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New Zealand Journal of Environmental Law |
Last Updated: 15 February 2023
65
Free For All or User Pays?
Assessing the Difficulties of Charging for Private/Commercial Use of the Coastal Commons in New Zealand
Ingrid Leersnyder*
This paper identifies issues that are hindering the implementation of Coastal Occupation Charges for private or commercial occupation of the coastal marine area pursuant to section 64A of the Resource Management Act 1991. It argues that constraints imposed by this legislation prevent local authorities from making definitive decisions on the implementation of a coastal occupation charging regime. A brief discussion is presented on the allocation of property rights in the Coastal Marine Area. The relevant legislative history of the Resource Management Act is described followed by discussion on the concept of resource rents and how they are applied to users for other public spaces. A case study describing some of the challenges encountered by the Auckland Regional Council when setting seabed licence fees for two marinas in Auckland is used to illustrate the tensions inherent in such a process. The paper then goes on to suggest that an alternative to using the Resource Management Act process to implement charging regimes could be the use of existing sections in the Local Government Act 2002 and the powers councils have to create bylaws. In conclusion it is contended that in its current format s 64A is unmanageable at a
*LLB (Hons), LLM (Hons) (Waikato). This paper was completed in partial fulfilment of a LLM (Hons) at the University of Waikato. I would like to thank my supervisor Professor Barry Barton for his helpful guidance and encouragement while I was writing this paper. I would also like to acknowledge the contribution of Hugh Leersnyder, Senior Environmental Scientist, Beca Infrastructure Limited, who suggested the idea of the paper and provided insight in relation to the topic.
local government level and may need central government intervention to bring a final resolution to the issue.
1. INTRODUCTION
The purpose of this paper is to identify issues that are hindering the implemen- tation of Coastal Occupation Charges (“COCs”) for private or commercial occupation of the coastal marine area (“CMA”) pursuant to s 64A of the Resource Management Act 1991 (“RMA”). Other options are also suggested that may reduce the legislative and bureaucratic uncertainties currently restraining Regional Councils’ implementation of COCs while ensuring that “public participation and consultation” is retained and not subjected to a potentially litigious and time-consuming process.
There are a number of issues associated with implementing a charging regime for occupation of what is traditionally considered “public property”. With an increasing demand for use of the foreshore, seabed, and coastal waters which either restricts or prevents public access, there is a growing awareness on the part of the regulators that some form of compensation should be paid to the “public or local government purse”. There are some major constraints and difficulties on how this could and should be done. Not least of these are the historical “property rights” where members of the public have “built” or “placed” structures such as boatsheds, jetties and moorings near or in front of their coastal properties. Originally many of these structures may not have had the necessary permits or consents, but the “owners” have subsequently claimed an inalienable “property right” preventing others from using or accessing them. Other factors include the recent growth of the aquaculture industry, marinas, and ports. Regional Councils had a statutory responsibility to make a statement on how they would address the issue by either 1 July 2007 or before any subsequent change to their Regional Coastal Plans. In the majority of cases, they have avoided the issue on the basis that there needs to be more clarification from Government on how they are to apply and manage the costing regime.
The paper is divided into two parts. The first part briefly discusses the allocation of property rights in the CMA and the legal uncertainties that have arisen when applying the RMA to the allocation of occupation and use of the CMA to different users for different but concurrent uses. There is also a section on how New Zealanders view access to the CMA, and some of the historical and socio-cultural reasons for this outlook. The second part looks at the legislative history of the RMA, specifically in relation to COCs and what the current situation is. It includes a discussion on how Regional Councils have approached the problem of charging for the private use of a public space and the conflicts which may occur between commercial and recreational uses of the same coastal
space. “Resource rents” are discussed, and how they have been charged for other natural resources such as minerals, and for other public spaces such as national parks, and whether or not these frameworks could be transposed into a charging regime for occupation of the CMA. To illustrate some of the practical challenges facing regulators and resource users, a case study is included which describes the challenges encountered by the Auckland Regional Council (“ARC”) when setting seabed licence fees for two marinas in Auckland.
1.1 Definitions: Beach; Coastal Marine Area; Foreshore and Seabed
It is important to define and distinguish between the words and phrases “beach”, “coastal marine area”, and “foreshore and seabed”. All these terms are often used interchangeably in a colloquial sense but in a general application do actually refer to the same “space”. However, there are differences from a legal perspective, particularly in regard to the use of “coastal marine area” and “foreshore and seabed”. For these two terms the definitions that are found in the RMA and the Foreshore and Seabed Act 2004 (“FSA”) are applied. For the more general term “beach” an “ordinary” dictionary meaning is used.
Beach n. 1. The shore of a body of water, especially when sandy or pebbly.
Coastal Marine Area, means the foreshore, seabed, and coastal water and the air space above the water—
(a) of which the seaward boundary is the outer limits of the territorial sea:(b) of which the landward boundary is the line of mean high water springs,
...2
Foreshore and seabed
(a) means the marine area that is bounded,—(i) on the landward side by the line of the mean high water springs; and(ii) on the seaward side, by the outer limits of the territorial sea; and
...
(d) includes the air space and the water space above the areas described in paragraphs (a) ...; and
(e) includes the subsoil, bedrock, and other matters below the areas described in paragraphs (a) ...3
Although the differences in these definitions are small and “beach” does not include the surrounding areas of “water, air or subsoil”, when New Zealanders say they are “going to the beach” it means the entire area, which includes all of the above, and it is this “cultural narrative” that they relate to when issues such as potential “loss of access” or “user pays” are brought to the fore.
2. PROPERTY RIGHTS IN THE COASTAL MARINE AREA AND SECTION 64A
In the past New Zealand’s coastal waters have been considered part of the “commons” available to be occupied and used by everybody, with very little in the way of controls or restrictions. However, a problem with the “commons” theory — referred to as the “tragedy of the commons”4 — is that unrestricted access to the common resource has the effect of diminishing its overall value either by causing irreparable harm to the resource through environmental damage or in terms of its amenity value, with the final outcome being that it becomes “useless” for everybody. One of the methods of combating this problem is by allocating property rights to the resource, in order “to promote the efficient allocation of resources to high value uses, whilst encouraging more investment in those resources”.5 The difficulty with this approach in relation to a public resource such as the CMA, which is used by multiple users and for multiple uses concurrently, is to achieve a balance between these parties.
Economic theorists have separated property into four categories, each of which has an associated bundle of “property rights” — namely, “access, withdrawal, management, and exclusion”.6 For private property all of the rights are controlled by the owner; common property by joint owners; public property by the State; and open access property has no controls.7 Property rights are a “social creation”: “[t]hey appear, evolve and vanish in response to economic, societal and environmental pressures”.8 The creation of New Zealand’s CMA as
“public property” under the FSA is an example of such an evolution as it vested the property in the Crown “to preserve ... in perpetuity as the common heritage of all New Zealanders”.9
The RMA is the main legislative tool that provides “control” over the CMA. It does this primarily through issuing of resource consents allowing for par- ticular uses of the foreshore and seabed. Consents to occupy may be granted for up to a maximum of 35 years,10 and they may exclude other users of the CMA to varying degrees, depending on the conditions of the consent. The RMA explicitly states in s 122 that consents are not “real or personal property”.11 However, when applying “the concepts of excludability and ... rivalness”,12 which include length of tenure, transferability, and preventing other users’ access to the resource, it appears that there is a contradiction in what the RMA says and what it actually does. Section 122(1) is qualified by s 122(2) which allows for consents to be regarded as personal property in relation to death, bankruptcy, and “for the purpose of the Protection of Personal and Property Rights Act 1988”.13 Notwithstanding this qualification, a major concern for marine farmers is that they cannot use their resource consents as security for a mortgage as the banks will not accept that they confer a “property right”.
The Courts appear to struggle with how the RMA deals with property rights. On the one hand, they affirm that resource consents do confer the property right of exclusion and security of tenure on the consent holder, as can be seen in Aoraki Water Trust v Meridian Energy Ltd 14 where the Court found that Meridian as the first consent holder had a prior right over the water which prevented anyone else from obtaining a consent. The judgment affirmed the principle of “first come first served” in Fleetwing Farms Ltd v Marlborough District Council,15 and which was also applied in Dart River Safaris Ltd v Kemp16 by allowing DRSL sole access to the river for their business because they were there first. On the other hand, in Hume v Auckland Regional Council 17 the Court found that there was no exclusive use of a jetty as it had not been specified as a condition of the consent,18 and that therefore the Humes were not entitled to restrict access to the jetty by members of the public providing the use was reasonable. In a more recent case, Marlborough District Council
10 RMA, s 123.
14 [2004] NZHC 820; [2005] 2 NZLR 268 (HC).
17 [2002] NZCA 167; [2002] 3 NZLR 363 (CA).
18 Ibid, at para 25.
v Valuer General,19 the issue was whether or not the Marlborough District Council (“MDC”) could charge rates over the “water space” used by a marine farm. The Court found that as the mussel farm enabled other users such as recreational boaties and fishermen access to the same space at the same time it was not an exclusive use and therefore the consent did not give the mussel farmer a personal property right over the occupied CMA which could be rated. These decisions can be contrasted with the outcomes in Telecom Auckland Ltd v Auckland CC 20 and Auckland CC v Ports of Auckland Ltd 21 (which were used by the MDC to support their case) where the Courts found that there was exclusive use and therefore the companies were liable to pay rates.22
The lack of clarity within the legislation and the differing judicial interpre- tations as to what does or does not constitute a property right has compounded the difficulties and challenges Regional Councils have to overcome before they are able to implement a charging regime for occupation of the CMA.
3. THE KIWI CONNECTION
New Zealanders have a well-established relationship with the coast which has developed both legally and culturally over the country’s pre- and post-colonial history to the present day. This section explores some of these legal and socio- cultural issues as to how and why New Zealanders view access to and use of the CMA with so much passion. Specifically, the impact that this “cultural attitude” has had on the allocation and use of property rights and the implementation of occupation charges in the coastal marine area.
3.1 Public Access to the Coast — Legislative History 1840–2007
Not only is access to the foreshore and seabed deeply ingrained in the “Kiwi Kulture” but it has also been reinforced and affirmed by legislation and case law of the last century. The following section provides a brief overview of the legislative history regarding public access to the beaches and CMA of New Zealand between 1840 and 2004.23
19 (High Court, Wellington, CIV-2006-485-933, 3 September 2007, Young J) para 14. 20 [1999] NZCA 259; [1999] 1 NZLR 426 (CA).
21 [2000] NZCA 190; [2000] 3 NZLR 614 (CA).
The relationship of New Zealanders to the coast and their access to it has its foundation in one of the first instructions to Governor Hobson. In December 1840 Queen Victoria directed that the Surveyor General24
reserve ... for public roads ... whether by land or water ... places fit to be set apart for the recreation and amusement of the inhabitants.
Subsequently, as New Zealand took on its own legislative autonomy and cut its ties with New South Wales, Hobson enacted a new Ordinance25 in 1841 which dealt with the appointment of Land Commissioners whose role it was “to validate claims of direct purchase made prior to the Treaty of Waitangi”.26 According to Brian Hayes this enactment was not only the first piece of legis- lation to allow for land to be set aside to provide access along water margins but it also followed Article 2 of the Treaty of Waitangi, affirming that “all land is exclusively derived from the Crown [thereby] establish[ing] one of the fundamental principles of New Zealand land law”.27
The effect of this Ordinance was to ensure that over the next 50 years, in the majority of instances where land was subdivided that adjoined the coast or a waterway, a reserve was included that would enable public access to them. Thus was created the “cultural ethos” and “legal fiction” that there is a public right of access to these resources. Approximately 70 per cent of land that is colloquially known as the “Queen’s Chain” is publicly owned, with the remaining 30 per cent held in private ownership.28
The Land Act 1892 (“LA 1892”) introduced by the Minister of Lands the Hon (Sir) John McKenzie enshrined in legislation the requirement that:29
There shall be reserved from sale or other disposition a strip of land not less than sixty-six feet in width along all high-water lines of the sea, and of its bays, inlets, or creeks, ...
McKenzie, a Scottish immigrant, strongly believed that everyone should be able to access and use the “commons” for recreation and food-gathering purposes and he was determined that the English and Scottish laws which prevented the general public access to waterways would not be “transplanted” here.30 This
29 Land Act 1892, s 110.
30 Brooking, supra note 23, at 110.
legislation has been regarded as “sett[ing] the foundation and philosophy for New Zealand in respect of providing public access to rivers and the coast”.31
The provisions in the LA 1892 were carried over in the subsequent LAs 1908 and 1924, and remained in effect until the LA of 1948 which, whilst retaining the fundamental principles of the original s 110 of the LA 1892, maintained the 20-metre strip along the coast but increased the number of inland waterways to which a strip would apply. 32 The LA 1948 stayed in effect until 1987.
In 1987 the Department of Conservation was formed and in the Conservation Act 1987 (“CA 1987”) a definition of “marginal strip” was inserted in s 2 which stated that: “[it] means any strip of land reserved or deemed to be reserved by section 24 ... of this Act”.33 For the following three years s 24 of the CA 1987 and s 58 of the LA 1948 maintained an “uneasy relationship”34 until the CA 1987 was amended in 1990 with “a new Part 4A comprising sections 24 and 24A to 24J”.35 Section 24(1) states that:36
There shall deemed to be reserved from the sale or other disposition of any land by the Crown a strip of land 20 metres wide extending along and abutting the landward margin of—
(a) Any foreshore; ...
Furthermore, s 24C defines the purposes of marginal strips and ss 24C(b) and
(c) specifically state that it is:37
[t]o enable public access to any adjacent ... bodies of water; and [f]or public recreational use of the marginal strip and adjacent ... bodies of water.
The other key piece of legislation that came into effect in 1991 which had a major impact on public access rights to the CMA was the RMA. In Part 2,
Purpose and principles, s 6(d) requires that:38
all persons ... shall recognise and provide for ... The maintenance and enhancement of public access to and along the coastal marine area ...
36 Ibid, s 24(1).
37 Ibid, s 24C. 38 RMA, s 6(d).
The terminology in this Act has moved from referring to the land adjoining the foreshore as a marginal reserve or strip to an esplanade reserve or strip. In reality this is merely a semantic change which does not have major ramifications on what the objective of the strip of land is — i.e. to provide the public with the means to be able to access public land without trespassing on private land. Esplanade reserves and strips are also defined in s 2 of the RMA.
The net result in 2007 of all this legislation and regulation relating to the pro- vision of access to the foreshore (and other waterways) has been to create the right of public access via four means:
The ability to access the CMA legally is important in relation to how the area is used by the public and the degree to which these uses are exclusive or inclusive when evaluating whether or not “rental” charges could or should be implemented.
3.2 Beaches, Baches and Barbecues — Quintessential Kiwiana?
New Zealanders’ relationship with the beach has been referred to as iconic
— “up there with L&P and buzzy bees”40 — and fundamental to the Kiwi psyche.41 This is hardly surprising given the proximity of the coastline to most of the population and a history and heritage of use for trade, food gathering, and recreation that has been implicit in the cultures of both Maori and Pakeha New Zealanders for generations. Such links to the beach often reflect the collective memories of summer holidays and enjoyable times shared with extended family and friends. Just as whakapapa is important for Maori in terms of placing them in their “space and place in history and the future”, so too are these stories, or “cultural narrative[s]”,42 important for non-Maori New Zealanders as they
Cultural Studies in Aotearoa New Zealand Identity, Space and Place (2004) 36–53.
provide them with their “space and place” in the history of New Zealand, by enabling them to not only “learn who they are, ... [but also] who they should become”.43
A recent PhD thesis44 highlights the importance of the “beach” to New Zealanders. In it, Relinde Tap notes that her interviewees “described beaches and the outdoors as representing freedom, timelessness, safety, laid-backness and a time when families could be together”.45 At the time she was conducting her research, the debate about the foreshore and seabed access was taking place, which was of some concern to her Pakeha participants who “see access to beaches as their ‘birthright’”.46 The perceived risk of losing this “birthright” because of the outcome of Attorney-General v Ngati Apa 47 was a major concern to them and “highlight[ed] [the] deep emotional involvement of New Zealanders with beaches”.48
The results of a survey conducted in Christchurch in May 2004 at the height of the “foreshore and seabed” debate are also useful as they “provide ... [an] insight into the way New Zealanders use the foreshore, [and] how they perceive their access rights”49 to the CMA in the 21st century. Thereby reinforcing the proposition that New Zealanders continue to consider the beach an important place to use for leisure and recreation and that this access has a legal foundation based on a “superficial understanding of the Queen’s Chain”.50
3.3 The Kiwi Connection: Conclusion
How and why Maori and non-Maori New Zealanders view the foreshore and seabed and their rights of access, use, and occupation of it are important and relevant to this paper. It provides a background and context to some of the reasons why politicians, both national and local, have had difficulty in dealing with the issues surrounding the concept of charging for the occupation of the foreshore and seabed and the use of resources within and around it.
(2002) 24.
47 [2003] NZCA 117; [2003] 3 NZLR 643 (CA).
4. COASTAL OCCUPATION CHARGES
Coastal occupation charges in their present form, pursuant to s 64A of the RMA, have evolved from previous legislation, differing political ideologies, and societal norms and values. New Zealand has moved from a highly regulated and structured political environment to one where there is more devolution of regulatory functions to local government and an expectation, and statutory requirement,51 that public participation and consultation takes place when decisions that impact on the community at large are made.
4.1 Definition: Resource Rentals
One of the problems with the implementation of COCs is a lack of a clear definition of what they are and what their purpose is. The current thinking is that a COC is based on the concept of a “resource rental”, which has been defined variously as “payments for non-depleting use or occupation of a resource”52 and53
a surplus value, i.e. the difference between the price at which a resource can be sold and its respective extraction or production costs, including normal returns.
When applied to a commercial situation a resource rental can also be seen as a “super profit ... because if [it] is not collected the user of the resource is earning over and above normal profits”.54 Therefore, if rental is not being charged, particularly in relation to commercial ventures such as marine farms and ports, it could be seen as a subsidy given to them by the taxpayer in much the same way as in the late 1970s and early 1980s farmers were guaranteed a Supplementary Minimum Price (“SMP”) for their products, which “was a subsidy programme entirely financed by public funds”.55
(2006) 3.
4.2 Legislative History
Over the past 140 years in New Zealand there have been statutory regimes in place requiring payment for the occupation of the CMA. These were known as “foreshore and seabed licences” and were charged and paid under a variety of Harbour Acts (“HAs”). The RMA introduced a regime of Crown Rents and Royalties56 which, with one exception, were not implemented57 and became “coastal occupation charges”.58 The sixteen Regional and Unitary Councils59 (which have both regional and district responsibilities) who are able to make these charges have chosen not to apply them at the present time and are asking for more clarification and guidance from Government before they continue with the process. Although, a number of Regional Councils have stated that in principle they are in favour of implementing a charging regime.60
Early Harbour Acts allowed for leasing of the foreshore and seabed by issu- ing licences and permits to use the foreshore. 62 The HA 1950 replaced and consolidated these earlier statutes and stated that the relevant Harbour Board or Local Authority could:63
license and permit any [land vested in it (being part of the foreshore or of the bed of the harbour or the sea) and any part of the bed of the harbour or the sea immediately contiguous to any such land included in the licence] to be used or occupied
The use and occupation covered a wide range of purposes with the final subsection concluding with “any other purpose relating to the convenience of ... the public ... which the Governor-General ... or the Minister may approve”.64
56 RMA, s 112.
57 Southland District Council. 58 RMA, s 64A.
The Act itself did not prescribe the level of the fees to be charged or the rationale under which they were to be formulated. The charges were based on a cost recovery basis for administration and monitoring of permits, as well as being used to enable the construction of private and public facilities.65 Many of the facilities, such as moorings and marinas, were owned by the Harbour Boards or the District Councils, and in these instances fees charged “were a mix of regulator and owner charges”.66 There was also a mix of commercial and non- commercial ventures such as marine farms and ports.
When the RMA came into effect the HA 1950 was repealed and the Foreshore and Seabed Endowment Revesting Act 1991 (“FSERA”), came into force. The FSERA revested ownership to the Crown of the CMA that had previously been owned by the Harbour Boards.67 The foreshore and seabed licensing responsibility was reassigned68 to the Regional Councils under s 112(1)(a), Crown Rents and Royalties:69
Obligation to pay rent and royalties deemed condition of consent
(a) Occupy, within the meaning of section 12 (4), any land of the Crown in the coastal marine area; [and] ...
there shall be implied a condition that the holder shall at all times through- out the period of the permit pay to the relevant regional council, on behalf of the Crown,—
(c) Any sum of money required to be paid by any regulation under section 360(1)(c).
The charges set under the Regulations of the Act varied depending on a number of factors, such as what the use was, how much space was used, which authority was setting them, and which Act applied.70
Section 112(a) was not popular with the Regional Councils71 and, with the exception of Environment Southland, they refused to implement and collect these charges. They considered that they were merely acting as an agent for the Crown in collecting these fees as the revenue had to go into a Crown fund. This was a significant change from the regime in place under the HA 1950 whereby the monies collected were used by the particular Harbour Board that collected them. This ensured that the financial “rewards” went back into communities disadvantaged by losing their public access, and often into community facilities such as public boat ramps and so on. Many Regional Councils considered that the “costs of compliance would exceed the amount of money returned”,72 a view which was reinforced by local government submissions to the Kimber Report73 in 1994.
In June 1994 the Minister for the Environment, Simon Upton, circulated a discussion document74 in which he described the current situation, gave a brief explanation as to the functions of a “resource rental”, highlighted some of their pros and cons, and asked a number of questions — including whether or not the public considered such rentals necessary, who should receive the revenue, what it should be spent on, and what type of charging regime should be implemented.
Six months later the Kimber Report75 was published. It has been described as “an outstanding example of just how to conduct a review should you want to elicit a pre-determined answer”.76 It is also a very good example of how the political process can be “captured” by an interest group, in this particular instance the “recreational boaties” who were vehemently opposed to any sort of charge for
70 RMA, s 360(1)(c).
their use of the CMA, based not so much on an ability to pay as on a “principle” based strongly on the public’s right to “free access” to “common” land as deriving from the “culturally inherited view” 77 of New Zealanders described in the previous section. According to Doug Kidd, Member of Parliament for Marlborough at the time, the boaties “were articulating a principle of ‘first in, best dressed, for free’”.78 It also reinforces the theory that “[g]roup influence is likely to be strongest when the group is attempting to block rather than obtain legislation”,79 particularly when the group happens to be:80
upper middle class, upper socio-economic welfare.... articulate, influential, powerful [and able] to back campaigns to get rid of members of Parliament.
The report also highlighted the differences between the views of a Government which was leaning more and more to the neo-liberal philosophy81 of “user pays”, and “devolution” of responsibility from national authority to local authority resulting in “agency ‘drift’ by local government administrators”82 who did not have the political will nor any real social or economic incentive with which to be able to “sell” the rentals to their constituents.
Kimber’s conclusion was that:83
coastal rentals ... as a means of obtaining a return on an asset to the Crown, are inefficient, seen as unfair and conflicting with the principles of the Treaty of Waitangi.
And he recommended that the current regime “be replaced by [a] user or occupation charge”84 which provided compensation to the public for the loss of use of the area being occupied for private use, and would be a means by which scarcity of resources could be managed and funding provided for local coastal amenities and resources.
84 Ibid, at 21.
The Kimber Report’s recommendations were not considered favourably by the affected government departments,85 but his former parliamentary colleagues did concur and the Resource Management Amendment Bill (No 3) was introduced in December 1995 by the Hon Simon Upton, who outlined the key rationales behind the changes to the coastal rental provisions in the main Act and what the expected outcomes would be in terms of benefits to the public and Regional Councils, asserting that:86
[t]he main issue is not money, it is about ensuring access to and good management of the coast. Charging must be appropriate and sensitive to local conditions and community views. ... regional councils ... are free to decide whether to charge, who and how much to charge; and they keep any money collected. [And that the] issue be addressed in regional coastal plans so there is full public debate. [And] any money collected be spent locally for the purpose of advancing sustainable management on the coast.
Two years later, Parliament was once again debating this Bill, now in its third reading. Hon Nick Smith noted that, overall, the Select Committee “supported the principles and form of the new law”87 and that they had taken note of views related “not only to public benefits of occupation lost, but also those that are gained”.88
Speaking to the Report of the Transport and Environment Committee, Hon Rod Donald identified the nub of the problem that Regional Councils have grappled with over the last 10 years:89
... essentially, the question is whether charges should be compulsory. ... Why should private companies get to occupy coastal space for free? From a rational, economic perspective it makes no sense at all, as the wider public value of the coastal space is effectively dismissed without consideration. We challenge the
Hansard, at <www.knowledge-basket.co.nz>.
Government to explain why an industry such as marine farming should have exclusive access to areas of the coast for free. This Government surely believes in user-pays for everything else. Why does that principle go out the window when it is the environment, our common wealth, that is being used for private profit, and it is local communities that miss out, in terms of both recreational and aesthetic opportunities?
5. REGIONAL COUNCILS AND SECTION 64A: A CONUNDRUM!
Notwithstanding these views, the Amendment Act was passed in December 1997 and s 64A was included in the RMA. It is reproduced below in its entirety as it is important to be able to see not only the complexity of the section itself but also to understand how difficult it has been for Regional Councils to be able to work through all the requirements of the section before being able to implement a charging regime:90
64A Imposition of coastal occupation charges
(a) The extent to which public benefits from the CMA are lost or gained; and(b) The extent to which private benefit is obtained from the occupation of the coastal marine area,—
whether or not a coastal occupation charging regime applying to persons who occupy any part of the coastal marine area (relating to land of the Crown in the coastal marine area or land in the coastal marine area vested in the regional council) should be included.
(a) The circumstances when a coastal occupation charge will be imposed; and
(b) The circumstances when the regional council will consider waiving (in whole or in part) a coastal occupation charge; and
(c) The level of charges to be paid or the manner in which the charge will be determined; and
(d) In accordance with subsection (5), the way the money received will be used.
(4A) A coastal occupation charge must not be imposed on any person occupy- ing the coastal marine area if the person is carrying out a recognised customary activity in accordance with section 17A(2).
And under s 2, Interpretation:91
occupy means the activity of occupying any part of the coastal marine area—
(a) where the occupation is reasonably necessary for another activity; and(b) where it is to the exclusion of all or any class of persons who are not expressly allowed to occupy that part of the coastal marine area ...; and
(c) for a period of time and in a way that, ... a lease or licence to occupy that part of the coastal marine area would be necessary to give effect to the exclusion of other persons, whether in a physical or legal sense.
5.1 Interrelationship with other Sections and Acts
Another factor which has contributed to the complexity of s 64A is its interrelationship with a large number of other sections in the Act. In particular, in Part 2 where account must be taken of the “sustainable management”,92 “preservation of ... and maintenance and enhancement of public access to ... the coastal marine area”,93 and “maintenance and enhancement of amenity values”94 and “the principles of the Treaty of Waitangi”.95 Reckoning also needs to be made with regard to all of s 12 as well as a number of other Parts of the Act.96 These are only a few of the sections that need to be taken into account
when Councils are assessing whether or not to put a COC in place. In Thompson v Marlborough District Council,97 the only case law that relates specifically to s 64A, Judge Kenderdine referred to over 40 sections of the Act that were affected by or impacted on s 64A.
Regional Councils also have to take into account the relationship between s 64A, other relevant Acts, and the New Zealand Coastal Policy Statement (“NZCPS”). In the report of a review of the 1994 NZCPS, commissioned by the Department of Conservation in 2004, the author recommended that “more specific provisions are needed regarding the requirements for coastal occupation charges”.98
Clearly, for Regional Councils to be able to give effect to the underlying objective of s 64A, there needs to be both simplification and clarification with regard to the “inter-section” relationships and those in other legislation and policy documents.
5.2 Public Consultation and Schedule 1
Under s 64 of the RMA Councils are required to notify their decision on whether or not to introduce COCs as a change to their Regional Coastal Plans. The objective of this is to ensure that the public have the opportunity to have “a voice” in any decisions Regional Councils make that may affect them. How this relates to s 64A was clarified by the Courts in Thompson v Marlborough District Council.99 The MDC had publicly notified a variation stating that it would not implement a coastal occupation charge. The Thompsons had put in a submission on the variation requesting that COCs be introduced and the Council had rejected this on the basis that the First Schedule process did not apply to it, simply making a statement about something it was not going to do. The Council submitted that as this decision was “made prior to commencement of First Schedule procedures [it] ... [was] made outside of the plan change process”.100 However, the Court found that it did come within the Schedule 1 procedures.101
The Thompson case highlights one of the major problems with s 64A — namely, that of public participation and consultation and the statutory process
97 W053/01 [2001] 6 NZED 675.
101 Ibid, at para 45.
required under the Act. Whilst not wishing to derogate from the principle of public participation and consultation, both of which are very important and now considered a “right” by most members of the public, there must be a line drawn whereby the practical effects of asking constituents whether or not they want to pay a market rental for occupying the CMA is tempered against the likelihood that these individuals, companies, or organisations would say “YES!”.102 In instances such as this it may well be better for the Government to play the role of “benevolent dictator” and present Regional Councils with a fait accompli so that they can ask their ratepayers the question, not “Do you want to pay a rental for occupation of the CMA?” but “How much do you think these occupiers/ users should pay for occupying the CMA?”.103
5.3 Rentals v Cost Recovery
It is also important to distinguish between rent recovery and cost recovery. Under s 36 of the RMA a local authority is able to impose charges for “the reasonable costs incurred ... in respect of the activity to which the charge relates”.104 The Act is very clear that Regional Councils are not permitted to charge over and above the costs they incur in the administration of processing and issuing resource consents and those incurred in the monitoring of resource consent conditions.
5.4 Port Companies
The issue of Port Companies in relation to s 64A is somewhat complicated. They were established as a result of the local government reforms of 1989 under the Port Companies Act 1988 with their main objective being that they operate as a commercial entity and make a profit.105 Harbour Boards were dissolved and their assets transferred to Regional Councils, who then provided funds to their respective Port Company to purchase port-related commercial undertakings from the outgoing Harbour Boards.
The introduction of both the RMA and the FSERA meant that the CMA, which had previously been “owned” by the Harbour Board, was initially transferred to Regional Councils, and then revested back to the Crown.106 Port Companies therefore had no legal right to occupy the foreshore and seabed. In 1993 as a result of lobbying by the Port Companies, s 384A was inserted
104 RMA, s 36(4)(a).
105 See the long title of the Port Companies Act 1988 and s 5. 106 Foreshore and Seabed Endowment Revesting Act 1991.
into the RMA. The Port Companies subsequently applied to the then Minister of Transport for a “draft coastal permit”107 which would give them the right to occupy the CMA for 35 years, being the maximum period that a consent is valid for under the RMA. The term of the permits was applied retrospectively to October 1991 and they will expire in 2026.
Even though they could have charged the Port Companies rental under s 112(1)(a), Regional Councils chose not to. Almost a year later Hon Simon Upton in his discussion document stated that:108
The consents that a Port company held on 1 October 1991 are exempt from any charges. ... they are treated on the same basis as they were before 1 October 1991. All new structures built after 1 October 1991 face the new charges.
It would appear from this statement that Port Companies were considered a “special” case by the politicians of the day, as prior to the enactment of the RMA they had not paid any rental. This situation leaves Regional Councils with a legal uncertainty with regard to s 64A. Can it be applied to require Port Companies to pay COCs for the space they occupy?109
For Regional Councils this is a “double-edged sword”. On the one hand, it is viewed with some concern as they have a major commercial user of seabed, foreshore and contiguous land110 not paying any form of compensation for the occupation of an area of “public land” from which it excludes members of the public. This would appear to fly in the face of the original intention of the section and could be seen as inconsistent and inequitable should the Regional Council propose to implement COCs. On the other hand, the majority of Port Companies are owned by Regional Councils and receive dividends from them.
It would appear that Ports of Auckland Limited (“POAL”) do not consider this a “risk” as they did not put in a submission to the ARC’s publicly notified 2007 Regional Plan change and there are still 18 years to go before the “grandfather” clause expires.
5.5 Marine Farms
Aquaculture has the potential to contribute a significant sum to New Zealand’s economy. It was a growth industry in the 1990s, particularly in the Coromandel Peninsula and the Marlborough Sounds areas. Due to increasing concerns over
107 RMA, s 384A(1).
the number of consents being submitted during this “gold rush” period,111 the Government implemented a moratorium on new applications in November 2001. The moratorium lasted until December 2004. During that time the Government continued its review of aquaculture-related legislation and in 2004 a number of Acts specific to aquaculture came into effect.112 One of the key impacts of this new legislation is to give Regional Councils the responsibility to identify Aquaculture Marine Areas (“AMAs”) where marine farming is not a “prohibited activity”, thereby allowing resource consent applications to be streamlined and minimising the likelihood of expensive litigation from people opposed to marine farm consent applications. There are currently significant concerns held by Regional Councils and the aquaculture industry as to the efficacy of these reforms. However, other than in relation to the application of s 64A this paper will not discuss these in detail.
Marine farms as occupiers of the CMA would be liable to pay COCs under s 64A, although there are potential difficulties in relation to the level of exclusivity of use. Depending on the type of farming being undertaken, occupation is exclusive to varying degrees. Young J in Marlborough DC v Valuer General 113 notes that mussel farming114
occupies only a relatively modest percentage of the total permit area at any one time ... [and that] it is often shared with other users of the sea.
In some instances farmers encourage “fishing around marine farms”.115 However, there are other types of marine farming such as fin fish farming or salmon farming where the area of the “water and air space” being occupied is such that members of the public would not be encouraged to share the CMA. If Regional Councils want to implement a charging regime under s 64A for the aquaculture industry these differences in occupation levels will have to be taken into account.116
The other area which may cause difficulties with Regional Councils implementing COCs on marine farmers is in regard to the implications of the Maori Commercial Aquaculture Claims Settlement Act 2004, which allows for the allocation of 20 per cent of all new space to be set aside for Maori and the
115 Ibid, at para 14.
116 RMA, s 64A(1)(a) & (b).
provision to “iwi [of] assets equivalent to 20 percent of the water-space rights created in coastal waters since September 21 1992”.117 It is unclear how this will interact with the prohibition on a COC being “imposed ... if the person is carrying out a recognised customary activity ...”.118
It is apparent that also in this area there is a need for clarification and guidelines before Regional Councils could effectively and efficiently implement a coastal occupation charging regime.
5.6 Marinas — A Case Study
Marinas have been in existence in New Zealand for some considerable time; the largest of these, Westhaven Marina in Auckland, was established in 1926. Of the approximately 30 marinas in New Zealand, four are in the South Island and over 20 in the upper North Island.119 There are 11 marinas in the Auckland region which have been established at varying times over the last 80 years.120 The legal instruments used to form the marinas have also varied, with licences granted under a number of Harbour Acts, special purpose Acts, and the RMA.
All these marinas operate as commercial enterprises, charging berth owners fees and leases for their occupation and use of the CMA. Six of the marinas within the ARC’s jurisdiction pay nothing for their occupation of the CMA, two pay fees to the Manukau City Council (“MCC”) (Pine Harbour Marina) and Rodney District Council (Gulf Harbour Marina). The remaining three pay significant charges as “seabed licences” to the ARC. This case study looks at two of these, the Half Moon Bay Marina and Bucklands Beach Yacht Club.121 These two are particularly interesting from a legal viewpoint as they are located side by side, share the same sea wall, yet the charges they pay are significantly different.
Half Moon Bay was established under its own special legislation122 and received its seabed licence in 1971. There was an initial “honeymoon” period of 21 years before the Auckland Maritime Foundation (“AMF”), the owners of the marina,
117 Ministry of Fisheries, “Details of the Maori Commercial Aquaculture Claims Settlement”, at <http://www.fish.govt.nz>.
118 RMA, s 64A(4A).
were required to pay a fee based on market values.123 The berths “are sold ... with ownership in perpetuity”,124 and the seabed licence is renewable every 14 or 21 years.
When the Half Moon Bay seabed and foreshore licence fee came up for review for the first time in 1995 it became apparent that there were legal issues that needed to be dealt with before any levies could be applied. In the first instance, the issue of who should receive the licence fees — POAL, MCC (for the land), the ARC, or the Crown (for the water). POAL issued proceedings in September 1995 for a judicial review125 of a decision made by the then Minister of Transport that the “marina assets” of the Tamaki Basin/Half Moon Bay did not come under the definition in s 2 of the Ports Companies Act 1988 of Port Related Commercial Assets. The decisions of the High Court126 and Court of Appeal127 both found in favour of POAL. The case then went to the Privy Council128 which found that the Minister had acted within his discretion and that therefore MCC should receive the lease revenue from the land-based activities, and the ARC as the Crown’s agent should receive the seabed licence fees.
Once the issue of who should receive the money was dealt with the second issue was how the value of the land and water space was to be decided. MCC and the AMF reached agreement over the value and methodology of the dry land, but the AMF and ARC could not reach agreement. Under the terms of their licence that matter went to arbitration under Tomkins J and Mr Gribble (a well-known valuer). The arbitrators agreed with the ARC’s methodology, and a value which took into account the land values of the hinterland with a 60 per cent discount for the water was agreed upon. This resulted in a charge of
$198,000 per annum for 500 berths, which was backdated to 1995.129 The annual charge per berth holder is approximately $400.130 The ARC and its ratepayers netted a $1.5 million windfall and the Half Moon Bay Marina berth holders a huge increase in berth fees.
Bucklands Beach Yacht Club Marina (“BBYCM”) is situated alongside Half Moon Bay Marina. Its berths are leased, and it has two licences which are due for renewal in April 2009 and 2010.131 The licence included a five-year review clause for the fees to ensure they remained at market value. In 2003 when the fees came up for review, the charging methodology which had been in place since the Privy Council decision in 1999 was used by the ARC to set the new level of fees. Unfortunately for the BBYCM, the surrounding hinterland, which had previously been the King George V Memorial Children’s Health Camp, had been sold and a new upmarket subdivision known as Compass Point had been developed on the land. The corresponding increase in land values affected the valuation of the BBYCM, which increased to $100,358 per annum132 for 100 berths or an annual charge per berth holder of $900. Not surprisingly, the owners and berth holders of the BBYCM were not very happy and complained vociferously. However, in the end they had little choice but to pay up as they could not afford to follow the litigation route of their neighbours at what was estimated to be in excess of $1,000,000 between the two parties.
These two marinas provide an interesting perspective as to how the “user pays” regime has been implemented for exclusive occupiers of the CMA in an area where there is a high demand on the use of the CMA from a wide range of recreational and commercial users. As a result, the vulnerability and scarcity of the CMA is becoming more apparent. It also illustrates the inequity of a situation where other marinas can get away with not paying anything for the same type and level of occupation and use.133
Half Moon Bay, Bucklands Beach, and a third marina not discussed in this case study, Westpark Marina, together contribute approximately $416,000 per year
to the ARC’s revenue.134 Although not required to, the ARC chose to use this revenue in a manner consistent with s 64A, to benefit the CMA in a number of ways.135 It is keen to implement COCs over all users of the foreshore and seabed in order to standardise the licensing process and reduce the anomalies. In 2007 the ARC went through the Schedule 1 submission process with regard to its decision not to proceed with implementing COCs. When submissions closed on 4 October 2007, they had received 16 submissions, eight on the behalf of organisations or people who represent boating interests; and of those eight, six were from marinas.136
Marinas are a growing phenomenon in New Zealand’s CMA, especially on the Coromandel Peninsula,137 in the Hauraki Gulf, and in the Bay of Islands. They are being viewed by some Regional Councils as a method of controlling the occupation of coastal marine space and reducing the numbers of swing and pile moorings to promote a more efficient and equitable occupation regime within the CMA.138 To prevent the sort of anomalies illustrated by the above case study it is important that the issues related to charging for occupation of the CMA by this type of commercial venture be dealt with fairly. Regional Councils that have this type of occupation use in their CMA need the tools to charge a “fair” rental, taking into account all the relevant factors, especially in relation to exclusivity of occupation and amenity benefits to the public at large.
6. OTHER OPTIONS — EXISTING CROWN “RENTAL” REGIMES
The collection of fees for the occupation, use, and/or extraction of Crown- owned natural resources is already in place in a number of other areas such as the mining industry through the use of royalties and through the payment of concessions to the Department of Conservation (DoC).
The payment of concession fees for using public land for commercial uses would appear to be the regime most analogous to that of applying occupation
charges in the CMA. There are a number of commercial ventures that are located on and use publicly owned land and associated facilities which are administered by DoC, and who pay fees to the Crown. These include tourism- related businesses such as hotels and ski fields as well as many other types of activities.139
The expectation of New Zealanders to “free” access and use of the CMA, as outlined above, also applies to their access to “public conservation land”140 and is enshrined in s 17 of the Conservation Act 1987.141 It would therefore seem that when looking to implement a coastal occupation charging regime Regional Councils could benefit from the experience and tools that already exist within DoC.
6.1 Existing Legislation — Local Government Act 2002
The Local Government Act 2002 (“LGA 2002”) replaced the Local Government Act 1974 (“LGA 1974”), giving local authorities a mandate142
to play a broad role in promoting the social, economic, environmental, and cultural well-being of their communities, taking a sustainable development approach.
Section 10 emphasises the importance of providing for present and future generations. Section 12 gives District and Regional Councils a wide range of powers to act in the interests of their community providing they remain within the law and take other relevant legislation into account.143
It may be possible to utilise the powers that s 12 of the LGA 2002 provides via the bylaw process under s 149(2) for a Regional Council to enact a bylaw whereby they can charge a rental144 for occupiers of the CMA. The argument for putting such a bylaw in place would be to ensure that they are managing and protecting public resources145 for which they are responsible.146 This would fit within the mandates of “promot[ing] sustainable management of natural and physical resources”147 and those of s 3(d) enjoining them to take
143 Ibid, s 12(2) and (3).
144 Ibid, s 150(1).
145 Ibid, s 149(2).
146 Ibid, s 149(1)(b).
147 RMA, s 5(1).
a “sustainable development”148 approach to ensure the overall well-being of their communities.
The consultative process which must be undertaken for creating a bylaw is covered by ss 83 and 86 of the LGA 2002. Councils must provide the public with access to the relevant information, give them at least a month to make submissions, and ensure that Council’s deliberations are open to the public. High Court action may be taken if members of the public consider that the bylaw is ultra vires because the fees set are considered unreasonable.
Although it may appear that this too is an arduous process, it would be less likely to create the administrative bottlenecks and potential litigation that may arise under s 64A and Schedule 1 of the RMA. The rationale behind this contention is that making bylaws is something that Councils do. The public know that there are bylaws which restrict and restrain them from taking part in particular activities in specified areas which are designated as public places. It is likely to be a far less contentious process than the current regime, whilst still ensuring that the underlying philosophy of s 64A is retained.
In Brady v Northland Regional Council,149 the Court found that a bylaw amendment which increased wharf fees substantially was not unreasonable or illegal, even though it not only met the cost recovery of licences, but also allowed for payment of upgrades to the Paihia Wharf. The consultative process met the legislative requirements under the LGA 1974. Although this case referred to a bylaw enacted by the Northland Harbour Board, it was “saved” under s 424 of the RMA when the Northland Regional Council took over the responsibilities and duties of the Harbour Board in 1989. The Judge noted that the charges were valid and as the Harbour Board’s “bylaw making powers were extremely wide”150 it was entitled to levy charges that were for more than cost recovery. The Court also referred to Mt Cook National Park Board v Mt Cook Motels Ltd,151 distinguishing between the fees a local authority could charge for the administration of its regulatory functions and those it could charge as a proprietor of land. Therefore it was able “to obtain revenue from the use of its land for profit”.152 The wording of s 150(6) appears to affirm this principle as it states:153
This section does not apply to charges for ... amenities provided by the local authority in reliance on the general power under section 12.
148 LGA 2002, s 3(d).
149 Brady v Northland Regional Council [2008] NZAR 505 (Elias J). 150 Ibid.
151 [1972] NZLR 481.
152 Mount Cook National Park Board v Mount Cook Motels Ltd [1972] NZLR 481, cited in
Brady, supra note 149, at 4.
153 LGA 2002, s 150(6).
Based on the mandate and wide powers which Regional Councils have under the LGA 2002 and case law, it is quite possible that using the LGA 2002 would be a way of avoiding the problems of s 64A whilst still preserving the public’s rights of consultation and participation in community affairs. This is not a new idea. A paper presented to the Cabinet Policy Committee, sponsored by the Department of Conservation, during the 2004 RMA and FSA reviews, proposed that the consultation process under s 64A be amended to resemble that required under the LGA 2002. However, the paper was withdrawn as it was considered, given the political climate of the time, too controversial.154
What is being proposed here is the possibility to avoid s 64A altogether. There would need to be a more in-depth assessment made of whether or not this is feasible. The advantages of using the bylaw mechanism is that it provides a degree of flexibility for Regional Councils by giving them a means to tailor to the needs of their community, to meet the demands on the coastal resource through a less onerous consultative process.
7. CONCLUSION
One of the key issues in the Resource Management Amendment Bill No 3 debate was how to provide Regional Councils with a statutory right to recover revenue for the private occupation of the seabed and foreshore. The original section in the RMA had not worked, and parliamentarians were of the view that amending the legislation to include s 64A would be an effective means to enable Regional Councils to implement a fair charging regime for occupation and use of the CMA.
The rationale behind imposing such a charge is in part ethical, such as the need to “create a level playing field” between a multiplicity of users and uses of the CMA, by enabling Regional Councils to receive a financial contribution from exclusive occupiers to compensate the general public for the loss of public space and amenity value, which could then be used to benefit the coastal area and all users of the CMA in a variety of ways. Another advantage is the theory that requiring a payment for occupying the CMA would increase the effective and efficient use of the resource. It also ensures that it is retained and maintained for intergenerational users as well as intragenerational users.
However, there are two major issues that need to be addressed before Regional Councils are able to implement a charging regime for occupation of the CMA. The first is that of “fairness”. The anomalies that currently exist,
154 Palmer et al, supra note 76, at 5.
whereby some occupiers are being charged a market-based rental and others pay nothing, is inequitable. This is further compounded by the lack of clarification as to what the situation is with the coastal space “exclusively” occupied by marine farms and Port Companies. Are they required to pay a market rental or a “charge”? The second issue is that of the process that Regional Councils must use to implement a charging regime. Schedule 1 of the RMA provides the opportunity for all members of the public, whether they are directly affected by a plan change or not, to put a submission in to the Regional Council. The submission process is an administrative nightmare for Councils, one requiring a huge input of staffing resources, often involved in consultation with frequently “hostile” stakeholders, working through the submissions and preparing them for councillors to review and debate on. The fact that decisions made can also be challenged in the Courts means that there is always the potential that litigation is perceived to primarily benefit lawyers, through the payment of fees, to the detriment of ratepayers as Councils may be forced to embark on costly defence and/or appeal cases. This can lead to parties making decisions based on their transaction costs rather than what could be the best outcome for them.
This paper raises more questions than it provides answers as to the effectiveness of s 64A as a tool to use for implementing COCs. Given these difficulties, it is not at all surprising that Regional Councils have chosen not to implement COCs at the present time. It is up to the Government to decide whether they will maintain the status quo, which means they would have to give clear guidelines to the Regional Councils as to how they implement the COC regime. Or to decide to repeal and/or amend the section, or to explore other alternatives available within other statutes such as the LGA 2002 or other charging regimes that are already available and working reasonably well, such as the use of concessions and leases for commercial operations on Crown land used by DoC.
What is clear is that s 64A is an oxymoron; in the language of equity it is “impractical, difficult and inexpedient” 155 and in its current format unworkable. It leaves Regional Councils in the uncomfortable situation that whether they do or don’t implement a coastal occupation charging regime it will be a process fraught with political and administrative difficulty, with a high likelihood that Councils become embroiled in time-consuming and costly litigation156 to the detriment of their organisation and their ratepayers. Ultimately it may be easier
for the local government politicians to acknowledge that it is too difficult for them to deal with at a regional level and insist that the Government provide them with clear guidelines on how to deal with this issue.157
<http://www.doc.go v t.nz> . There have also been questions raised as to whether some of these policies may be ultra vires the scope of s 58 of the RMA and provisions of s 64A. See the submissions presented by Professor Kenneth Palmer on behalf of the Auckland District Law Society, at <www.doc.govt.nz>.
Postscript: New Zealand has just undergone a change of Government from a Labour Party coalition to a National Party coalition. One of their election pledges was to review the Resource Management Act 1991. It will be interesting to see if any changes are made to s 64A as a result of this process.
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