Crown Minerals Amendment Bill

In speaking to Part 2 of the Crown Minerals Amendment Bill, the Minister in the chair, the Hon Harry Duynhoven, could have got to his hind legs and explained the problem we were having a moment ago with what “existing privilege” meant, because I finally did find it defined in Part 2 of the principal Act, and it is exactly what I feared. It relates to privileges granted under the old Acts; the Mining Act of 1971, the Coal Mines Act of 1979, and the Petroleum Act of 1937.

Why Part 2 of this bill is so important is that it is possible the courts of this land may rule that licences issued under those original Acts—the Mining Act of 1971, the Coal Mines Act of 1979, and the Petroleum Act of 1937—could be extended and could be varied. In fact the court in the case of Glenharrow Holdings Limited v Attorney-General ruled in Glenharrow’s favour originally, and suggested that the 1991 Act did not extinguish those rights to vary licences or renew licences, or at least the chance to apply to have those licences renewed.

What is so objectionable about this legislation is that despite the court not having finally concluded on whether holders of those mining licences could seek to have them extended or could seek to have them renewed, it is quite clear someone could not apply for a new licence altogether under those old Acts. But the issue is, could someone with existing privileges or existing rights seek to have them renewed or extended?

What is objectionable about this legislation in Part 2 is that the Government is moving against such licence holders, and in clause 22 is going to legislate those possible rights away before the court has ruled on them. The Government is saying: “OK, for those who have made applications up to the date Mr Duynhoven made this decision, how the court rules on their applications will be left up to the court.” That is done in new section 111, in clause 22.

But applications where people did not happen to apply prior to that date will be ruled out. Their property rights will be extinguished by clause 22, and we object to that. We object to property rights being legislated away without compensation. If members look at clause 24, there is no compensation. What is unfair about it is that some people got applications in against advice, because the general advice was that the 1991 Act had extinguished their rights under the old Acts—the rights to renew licences under the old Acts. Some people thought that that was not right. They went to court and got an initial ruling in their favour—not from some beginner judge, but from the Acting Chief Justice, who ruled in their favour.

The courts have not finally decided on this issue because a subsequent hearing questioned the judgment of Acting Chief Justice Heron. Justice Chisholm questioned Acting Chief Justice Heron’s decision, although he did not rule totally against it, if one looks at the fine details of that ruling. What Justice Chisholm said was that licences cannot be perpetually renewed. Acting Chief Justice Heron did not imply that. All he said was that people had a right to apply for renewal. He did not say they would automatically be granted renewal.

What is objectionable about Part 2 is that the Government is not waiting for the courts to sort out that issue—to tease it through. The matter is still before the courts and the Government is saying that it will not wait for that, that it will rule across that and make it that anyone who does not have an application in by Mr Duynhoven’s date of 5 p.m. on 19 September 2002 will be ruled out. It is a bit rich that the Minister in the chair, the Hon Harry Duynhoven, who had to rely on this Parliament to keep him in his job, brings into this Parliament legislation that rules people out. If other citizens of this country did not have their applications for renewal in prior to Mr Duynhoven’s date they would have been ruled out. They do not have a Labour Party sympathetic to business to rule in their favour in the way that it did for Mr Duynhoven. It stinks.

I was right to wait until this part came up before addressing the issue of clause 9 for the Hon Dr Lockwood Smith, because I am afraid that he seems to have some confusion. Clause 9 is about unitisation—that is, between old system licences and new system permits. Existing privileges are on licences and other interests under the Mining Act, the Coal Mines Act, and the Petroleum Act. Those Acts were in effect taken over by the Crown Minerals Act passed by his Government in 1991, in which I assume he took a part. One of the reasons we are here doing this is that clearly there were problems. So there are some issues, but no one is losing any rights here.

I refer Dr Smith to new section 111(3) in clause 22. That provision is about ensuring that at a given date, those who had put in their application had those rights protected. The whole purpose of this provision is to ensure that we do not have some open-ended claims system running. What we have here are the rights of those people who had actually put in their applications being protected under this legislation. This is nothing to do with Glenharrow. [Interruption] I did not interrupt Dr Smith’s speech and I ask that he do me the decency of not interrupting mine. If he wants to talk about the role of Justice Heron in this, in the first Glenharrow case Justice Heron ruled that there should be an extension. He said that the transitional provisions of the Crown Minerals Act stated that the licence should continue. However, in the second Glenharrow case the ruling was that the Minister of Energy is not able to grant a new mining licence under section 77 of the Mining Act.

Dr the Hon Lockwood Smith: A new one. What about a renewal?

Hang on and I will get there. The member should be patient. Then, if we look at Justice Chisholm’s work, he confirmed that the term of a licence is a condition of the licence that can be varied under section 103D of the Mining Act. Subsequently in the Court of Appeal, before a full bench, it was ruled that the Minister neither has the power to grant a new licence nor to consider an application to vary the term of the licence. Dr Smith has a very convenient selective memory.

This bill cleans up, and is designed to sort out, a mess made by the previous Act, which did not define clearly enough. I have to say that the mining industry in general has not kicked up a ruckus about this; only a few members of the industry have done so, and, of course, its association has said that it will have to back their case. The thing that has been impressive to me is that the officials have worked this matter through with the mining industry. There has been consultation over this. It has not been a case of no consultation; there has been significant consultation since the year 2000.

Finally, I will just tidy up the issue of coal-bed methane, which I think Sandra Goudie mentioned. I will leave Mr Connell’s puerile submission on this bill out of it. However, to address Sandra Goudie’s intervention seriously, I want to say that coal-bed methane was an issue that was considered, but unfortunately it has been ruled by the Chair that the amendments required for that were outside the scope of this bill and will certainly have to be considered at a future stage as we get further down the track of coal-bed methane development.

I am encouraged that the Minister, the Hon Harry Duynhoven, has taken a call. I appeal to this Minister, who would understand the consequences when people were not aware of the actual law or were misguided, as he was, in believing that certain actions were not available to them, and therefore found themselves in the position where they were deprived of their property rights.

The mining industry was informed by the Crown minerals division that its rights to reapply for mining licences were extinguished by the passage of the Crown Minerals Act in 1991. It was informed by the officials that the 1991 Act repealed their rights. A large number of people accepted that, until Glenharrow Holdings challenged a case in court, and won. The officials who represented the Government until then told them otherwise. Of course they thought they were listening to authority and accepted that decision, and, suddenly, the Labour Government brought in legislation to legislate away those property rights. I inform the Minister, the Hon Harry Duynhoven, that I attended part of the Commerce Committee in the last term of Parliament, and the mining industry was not consulted during the first phase of consultation. It was told by the Minister that it was only a technical amendment. In the Labour Government’s term, if legislating away people’s property rights is called a technical amendment, I would hate to see what a substantive amendment would be.

The industry thought that the Government was bringing in legislation, and the industry was promised that during the select committee process it would have a fair chance of being heard and consulted. In the middle of a Commerce Committee hearing, and out of the blue, Harry Duynhoven brought in another commencement date of 5 p.m. on 19 September 2002. He said that if people had not submitted their application, then they could forget about it. Harry Duynhoven understood the pain of finding on 11 June that his membership of Parliament was technically lapsed. He should have understood the pain of those people being told suddenly, out of the blue, that their licences could not be reapplied for.

It is an outrage. I think Harry Duynhoven should take a call to explain why people who acted in good faith and listened to the officials advice, then waited for the due process of the Commerce Committee to complete its deliberations, suddenly found that if they were law-abiding they were not rewarded. This particular clause is an outrage to the industry. The industry was never consulted in the first place, and in the middle of the select committee process a new date was implemented to stop any person who failed to file an application because he or she was still waiting for the deliberation of the Commerce Committee.

The Minister should explain to us why the mining industry should have confidence in the Government. Why should the mining industry have confidence in the due process of a select committee? Why should the mining industry continue to have confidence in a Minister, the Hon Harry Duynhoven, who, above any other Labour member, should understand the frustration of a law that in his words was outdated, old, or whatever?

When listening to the previous speaker, Pansy Wong, I loved hearing the expression “technical amendment”. That sums up the way this particular Government works. Here is a bill that extinguishes people’s property rights, yet it is described as just a technical amendment. That is astonishing.

The select committee that I sat on to hear the latter part of this bill was not made aware of this technical amendment stage, at all. However, it was made very clear to us that Acting Chief Justice Heron had come out in favour of Glenharrow Holdings. That court case caused a flurry of activity around the Government, which resulted in a press release by Harry Duynhoven dated 19 September 2002. He gave everybody until 5 p.m. on that day to put in his or her application. Up until that point the select committee was aware of just Glenharrow’s application and one other possible application. All of a sudden the panic set in and this press release came out to extinguish that one other application, right on the spot, and anybody else who had thought of applying for an extension of his or her rights.

Acting Chief Justice Heron quite rightly stated that they had rights to apply under the earlier Acts—the Coal Mines Act and the Mining Act. It was also made clear in another Act—the Ngai Tahu (Pounamu Vesting) Act, which had a grandfather clause that stated that the Act would not extinguish the rights to continue under the original Mining Act. The original Crown Minerals Act also had a grandfather clause that stated that people’s rights were not extinguished. However, on 19 September 2002 Harry Duynhoven extinguished those rights completely. They were extinguished so that we could continue to debate this bill.

Harry Duynhoven’s press release made this bill worthless, because he extinguished people’s rights right then. It was governing by press release. There was a precedent during the Muldoon era, where he governed by press release, and this Government has done the same—it has extinguished the rights of people. It was set out in previous Acts that people had the rights to continue with the licences. New section 111, inserted by clause 22, now extinguishes all other rights that people may have had. It extinguishes section 111 in the original Act and replaces it with Harry Duynhoven’s press release wording, which is now encapsulated in this bill, in new section 111, “Right to new permits”. New section 111A also encapsulates that and states that no application under section 103D of the Mining Act for an extension of the duration of a mining privilege may be granted. That is also extinguished by Harry Duynhoven’s press release. If this Government wants to continue to govern by press release, then why bother bringing bills like this to the House?

💬 Peter Brown: Don’t give it any ideas!

I had better not give the Government any ideas. It might start to do everything by press release and forget about the legislation, and also the select committee process.

At this stage, given that we are debating Part 2 and that everybody is expressing some serious concerns about the abrogation of property rights and about miners’ ability to apply for licences, I would like to read from the commentary—

💬 Hon Harry Duynhoven: That is the whole issue. It is not licences; it is permits.

That was a terrible bone of contention. When the wording was changed from licence to permit, it took with it as part of that licence what was considered to be an inalienable property right. So we now have this whole wording around permit and fee, which takes away the property right that has been attached to the form of licence, the right by which a lot of money is expended in establishing a business and in putting capital into an ongoing business function. The value of that is reduced by a permit, because under a permit we do not have an inherent property right as we do have with a licence.

I would like to refer members to clause 22, which repeals and replaces section 111 of the Act. This new section 111 removes the right of current mining licence holders to apply for new mining licences under the repealed provisions, which include sections of the Mining Act and the Coal Mines Act, etc. Clause 23 inserts new section 111A, which removes the right to vary the term of a mining licence granted under the Mining Act. On 19 September, the Government announced a policy decision to propose amendments to the bill so that the removal of the right to apply for a new licence, or a variation to the term of an existing licence, would take effect. So we have removed the right to apply, and that is where we have abrogated people’s property rights.

I would like to refer members to a New Zealand Law Society submission with regard to this bill, which said that rights under the former mining legislation are a form of property. We are talking here about the New Zealand Law Society, which is an independent body that can look at this type of legislation and treat it with some objectivity. If the society says that rights under the former mining legislation are a form of property, I think we can take that as being pretty well correct. That was in conjunction with having a licence, and there is more on that in many of the submissions made to this bill.

In reforming legislation, the existing rights of property are normally maintained without modification, especially where there is no compensation paid. That was the case here. There has been no compensation paid for the abrogation of the private property rights that went with that licence, and that have been summarily taken away by the proposal of clause 23. That has been one of the biggest bones of contention through this whole process with this bill, and with this Part 2. A number of submitters have all made reference to Part 2, particularly to clauses 22 and 23, and have objected to them and asked for their deletion for this very reason—that it is an abrogation of their property rights. They are having a great deal of difficulty in applying for licences and in trying to re-establish some of their business undertakings.

I would like to carry on with what the New Zealand Law Society said, in relation to clauses 22 and 23, about this whole area of long-established rights. It said that the explanatory note contained no convincing argument for the revocation of those rights, or the ability easily—if at all—to renew them, so are we just creating a new injustice around property rights? Clearly, my learned colleagues and the majority of submitters believe that to be the case. Perhaps the Minister would like to take a call and explain why there seems to be some variance in what all the submitters see as being the result of clauses 22 and 23, and what the Minister sees as being the result of clauses 22 and 23. It is also claimed that landowners and occupiers can exercise the right to restrict or control mining on their land.

I would like to make a contribution to this debate. Part 2 is headed “Amendments to transitional provisions relating to minerals”. I look at the word “transitional” and I wonder what certainty it gives to an industry in this country that potentially could be worth $86 billion. That is worth reflecting on for a moment. This industry has been determined, I believe by the geological people, as being worth potentially $86 billion. Here we are, in the Committee, debating Part 2. The Government has used words like “transitional”. “Transitional” to me means temporary, uncertain—a bridge. To provide uncertainty for this industry, indeed any industry, is just totally unsatisfactory. Probably the most debilitating impact one can have on any industry is to deny certainty, to deny licences that have been granted and exercised in total good faith, only to find a Government comes along and says that it wants to look after its friends, that it will not exercise total control, but that it will exercise control over the company Glenharrow Holdings and extinguish its property right.

This Committee is discussing at this time a hugely important issue. It is not just about the mining industry; it is about the fundamental premise of property rights in this country, and whether a company legitimately exercising that property right should expect the Crown to come in with something like Part 2 and exercise the total control that the Crown does have. There is no question about the ability of the Crown, about the ability of Mr Duynhoven to exercise his right as Minister; whether it is justified and appropriate is an entirely different matter.

There seems to be a certain irony in this whole process. Just recently we needed to validate the Minister’s warrant in this House, and here we are discussing Part 2, and having to validate this bill in the Minister’s name. Both have been done with retrospectivity. That is absolutely wrong—certainly, in this particular case it is totally and utterly wrong.

The determination made by the Minister by press release is, as I mentioned earlier, a hugely debilitating exercise for the industry. I wonder what this word “transitional” really means. What does the Government really mean by “transitional provisions relating to minerals”? It has already been mentioned in this House that this industry requires huge amounts of capital. How can an industry survive if it has what is known as “transitional provisions”? Where in this bill is the certainty that should be given to the mining industry? I mentioned earlier that there has been a determination that the mining industry could be worth $86 billion to this country. We would not have to worry too much about funding hospitals and schools if we had that sort of industry contribute even a fraction of that money on an annual basis.

We are never going to attract miners into this industry as long as we have phrases such as “transitional provisions relating to minerals”, which are just so ambiguous. One could argue quite justifiably that even the concept of who owns the minerals, and, indeed, what a land title actually means today, are ambiguous in the context of the debate we are having over foreshore and seabed.

First, I think it is important to put this matter into scale. Before 19 September 2002 and before the press release that I sent out, there had been five applications for new mining licences, and three applications for new mining licences—there had been five applications under the Mining Act, and three under the Coal Mines Act, one of which has since been withdrawn—and 10 applications for variation, out of the 171 licences under the old Mining Act. That puts it into scale.

Second, a number of comments have been made, and Mr Eckhoff has continued down that track, that this measure was grossly unfair because it cut off a whole lot of people.

💬 Gerrard Eckhoff: It cut off Glenharrow.

Yes, and the member specifically talked about Glenharrow Holdings. Well, first of all, Ngāi Tahu had the pounamu resource vested in it by an Act of Parliament passed in 1997 under the previous Government. That effectively prevented any further application by Glenharrow Holdings, for example, in that area. However, its existing right to continue for the term of its licence was protected. What we have had since then, of course, is the work of the judges.

I was very interested in the issue raised by Sandra Goudie, who talked about injustices over property rights from the Mining Act etc., and the learned Law Society’s opinion. I am sure she would agree that the justices on the bench—the four judges of the Court of Appeal—were also relatively learned. They confirmed that when the Crown Minerals Act 1991—again, passed by the National Government—repealed the Mining Act, the right to apply for new mining licences under the Mining Act ceased. In other words, the first five of the new licences applied for—the ones that Mr Eckhoff and others have talked about—were null and void, under that ruling. The Minister could no longer issue mining licences under the Mining Act. The Minister’s powers were then governed by the Crown Minerals Act. The Court of Appeal held that the term of a licence is not a condition for the purposes of section 103D(3) of the Mining Act.

Then we move on to the issue of compensation. “Why no compensation?”, asked Sandra Goudie. She said this is awful; this is terrible. The bill that is currently before the Committee expressly removes the right to apply for a new mining licence or to vary the term of a mining licence as of the line drawn in the sand by myself on 19 September 2002. It also provides that no compensation will be paid for the removal of those rights. The right to be granted a new licence, or to extend the term of a mining licence, is a right created by statute. Prior to the High Court decision in the Glenharrow Holdings Ltd v Attorney-General 2001 case, it was the Crown’s view that those rights had been extinguished in 1991 by the coming into force of the Crown Minerals Act. That is why the minerals industry has been quite straightforward about this issue. Sure, it recognises that there are one or two aggrieved parties; of course it does. But it had been, until that time, convinced that the Crown Minerals Act did what it said it did. But we had a judge who said: “Sorry, I don’t think it does.”

No provision for compensation was given in 1991 by the National Government for the extinguishment of those rights. So let us not dance too much on the head of a pin, folks; let us continue with the regime that was carefully thought through, I presume, by the previous National Government, and make the technical amendments necessary to make it work.

I suppose we should be grateful that the Associate Minister of Energy did get to his feet and take a call—two calls.

💬 Brent Catchpole: That’s two calls more than anyone else has done.

It is a pity that he did not do it when we were dealing with Part 1, when we wanted him to. It might have saved a lot of time. It might have saved him from bursting a blood vessel, because the truth got very close to Harry, and it hurt.

The CHAIRPERSON (H V Ross Robertson): The member cannot use a person’s Christian name. He might like to look at Speaker’s ruling 6/1 (Supplement).

The truth got a bit close to Harry Duynhoven, then he had the effrontery to tell my colleague Lockwood Smith that he had had a memory lapse—selective memory! He is the guy who, when he applied for Dutch citizenship, forgot that he was an MP. Do members believe that?

The CHAIRPERSON (H V Ross Robertson): That has nothing to do with the bill.

He has just had another memory lapse. If one breaks the law one’s mates will fix it up anyway, so that is OK. That is what is happening with this bill. This Government does not have the confidence of the mining industry, or any other business community, because it breaks the law at a whim, and it does not care. Well, I tell Harry Duynhoven that we do care. I do not accept the proposition that there is one rule for you, Harry Duynhoven MP, and other rules for other people.

The CHAIRPERSON (H V Ross Robertson): Do not bring me into the debate.

Clauses 22 and 23, in Part 2, go right to the heart of the matter, where you put yourself above the law.

The CHAIRPERSON (H V Ross Robertson): The member must not bring the Chair into the debate.

The Minister puts himself above the law. The fact is that Glenharrow Holdings went to court and won.

💬 Hon Harry Duynhoven: It lost the appeal.

Oh no, no. At the time that you made your announcements it had won. But it was not good enough for you.

The CHAIRPERSON (H V Ross Robertson): The member is bringing me into the debate again.

It was not good enough for the Minister. He came out with statements and drove the debate through the media, because he knew he could not do it in the House with any conviction. Why is the Minister’s Government, the one he is proud to be part of, so anti-business? What is wrong with sustainable management? I tell the Minister that this tree-hugging nonsense has to stop. It is costing this country huge amounts of money. The member who spoke before me gave a figure of something like $86 billion; that is what we could get, if we managed our resources in a sustainable way. These things are manageable. Please do not give me the old consultation, “Trust us; you can talk to us.”, minor amendment type of rhetoric, because we know that you do not consult.

The CHAIRPERSON (H V Ross Robertson): The member is again bringing the Chair into the debate. He should look at Standing Order 104.

I apologise, and thank the Chair for his direction. We know that this Government does not consult. If we ask people in the forestry industry whether they were consulted about the nationalisation of their carbon credits, the answer we get is no. The Minister and his Government say they were consulted; the forestry industry says it was not. The forestry members say that they lost $1.5 billion. Were the farmers consulted over the flatulence tax? Oh no, they were consulted on how they were going to pay the tax, but not whether they should pay it. So we have no confidence at all.

💬 Hon Harry Duynhoven: What’s this got to do with mining?

It goes right to the heart of your contradiction of the court. You knew better and you put yourself above it. Sustainable management of resources is something that is not at odds with those people who have conservation values. Why can we not do these things collectively? Irrigation in Canterbury is one good example.

💬 Hon Harry Duynhoven: Irrigation!

Irrigation is one good example—the use of water. I know it is a foreign concept—

The CHAIRPERSON (H V Ross Robertson): The member is again bringing the Chair into the debate.

💬 John Carter: I raise a point of order, Mr Chairperson. You are quite right in drawing the member’s attention to the fact that he is breaking Standing Orders and Speaker’s rulings. But if you are going to apply the Standing Orders and Speaker’s rulings, then maybe we should have some consistency in as much as you know as well as I do that the Minister in the chair is not to interject at all, because the microphone in front of him is live. It is quite incorrect and discourteous for him to do so. If you are going to apply the rules, please apply them consistently to both sides of the Committee.

The CHAIRPERSON (H V Ross Robertson): Thank you.

I appreciate the Chair’s perseverance, and I thank my colleague for his support. One thing that we cannot avoid in this debate is that the mining industry has lost confidence in this Government. It is an extremely capital-intensive industry, and it relies on the ability to attract capital.

I would encourage the Associate Minister of Energy to continue to take calls in this debate on Part 2. Part 2 is the substantive part of the bill and quite a few principles are at stake.

In my first contribution I talked about the process, and that issue has continued to worry me, and it should worry the public. I would like to share with the public the two new sections that have been introduced in Part 2. New section 111(3), in clause 22, states: “The rights of any person who has made an application referred to in this section before 5 pm on 19 September 2002 must be determined under the final judgment, decision, or order given or made (including any appeal) in the proceedings Glenharrow Holdings Limited”, etc. We then find something very similar in new section 111A(2), in clause 23: “The rights of any person who has made an application for an extension of duration of a mining privilege under section 103D of the Mining Act 1971 before 5 pm on 19 September 2002 must be determined under the final judgment,”.

The question remains a puzzle to myself and, I am sure, the public. Right at the beginning, the mining industry was told that some amendments would be made to some administrative, technical matters. A bill was introduced to the House that made substantive changes. It extinguished property rights, in that mining operators would not be able to renew their licences gained under the old Act. In the middle of a Commerce Committee hearing, the Hon Harry Duynhoven introduced a deadline, and said that any person who had not submitted an application at 5 p.m. on 19 September 2002 would not be able to apply under the ruling made in the court case won by Glenharrow Holdings.

The Minister should take a call. We know that an appeal is ongoing; we do not know the decision. We know that, by introducing a deadline in a press release, the Minister has imposed a decision that no other mining operators would be able to renew their licences anyway. Why are we debating this legislation in this House when the decision has not gone through the whole judicial process? Glenharrow Holdings won its case, but it is under appeal. The fact is that no other licence operators are able to renew their licences under the old Act, so why does this bill suddenly have to be introduced and debated in this House, when the whole judicial process is still ongoing? We still do not know what might be the final outcome of the appeal. Why the urgency? This Committee needs to know. Maybe there are some very good reasons that we need to finalise this bill. I understand that Part 1 is basically technical adjustments.

The Minister should take a call to explain why, given that all the decisions have already been made in terms of people not being allowed to apply for licence renewals, and given that we are still waiting for the outcome of an appeal case, this House is passing legislation that has two provisions that sort of say we actually do not know what the final outcome will be. The final outcome awaits the court decision. It seems to me very strange that this bill was rushed into the House at Christmas time 2001.

I seek leave to table the consultation on the Crown Minerals Amendment Bill, showing no fewer than 12 occasions when such consultation occurred over the year 2002 and up to the present.

Document not tabled.

I move, That the question be now put.