand (2016), National Performance Review 2014-15, Water New Zealand, Wellington.

Watercare (2016), Watercare Services Limited, Asset Management Plan 2016 to 2036, Watercare Services Ltd, Auckland.

Wellington City Council (2016), Draft Low Carbon Capital Plan, Wellington City Council, Wellington.

Wellington City Council (2015), 2015/16 Development Contributions Policy, Wellington City Council, Wellington.

Wellington Region Local Government Review Panel (2012), Future Wellington – Proud, Prosperous and Resilient, Wellington Region Local Government Review Panel, Wellington.

Zheng, G. (2013), “The effect of Auckland’s metropolitan urban limit on land prices”, Research Note, New Zealand Productivity Commission, Wellington.


← 1. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

← 2. The New Zealand Department of Internal Affairs defines sustainable urban development as a process of “improving the quality of life in a city, including social, economic, environmental and cultural components, without leaving a burden on future generations” (DIA, 2008).

← 3. This figure is based on a New Zealand-specific definition which includes small towns with a population of more than 1 000; other definitions thus yield lower results.

← 4. A 6.3 magnitude earthquake hit Christchurch on 22 February 2011, at the time New Zealand’s second-most populous city. The earthquake caused the death of 185 people and widespread damage to the city’s infrastructure, which had already been weakened by a 7.1 magnitude earthquake on 4 September 2010. A significant number of dwellers were displaced, and much of the city’s infrastructure and assets had to be relocated and rebuilt. By 2013, average population density in Christchurch had decreased by 2%, compared to 2001 (Nunns, 2014b).

← 5. In Auckland, absolute GHG emissions increased by about 15% over 1990-2009; they have remained relatively stable since, but are projected to increase by nearly 20% by 2050, compared to 2009 levels, if no mitigation action is taken. In Christchurch, emissions increased by 15% over 2000-08. Wellington’s emissions increased by 25% over the first half of the 2000s, but decreased to 2000 levels by 2012 (Auckland Council, 2015a, 2014b; Christchurch City Council, n.d; Wellington City Council, 2016).

← 6. Diesel vehicles remain disproportionate polluters for both PM10 and NOx. In Auckland, for example, diesel combustion accounted for 72% of transport-related PM10 emissions, and 55% of motor vehicle NOx emissions in 2011, despite representing only 25% of vehicle kilometres travelled.

← 7. Currently, there are 11 regional councils, 67 territorial authorities and 6 unitary authorities (these are Gisborne District Council, Nelson City Council, Tasman District Council, Marlborough District Council, Auckland Council and Chatham Islands Council). The average population of a territorial authority is 65 000 residents, but varies from 1.4 million in Auckland to 650 in the Chatham Islands (LGNZ, 2016).

← 8. According to the OECD Metropolitan Survey, 68% of OECD metropolitan areas have a metropolitan governance body; however, only one-third can impose binding regulations (OECD, 2015b).

← 9. The new council has accelerated modernisation of wastewater treatment systems by substantially upgrading the region’s two key wastewater treatment plants and advancing the NZD 950 million “central interceptor” project that aims to reduce overflows from the Auckland combined waste and stormwater system (McKay, 2014).

← 10. The Better Local Services reforms (presented within the Local Government Act 2002 Amendment Bill (No 2) introduced to Parliament in mid-2016) aim to:provide councils with greater flexibility to collaborate to deliver public services; establish new processes for council-led reorganisations (rather than a single Local Government Commission-led option); and provide a more proactive role to the Local Government Commission to promote and facilitate reorganisations.

← 11. The amendments to the Local Government Act, for example, have introduced more planning requirements and standardised reporting obligations for local councils and given the national government more powers to intervene. The Auckland Special Housing Accord (Indicator 5.2) increased the power of the Minister of Housing to override local government planning regulations in Auckland; the minister can now grant planning permission for residential developments directly. Proposed amendments to the Resource Management Act would also increase ministerial powers to directly change local land-use plans under certain circumstances (also see Chapter 2) (Murphy, 2015; NZPC, 2016).

← 12. The Ministry for the Environment (MfE) monitors implementation of the Resource Management Act, the principle legislation for land use; the Department of Internal Affairs is responsible for local government legislation; the Ministry of Business, Innovation and Employment (MBIE) advises groups of regions or cities (mostly Auckland and Christchurch) to maximise their contribution towards national development; and the Ministry of Transport and National Agency for Land Transport plans and co-finances urban transport investment.

← 13. For example, Whangarei City, capital of the Northland region, has been governed by a strategic plan for the city council, a sub-regional growth strategy, an urban growth strategy (developedjointly with neighbouring councils), a coastal management strategy, a rural strategy, an open space strategy and a walking and cycling strategy in 2010, in addition to its district plan and its Long-Term Council Community Plan (Miller, 2011). Wellington is governed by a plethora of complicated and interlocking plans developed by each of its six local authorities (Wellington Region Local Government Review Panel, 2012); Auckland is governed by nine different district plans, until the new, region-wide land-use plan fully comes into effect (see Indicator 5.2).

← 14. The commission argues that natural and built environments require different regulatory approaches and proposes two possible ways of achieving them: keeping a single resource management law with clearly separated natural and built environment sections and clarified linkages with land transport and infrastructure laws; or establishing two separate laws for the natural and the built environment, in which the latter would include built environment regulation, and infrastructure and land transport planning. In both options, land-use legislation would have separate purposes and definitions for the natural and built environment (NZPC, 2016).

← 15. Most OECD member countries have developed national urban policy frameworks, which take various forms depending on the country’s circumstances – from legally binding planning documents to informal guidelines. Korea and Turkey are two examples of countries that recently adopted new legal frameworks for metropolitan areas; in Italy, a new law on metropolitan cities was proposed in 2014 (OECD, 2015b).

← 16. The statement’s primary focus is to reduce regulatory barriers to the supply of housing or commercial development. It supplements theResource Legislation Amendment Bill 2015 that is before Parliament (see Chapter 2), which puts legal requirements on councils to provide enough development capacity to meet demand. The draft NPS encourages integrated planning, but provides no practical guidance on how to reconcile planning processes under the three major acts (e.g. by ruling that land-use decisions must consider planning documents of all three statutes; by requiring or encouraging cities to conduct strategic spatial planning; or by giving spatial or strategic plans legal weight to existing planning processes).

← 17. In the Waikato Region (which hosts the city of Hamilton), for example, a group of local authorities aimed to formally integrate objectives and priorities of their 50-year Future Proof Strategy into statutory documents under the RMA, LGA and LTMA. Even though the strategy went through comprehensive public consultations, separate processes were required to embed it into statutory documents; this raises again the issue of duplication of efforts (FPIC, 2014).

← 18. The Auckland Transport Programme was developed to implement the transport-related objectives outlined in the Auckland Plan. The Auckland Plan aspires to improve the region’s connection and accessibility, through four priorities: i) to manage Auckland’s transport as a single system; ii) to integrate transport planning and investment with land use; iii) to prioritise and optimise investment across transport modes; and iv) to implement new transport funding mechanisms.

← 19. The panel’s recommendations were published in August 2016 and shortly after adopted by Auckland Council. The AUP will become operative when the appealsprocess is complete.

← 20. Beyond land supply, several other factors have contributed to the lag in housing supply, which to date have received less attention. These include high and rising construction costs, reflecting rising commodity prices, labour shortages and decline in productivity in the construction industry, easy credit and tax incentives that bias investment decisions towards property over other types of investment (Cheung, 2011; OECD, 2015a).

← 21. In Auckland, current regulation was estimated to have increased house prices by between NZD 65 000 and NZD 110 000 per apartment (NZPC, 2015b).

← 22. As an alternative to targeted rates, some cities capture windfall gains through a one-off tax liability that must be paid when the land is sold.

← 23. Auckland Council calculated that the Local Government Amendment Act, proposed in 2013 with the aim to narrow the scope of development contributions, would lead to a cumulative 8.5% increase in rates over eight years in Auckland, in addition to raising council debt by NZD 480 million (Auckland Council, 2014f).

← 24. The interim transport levy is being charged for three years to fund urgent short-term transport needs. It is expected to allow for around NZD 170 million of transport investment per year.

← 25. In 2014, New Zealand’s sub-national governments shouldered 11% of total public expenditure and were responsible for about 40% of public investment; these values are among the lowest in the OECD (and significantly below the respective OECD averagesof 40% and 59%) (OECD, 2016b).

← 26. The 2015 OECD Economic Survey of New Zealand recommended that sharing in a revenue base linked to local economic activity could allow local councils to pay for infrastructure and reap more of the benefits of population growth. At present, rates are the only taxation-based income to New Zealand councils. This contrasts with most other OECD member countries, where local governments also gain income from sales or income taxes, for example. In some countries, such as Canada, taxation power of local government varies across cities: Toronto, for example, has the ability to levy additional taxes (e.g. vehicle registration fees, a land transfer tax and a billboard tax), a power that smaller municipalities in the province of Ontario do not have.

← 27. Investment focused on the upgrade of the rail network and the purchase of electric multiple units in Auckland and Wellington (with NZD 1.6 billion and NZD 485 million, respectively); other investments included the introduction of an integrated fares system in Auckland (NZD 100 million) and completion of a real-time information system in Wellington (NZD 80 million). The government also aims to channel larger funding to the improvement of walking and cycling infrastructure in New Zealand’s main urban centres, with investment of NZD 100 million over four years (see Chapter 3).

← 28. This is a type of development contribution charge in Auckland (the regime differs as water services are provided by a CCO).