How effectively does it work?

How effectively does it work? Report on a survey of the Public Works Act 1981

About Simpson Grierson Simpson Grierson's local government and property law specialists are uniquely placed to assist local authorities in management of property portfolios and completion of major infrastructure projects, leading to better planning and decision making. We offer the top local government property specialists, with extensive skills and experience in the complicated issues faced when managing property portfolios in the local government context. We have advised on some of the most significant and ground breaking developments undertaken by New Zealand local authorities, providing strategic advice to Councils undertaking major infrastructure projects. About LAPA In 1991, six local government property employees met together in Palmerston North to exchange ideas and work experience. News of that meeting spread, and so began an annual get-together of local government property employees. Numbers grew; corporate sponsorship was offered for what had become known as The Annual Local Government Property Conference'. The Local Authority Property Association (Inc) was ratified and established at the 2005 Conference, appropriately in Palmerston North where it all began. The Local Authority Property Association (LAPA) includes specialists across a vast area of property management and property consultancy, who collectively manage one of New Zealand s largest property portfolios. Those activities range from utility and insurance procurement and administration, legal property transactions and procedures, to community housing, commercial property management, and fleet management. Contacts Doug Tate President LAPA Email: dougjt@horowhenua.govt.nz Michael Wood Partner Simpson Grierson Email: michael.wood@simpsongrierson.com Duncan Laing Partner Simpson Grierson Email: duncan.laing@simpsongrierson.com Nick Wilson Senior Associate Simpson Grierson Email: nick.wilson@simpsongrierson.com 2 Donna Hurley Senior Associate Simpson Grierson Email: donna.hurley@simpsongrierson.com Phillip Merfield Consultant Simpson Grierson Email: phillip.merfield@simpsongrierson.com

Contents Introduction 3 Summary of Key Findings 5 Key Finding 1: The PWA does effectively enable infrastructure 6 development Key Finding 2: Compensation, offer back and compulsory 7 acquisition aspects are in most need of reform Key Finding 3: Compulsory land acquisition needs to be made 8 more efficient and timely Key Finding 4: Inconsistent approaches to valuation should 9 be addressed Key Finding 5: Incentives for settling promptly would improve 10 acquisition and compensation Key Finding 6: The offer back obligation should be limited 11 Key Finding 7: Compulsory acquisition of Māori land should not 12 be restricted Methodology 13 1

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Introduction The Public Works Act 1981 (PWA) is an important piece of legislation that governs the power of local authorities to acquire or take land for a wide variety of purposes. Through this survey we wanted to find out what local government employees and LAPA members think about the PWA - how effectively it functions and what aspects of it could be reformed. Some clear messages emerge from the responses. The majority of respondents believe the PWA enables infrastructure development. However, there are aspects of the legislation in need of reform and there are issues that need to be addressed in relation to land acquisition. Simpson Grierson and LAPA are delighted to have collaborated on this research project. We hope you enjoy reading this report and find it useful as well as relevant. We look forward to discussing it with you at the LAPA conference, and would welcome your feedback. Thanks again for your support with this initiative. Michael Wood Partner Simpson Grierson This report draws on 41 responses from local government staff on the LAPA database. The survey was carried out in September 2015. 3

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Summary of Key Findings The PWA does EFFECTIVELY ENABLE infrastructure development COMPULSORY LAND acquisition needs to be made MORE EFFICIENT & TIMELY Inconsistent THE OFFER BACK obligation SHOULD BE LIMITED Compensation, offer back & COMPULSORY ACQUISITION aspects are $ APPROACHES to VALUATION should be ADDRESSED IN MOST NEED OF REFORM Incentives for SETTLING PROMPTLY WOULD improve acquisition & compensation Compulsory acquisition of Māori land SHOULD NOT BE RESTRICTED 5

Key Finding 1 The PWA does effectively enable infrastructure development Our first question asked respondents how effectively the PWA works in enabling infrastructure development. Of the 41 respondents, 49% stated the PWA works very effectively or effectively. Another 42% said it works somewhat effectively. Only 7% thought that it was not effective. "It is reasonably effective, if you are acquiring an interest in land from a willing seller; not for compulsory acquisitions - too cumbersome and long-winded." Q1. How effectively does the PWA currently work in enabling infrastructure development? "It is an effective tool to acquire land for Public Works, but there needs to refinements with regard certain matters (that will hopefully be mentioned later on in this survey)" "I think the PWA is very effective in ENABLING infrastructure development but over the years the interpretation of certain provisions have become obstructive." Effectively 44% Very effectively 5% Somewhat effectively 42% Not effectively 7% Don't know 2% 6

Key Finding 2 Compensation, offer back and compulsory acquisition aspects are in most need of reform We asked respondents which aspects of the PWA are most in need of reform. Three aspects clearly stood out. Compensation (45%) is the aspect most would like to see reformed. 40% selected compulsory acquisition and 40% also selected offer back. "Offer back is cumbersome and needs some guidance..." "The Act could be more descriptive on what is and isn't to be valued for compensation." "The model for compensation is too prescriptive and follows the British model as opposed to the more generous European systems. Leaving the owner 'no better or no worse off' does not motivate landowners to engage actively with the acquiring agency." Q2. Which of the following aspects of the PWA needs to be reformed the most? (Respondents could choose as many options as appropriate). Compensation 45% Compulsory acquisition 40% Offer back 40% Acquisition by agreement 18% Issues surrounding Māori land 15% Don't know 13% 7

Key Finding 3 Compulsory land acquisition needs to be made more efficient and timely Question 3 asked respondents what issues in relation to land acquisition need to be addressed. Two issues stood out. Most respondents (62%), believe the compulsory land acquisition process needs to be more efficient. A majority (60%) also believe that the time it takes for acquisitions to be completed needs to be reduced. Q3. What are the most important issues that need to be addressed in relation to land acquisition under the PWA? (Respondents could choose as many options as appropriate). "It is slow, cumbersome and expensive." "The compulsory acquisition process is too expensive, and can prompt agencies to pay too much to avoid it. This creates inequities, causing some owners to stall in the hope of getting more compensation." Making the compulsory land acquisition process more efficient 62% Reducing the time it takes for acquisitions to be completed Being able to acquire land for works that indirectly result from a primary public work project Enabling network utility operators to acquire land under the PWA without relying on the Minister to invoke the compulsory acquisition process Making the compulsory land acquisition process fairer for landowners Don't know 8% 14% 27% 35% 60% 8

Key Finding 4 $ Inconsistent approaches to valuation should be addressed The next question asked respondents what issues need to be addressed in relation to compensation. Again, two issues stood out. The majority (62%) believe that inconsistent approaches to valuation need to be tackled. 54% consider the lack of incentives for landowners to settle promptly to be an issue. The low level of solatium payments was also identified as an issue of concern by 41%. Q4. What are the most important issues that need to be addressed in relation to PWA compensation? (Respondents could choose as many options as appropriate). "[Issues include] valuers who do not understand the basic principles of compensation holding the acquiring authorities to ransom." "Introduce measures to prevent landowners' advisors dragging things out to benefit themselves rather than their clients' interests." Inconsistent approaches to valuation 62% Lack of incentives for landowners to settle promptly 54% Solatium payments being too low or too limited 41% Costs claims 35% Business loss claims 16% Extending injurious affection entitlements to persons whose land isn't taken 16% Don't know 11% 9

Key Finding 5 Incentives for settling promptly would improve acquisition and compensation Question 5 asked respondents about changes to the PWA that would improve acquisition and compensation. Being able to pay incentives for settling promptly is the change most respondents (53%) would like to see. As identified earlier, increasing the amount and scope of solatium payments is also important (37%) for respondents as is simplifying the notice procedures (37%). "[It is] easy to tick a box, difficult to come up with a solution that is fair." "The act restricts negotiation, being able to provide incentives by way of solatium may assist negotiations." Q5. What changes would most improve PWA acquisition and compensation? (Respondents could choose as many options as appropriate). Being able to pay incentives for settling promptly 53% Increasing the amount and scope of solatium payments 37% Simplifying the notice procedures 37% Being able to pay more than market value for land 32% Don't know 16% 10

Key Finding 6 The offer back obligation should be limited We asked respondents if the offer back obligation should be limited. The vast majority (87%) think it should. When it comes to the best way for it to be limited, respondents are largely in agreement. 74% believe it should be limited to the former owner only. 53% think it should be limited to compulsory acquisitions. Q6. Should the offer back obligation be more limited? Don't know 3% No 10% Yes 87% "I think the Courts have taken the offer back obligations much further than was ever intended when the legislation was passed." "Offer backs have been hijacked by commercial interests..." Q7. If you answered 'yes' to the question above, what is the best way for it to be limited? (Respondents could choose as many options as appropriate). Limited to former owner only 74% Limited to compulsory acquisitions 53% Allowing contracting out of offer back obligations 47% Time limit 47% Wider or further exceptions 15% 11

Key Finding 7 Compulsory acquisition of Māori land should not be restricted The next question asked respondents whether compulsory acquisition of Māori land should be restricted. A clear majority (61%) state it shouldn't. Q8. Should compulsory acquisition of Maori land under the PWA be restricted? Yes 3% No 61% Don't know 36% "Compulsory acquisition should be subject to the test of absolute need for any land." "It's already hard enough to compulsorily acquire land." "It isn't now, and definitely shouldn't be excluded. All private land tenure needs to be subject to eminent domain." 12

Methodology This report draws on 41 responses from local government employees on the LAPA database. The survey was carried out in September 2015. Questions in the survey were not compulsory leaving respondents to answer the topics they were most knowledgeable about. Question Number of responses 1 41 2 40 3 37 4 37 5 38 6 38 7 34 8 38 13

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