The regulations, which came into force this month, require councils to pay a minimum 1% discount for each day a consent is processed beyond the statutory limit of 20 working days.
Councils can offer a more generous daily discount, up to a maximum of 50% in total, if they choose.
Dr Smith said the penalty aimed to tackle an "appalling deterioration" in consents processing, which saw the number of late consents increase nationally from 18% to 31% between 1999 and 2008.
However, council resource consents manager Alan Worthington said the council was in a "fairly sound position" when it came to processing consents.
In the past year, 98% of consents were processed on time, with just 14 of 772 being completed late, he said.
And, since 1999, the average had remained above 90%, except for a surge of consents in 2007 - on the back of a booming economy - which resulted in the rate dropping to 60%, he said.
"It [the discounts] will provide some challenges if the economy goes back to the levels it was in the 2003 to 2008 period, where there was a really high level of activity . . . [but] for the foreseeable future it looks all right."
If consents activity increased, the council could recruit extra staff or outsource more work to consultants to avoid any significant bill for discounts, he said.
However, the present level of activity remained "very constant", he said.
Council chief building control officer Neil McLeod said the new regulations did not apply to building consents, and there was no indication that would change.
His staff were taking 11 working days on average to process applications, well within the statutory limit of 20 working days, with 100% of applications processed in time last week.
That followed a surge in activity in June, which resulted in consents taking 22 days on average to process - two days more than statutory limits - for several weeks, he said.
"It's waves and troughs. When there's not much work coming in, or alternatively when your staff aren't taking annual leave or getting sick, you get your 20 working days quite comfortably."
