As New Zealand’s housing crisis has worsened over the past few years, the pressure for new greenfield sites to be zoned for residential development has also increased. The new National Policy Statement for Highly Productive Land (‘NPS-HPL’) contains central government direction as to how regional councils and territorial authorities must manage highly productive land. The NPS-HPL comes into force on 17 October 2022.

The objective of the new NPS is to improve the way highly productive land is managed under the Resource Management Act 1991 (‘RMA’). The NPS-HPL will eventually be transitioned into the new National Planning Framework under the RMA reforms. The NPS-HPL seeks to ensure that the availability of highly productive land for primary production for future generations is maintained.

What is ‘highly productive land’?

The NPS-HPL requires regional councils, within three years from commencement, to notify maps of "highly productive land" in regional policy statements (which territorial authorities must then include in district plans). Highly productive land is defined as land that is:

• zoned general rural zone or rural production zone;
• predominantly identified within Land Use Class (‘LUC’) 1, 2, or 3; and
• forms a large and geographically cohesive area.

Councils may also include land which is not LUC 1, 2 or 3 but is highly productive land based on the soil type, physical characteristics, or climate of the area. Land which is identified for future urban development at the commencement date cannot be classified as highly productive land.

While the mapping process is underway, territorial authorities must still apply the NPS-HPL to land which is both zoned general rural or rural production and LUC 1, 2 or 3 land, and is not identified for future urban development or subject to a plan change to rezone it from general rural or rural production to urban or rural lifestyle.

Rural landowners are able to check whether their land may be affected by the new NPS by checking the classification of their land using the LUC map.

What does the NPS-HPL require councils to do?

The NPS-HPL directs regional and territorial authorities to “avoid” the urban rezoning, development and subdivision of “highly productive land” (as defined), except as provided for in the NPS-UD. Highly productive land must also be “protected from inappropriate use and development”. These are very strong policy directions.

What are the exceptions to HPL protections?

Urban rezoning of highly productive land may only be allowed if certain circumstances apply, including for providing development capacity under the NPS-UD, where there is a lack of available alternatives and where the benefits of rezoning outweigh the costs associated with the loss of highly productive land. Slightly more onerous requirements apply to Tier 1 and 2 councils compared to other councils.

Rural lifestyle rezoning of highly productive land as rural lifestyle must be avoided unless the exceptions from the ‘subdivisions, use and development‘ section below apply.

Subdivisions of highly productive land must also be avoided unless the subdivision is for either specified infrastructure or defence facilities and there is a functional or operational need for the subdivision, or the productive capacity of land will be maintained in the long term, or the subdivision is on specified Māori land.

Subdivisions, use and development may also be allowed on highly productive land if:

• Constraints exist on the highly productive land that make land-based primary production economically inviable for at least 30 years; and
• The subdivision, use or development avoids significant loss of productive capacity and fragmentation of highly productive land and reverse sensitivity effects on surrounding land-based primary production; and
• The benefits of the subdivision, use or development outweigh the costs.

Inappropriate use and development (essentially, those other than land-based primary production uses) of highly productive land is to be avoided, but the NPS-HPL provides a list of activities that are not deemed to be ‘inappropriate’ for the purposes of this restriction. The exceptions include:

• To address a high risk to public health and safety;
• For a section 6 purpose (i.e. one of the matters of national importance listed in s6 of the RMA);
• An activity undertaken by a requiring authority in relation to a designation or notice of requirement; or
• Where there is a functional or operational need for the use or development to be on the highly productive land, and the use and development relates to:

1. the maintenance, operation, upgrade, or expansion of specified infrastructure;
2. the maintenance, operation, upgrade, or expansion of defence facilities;
3. mineral extraction that provides significant national public benefit that could not otherwise be achieved using resources within New Zealand;
4. aggregate extraction that provides significant national or regional public benefit that could not otherwise be achieved using resources within New Zealand.

Where an exemption applies, territorial authorities must still take measures to ensure the loss of productive land is minimised, and to avoid potential reverse sensitivity effects.

How are the provisions likely to work in practice?

About 15% of land in New Zealand is estimated to be highly productive land under the LUC classification system. The NPS-HPL provides important directions to councils to protect this finite resource whilst attempting to strike a balance with councils seeking to provide development capacity under the NPS-UD.

However, in our view, there are likely to be teething problems with the exemptions for infrastructure. While activities authorised by existing designations will be covered by the exemption, the reference to notices of requirement is less clear. This is because notices of requirement do not (until they become designations) authorise any activities – they simply serve to provide notice to district plan users and impose restrictions on what landowners can do on their properties.

We expect questions will also arise regarding the development of infrastructure. Exemptions are provided for the maintenance, operation, upgrade or expansion of specified infrastructure, but not all infrastructure will come within the definition of “specified infrastructure”. In addition, the development of new infrastructure does not appear to be exempted (only upgrades and expansion of (presumably existing) infrastructure). This could be particularly problematic for new wind and solar farms, which cannot be authorised by a designation, are often located in rural areas, and are typically developed as a new project (rather than the expansion of an existing project). The Ministries for the Environment and Primary Industries have indicated that technical guidance on the NPS-HPL will be released in January 2023. This is an opportunity for the exceptions regime to be clarified.

If you would like further information on the how the NPS-HPL will apply to your project or land, please contact us.