Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill

Members, when we were last debating the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, Raymond Huo was speaking. He has 6 minutes and 30 seconds remaining, should he wish to speak

Thank you, Mr Assistant Speaker.

💬 Hon Maurice Williamson: Oh, no! Not 6 minutes.

Thank you, Minister. I say to the Minister responsible for this bill that New Zealand taxpayers will be short-changed and a select few farmers will benefit from a rent reduction, even though they do not need it. This is just another Government bill that favours the 1 percent at the cost of the 99 percent.

The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill seeks to change the rules for setting rents for pastoral leases. If this bill passes, then rents will be determined purely on the stock-carrying capacity—

💬 Jacqui Dean: And that’s a good thing.

—and not on the value of the property or the non-pastoral values, I say to Ms Jacqui Dean, which these Crown-owned properties are increasingly purchased for. This means that farmers would be given a discount for their rent and the Crown’s rights will be given away to a few select farmers—

💬 Jacqui Dean: Oh, stop it! That’s silly.

—who purchased their leases knowing the rules—probably advised correctly by that member. Another serious consequence arises from the fact that many of these farms are going through a tenure review.

💬 Jacqui Dean: What is a tenure review?

OK, let me explain to Ms Jacqui Dean. Tenure review splits the land between the Crown as landlord and the farmers as lessees or tenants, meaning that part of the land is converted into a freehold ownership, and part of it is converted into public conservation land. After tenure review, to gain freehold titles, some of the properties are onsold for big profits by those tenants-turned-owners.

💬 Jacqui Dean: Name one.

OK. If the past is anything to go by, of the 77 runs that have completed their tenure review from 1992 to 2008, at least 28 new landholders have onsold 176 parcels of newly freehold land. Combined, this land, in which the tenant previously had the leasehold interests plus improvements, with freehold property from the Crown for $6.9 million, was onsold for $134 million. So I say to Ms Jacqui Dean and to the Minister responsible for this bill that the two figures are very vivid—$6.9 million paid to the Crown, and onsold for $134 million.

The current rent is already set at a low 2 percent of the land value. In addition to this there is a mechanism to reduce rents in cases of hardship. My good friend and Labour member for Palmerston North, Iain Lees-Galloway, asked a very good question in his first reading contribution. The question was: does any member know how many such tenants applied for the discount? The answer was and probably still is “zero”. So that mechanism does not apply to those tenants. So the land information Minister—my favourite Minister—Maurice Williamson, knows, or must have known, that the low rent will be capitalised by the farmers in their sale price when they sell their interest, and I think that has been covered quite thoroughly and comprehensively in the Clayton report produced in the 1980s.

So I say to the Minister that all New Zealanders own the land and it is not right for his Government to just give away part of the Crown’s interest to a select group, many of whom do not need it. This is really a case of the National Government ruling in the interests of the privileged few, the 1 percent, at the cost of the ordinary many, the 99 percent of ordinary Kiwis.

It is a pleasure for me to take a very brief call on the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill in its second reading, and it is a particular pleasure following the contribution by the Labour member whom I have just had to listen to. He spouts what we have heard from the Labour Party with regard to this legislation throughout its progress in the House. We have heard speeches full of jealousy and envy that are not focused at all on how best to look after what is perhaps the most fragile farming environment in this country.

The history of this goes back to the vindictiveness of a former Labour Prime Minister, Helen Clark, who had it in for 300-odd high country families who are attempting to do their best to farm and live in the high country. She decided she would do everything she could to drive those families out of the high country, because her ambition for that country was to make it a huge Department of Conservation estate. That would have meant further ecological damage to the high country, and we have seen that with the likes of St James Station, with Birchwood Station, where the previous Labour Government paid millions. I think I am right in saying it paid $40 million for the St James Station, and now it worries about how it can look after that property, whereas previously it was farmed for generations by the Stevenson family, who did a good job and paid a rent to the Government for the privilege of farming this country.

What we saw immediately when we put the policy out there—and, frankly, it was another election promise of the National Government in the lead-up to the 2008 election—and announced we would be making a change to the rental basis for these high country leases was the Hon Damien O’Connor coming out and praising the National Government and saying that that is exactly what Labour would have done if it had been the Government from 2008 onward. We were surprised—Mr Williamson will recall the night we sat in here as we brought this bill into the House for the first reading and, surprise, surprise, Damien O’Connor sat silently and David Parker took the first call. If any listener ever wants to see the most vindictive speech that has probably ever been delivered in this Parliament in recent decades, they should look at that first reading speech by the Hon David Parker.

That is what the Labour Party opposition to this is all about. They see these high country farming families as rich people who deserve to be got to by the Government. That is what it attempted to do by raising the rents not by 10 times but, in some cases, by 20 times, to the extent we can quote farms today where the rents proposed by the Labour Government under its formula were higher than the gross income from the farming property. How practical would that ever have been? So it is with delight that we have had the ability to work with the Hon Maurice Williamson as Minister for Land Information to deliver, back into Parliament, rents that are based on what they should be based on, and that is the income-earning capacity of that property. Because the income-earning capacity of the property then determines that the farmer has some money left at the end of the day to do the weed control and the pest control that is essential for the ecological protection of these properties and to make sure they actually make a profit.

That is a dirty word on the other side of the House, but I actually want to see these farmers making a profit. I know these people well, and when they make money they pour it back into their property trying to raise productivity and trying to increase the amount of fine merino wool they send out of the country. We have this stupid situation developing in this country where Icebreaker, which is an absolute success story, is in danger of having to curtail its expansion as a company because it cannot get enough merino wool grown in the high country. So that is what happens when Helen Clark—and the current Labour Opposition—attempts to lock this country up, take it out of production, and make sure it is unavailable for the productive economy of this country.

I am pleased to speak to this bill. What this is about is delivering some certainty back to those high country families who have put up with nothing but sheer hell for the 10 years that that Labour Government was in power.

It is a shame that that member over there does not show a bit more leadership in agriculture. Everyone might be a little bit better off.

I was in this House in the 1990s and I sat through two bills. One was the Crown Pastoral Land Bill, which was passed in 1998. The other was the Maori Reserved Land Bill, which was passed in 1997. The second bill righted an injustice that was occurring in the country where the owners of Māori land were unable to extract from the people leasing their land a fair rental. In fact, they were locked into a situation of 21-year rents and perpetual right of renewal, and the lessees on that land were paying over time—adjustments were made every 21 years—a nominal fee for the rental of that land, be it commercial, be it rural, or be it residential.

The National Government rectified that situation, and good on it. The Government said it was completely unfair, unjust, and immoral that the owners of the land could not extract a rightful rental. It was established in law that the Māori landowners were entitled to 5.5 percent of the unimproved land value of that land on an annual basis—that being a fair return. What we are doing here today is challenging that precedent, once again, and, in fact, putting in place bad law.

I have a passion for the high country, and I have to say I have been fortunate to be the guest of a number of high country runholders. I have skied in the area. I love the place. It is iconic; it is what we portray as New Zealand: the Mackenzie Country, Molesworth, and right down through Otago. It is magic. We must protect it. And we must protect the people who have endured hardship and who live a long way from civilisation. The cost of living out there is high. They live lonely lives, except they enjoy them because they make do with their own family. They are people to be applauded and looked up to.

But the reality we were facing, and have been facing, is that the value of those properties has been going through the roof. The previous speaker, the Minister for Primary Industries, said that the Crown had to pay a lot of money for a couple of properties—acknowledged. But the value of that land had been driven up primarily by offshore people coming in—

💬 Jacqui Dean: Not true.

💬 Colin King: Not quite true.

I am afraid it is true, initially. There are also New Zealanders who have purchased properties as well having to pay for what is quite a large amount of land. It is hard to make an economic return, and I acknowledge that. However, value is in the eye of the beholder. People purchase properties because they want somewhere to hide away; they want some of the most majestic scenery in the world at their back door. And who can blame them?

The problem was that the value of the land, exclusive of improvements or otherwise, crept up. The dilemma facing the Crown or the Government, as the landowner, is what sort of rent should be expected from that land. Well, in fact, we have got now—through a Land Valuation Tribunal ruling, of course—that 2 percent of the land valuation, exclusive of improvements, is the rightful rental. That may be fair. It is certainly less than the 5.5 percent the National Government put in place for Māori landowners, which has been accepted. It is a lot less. So the question for a lot of taxpayers is whether we are getting a fair return or whether there is something funny going on here. Now it is actually not just that valuation, but, in fact, an arbitrary valuation based on a subjective assessment of the productive capacity of the land—base productive capacity, exclusive of improvements—and the value of the stock, because it is based on the stocking rate. It is a bit like saying “How long is a piece of string?”. It is very, very hard to establish.

I am sure there will be negotiation and a value arrived at. However, Parliament has the role of passing legislation that is fair. I want to see those families remain on this land. I do not want to see people speculate and make windfall profits; it has happened in the high country where there has been tenure review, compensation paid, land valued, and then flicked off for a huge profit. I think the genuine farming families have not been easy with that process at all, because they want to remain on the land, farm it properly, and protect the environmental values. I absolutely respect their management practice and what they have done over many years.

The problem with passing a piece of legislation that is inherently unfair is that somewhere down the track another Government will rectify the problem. It will do so with moral authority because it will point out the unfairness of this, be it to the taxpayer or to any other party. I went to a meeting and put Labour’s proposal on the table, and said we would sit down, provide the right incentives for farmers who were managing the land properly, and ensure that they had affordable rents. But the establishment of the base value of the land and the base rental had to be consistent with most other commercial entities across the country. It must be, otherwise there will be a stream of people knocking on our doors saying that they want to be like the other crew, who might be getting a concession at 2 percent, or at 3 percent, or whatever, when some people on fixed incomes are being forced from their homes because Māori landowners want 5.5 percent return on the valuation of a block of land in Motueka, and those people cannot afford to pay it. People have been forced from their homes.

There was talk, and the Minister said, that families were going to be forced off the high country. That is not what we want. In fact, the whole concept of income-based rentals was developed by Labour for Housing New Zealand Corporation tenants. What did the National Party say about that? It said it was outrageous. What sort of hypocrisy did we see in this House when we suggested and implemented income-based rentals for Housing New Zealand Corporation tenants? Oh no, those members said that was not right, because they had been through the process of trying to sell off Housing New Zealand Corporation properties and make it harder for those people to remain in their homes. Now we have a National Government implementing a law that says that for high country lessees we should have income-based rentals.

I am not absolutely opposed to that, but we need to establish a fair system of how we do that. We should provide financial incentives, as the Parliamentary Commissioner for the Environment said, for people farming the land properly and upholding and sustaining the environmental and intrinsic values of that high country. It is spectacular, and we must maintain those values, and the farmers on most of those stations and properties have the knowledge and the experience to do that. We want to see them stay there, but they must, deep down, know, if they think they are getting a good deal now, that someone in the future is going to knock on the door and say “We’ve got to make this fair, guys and girls, because the taxpayer is actually losing out here.” or “Can we sit down and work out another way of ensuring the taxpayer gets fair value?”. And the value could be in the protection of the values. We said that to them. It could be an enhancement of the environmental values. There should be a value put on that, and we should acknowledge what those good farmers are doing.

Unfortunately what we have here is a piece of legislation that is inherently unfair and unjust. It is unjust to the owners of the land, and those are the taxpayers of this country. It is an arbitrary assessment of what is productive carrying capacity, and it is an arbitrary assessment of what is stock value. Ultimately the final figure will be one established by negotiation, but it may in hindsight not be considered fair. So I want to support the high country families in having a truly sustainable regime that is both affordable—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. His time has expired.

It is with pleasure that I rise to speak on the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, because like the previous speaker, Damien O’Connor, I have enjoyed the hospitality of a number of pastoral lessees. I would like to pay tribute to the late John Aspinall for his contribution on walking access, on biosecurity, his passion for getting rid of wilding pines, his stewardship in the high country, and the generous recreational access he provided near Mount Aspiring National Park.

The Green Party supported the introduction and referral of this bill to the select committee in order to hear submissions. I certainly agree with the sentiments expressed by Federated Farmers in their submission, in that the legislation should provide certainty and be enduring, and that it must be transparent and demonstrate fairness and equity to both parties, namely the Crown and leaseholders. But this bill fails to do that. It introduces a system whereby pastoral lease rents are disconnected from the value of the land, and potentially it advantages leaseholders at the expense of the Crown, particularly during tenure review, and it will potentially compromise the ability of the Crown to get a fair share and a fair rate of return on its high country assets. That is why the Green Party opposes this bill. It is because rental income helps determine the extent of the Crown’s interest and its equity in a lease, and those valuations that are done as part of the whole tenure review process rely on that rental income, so calculating rents on the basis of stock-carrying capacity does not take account of the full span of benefits that pastoral lessees enjoy. It will significantly increase the lessees’ interests in leases, and that will be at the Crown’s expense. The bill will significantly increase the cost to the Crown of achieving tenure review settlements.

The Crown will have to pay more to resume full ownership and protect lands with conservation and recreation values, or “significant inherent value”, in the language of the Crown Pastoral Land Act. So less land is likely to become part of the conservation estate, and less high country land is likely to be available to the public as a result of tenure review. Just as the Government’s asset sales will benefit major corporates at the expense of our ability to influence New Zealand’s strategic direction, this bill will benefit those wanting to privatise high country lands, and it will make good tenure review outcomes much more difficult to obtain.

There are around 230 pastoral leases that are part-way through or have yet to enter tenure review. They cover 1.6 million hectares. That is a significant chunk of the high country. The whole method of setting rents since 1979 has been based on a fixed percentage of the value of the land: 2.25 percent of the value of the land exclusive of improvements, with a discount for prompt payment. Under that system the rent can take account of amenity values that are present on many leases—the views of lakes, the views of sprawling mountains, tawny tussock grasslands—and, as the High Court has confirmed, the lessees’ rights of exclusive occupation give them the exclusive use of those amenity values. For a recreational user to go on to the land, they need the lessee’s permission.

It is inequitable, then, that the Crown and, through it, the public can receive no benefit from the fact that the lessee has these rights of exclusive occupation. Those rights are clearly recognised in the high values that are paid for pastoral leases when the leases change hands on the private market. If rents are calculated on the basis of stock-carrying capacity, you will not get that exclusive occupation benefit being taken into account.

No private landowner would lease their lands commercially without taking account of location value, so it is ridiculous for the Crown to be doing so in these circumstances. It is those location and lifestyle values, rather than stock-carrying capacity, that now comprise a substantial portion of the market value of pastoral leases. Shania Twain did not buy Motatapu Station because it was a good farm, the US billionaire Julian Robertson did not buy Brooksdale Station, near Porters Pass and Lake Lyndon, because it was a good farm, so the Crown should not have to subsidise through these rentals overseas celebrities or investors who are buying for capital gain.

It was an economist, Dr Basil Sharp, in his 2007 paper on valuation issues relating to high country tenure review, who said that the rent, if it was based on stock-carrying capacity alone, would not adequately reflect the Crown’s interests. Dr Basil Sharp said: “The exclusive right to occupy and enjoy amenity values has been attributed to increasing value in the market and this value should be included in the values assessed for the calculation of rent. … The rental stream deriving from the right to occupy might turn out to be a major component of the lessor’s interest, omitting the market value of this stream of rent will result in the Crown’s interests being under valued and the lessee’s interest being overvalued.” In her analysis of tenure review, Lincoln University’s Dr Ann Brower described it as “a massive transfer of … wealth from the public to a lucky few farmers.” This bill will exacerbate that.

High country leaseholders have been the major beneficiaries of tenure review. Members opposite ask for some examples. Well, on Hillend Station near Lake Wānaka, the lessee paid the Crown $120,000 to freehold 73 percent of Hillend Station, and then was able to subdivide it into 36 smaller sections, and onsell these for more than $26 million. If the Crown’s equity in pastoral leases is undervalued, then past trends in tenure review are likely to continue or worsen. If amenity values are not included as part of the rental, then the Crown’s assessment of development potential as an element of property valuation will be much lower.

If the affordability of pastoral lease rentals was a genuine issue for some high country pastoral lessees, then a better solution would be to do what the Royal Forest and Bird Protection Society suggested in its submission, and that was to provide a reduced rental in return for practical benefits for the Crown. Some of those benefits might be increased public access, more widespread control of biodiversity pests, or implementing a farm management plan that promoted sustainability. Those options were available to the Government. It has not chosen to take them up. This bill will exacerbate the poor return that there has been for the Crown in tenure review in the past. That is why the Green Party opposes it. Thank you.

It is a pleasure to rise in support of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. It has been interesting to listen to the speakers from the Opposition speak about why they think this is not a good idea. There is one thing that has not been discussed by those speakers, however, and it is this: if you apply an amenity value to the lease setting, and the Crown pastoral lessee no longer can afford to profitably farm the land, they make the call to leave, and no other lessee can farm the land profitably, then what happens? It returns to the Crown, of course. That is what happens, and the merinos go. If you extrapolate that across the whole of the 230 leases, then you take off 6 million merinos. It has been stated in this debate that there is no value to the Crown of this activity. I understand that it is about $300 million of export earnings.

It was commented on earlier by a previous speaker that we are in a ridiculous situation where one of our iconic brands, Icebreaker, can no longer meet the demand for the raw product that it needs from our own country and is looking to source that product from elsewhere. If you take 6 million merinos off the high country and you take out $300 million worth of export earnings, then what happens? Now the Crown has a liability, probably to the tune of a further $300 million, to maintain that land, because, you see, there is a bizarre and absolutely mind-numbingly stupid concept that has been put forward in this debate, and that is that you can remove all human activity in the land and it will be fine. Just leave it alone; it will be fine. But in the same debate, we have heard about wilding pines and we have heard about the control of other pests and weeds. Whose liability will that be now? What we have seen in the case of St James Station and Birchwood Station, where the Crown did intervene, decided that these were of substantial conservation value, and paid five times—five times in one case—the actual livestock value of the property, is that we have had massive increases in cost to the Crown balance sheet.

So, you see, the debate is all very well, in terms of what is a pure model. The Shania Twain example was used, but Shania Twain did not buy a high country lease; they went and bought freehold properties, and they paid the amenity value because that is what they wanted to do. If the Crown really wanted to extract the value and the proceeds that could be there because of amenity value, then of course it would put the property on the market. That is not the suggestion put forward by those who would argue against this proposal. The suggestion put forward is that we must lock the whole lot up, that the Department of Conservation will take on the extra liability, and that the Crown will find the money somewhere. Of course it will not, and a very poor job will be done, as is in the example of a lot of other Crown land that is under the Department of Conservation. So it is a compromise.

There are 230-odd of these lessees, these high country farmers. They are—and I met a number of them during the submission process—hard-working, genuine, honest, decent New Zealanders. And you could argue that they may have had something they were not entitled to, if you wish, but I would suggest that the amount that they contribute to society, both through the communities they live in and the contribution they make to the wider economic benefit of New Zealand, far outweighs any shallow, vindictive, and cheap argument that has been put up by our opponents to this bill about what they may be getting from the Crown for nothing or from transfer of wealth. I would like to see where that transfer of wealth is taking place, because there is no pure model here. This is a unique circumstance.

The irony of it all is that as the Crown has negotiated with these leaseholders over the years, parts of these stations have been returned to the Crown, and other sections of them have been freeholded, what we have seen is an enormous conservation advantage. I know of several examples where the landowners, as they have been able to freehold sections of what was originally Crown land, have put in huge amounts of investment into conserving certain aspects of what are seen to be areas of high conservation value. That is private conservation. It is not Crown conservation, it is not State intervention, and it is not State investment. It is personal investment, because they have a personal investment in the area. It is not true—it never has been and it cannot be found to be true anywhere in the world—that the Crown, wherever that may be and whatever jurisdiction, has the sole right and the sole ability in conservation. In fact, what you will see when you go and look internationally and within New Zealand is that some of the best conservation work that is carried out in this country is carried out by the private sector or by private individuals.

It is quite interesting to listen to the debate. I know it is an emotional one, because when you start talking about land, particularly Crown land, people do get themselves worked into a bit of a frenzy. The circumstance that existed before was totally unsustainable and it was in decline. We had submitter after submitter who were leaseholders submit that to us. So the situation if it were allowed to continue would be that you would see a decline in the state of the conservation work on a lot of this land, you would see the exodus of families from these high country stations, and you would see the loss of that production that the State enjoys. It is an interesting concept that if the private sector is earning money, paying taxes, and spending that money domestically, then there is no State benefit—that there is no State benefit from that. So you do away with business completely, take all business out, hand everything back to the State, and the State will run it better. Well, they have tried that in different parts of the world and it has failed. The experience has been that it does not work. So I suggest to those on the other side who have that view that they should go and actually have a look at the basics of some of this and decide where you strike that balance.

I think that when you look at where the bill is headed and you look at what has gone into the construction of it, you see that certainly the status quo was unsustainable. The proposition put forward is a compromise, but it is the best that can be done in the circumstances that are unique to this particular issue. Thank you.

I rise on behalf of New Zealand First to speak on the second reading of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. New Zealand First opposes this bill, but we bring a fresh perspective. We oppose this bill for a number of reasons.

Firstly I want to reiterate what New Zealand First campaigned on and what was in my maiden speech—that we seek to be a positive and constructive Opposition. We provide informed commentary and useful suggestions. We will support good policy and good law, regardless of who is its author. Unfortunately, we cannot find any of that inside this bill. We believe that this bill is a dreadful piece of legislation, which, like far too much of this Government’s policy agenda, is completely unnecessary. By attempting to address another problem that does not actually exist, this bill will have the effect of making this situation worse rather than better.

Due to our unplanned absence from this House through the term of the 49th Parliament, New Zealand First has not had prior opportunity to comment on this particular bill. If we had we would have highlighted to the Government, the farming community, and the wider public the fundamental shortcoming of this bill’s approach to the setting of rentals for Crown leasehold land and the shortcomings of the ideology behind that approach.

The present system bases rent on value of land, excluding improvements. This is set at around 1.5 to 2 percent, and it has worked well for more than a century. It could have worked far better for a good two-thirds of that time if the Crown had proved to be a better and more responsible landlord and if the Crown had invested in improvements that farmers were unable to fund for themselves because banks would not lend against leases that had no guaranteed right of renewal.

In 1948 the Government sought to remedy this problem by granting leaseholders the right of renewal in perpetuity. Since then, farming in the precarious and marginal environment of the high country has been able to continue with the reassurance that at least one vagary has been removed. However, now that those leases, which were first renewed in 1948, are coming due for their third renewal, this Government appears to have decided that a new method for determining the rents is needed. It appears to be partly in response to the unsatisfactory situation created as a result of the previous administration’s high country 10-year review process, and partly as an exercise in finding an excuse to put those rents up.

The Government’s reasoning and methodology for engineering this increase in rent differs from that of the Labour Opposition, but its intent and the end results will be the same. The high country tenure review process came about because of a desire to create a national park of sorts across the roof of New Zealand, stretching the length of the South Island.

The previous Government regarded this environment as special and iconic, and rightly so. That Government proclaimed a desire to remove this land from the care of the farmers who had nurtured and preserved it for well over 100 years, and to make it available as a playground for the public at large. Although this stated intention may well have been honourable, if somewhat idyllic, it remains a reality in application if not in theory that such a wilderness would come to be the preserve of only a very few with the time and wherewithal by which to access it.

It is the view of New Zealand First that that plan was an elitist one, driven by ideology and created without regard to the realities of the environment in question. There was no adequate recognition of the input made by farmers and the control of plant and animal pests, and no corresponding increase in resourcing for the Department of Conservation to allow the department to take over these duties where the leaseholders would be leaving off.

There appeared to be little appreciation amongst some of the proponents of the high country tenure review process—those who wanted to take the land in question away from the farming estate in order to preserve its iconic appearance. There appeared to be a lack of appreciation that this very iconic appearance had itself been created and preserved by the actions of 150 years of farming. Gorse, rabbits, wilding pines, deer, goats, and thistle were kept at bay only by the constant efforts of thousands of farmers, shepherds, musterers, hunters, spraying contractors, and all those who worked the land and, in doing so, preserved its natural appeal.

The unintended consequence of allowing farmers to freehold higher value lowland country in exchange for higher tracts of high country leasehold land was that some farmers found themselves in possession of prime lakefront and other very aesthetic property that was ripe for development. Naturally, of course, the elitists did not want them to have that, either. They wanted to have their idealistic cake and to eat it too.

As far as setting new rents is concerned, if Labour’s desire to change farmers’ rent based on the amenity value of pleasing vistas—which they, the farmers themselves, had helped to mould—was not bad enough, New Zealand First believes that the National Government’s proposal to charge them based on the value of the farming operation is actually even worse. The former proposal could be likened to letting a tenant redecorate his house at his own expense, and then putting up the rent to reflect the fact that the house was now nicer to live in. The latter, however, is more like making a random assessment of how much turnover a business should be able to make and charging the owner a rent based on that. Whether his operation is capable of achieving it or sustaining it is not in play.

The proposals in this bill do not constitute a formula for setting rent on marginal high country land. They are a tax on the operations of farming businesses, plain and simple. New Zealand First does not believe that rents on high country leasehold land need to be increased at all. Indeed, we agree in part with the findings of the 2005 Armstrong committee, which found that in many cases they were actually too high already.

If the farming value of land is to be used to determine the rent payable on it, then in times of downturn farmers will reduce their maintenance of more marginal country, allowing it to deteriorate and thus reducing the value further, knowing that such will be reflected in the following annual review. If neither the farmers nor the Department of Conservation is looking after such land it will, indeed, cease to be iconic in very short order.

New Zealand First believes that the farmers of the high country have proven themselves to be the best guardians over the past six generations and that the results of their efforts are to the benefit of the nation as a whole. We believe the tenure review process was and is a mistake in its entirety and that rentals should be returned to the formula that has been proven to work over a century and a half and which reflects the otherwise unpaid service that the farmers of the high country provide to the nation in preserving our national image and all the benefits that that brings.

New Zealand First supports the farmers of this country and we oppose this unnecessary and undesirable bill and the unjustifiable regime of taxation that it imposes. Thank you.

It is a pleasure to speak on this Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. It is a bill whose time has come because it confronts an issue that is really at the heart of what New Zealand stands for. It is about partnership, and that is the one comment that I have not heard in this debate, apart from by members on this side of the House. It is about partnership. It is partnering the custodial aspects of the land between the Crown and those families who through history have been able to eke out an existence, whether through trying times or good times. They have had to live in isolation. I just want to stress that point—that it is very much about partnership. This Government is very aware that there needs to be a balance around how this is approached. We have the Minaret case before the Land Valuation Tribunal, and such things, to base that on.

I just want to take exception with the Labour speaker who spoke first about arbitrary figures. There is nothing arbitrary about the Economic Service team of Beef and Lamb New Zealand run by Rob Davison, and the science that it applies to that system of working out what classes of land can produce and what stock values are worth. I would just like it put on record that Rob Davison is an authority, with his team within the Economic Service of Beef and Lamb, and I am quite confident that they will be able to give the Director-General of Lands some very good, accurate information on what the carrying capacity should be on those properties and what the opportunity of economic generation will be.

I would also like to just touch on the point of just how damaged that partnership became under the Labour Government. It was completely destroyed. I just want to point to one particular case. When we talk about these pastoral leases we are talking about a bundle of rights that the landowner or the lessee holds, and the ownership of the Crown. At St James Station—you know, if you have a willing seller and a willing buyer, you have a good balanced market—the Labour Government drove the price up to $43 million to purchase a lessee right of residence and dwelling on a property that ran, under the lease agreement, only some 8,000 stock units. That just highlights the hypocrisy that is surrounding this debate. What we are confronted with in St James is a property with great iconic values but which is becoming weed infested, which will actually cost the taxpayer far more than we are hearing about from members on the other side of the House about transfer of wealth. We saw the same thing happening at Birchwood—stratospheric prices for a farm that was running a smaller number of stock units. Really, what has happened here is ideology gone mad, and we really do need to do our utmost to partner these families in these rural communities. We talk about high country. They have been surrendering the high country in these properties for years upon years until a stage now where it would be nearly an exaggeration to call these leases high country leases, because they have had to surrender them.

This is a bill that addresses a very emotional subject. In my area of Marlborough it is pretty hard to see any particular outstanding vistas. You have got rabbits, you have got Hieracium, you have got remoteness, and you have got access to and from your property at a very, very substandard rate, and here we are having a conversation about transferring wealth.

These people need to be congratulated. They are the backbone of a country that at present has got a fair amount of muscle. I am delighted to see that this Government has had the courage to address this situation; otherwise, we would be bogged down with tribunal upon tribunal, hearing the claims for rents that are set in relation to the income of the property. I am delighted to support this bill, and I look forward to seeing those farmers being there for another 150 years. Thank you very much.

I think the Minister for Primary Industries rather unkindly called my speech on the first reading of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill the politics of envy and other words that were stronger, suggesting he disagreed with the contribution I gave in the first reading. Well, I am pleased to disagree with the Minister on this, because his position on this legislation is without principle. It is without principle.

I was the Minister for Land Information for the last 3 years of the Labour Government, and when I first met with a group of lessees, the lessees came to my office and they said: “Don’t force us into tenure review, please, Minister. Please respect our contractual rights under the lease.” My response to that was “I will not force lessees into tenure review, neither will I force the Crown into tenure review outcomes that the Crown does not want, and I will respect your rights under the lease and I will enforce the Crown’s rights under the lease.” That is all that we did. All that Labour did was enforce the legal terms of the lease. Of course, a lot of the high country farmers did not like that, because they are used to National Party Ministers who, when it comes round to their turn in power, all they do is bow to the will of the lessee, rather than protect the lessor’s interests under the lease, which it is their duty to enforce.

These leases were purchased by people who had legal advice. The terms of the leases have as a central tenet that the rent is 2 percent of the land value, excluding improvements, if paid on time; 2 percent, not 10 percent—2 percent. It is 2 percent of the land value, excluding improvements, if paid on time. These farms have increased in value. Why have they increased in value? Because people do not purchase them only for the pastoral value. The high value properties are on the shores of Lakes Wakatipu, Wānaka, Ōhau, Pūkaki, and Tekapō. They are the highest value properties generally. They are the properties that you see on cake tin lids, they are the properties that you see on calendars, and they are the properties that you see in photographs promoting New Zealand overseas. When the leases of these properties are sold, the purchasers of the leases do not get just the right of pastoralism; they get the right of exclusive occupation of the land. That means they can exclude trespassers, which means they can exclude anyone from the land whom they do not want to be there. And they do, because, increasingly, these properties are being purchased for not their pastoral values but their non-pastoral values, which relate to exclusive occupation of the land.

The farmers come along and ask why they should pay a higher rent for a property around Lake Wakatipu that is worth a lot more than a property in the Blenheim region that does not have the same iconic values. That is what they come along and say. The answer to that is why does someone pay more for a section in Remuera than in South Auckland, or in Cashmere compared with one in the eastern suburbs.

💬 Shane Ardern: The presumption is the section is for sale. The presumption is it’s for sale. This is not for sale.

OK, I will come back to that argument. But there is a difference in the value of these different properties, because some of them have more attributes than other properties, and people are willing to pay more for those attributes, and that is part of the land value, excluding improvements. That is something that is intrinsic to the land.

I was Minister when the Minaret Station case started, and I was Minister at the time—actually, I think the hearing of the case was while I was Minister, but the decision came out at the time of the election or shortly thereafter. The Crown Law advice at the time and the Land Information New Zealand advice at the time was that the decision of the Land Valuation Tribunal was wrong and ought to be appealed because it set a wrong principle in law. It actually said, if you use the comparison that I was using, that Remuera land should, for the purposes of rent, be the same as South Auckland land, which is a nonsense because they are of different worth.

The rental of 2 percent of land value, excluding improvements, is affordable by some, but not all, tenants. We accept that some tenants—and Mr Ardern made the point quite fairly—some lessees, are long-term holders and they do not want to sell. They only want to extract pastoral values from the land. They have not purchased it for tens of millions of dollars, and they cannot afford a rent that is based on what they might sell it for. They need a rent that is lower than that. The law already allows for that. We do not need this change in the law to achieve that outcome. When I was Minister and enforcing the proper rent in accordance with the law, the lessees rose up and said that somehow I was acting improperly in charging the rent of 2 percent of land value, excluding improvements. They said it was terribly unfair. I was actually worried about some of those lessees, because some of those lessees were under financial pressure and they found this changing of the rent stressful. I wrote to every one of them—every one of them—and not just once; I personally wrote to them twice. I said if there is a case of hardship, please come to us and we will do a deal. Sometimes we will ask for something in return for a rent reduction.

One of the examples I gave in the letter was some wilding pine control. At the moment it is a moot point as to whether wilding pine control has to be carried out by the lessees. Some lessees do not do it. Some lessees even prevent volunteers from going on the land to clear wilding pines. So I thought that that was something in the public interest that I as Minister could extract in return for a rent reduction—either the control of wilding pines or letting someone else do it. It seemed pretty reasonable to me.

On occasions we have landlocked rivers and lakes. We have landlocked rivers and lakes. I do not have the time to go through why that is the case. Well, actually, I will digress a little. In respect of the central part of the South Island, because the original tenure that was given to those farmers was non-renewable pastoral occupation licences—before we had pastoral leases—there were never proper surveys done of those areas, and therefore the Queen’s Chain was never set off around those lakes and rivers. As a consequence of that, when the pastoral occupation licences were changed to perpetually renewable leases, that issue was never tidied up, and it has never been tidied up properly since. Although it is in part being fixed in the renewals of pastoral leases at the moment, we have a residual problem in respect of New Zealanders’ being able to have access to some of our rivers and lakes, and that is wrong. I think I should be able to, and every other New Zealander should be able to, access our rivers and lakes. So one of the other things we said was that if you have rivers and lakes that people have not got access to, and you want a rent reduction, we will negotiate access through your property—not wandering at will but access ways through your property—to those lakes and rivers. The farmers decided that what they would do was get out their union book, run the farming union, and actually vote as a block, and not one of them would take that offer of a rent discount. They decided to wait out the term of the Government—because we were obviously coming towards the end of our term in Government—and renegotiate with the National Government. And that is what they did. They stonewalled, and then they came to the Government and they said: “We can never afford to pay this rent.”

Do you know who the discounts are being given to? The discounts are being given to, in some cases, people who paid $10 million for their land, knowing that the rent was 2 percent of the land value, excluding improvements. Some of these people are good people. In fact, all of these people, to my knowledge, are good people. But they do include people like the partner of Shania Twain—and I will not name him. He is doing some wonderful things to look after the land, but he did not buy it on the basis that he should have a discount on his rent of 2 percent of the land value, excluding improvements. He paid $10 million or $5 million for his farm, knowing that the full rent was payable. This Government is giving that multimillionaire, who paid that price for the land, a rent discount, when he did not ask for it and did not need it. This is ridiculous. And this is a Government that is running a $12 billion deficit.

These decreases in rent are unprincipled. This has opened Pandora’s box. We have given the warning before that if you interfere in these contractual relations in this way, a future Government can do the same, and will—and will. I make the point that it will, because it should. I will give you other examples. There is nothing wrong with fractionised ownership of these stations, but increasingly these stations are owned by a wide range of people who are very wealthy people, and they are effectively a time-share; that is what they effectively are. They are a giant time-share, and those people get a rent discount, too, despite the fact that they have not asked for it, and despite the fact that they do not need it.

This is bad legislation. The rents should be 2 percent of the land value, excluding improvements, with discounts for those who cannot afford to pay.

I am pleased to take this opportunity to speak briefly to this enlightened piece of legislation, the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, and I intend to bring it back to a practical basis. The legislation is designed to ensure that high country rents—and I refer to pastoral leases, of course—are fair, workable, understandable, easily interpreted, and do not result in unnecessary disputes in the negotiation process, and a large bit of the discussion in the last few minutes has been around that. There are a number of other matters for consideration that will possibly spin out of this legislation and further justify the changes proposed by it. Farmers throughout New Zealand have a huge interest in their environment and it is essential they are able to farm profitably, as this enables them to make the contribution to environmental matters that is so necessary in this type of country. This bill will assist them by setting a rental that is based on their leased land’s productive potential, allowing them to plan and better understand their future cash flows.

Another consideration in this rental-setting process could well be the fact that we may set rentals at a level that does not drive production beyond the sustainable capacity of the land concerned. We have seen this happen all too often in New Zealand farming history, and some of the subsidy schemes of 30-odd years ago certainly distorted the use of land and put pressure on the sustainability of that land in a manner that is still being paid for today.

Including amenity value in the valuation process will inevitably put renewed pressure on the sustainable capacity of the land, as livestock farming would have to subsidise. The so-called amenity value as returned from this source is not an option in the current or foreseeable future on many of these farms.

My own electorate in the Rangitīkei, of course, has a fair bit of what might be termed high country land. It is, however, highly productive and for the main part privately owned. Therefore, the bill does not apply to us North Islanders, and I guess to some extent we would regret that. This country is, of course, the home of the mighty merino, one of our most valuable, high-end, luxurious, and totally sustainable fashion products—and fashion icons, really. I think that this Government must encourage the production of merino and its products through sound policy, and this, in my view, is sound policy. There is no doubt that high country leases are the best way to both manage and protect this wonderful piece of New Zealand for future generations of our children. Thank you.

This bill, the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, not only limits the Crown’s earning potential but currently misses the potential of ensuring environmental gains. The need to ensure best-practice farming management that may actually stock significantly less intensively than the stock-carrying capacities that are currently accepted is not actually enshrined in this rental-focused bill. It allows for it but does not enshrine best practice. Whatever mechanism is used to determine rentals, it should necessitate the requirement that farming practices must be genuinely sustainable and that biodiversity protection targets are set and met. There are brilliant examples of good management within leaseholders, and those best-practice—including certified organic—examples need replicating at every opportunity.

This bill could allow a little bit more certainty about ensuring some of those aims. I know there are other provisions that should be treated a little more holistically than focusing on some carrying capacity methodology. The Commissioner of Crown Lands must take into account certain matters, including ecosystems and values of indigenous plants and animals and landscapes, and the like, but the Greens think that this bill could actually enshrine some of those benefits that we actually look for.

With 1.6 million hectares potentially being able to be truly sustainable while ensuring good biodiversity outcomes, if the mechanism was correctly applied, this could happen with a good formula. The Greens support farming families. We want to see more families on the land, but not farming families that are not using genuinely environmentally sustainable practices. What is considered an efficient farmer, as in some of the preliminary discussion on this bill, has no certainty of genuine environmentally sustainable outcomes.

I heard partnership mentioned before. I think partnership is fantastic. Partnership between leaseholders and the Crown can ensure very good outcomes, but values around carrying capacity need to ensure the best environmental outcomes—not just adequate, but the very best. The Greens oppose this bill, but would support a mechanism that ensures the Crown a fair return on all values of this land while allowing genuine farming families an affordable rental while preserving biodiversity values and being committed to improving the land for future generations.

It is nothing but pure eco-arrogance to assume and to put forward the notion that high country farmers do not, and are not able to, farm sustainably. I find those comments ignorant and offensive, and they will certainly be offensive to those 300 high country farming families who for a number of generations have not only sustainably farmed their high country pastoral leases but also in the meantime have improved them to the extent where—well, not now—the previous Labour Government turned its beady eye on to them and decided that “Yes, we want them back now, thanks very much.” So I completely condemn the comments of the previous Green Party speaker, Steffan Browning. If that reflects the attitude of the Green Party in general, then heaven help us, because I just find that absolutely abhorrent.

In fact, it was the Parliamentary Commissioner for the Environment, Dr Jan Wright, in her report on the sustainable management of the high country of the South Island, who acknowledged that management is not an either/or thing. Management is not either protection of the environment or exploitation for productive management; in fact, the future of the high country in New Zealand is a combination of those, plus many other things.

I think that perhaps members of the Green Party should also cast their eye over what is happening now in the Mackenzie Basin, which involves land that is not only in pastoral lease but also in freehold, and the efforts that those farming communities and all stakeholders are coming to in order to find a sustainable vision for the Mackenzie high country. We will hear more of that in the months and years to come.

So I think it is probably quite useful to remember what, in fact, the history is of Crown pastoral leases. Many, many generations ago the high country was in dire danger of, well, literally blowing down off the alpine tops because weed was taking over. We were losing the value of that country, so it was decided to offer that land to high country farmers by way of a perpetual lease. Thank you.