Simpson Grierson - The Public Works Act overhaul is complete

3/04/2025·5 min read

The Public Works Act overhaul is complete - PWA Reform Update

On 1 April, Chris Penk as Minister for Land Information New Zealand announced that the Government’s review of the Public Works Act 1981 (PWA), which began in mid-2024, is now complete.

In this article we outline the proposed legislative changes, what we make of them, and how they differ to the current PWA.

Minister Penk stated that the PWA currently lacks “clarity and commonsense”, and that the goal of the review was to bring the Act into the 21^st century. This week’s media release stated: “if we want to grow the economy, boost productivity and make New Zealand a better place to live we must fix our pipes, increase the capacity of our schools and hospitals, and build more homes, roads and renewable energy sources.”

Minister Penk says that the reformed PWA will make the Act more efficient, effective and transparent, which will “help end decades of difficulties which have seen central and local governments struggle to secure land for development.”

Final tranche of changes:

As we have discussed previously (see links below), over the last six months the Government has periodically released proposed responses in relation to the issues this review sought to address.

This final tranche of changes includes the following:

Introduction of incentive payments: Much like the Government’s recently announced separate Public Works (Critical Infrastructure) Bill, the reformed PWA will include incentive payments to encourage landowners to reach early settlement with acquiring bodies. Landowners who voluntarily sell their property prior to being issued a Notice of Intention will be eligible for an incentive payment worth 10% of the land’s value but capped at $100,000.00. This amount is less than the 15% / $150,000 maximum stipulated for critical infrastructure, although it is unclear whether the critical infrastructure pathway will also require payment of the home-loss or land-loss payments discussed below.
Updating home-loss and land-loss payments: To recognise the disruption acquisition causes, the Government announced that additional payments for land and home loss will continue to be made alongside the new incentive payment. The payments will be increased as follows:
- Home-loss: Base payments increased from $35,000 to $50,000;
- Land-loss: Increased from $250-$25,000 to $350-$35,000; and

Home-loss payments will also be extended to situations where there are multiple homes on one property.

Land acquisition process reforms: The land acquisition process is set to be replaced with a more structured and streamlined one. Under the new regime, prior to being issued a Notice of Intention for compulsory acquisition, landowners will receive comprehensive information packages detailing their rights, entitlements and an invitation to sell. The acquiring entity will still be required to negotiate with landowners in good faith for at least three months for non-Māori land, and with a new extended timeframe of at least six months for Māori freehold land.
Emergency provisions: These new provisions are a direct response to recent extreme weather events, such as Cyclone Gabrielle and the Auckland Anniversary Weekend floods. The new provisions provide for land acquisition following a declared state of emergency, activated by an Order in Council. The aim of these provisions is to support faster infrastructure restoration and community recovery by allowing for the PWA’s powers to be used when roads, railway lines, water and power stations are wiped out and homes left uninhabitable by natural disasters.

Our thoughts:

Structured and streamlined approach

While the media release gives quite detailed insight into the upcoming changes, we will need to see the detail in the Bill to assess whether it is likely to make the land acquisition process more streamlined. It appears that the Government will re-design the current process contained in section 18 of the PWA. Section 18 currently requires the acquiring entity to serve a “notice of desire” to acquire land on a landowner and then negotiate with the landowner for at least a three-month period after serving that notice.

Under the more structured engagement process that will replace the section 18 notice, owners will receive comprehensive information on the acquisition, their rights, entitlements, and an invitation to sell. However the requirement for a three-month negotiation period will be retained and extended to a period of six months for Māori freehold land.

Providing information on the acquisition and landowners’ rights and entitlements at the outset is already considered best practice under the PWA and often already happens, despite not being compulsory. An invitation to sell is already required as part of the section 18 notice.

If the requirement to serve section 18 notices is removed, that will potentially create uncertainty regarding the exact date from when the three / six month period of good faith negotiation begins. We look forward to seeing how the new Bill will provide certainty as to the process and promote streamlining.

Additional compensation incentives

The table below outlines the differences between the current PWA and the Government’s proposed changes:

	Public Works Act 1981	Public Works Bill 2025	Public Works (Critical Infrastructure) Bill*
Early Incentive Payment	N/A	Capped at $100,000	Capped at $150,000
Home-loss Payment	Section 72(1)(a): From $35,000 but up to $50,000^[1]	From $50,000	N/A
Land-loss Payment	Section 72C: 10% of the land’s value (from a minimum of $250 to a maximum of $25,000)	10% of the land’s value (from a minimum of $350 to a maximum of $35,000)	N/A
Recognition Payment	N/A	N/A	Capped at $92,000

* (limited to Roads of National Significance and projects listed in Schedule 2 of the Fast-track Approvals Act)

Incentive payments are clearly a useful tool to encourage early agreement and avoid prolonged and costly negotiations and disputes. However, we think that the quantum of the other changes is unlikely to have a significant impact. Section 72E of the PWA already enables additional compensation amounts to be increased by way of an Order in Council made on the recommendation of the Minister, and we assume that power will be retained.

The increased base for the home-loss payment may not result in many increased payments in practice. While the current base payment is $35,000, there are two potential top-up payments available for early agreement ($10,000) and to acknowledge personal circumstances ($5,000). Our experience in practice is that these top-ups are generally made already, meaning most homeowners are currently receiving a $50,000 allocation. The maximum amount payable for land loss (increasing from $25,000 to $35,000) arguably reflects increased land values and will likely have only a minor effect.

Emergency provisions

We welcome the introduction of the emergency response provisions. To echo Minister Penk, the recent extreme weather events across the country highlight a gap in the PWA around climate-change response and managed retreat. New Zealand needs to bring the PWA into the twenty-first century to respond effectively to climate-related natural disasters. However, we note that these powers only seem to be available where a state of emergency is declared, meaning they may not extend to allowing acquiring entities to pre-emptively buy vulnerable land or facilitate managed retreat. Again, it will be interesting to see what the detail in the Bill will be around these issues.