Finding opportunities amongst the changes

It’s without a doubt a tough old time here in Aotearoa at the moment. The mix of political and economic uncertainty means people are holding off on making any significant investment decisions and consumers are being overly cautious. We spoke with Andrew Collins, our head of clients and markets, about what the current climate means for our industry and where the opportunities may be.

We’re fortunate to work with clients across a broad spectrum of Aotearoa. From central and local government, community housing, private developers, infrastructure companies and corporates all who’re telling us that the current mix of political and economic uncertainty is causing a delay in most investment decisions.

As we all know, the current political backdrop includes factors such as the government’s initial 100-day plan (with the reversal of many previous initiatives and announcement of new ones), and the new 36-point quarterly action plan announced for 1 April to 30 June. It includes key decisions and directives on land transport, Going for Housing Growth, the Kāinga Ora review, renewable electricity generation, the new Regional Infrastructure Fund, and the first of two RMA Amendment Bills.

The current economic backdrop includes factors such as inflation easing from a high of 7.4% in late 2022 down to 4.0% in the quarter ending 31 March 2024. However, inflation has been reducing more slowly than in many overseas countries and is still above the Reserve Bank’s 1-3% target range.

In early April, the Official Cash Rate (OCR) was again held at 5.5% and forecasters are split as to whether the first drop in OCR will be in August or November and further increases of course can’t be completely ruled out but are looking unlikely at this stage.

What will the next quarterly GDP figures show? Rear-mirror indicators like this are of interest, but forward-looking indicators like business confidence data, are perhaps more useful.

And of course, the anticipated Government’s Budget 2024, due 30 May, is also expected to provide more certainty around the Government’s intentions in many areas.

The current regulatory and policy context of relevance for many of our clients and their projects includes the Fast Track Approvals Bill which differs from previous “fast track” consenting legislation. This Bill proposes a “one-stop-shop” approach for nationally and regionally significant projects that cover Crown permits, approvals, and consents under a range of legislation. In our opinion, this makes a lot of sense and there will still be a robust evaluation process. An expert panel will consider all the permits, consents and approvals required for projects referred to it, and for projects listed in Schedule 2 (Part A) will recommend a common set of conditions, and for projects listed in Schedule 2 (Part B) will recommend either decline or approval with a common set of conditions. Final decisions will then be made by the joint ministers of Regional Development, Infrastructure and Transport (Ministers Jones, Bishop, and Brown). The Bill is currently before the Environment Select Committee so we wait with interest for the projects that’ll be included in its Schedule 2 (Parts A and B) and whether any refinements will be made to the process outlined in the current Bill.

Minister Bishop has also signalled that the first of two Resource Management Amendment Bills will be released this month and another one later this year. These Bills will have implications for many of our clients’ projects, hopefully in a positive way.

The Resource Management Act has been on the chopping block for many years now and, despite its temporary reprieve due to the recent repeal of the Natural and Built Environment Act 2022 and Spatial Planning Act 2022 which had been due to replace it, full reform still lies ahead. The RMA reform process will again get some traction next year. In the meantime, many pent-up plan reviews and changes will continue to be deferred until further clarity is provided about this next reform.

Details of Local Water Done Well are slowly emerging including a pending Bill to facilitate the establishment of new council-controlled organisations for water services. Watch this space.

So, if clarity and confidence are two of the desired ingredients for investment decision-making, it’s not surprising that with all this change and uncertainty in the market, many clients are taking a “watch and see” approach. In our view, there is reasonable cause for optimism. Inflation and interest rates are decreasing, various legislation and policy changes are starting to take shape; there is political appetite to facilitate urban development and infrastructure and to consider new financing and funding mechanisms. We’re advising clients about how they can prepare now to make the most of the market upswing (and within that, the property cycle upswing) that inevitably lies ahead.

At Harrison Grierson, we have a positive mindset and are focusing on matters that we can control. We are laser-focused on supporting our valued clients to make the most of opportunities and achieve good project outcomes as you navigate the current political, economic, and legislative environment.

Andrew Collins has 35 years of resource management experience covering all aspects of statutory, policy and strategic planning, with a particular depth of expertise in development and infrastructure planning. Andrew has led and project managed many large multi-disciplinary projects and is regularly called as an expert planning witness in council and Environment Court hearings.

Please reach out if you’d like to talk further a.collins@harrisongrierson.com