2022 is shaping up to be yet another busy year for local government.

There has been a recent flurry of activity on proposed reforms for a range of topics, from climate change to three waters, drinking water and housing. Of course we cannot forget Government's intention to proceed full-steam ahead with the replacement of the Resource Management Act 1991 (RMA), with new legislation due to be introduced to Parliament in the third quarter of this year. And, on top of all of this, it is the year of local body elections.

Unsurprisingly, the proposal to replace Aotearoa's entire resource management legislative framework has generated a lot of discussion. Much of this discussion has centred on core topics regarding the operation of our new system, such as the new Part 2 "engine room" of the RMA, and how planning and consenting will operate under the new system. This is very important kōrero, and much work remains to be done on these issues before a replacement bill is introduced in the House.

However, one core aspect of the resource management system that has managed to stay shy of the spotlight so far is how the allocation of Aotearoa's natural resources will be addressed in a new framework.

Stripped back, the RMA fundamentally provides a framework for regulating the management of natural and physical resources. Fresh water (wai māori) and the coastal marine area (takutai moana) are two such resources that are essential to the health and wellbeing of Aotearoa and all New Zealanders. They are "commons" – resources that, in their own ways, are both scarce and in demand.  As such, the regulation of these resources requires careful consideration of how to manage public and private interests in their use, and protection.

For the most part, the RMA does not contain specific provisions to guide decision-making about resource allocation among competing private interests. Case law has developed to fill the void, developing the 'first-in, first-served' principle for allocation. This means that when two resource consent applications are being processed for the same resource, the first application received by the local authority must be heard and decided first. Similarly, case law has clarified that councils are not concerned with determining what is the best use of a resource, even where there are competing uses for that resource.

The report prepared by the Resource Management Review Panel, chaired by Hon. Tony Randerson QC, in 2020 identifies fundamental issues with the first-in, first-served allocation system. While such a system provides certainty in times of low resource scarcity, the Panel found that it provides limited ability to respond to change and new environmental pressures. Concerns have also legitimately been raised regarding the ability of our current system to accommodate new, more efficient, uses of water.

Accordingly, the Panel recommended that first-in, first served be replaced with allocation tools derived from the principles of sustainability, efficiency and equity with the relevant principles enshrined in legislation. The Panel anticipates that such a system should be more flexible, be guided by the merits of uses and rely increasingly on economic tools. Such allocation principles will be relevant in a number of different scenarios, including in relation to freshwater and the coastal marine area. The Panel has also signalled that a combination of regulatory and market-based mechanisms is needed to allocate resources. However, at this point in time there has been no clear indication from the Government on where its thinking might be headed in relation to these fundamental allocation issues.

Flowing alongside these issues in terms of allocation principles under the new legislation, are Māori rights to wai māori and the takutai moana.

In 2019, the Waitangi Tribunal released its second Fresh Water Report, finding that the present law regarding wai māori is not consistent with Treaty principles, making a number of recommendations in relation to the allocation of freshwater. Litigation in relation to these issues is underway. In the South Island, an application has been made to the High Court seeking declarations that Te Rūnanga o Ngāi Tahu has pūtake-mauka (a unique Ngāi Tahu term used to refer to the ancestral source of one's rights upon the landscape whether it be the land, waterways or other taonga) / rangatiratanga entitlements to wai māori, and that such rights be safeguarded. Similar claims have also been made in other parts of the country.

In the takutai moana, approximately 600 claims for recognition orders for either customary marine title or protected customary rights have been made under the Marine and Coastal Area (Takutai Moana) Act 2011. Where granted, customary marine title will confer significant rights on title holders, including the ability to give or decline permission for resource consents and the ability to prepare a planning document that influences regional planning. Whilst the first of these claims are in the process of being resolved by the Courts, the vast majority (whether being heard by the Courts or negotiated with the Crown) remain unresolved. The claims are unlikely to be resolved quickly - even with more resources now being committed to working on claims, the Crown anticipates that all claims will be resolved by 2051.

These processes and their outcomes have the potential to be fundamental to the allocation of freshwater and the takutai moana, but will not to be resolved prior to the Natural and Built Environments Bill being enacted. Despite Government assurances that Māori rights to wai māori and the takutai moana will not be impacted by resource management reforms, it is difficult to see how any new allocation principles can be enshrined into legislation in advance of these fundamental issues being resolved.

Beyond recognising that allocation of resources is an important issue to be addressed, there has been almost no indication from the Government on how these resources will be allocated in the new resource management system. Given the fundamental importance of wai māori and the takutai moana to all New Zealanders, the lack of guidance as to how they will be allocated in future is striking.

At the time of writing quarter 1 is well underway, giving the Government little over 6 months to propose a solution to one of the most wicked of problems in the environmental space, in a way that doesn't undermine the resolution of Māori rights in both wai māori and the takutai moana. Whether this can be achieved remains to be seen.