Economic Assessment for Fast-track Approvals Act 2024
Prepared by Dr J D M Fairgray, Director, Market Economics and shared with RMLA for publication as part of RMLA Insights.
The Fast-track Approvals Act 2024 (FTAA) brings in a set of rules for assessment which is quite different from what we are used to under the RMA.
The FTAA (the Act) places economic assessment at the centre of project evaluation, although the decision structure offers scope for quite broad evaluation. The FTAA’s purpose of enabling more economic activity, and its focus on the regional and national benefits of doing so, puts emphasis on how Fast Track projects will contribute to overall economic activity, especially the delivery of benefits. However, the wider effects of this additional activity are subject to scrutiny just as they are under the RMA. The decision framework is based on the proportionality of adverse impacts and benefits, assessed across a potentially broad basket of effects. This provides scope for decisions to consider more than whether the benefits exceed the costs, as is often the case in a standard cost-benefit framework.
These matters are to be assessed in the context of an Act with a primary purpose to approve more activity in the economy, and an implied starting presumption that a project which adds activity will be beneficial for the economy.
This Paper examines the nature of economic assessment under the Act, and compares that assessment with approaches applied to date especially the RMA.
The FTAA is not simply a faster version of the RMA - it has a different purpose, a different decision-making framework, and a closer focus on benefits, while also requiring the multi-faceted assessment of the RMA:
· The Act seeks to facilitate additional economic activity, through approving development and infrastructure projects
· Decision-making is based on whether adverse impacts are “out of proportion” to benefits, not an overall balancing of the positive and the negative effects
· It has strong emphasis on regional and national benefits with an inherently broad whole-of-economy perspective on outcomes, rather than just site-specific or local effects
The assessment necessary under the FTAA is not ‘once-over-lightly’ despite the tight time frames. Doing it well is technically demanding. The economic effects are central. Economic assessment sits at the heart of FTAA decision-making, with proposals evaluated based on how they contribute to additional economic activity, employment, and overall economic performance.
The purpose of facilitating additional activity in the economy puts strong focus on establishing what additional economic activity would be generated from projects themselves and intermediate suppliers to that project, and what components of a fast-tracked project would be net additional to the economy, as distinct from simply displacing development that would have occurred in any case. This typically requires economic modelling to identify the total and net additional contribution to GDP and employment.
Identifying the net additional effects also requires clear definition of the counterfactual to the project, to identify what would likely occur otherwise. A key aspect is to identify the net additional activity by location to separate out transfers within the economy, and to show the spatial implications and effects on the well-functioning urban environment. The requirement to to consider regional and national benefits means that the direct and the flow-on effects of a project need to be examined, across the economy and over time.
The language in the Act implies a focus on economic effects. However, assessment is not constrained to the effects on the economy, and the suite of environmental, social, and cultural effects have to be considered. The core process to compare benefits and costs means an assessment is ‘economic’ by nature, in the same way as RMA s32, however the subject matter for FTAA economic assessment still has to include that range of effects – albeit in a condensed time frame.
For practitioners, the FTAA sets a different bar on how proposals are assessed and presented:
Economic narratives need to be robust, not just descriptive
Evidence needs to demonstrate net benefits, not just total activity
Assessment needs to go beyond the site, to consider wider regional and national effects
Methodology does matter — the choice and application of assessment tools is subject to considerable scrutiny
For decisions on approval or rejection, adverse impacts and benefits are assessed according to proportionality, not necessarily whether the benefits outweigh the costs or not. This introduces more flexibility - but also substantially more judgement - into decision-making.
More broadly, the FTAA represents a shift from evaluating proposals in the context of sustainably managing resources, to instead facilitating proposals to deliver regional and national benefits through additional economic activity. Doing this well is important – many projects over the years have shown unexpected and unintended consequences – and it demands a disciplined and transparent approach to how benefits and impacts are identified, assessed, and communicated.
This is a high-level summary only. Read the full paper here.
The views in this guidance are those of the author and do not necessarily represent formal RMLA policy. Although every effort has been made to ensure accuracy and reliability of the information contained in this report, neither RMLA, Market Economics Limited nor any of its employees shall be held liable for the information, opinions and forecasts expressed in this report.