Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill

The Green Party will take a short call on this bill. We will support its referral to the select committee, but we make no indication beyond that of our intention to support it. It is beyond dispute that the normal process for calculating rents based on the unimproved land values of these leases is not a viable process, so something has to be done about that problem. The issue touches on one very small aspect of the very much larger issue of how best to manage these pastoral leases, especially in the high country.

These leases have been historically important for New Zealand agriculture but are now under considerable pressure. For the most part, these areas of Crown land are also the sites of very high conservation values, and that is the nub of the issue around these leases. Tenure review is a process that is placing some of those conservation values at even greater risk, and that happened under Labour Governments and National Governments, but particularly under the current National Government there is a determination not to add any land to the public conservation estate, and, at the same time, that is coupled with the disastrous decision by the Government to in fact reduce the funding available for conservation.

That has created a situation in which the objective of the Crown Pastoral Land Act to manage these areas in an ecologically sustainable manner is now at profound risk. What the Government is instead doing is relying on an extremely weak form of protection—covenanting—to provide any protection whatsoever for the conservation values on these areas of land.

I am a big fan of the Queen Elizabeth the Second National Trust. I have a trust covenant over my own land on the West Coast. The success, or otherwise, of that mechanism for actually protecting the conservation values of a place is entirely dependent on the motivation of the landowner, because the trust itself is not in a position to actively manage and protect those conservation values.

Although there are some great and committed landowners who are part of the trust and who entered into that covenanting relationship willingly, if, instead, the covenanting of parcels of their land is a condition of the tenure review process, one might suspect that at least in some of those cases the commitment of a landowner to protecting the conservation values in that place is likely to be less. That means that some of the places with the very highest values in New Zealand in terms of conservation are now resting on the whim of the landowner, who may be poorly motivated to do so to protect them. That is a situation that creates some profound risk for some very important conservation values for New Zealand. So that objective of the Crown Pastoral Lease Act is currently subject to jeopardy.

It was kind of interesting that another mechanism was offered by the Parliamentary Commissioner for the Environment in her report from April 2009, Change in the high country: Environmental stewardship and tenure review. The report indicates that a more creative option around rentals was possible. She suggested, in fact, that our Parliament should look at a rental policy that actually prioritised the environmental outcomes that we were seeking from these precious places. It is with regret that I note that the Government has chosen not to pursue that path.

However, this is a complex issue, and it may well be that there are sound arguments for not pursuing that option that was proffered by the commissioner. If so—and we have not heard them yet—we will be very interested to hear the debate at the select committee. We are prepared to support the first reading of the bill, but at this stage our intention is to wait and see what the submissions say. Thank you.

The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill is a continuation of how this Government is providing certainty, fairness, and equity for all things related to New Zealand. This Government is committed to fairer, more equitable high country rents. It acknowledges, and many across this country acknowledge, that the current system is unworkable. It is inequitable, and it was more about some political philosophy rather than the economic realities that high country farmers in the South Island face.

This bill is a new approach; we acknowledge that. But it brings fairness and equity. I also note that it was a key element of National’s pre-election agricultural policy, which was endorsed, along with many other fine National policies, just 2 years ago. I commend the bill to the House.

I am pleased to stand to take a call on the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. This bill will give effect to a new rent system for Crown pastoral leases, and will amend the existing rent-setting provisions in the Land Act 1948 and the Crown Pastoral Land Act 1998.

There has been widespread support for the introduction of these measures by high country farmers in the South Island, where the majority of Crown pastoral leasehold land is located. As the member of Parliament for Te Tai Tonga I will, of course, be listening to the views of those farmers, and taking their support into consideration about how this bill impacts on Te Wai Pounamu. We know that this bill will deliver certainty to leaseholders by creating a more objective formula tied to the productivity potential of the land. Certainty is of great importance to the economic and social well-being of the primary production sector.

The particular point of interest for the Māori Party in this bill is in relation to the fact that the leases will be set according to the earning capacity of the land at its highest and best use. Realising the highest and best use of land is an intergenerational priority for iwi and for Māori landowners. I would expect that every member of this House will be aware of just how important the concept of whenua is to the people we know as tangata whenua—literally: “the people of the land”. I would also expect every member of this House to know the tragic story associated with Māori land alienation. Māori lost land to the Crown and private owners through a wide variety of methods. Some was sold to the Government for very low prices; other areas were confiscated after the New Zealand Wars. The Native Land Court converted customary titles to freehold, often leading to further losses of land. On top of this shameful history there is also a more recent history relating to the current condition of Māori land, which may be affected by this bill.

There have been many practical and statutory barriers to Māori land and iwi assets achieving productivity potential. It will therefore be important for the House to carefully assess whether the valuation formula successfully takes into account any barriers iwi and Māori may experience in achieving the earning capacity of the land. I think it has bearing on this legislation to consider the broader context in relation to the productivity of Māori land. We know from the local government rates inquiry in 2007 that the quality of Māori land is so variable that it would be inappropriate for valuations for rating purposes to be based on the market value of Māori land. It is important to the Māori Party that certainty is carefully partnered with fairness.

All the evidence to date suggests that high country farming leaders are backing the system outlined in this bill for setting rents for pastoral leases administered by the Crown. Our particular interest as the Māori Party is to consider what, if any, impact this legislation will have for Māori land, and for iwi and Māori landowners. It is also important that the potential precedent effect of this formula is recognised. The approach for Crown pastoral land is not necessarily suitable for private arrangements, particularly those attaching to Māori land.

At this point we will support the bill at its first reading, to enable the kōrero to be had, and for iwi and Māori landowners to have the time to consider the implications carefully. Tēnā tātou katoa.

I am a little bit surprised by the Green and Māori Party positions on this Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. I listened closely to the contributions from Kevin Hague and Rahui Katene, and it seems as though they are keeping an open mind at this point in time. But, really, I think once they hear the submissions at the select committee, and once they have actually looked through this bill properly, they will shift their position closer to the Labour position, which is to oppose this bill. Because if ever there was an example that this Government is not working for ordinary New Zealanders, it is this example. We have plenty of examples, but here is just another.

Ordinary New Zealanders own this land. The South Island high country is one of New Zealand’s most precious State assets, but this bill proposes to reduce the rents that the Crown can actually receive from that asset. The rents the Crown receives should be fair, and they should reflect the value of the land. That is how every other landlord would do it. That is what National members would expect from a private landlord. They would say that property rights are important, that we need to uphold property rights, and that a private landlord should get to set a fair market rent. But for some reason they seem to believe that the Crown should not be allowed to do that. This Government is intent on undermining public property rights.

Not only are we seeing an undermining or erosion of the rent that can be received from those properties but there is a massive flow-on effect. This is the bit at which I think the Greens will come round, because at tenure review some of this land gets privatised. Tenure review is a process by which some of the land gets shifted into the Department of Conservation estate, the land that is quality pastoral farming land gets privatised, and money changes hands. But we have seen over the years an absolute rort of the tenure review system, whereby private landowners get the land for an absolute pittance, the Crown cannot get a reasonable and fair price for the land, and those landowners get all the windfall profits from that land. It is simply unfair that the 4.4 million New Zealanders—the vast majority—who own this land do not get the windfall profits. Meanwhile the 231 lessees—231—are getting all of the profits, and all the benefits out of the system, at the expense of 4.4 million New Zealanders.

Windfall profits mean that farmers are in a better position to freehold their properties. They are in a better position to onsell a part or all of a farm, and that gives them windfall profits. We have already seen that happening. Of the 77 runs that have completed tenure review between 1992 and 2008, at least 28 of the new landowners have onsold 176 parcels of newly freehold land. Those 28 new owners paid the Crown $6.9 million to freehold that land, but they have realised $134 million after onselling 45,266 hectares, or 44 percent of the land that was freeholded. So 44 percent of what was valued at $6.9 million has ended up paying windfall profits of $134 million. That is a massive transfer of wealth from 4.4 million New Zealanders to a tiny number of people—28—and 4.4 million New Zealanders have lost out so that 28 of National’s mates could make just under $130 million. It is an outrage; it is an absolute outrage.

💬 Brendon Burns: Good donations!

I bet there were some good donations out of that. But here is the thing: the lessees will argue, and the Government is arguing, that the lessees cannot afford the full market rent. Well, if they cannot afford the full market rent, a discount is already available—they can apply for a discount. Do members know how many of those lessees applied for a discount? Can anybody guess? Zero, nada, none—not a one! Nobody applied for a discount, yet apparently it is absolutely outrageous that the Government expects a fair market valuation on the land so that it can ask a rent—would members believe—of 2 percent of the total value of the land. It is apparently so outrageous that no one can afford it, but not one of those lessees applied for the rent discount. They were told about it—they were told about it three times, no less. They had plenty of opportunity to apply for a discount, but they did not.

Why? It is a very good question. Why do lessees not apply for a discount if they think they cannot pay the rent? Well, because there is another option, which is to challenge the full rental valuation. That is exactly what these lessees have done. In fact, I have heard from the Government that about 113 lessees have applied to the Land Valuation Tribunal for their rental assessments to be revalued. Why would they do that? If the lessees get an actual revaluation of their leases it diminishes the value of the land, so that when they get to tenure review and there is an opportunity to privatise the land, they can get the land for a lower value.

If the discount were applied for, and it was acknowledged that the full market valuation on the rental still existed but because of particular circumstances a discount was given, then that would secure the full valuation of the land. In that way, the Crown would get to realise the full value of that land when it was privatised. But, no! That is not what the lessees want to do, and that is not what this Government wants to do: it wants to make sure that all those windfall profits go to their few mates in the High Country Accord at the expense of the rest of New Zealand.

There is an agenda going on here to devalue a Crown asset. It is one thing to go around selling off all our Crown assets left, right, and centre, but here we have an asset that the Government is receiving rent on. It is a dividend that comes into the Government coffers that can be used for everybody. But, no, the Government wants to devalue that so it can reduce the amount of income coming in. The gains that come from those leases rightfully belong to all New Zealanders. It is quite obvious what this Government is trying to do. In the first instance, it is undermining the dividend; it is reducing the dividend that all New Zealanders could have received. In the second instance, it is ensuring that the windfall profits go to a tiny few, and do not get passed on to the majority of New Zealanders. The Government would have people think that by Labour taking this position, the party is somehow anti-farmer.

💬 Hon Maurice Williamson: Well, you are.

Aha—there we go. I just wanted to check and make sure—yes, OK! The Government would have people think that we are somehow anti-farmer. Well, that is simply not true.

Let us just look at this policy a little bit more closely. Who actually benefits from it? Is it the farming community at large, is it New Zealand’s entire rural community, or is it in fact 231 lessees, not all of whom are farming? It is the latter who benefit from it—231 lessees, not all of whom are farming. Some of them are foreign rock stars who just enjoy living on that particular land, with all of the views and the general and pleasant lifestyle they get from it. All other farmers in the country have to pay either a fair valuation if they purchase the land or a fair market valuation if they are leasing the land. This policy is not some pro-farmer policy; it does nothing for most farmers in New Zealand. It works for only a tiny, tiny few living in the high country of the South Island.

These lessees are getting very special treatment from this Government, and I would like to know why the Government is giving such a small number of people such special treatment, because that is to the disadvantage of all New Zealanders. It is to the disadvantage of the rest of the rural community; it is to the disadvantage of the Government of the day, which receives a dividend from this land. It is just unbelievable that the Government is trying to sell us a story about how it is supporting high country farmers. You know, I think the Government would have us think that the people it is working for here are blokes riding around on horseback saying “Good on ya, mate.” to one another, but it is not. They are a tiny, tiny few, and this legislation is to the disadvantage of all New Zealanders because this Government is not working for New Zealand.

I applaud the Hon Maurice Williamson for bringing the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill to the House. This is a win-win opportunity. The simple truth is that Opposition members are fiscally incompetent and do not understand that people can be rated or rented off the properties that they occupy. Here is an opportunity to keep people on the land, looking after the land, being productive, and providing conservation and stewardship of that land, in a win-win situation, and Opposition members do not want it. That is why there was such a mess under Labour. National will make a difference, and make sure that that situation is a win-win and an improvement for all New Zealanders.

I move, That the Primary Production Committee consider the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, that the committee report finally to the House on or before 5 July 2011, and that the committee have authority to meet at any time while the House is sitting (except during oral questions), and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 187, 189(a), and 190(1)(b) and (c).

Motion agreed to.