The Treasury

Global Navigation

Personal tools

Treasury
Publication

Central Government Guidance and the Resource Management Act - PP 05/02

Problems and responses

The preceding discussion set out briefly the framework within which central and local governments interact in general. Within the specific circumstances of New Zealand’s environmental regulatory regime there is, in theory at least, considerable scope for decisions to be made at either level. The extent to which central government becomes directly involved depends on the specific issues and circumstances in question, political factors, and the inherent design principles of the RMA.

Who should make decisions?

Few general principles exist for central vs local government actions.

There is little if any explicit guidance for decisions within central government on when it is appropriate to act directly, versus leaving an issue to local action, and if the latter whether to then constrain, guide or provide support for that local action. Influences can include the legislative powers relevant to the issues (eg, whether central government can require specific actions, set decision-making principles, or simply offer guidance). Other influences include the nature of the information needed to make decisions, the degree to which impacts are location specific, and the capability of the levels of government.[6]

An important factor is balancing knowledge versus independence. Local decision-makers are likely to have a better understanding of local circumstances and community views. However, they are more subject to pressure from affected parties and likely to place greater weight on local rather than national interests. National or independent decision-makers trade off less awareness of local conditions for greater independence, but the process for their appointment or the referral of the decision to them can itself colour perceptions of the outcome. Those perceptions can be as significant as the decision itself in affecting community responses to specific decisions and the overall regime. Uncertainty around the right approach may lead to a desire for diversity in approaches between councils as an experimental means of determining the best regulatory option.

General rules about who is best placed to exercise powers, and how best to match powers and accountabilities, are difficult to apply in specific cases.

Governance structures and accountability mechanisms are relevant to the allocation of decision-making powers and vice versa. For example, local government responds to a narrower community, which may lead to different priorities. On the resourcing front the provision of funding or other support from central government inevitably creates pressure on local government to comply with national wishes. Failure to provide such central support can lead to concerns about “unfunded mandates” imposed on local communities.

The degree of national interest in an issue and its relevance to competition between local governments can affect roles (Gerber and Taske 2000). Delegation of powers can also be used as an indirect means of limiting restrictive regulation or subsidies by placing the responsibility for such measures on a level of government that is constrained in its resources and facing competition from comparable jurisdictions. For example, local government subsidies to State firms in China are constrained by limited local resources and pressure to use those resources to attract foreign investment (Qian and Weingast 1997). A converse view is that “Interest groups pragmatically desire the regulatory level whose outcome they like best and the relation of group strengths on the … levels then determines the preferred levels of regulation” (Noam 1982, p279). The impact can differ widely, with one company preferring local regulation because of contacts or a resourcing advantage over a local council, and another preferring national intervention to override locally centred objections.[7]

The above standard arguments affect more the overall design of a legislative regime such as the RMA, than specific decisions within it. More relevant to the RMA, and the specific issue of when central government should provide guidance, is the problem of differences between national and local interests or priorities, or regional variations in values.

In practice the debate focuses around differences between national and local interests.

Common reasons for such differences include a particular concentration of one cultural or sectoral perspective in an area, or that the impacts of a choice differ by area. For example, there may be a national interest in preserving bush environments or reducing pollution, but a local interest in jobs. Conversely, the national interest may call for transmission or road infrastructure that impinges on locally important scenic or historic features, or creating jobs nationally through hydro electricity generation may prevent job creation locally through irrigation.

In all of these situations a mechanism is needed to resolve such differences. In the case of the RMA it is generally lacking as the legislation does not explicitly address the national interest (although it can be read into Part II, particularly section 5) and little national guidance has been provided.

Notes

  • [6]An example is the management of natural disasters, which can often be regarded as an insurance issue in terms of a trade-off between preventive measures and building up reserves against an event. The magnitude and geographical spread of impacts can determine responses and there are clear legislative powers for both central and local government.
  • [7]The application of theoretical constructs such as principal-agent theory to such situations is not straightforward as local authorities typically answer to multiple principals eg, central government, regional councils (for district or city councils) and local voters; while central government is itself an agent of voters nationwide. “A simple dyadic model does not capture the dynamic interactions that occur between principals and agents” including “the interactions of various types of principals and agents” which may have similar characteristics (Waterman 1998, p36). “Agents can side with principals that most closely represent their policy perspectives or they can play one principal off against another” (Waterman 1998, p18). All these possibilities exist in the application of the RMA in New Zealand.
Page top