Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill

on behalf of the Minister for Land Information: I move, That the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill be now read a third time. I am particularly pleased and proud to see this bill back before Parliament tonight. I am thankful for the cooperative working relationship I have established with the Hon Maurice Williamson as Minister for Land Information.

Tonight we see the final stage of what has been a very unfair and very unfortunate battle with a relatively small number of highly specialised South Island high country farmers. This battle was started by the former Labour Government for reasons that fail any logical explanation whatsoever. The former Labour Prime Minister Ms Helen Clark did enjoy the high country. She was known to have an affinity for the high country. She was known to go there and spend her time trekking the high country, and her adventures through the high country were well publicised. But if she had an affinity for the high country, she certainly had no affinity at all for the farmers and their families who try to eke out an existence in this very hostile and fragile environment.

What drove Helen Clark’s jealousy and distaste for those high country farmers is something that we will never know for sure. There are lots of rumours around the high country as to what drove this jealousy and this hatred from the former Labour Prime Minister. One rumour was that she had trespassed with her trekking party on to private property. All she had to have done was ask for permission. But, of course, with somebody as arrogant as Helen Clark she did not do that. And, of course, the farmer, aggrieved by the fact of finding somebody on private property, asked her to leave. Whether that was the reason or not, the point I make is that she simply had to ask and that access would certainly have been granted.

Having come up with a dislike of, and hatred for, these farmers, Ms Clark and her Labour Government went out to get these guys. They dramatically increased the rents for the lease that these leasehold farmers would then have to pay to the Government. She was ably assisted in this process by the Hon David Parker, who I have no doubt will make some contribution shortly in this debate, because he had a similar atrocious attitude to these high country farmers. Again, I do not know why he hated these people. It may have been because he came into Parliament as the member for Otago, representing the majority of those people and as constituents they quickly realised that he had no affinity with them, so they dumped him after 3 years as their member of Parliament. I can now say they are very well served by the current member for that area, Jacqui Dean, who has got to know those families and to understand their issues. She has developed an affinity with those high country farmers.

What drove the hateful attitude of Mr Parker and Ms Clark towards the farmers is unknown, but what they did then was march the rents up for those properties by not doubling, not tripling, but in many cases increasing them by 10 times. In cases they drove the rents so high they were higher than the gross income that the farmer received from that property. Mr Parker laughs at this, but that is how stupid his policy was. Mr Parker never realised that the major income for those people was an annual wool cheque. Most of their income came from merino wool. He was expecting the rent to be higher than that wool cheque, absolutely disregarding the fact that it costs money to run these farms. This Government wants to see these farmers with enough money to spend on weed control, wants to see these farmers with enough money to spend on pest control. But Mr Parker wanted to make sure there was no money left for those expenditures.

So what National did in the 2008 election campaign was to campaign to fix this ridiculous policy. We said we would make sure we established rents on the basis of what a farmer can earn from his land. In times when wool prices are good, farmers can afford to pay more to the Government for the rental of that land, but equally in times when wool prices are not good, they cannot. I want those farming families to stay on that country. I want them to be good enough and to have enough money left to sustain themselves and their families, and to improve the property. If they do not improve the properties—and Mr Parker and Ms Clark drove them off the properties, and it all fell back on the taxpayer and on the Department of Conservation. You ask any person who logically knows that country who will look after the high country better: a Government department or those farmers who have been there for generations. I tell Mr Parker that it will not be the Department of Conservation. That is not its skill set.

The responsibility comes back on the Crown if these farmers are not able to physically survive on that land. We have to make sure that we deliver income-related rents, and that is the policy that we have espoused tonight. We progressed the legislation as well as we could through the first term of the National Government. We did not get it passed before the last election, but I gave my word to the high country farmers that we would do it as soon as possible in 2011-12. We are doing that tonight.

The final point I want to make is that when the policy was released on 3 August 2010 the Labour Party, through Damien O’Connor, supported it. Mr O’Connor said on 4 August: “High country rentals based on earning capacity is a good principle on which to base lease payments to the Crown …”. He went on to say: “I am sure farmers will welcome the decision and get on with farming and protecting their leasehold properties,”. I agree with Damien O’Connor. He saw the sense in this policy, yet when the bill finally came back to the House for its first reading Labour opposed it. Damien O’Connor had been completely embarrassed and rolled by his caucus.

💬 Hon David Parker: Rubbish!

Mr Parker says: “Rubbish!”. Why did the Labour Party, through its spokesman at the time, support it when it was announced, yet when the bill came into the House for its first reading the Labour Opposition opposed it? There can be only one answer, Mr Parker, unless you are as illogical about this as you were about your original policy. Damien O’Connor got rolled again. It is because of David Parker leading the debate in their caucus room, because Mr Parker has never understood these families who farm the high country.

In closing, I want to thank the Primary Production Committee, under the superb chairmanship of Shane Ardern, for the work it has done in considering the bill. To all of those who made submissions to help get the bill even better, I express my appreciation. There has been significant support amongst those submissions. The committee did introduce some useful amendments, including the purpose clause. This bill will make the process for setting rents for pastoral leases much more transparent and much more predictable. The process will be less expensive for the Crown and less expensive for the lessees. Crown pastoral leases are a unique form of tenure under which the farmers do carry out their pastoral activities while preserving conservation ability. The Crown gets considerable ecological benefits from having pastoral leases on these unique landscapes of the South Island high country.

Finally, I want to thank officials from Land Information New Zealand and the Ministry for Primary Industries for their help and their work in what has been a complex task of developing this new rental system. The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill will eliminate the huge amount of friction with the Crown that was developed by Mr Parker and Ms Clark. We have restored the lessees’ confidence in Government.

What balderdash we just heard from the Minister for Primary Industries for National. The reason that the National Government is passing this bill, the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, is that the practice that it wanted to adopt under the prior law was illegal. That is why it has changed the law. To accuse me and Helen Clark of acting improperly when we were just enforcing the law seems a little bit unusual to me as a legislator.

💬 Hon David Carter: You lost it in court, Mr Parker.

Actually, I will deal with some of the points that you raised, Mr Carter, because your understanding of the issues is obviously flawed. When I became Minister for Land Information the cry of the pastoral lessees was that they wanted the Government not to force them into tenure review and to respect their rights under statutory leases. I was at a meeting just the weekend before last where someone came up to me and said: “Oh, I remember that first meeting with you”—speaking to me—“as then Minister of Land Information, when you had that first meeting with the pastoral lessees.”

I remember them saying to me, on behalf of the Government, to please respect the lessees’ rights under pastoral leases. My response to them was: “Yes, I will.” They said “Please don’t force us into tenure review”, and I said “I agree. I won’t.” And I said: “My duty as the Minister is to enforce the statutory lease on behalf of the lessor, because that is who the Crown is, and I am going to do that, and I am going to only accept tenure review outcomes where I think they are in the Crown’s interest, and I am going to do that.”

That is all I did. I enforced the law. It seems pretty novel to the National Party that one might do that, but that is all I did—that is all I did. It is true that the value of some of these properties has gone up hugely. Actually, when values of properties go up, rents normally follow. That is what happens in the private sector. In fact, I think Mr Carter might own a property or two, and occasionally when the value goes up I think you might put the rent up. Oh, but not when you are the Minister and you have custody of these properties on behalf of the Crown and a voting section of your population. What you do then is you put the rent down for your mates. If this was a point of principle as to why you were doing this, I could understand it, but there are other mechanisms that could be used to address this.

What we in the Labour Party found was that some of these rents were ridiculously low. I will give you one example. We had complaints from someone who had a big station in the Kyeburn area. They said it was worth millions of dollars, that high country runoff grazing, to their lowland farm. How much rent do members think they were paying for this thing that they said was worth millions of dollars to the value of their lowland farm? Less than $1,500 per annum—$1,500 per annum—plus GST. Less than that—I think it was about $1,250 plus GST. It was an absurdly low rent.

When I was Minister and we had some issues that needed to be resolved in the high country, I thought: “Well, I’ll apply the law”. So we got some valuation advice. It turned out that we had inconsistent valuation practice, and some people were getting rents set on one basis and some people were getting rents set on another basis. So I took advice from Crown Law, and I said: “What’s the correct basis to set rents?”. I then instructed the department to assess rents on that basis. These rents are set according to a statutory formula: not 10 percent of the value, not 5 percent of the value, but 2 percent of the land value excluding improvements. Improvements are excluded because they are already the property of the lessee, but the lessor is entitled to rent under the current law, which is changed by this bill, at 2 percent of the land value excluding improvements if paid on time.

When we did that, we found that some of these properties are being purchased by people who are not buying them for pastoral values alone. People are paying sometimes $10 million for these properties, because they are postcard properties. They are picture-postcard properties on the edges of lakes. They are on the edges of Lakes Wakatipu, Wānaka, Hāwea, Tekapō, Ōhau, and Pūkaki. People who are very, very wealthy are on occasions buying these properties as, effectively, giant holiday homes. Sometimes they are being run as time-shares, where a number of wealthy people own fractional interests in these properties and they are effectively using them as a giant holiday home. They purchase them knowing that the rent is 2 percent of the land value excluding improvements.

In respect of those people, I do not think they should get a rent discount. I do not think they should, but there are other people who should. There are some farmers who extract only pastoral values—and Mr Carter has said that they have owned these farms for generation upon generation—and they cannot afford to pay the high rent. I have always acknowledged that. When the Labour Government was in, we acknowledged that. I wrote to every one of those lessees personally. I can remember what a darned boring job it was, signing out 236 letters or whatever it was to these people, and I did it twice. I wrote to each of them and said: “If you cannot afford to pay the rent, please come to us and we will negotiate a discount.” We wrote to every one of them.

We said: “Look, sometimes there are problems of access to adjacent rivers and lakes that we want to sort out.”, because some of these properties surround lakes and there is no decent access for New Zealanders to go through these properties to get to the lakeside. I wanted to regularise access so that New Zealanders could access their lakes and rivers. I also said that there are occasions where we want to stop wilding pines spreading, and we might like some wilding pine control, or at least access on to the land to control the spread of those wilding pines. We also said explicitly in this letter—I still have copies of the letter, and I remember writing them—“If you have an excessive rent that you can’t afford, and we don’t need access to a river or lake, and we don’t need wilding pine control, well, we’ll give you the rent discount anyway, if you can’t afford to pay.”

The lessees chose to say that they would not engage in this debate, because it was coming to the end of our third term and they thought they would take their chances on being able to delay this long enough so that the Government would change and they could go through the back door and see that duke, Mr Carter, who would, in the face of a $13 billion deficit, give up on rents to multimillionaires who paid these prices knowing that the rent was 2 percent of the land—

💬 Hon David Carter: Here’s the envy!

It is not envy. It is not envy; it is a fact. Let us take the example of Shania Twain’s partner, Mutt Lange, who purchased a property up in Central Otago, Mount Soho Station. He has actually done some very good conservation work. He has done some very good work up there and he farms the property very well, but do we really think that we should be giving that person a discount when they paid many millions of dollars for that property, knowing that the rent was 2 percent of the land value excluding improvements?

What Mr Carter says is a bit like saying that the rent for a commercial property in Remuera ought to be the same as the rent for a commercial property in South Auckland. That is the logic that he is using. It is a nonsense, because the two properties are of different values, and the law said that they should be paying rent on the basis of land value excluding improvements.

Mr Carter, the other thing that I would say is I would take you back to that original meeting that I recounted to you where the lessees said they were fearful that the Government would change the law—they actually put this to me. They said: “Please don’t change the law on us. It’s terrible. This is sacrosanct. Don’t change the law.” They were fearful—and this was in the newspapers at the time—that the Labour Government would change the law and that that would be somehow interfering with their private property right. Well, actually, what Mr Carter is doing is opening Pandora’s box here, because he is legislating to interfere with the Crown’s property right in these leases. Once that key is turned and that door is opened, it has consequences in the future, and it will have those consequences.

Mr O’Connor said “Yes, income-related rents are fine for those people who need them.”, and we have said that. I have actually explained the letters that I wrote to similar effect to the lessees. But the people who do not need them, who paid multimillion dollars for these properties knowing that the rent was 2 percent of land value excluding improvements, ought not to be given a discount, particularly when you are running a $13 billion deficit like this Government is, and the deficit is worse as a consequence of this bill.

Finally, can I say that there has never ever been any hatred from this side of the House towards lessees. I value that heritage farming, that historic practice, in the high country. I actually think lessees protect against overdevelopment of the land. I do not think all these leases should be forced into tenure review, but it does flow through to tenure review outcomes in a way that is unjust to the Crown.

It is a pleasure to rise tonight and speak in favour of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, and can I say so on this basis. Having listened to the last speaker, David Parker, you would have to really question how the late Howard Paterson got it so wrong, and how the good folk of Otago actually made a mistake—only once, and they soon corrected it and now are well represented by the member of Parliament for Waitaki, Jacqui Dean, who does know this issue well and does represent these people very well.

The concept that we are being asked by the other side to believe is that the Crown’s ownership in this land is such that a massive discount has been given to these folk in the way that the rents are being set. The real irony of that is that it was the last Government that actually said the Crown’s ownership in this land is worth nothing—absolutely nothing. In fact, it could be less than nothing, if it is possible for that to be. The last Government went in and it bought two stations, Birchwood and St James, and it paid a price that your colleague, Mr Deputy Speaker, that good farmer from Southland, tells me was five or six times—I said it was five or six times, and he said it was more than that—more than the value per stock unit of any equivalent merino run anywhere else in New Zealand. So what does that mean? If the Crown owns the land, the Crown goes and buys the lease, and it pays five or six times more than what anyone else would pay for a merino station anywhere in New Zealand, what value does the Crown place on the freehold part of it? What value did the Clark Government place on that? Zero, or even below that, if it is possible to be on the other side of that balance. So to say that the leases are too low, on the basis that 2 percent of the freehold value amounts to X figure—and it will be different for each particular station—is so misleading, and it is the reason why so many of these people have felt so insecure for so long.

Let us just have a look at what exists here. We have got 212 leases, 112 rents in dispute at the Land Valuation Tribunal—so that seems to be a system that is not working too well; something needs to be done to fix that—and $2 million project rents under the new system. So there is an income for the State straight away. Some have suggested doing away with that by charging an amenity value—that is, making the price of the lease such that you cannot make a profit from farming merinos, because merinos that have a lovely view of Lake Wakatipu, Wānaka, or somewhere are obviously going to earn a lot more money from their wool than those that are hidden in the back of my good colleague here Colin King’s Kaikōura electorate or somewhere.

As an aside, I actually was flicking through the channels on television on Saturday night, and Country Calendar was on. I had not seen it for I do not know how long, and I happened to stumble upon it. It was featuring a high country lease 5 hours from a tarsealed road—5 hours. You had to travel in a vehicle for 5 hours before you got to a tarsealed road, and when you got there you had the tearooms and another couple of hours to get to—

💬 Hon Maryan Street: Sounds like Taranaki—your country.

It was on Country Calendar. I thought that here was a rich farming family driving around in their 15-year-old Toyota Hilux that had done a million kilometres and that they were wealthy, living way in the back country there and farming. They had a daughter who had recently returned from being overseas for many years. She had decided to come back because she was born and bred there and loved the lifestyle, and she brought her family and her husband back. I just looked at that and I wondered how a Government could look upon that family as being vandals to the environment who were ripping off the system and not paying a fair rent and say that they should be taken off the land so that the Crown can take it back. I bet you the Department of Conservation could not find that station, let alone anyone from the Department of Conservation driving 5 hours from the end of a tarsealed road to get to it. So whatever is needed to make that family successful and sustainable on that land is what the State has to do in response to that.

There is something like, I understand, $3 million worth of merino wool out of just the Otago region alone. I am not sure whether that figure is correct—and the member may be able to correct me—but, effectively, if you take that income out of there, it goes completely out of that community. It just takes that money out of that community. The conservation investment that these families make in the sustainable management of this land is such that the Crown would be likely to have that amount of liability to maintain the land in anything like the state it is in now. So to suggest that somehow or other the National Government is doing some sweetheart deal for its rich mates, when you look at the facts is so far from the truth. You may find one or two examples somewhere that you might be able to hold up, and it is interesting to note that those members hold up the foreign investors whom they allowed to buy the land when they were in Government. You know, how did that get past the Overseas Investment Office? If having foreign ownership of the land is such a dreadful thing, how did that happen? I am not saying it is a bad thing. In fact, the previous speaker said what a wonderful job those investors were doing of farming it, and he talked about the amount of money they were investing in conservation values there. The land and the property will be in better condition when they decide to sell it—likely back to a New Zealand owner—at the end of their tenure there. I do not see any downside from that, at all, only upside. So it is with pleasure that I stand tonight in support of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. Thank you.

I would like to acknowledge the previous speaker, Shane Ardern, as the chairman of the Primary Production Committee. I think he did a good job with a difficult bill and one that he, actually, if he is true to himself, will admit does challenge some of the basic tenets around property rights—something he has advocated for so strongly—and the ability of a property owner to get a rightful return on that property.

Before I go any further I would like to acknowledge one person whom I have always respected as a champion of the high country and someone who passed away recently: John Aspinall. He was a gentleman. He was kind. He was generous with his time, with his land, and with access through his land. I would like, having not had the opportunity to go to his funeral, to acknowledge in this House his contribution to the high country and, in particular, to the Walking Access Commission and the good work he did in that area. I would also like to acknowledge Jonathan Wallis, who as a new emerging leader of the high country has put in a lot of time to bring this issue before us in Government and the National Government. I am sure he would be happy with the passage of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, but I know that, as a smart farmer, deep down he acknowledges that this bill does create some dangerous precedents, and it is the property rights one that I raise.

It was interesting, as Mr Ardern was going on about it, because I think he comes from the dairy industry, and I have yet to find a farmer who in times of difficulty has been able to set aside the charges for grazing, or set aside, reduce, or, in fact, increase the income for a sharemilker, if he needs it. The fact is that solid commercial contracts are written into the dairy industry to ensure protection for both parties, and indeed that is the only way that commerce can go forward. The certainty, which my colleague David Parker referred to, is not, unfortunately, being entrenched by this legislation. In fact, we are opening the long-term situation up to greater uncertainty, because if there is one thing that this Parliament usually does, it is to rectify law that is bad law.

Although I support the high country—I love the high country—I have not had enough opportunity to be there, but I have certainly spent many, many days and weeks there in different ways: skiing, walking, on farms, helping chase a few sheep around, or chase a few deer. It is magical, it is iconic, and it is the true New Zealand. The people who have lived and farmed on these properties have done it hard. As the previous speaker said, there are some properties that are small, that are marginally economic, and where families have battled, through heritage, really, and pride, to stay on those properties. Indeed, when we put up the proposal to implement the law and to actually implement commercial leases on these properties, it was going to cause hardship for some, which is why I personally went to Treble Cone in the summer—I usually like going there in the winter—and faced a whole lot of high country farmers, and passed on that message. They did not all like it, but I said “We as a Government are prepared to sit down and offset the increase in rental.”

The increase in rental was fair and commercial. It did, however, for some create hardship, and that is where we wanted to go. Income-related rentals are something that we have implemented on the basis of reducing hardship for people in their own homes, yet the National Government has opposed that, time and time again. In fact, what it did in the 1990s was to offset the acknowledged hardship, and bring in an accommodation supplement, which was actually a subsidy to the landlord to ensure that people could afford to be there, but it just simply subsidised the landlord. In this case, that is probably unlikely to happen, and the taxpayer will miss out.

If I bring the argument round to the start, it will create uncertainty, and although there may be some joy in the high country from this, I am sure that a future Government—and I am not saying Labour; we have not considered it properly at this point—will see that this is not quite right, in the same way that the National Government in 1997 saw that the situation with Māori reserve lands was not right and adjusted the legislation to allow the owners of the land, Māori, to have a fair, commercial rate of return and rental that was fair from their land. That situation needed to be rectified and I think a future Government will do the same thing here. I hope that does not create hardship for high country property owners or lessees, who have property rights but do not own the land, because they might have capitalised into the price they pay for that lease the deal that this Government has put on the table, because it is a bit of a false deal, and it is one that will not hold up.

If I come back to the minority view and report as stated in the commentary on the bill here, it is quite clear: “Labour supports the continuation of tenure by leaseholders on Crown pastoral lands to ensure sustainable management and productive utilisation of high country leases.” We want them to be farmed well, and for the most part they are. We want farmers to have the money to do the pest control, to do the weed control, and to have a good, fair living and rate of return on their efforts, just as the landowner, the Crown, wants the right for a fair rate of return on its ownership of the land. However, back to this: “this bill challenges the basic tenets of property rights between the land owner and lessee.” That intervention is not right and, as I say, will be rectified.

The calculation of what that rent will be is another dilemma created by this bill, because what is being asked of the valuer is to work out the land value, exclusive of improvements—that is, the land that was there 150 years ago, if you can imagine back that far—and calculate the number of stock that could be run on that piece of land. It is a fairly tall stretch, I would say. I guess we could have modern-day, efficient merinos we have to calculate; none the less, it is a bit of a hard ask. So the valuer has to work out how many stock could have been run on that. There were moa around at that time, of course, as well, or going back a little way, so I am not sure of the grazing impact of the moa versus the sheep, but none the less this is the theoretical calculation that should occur. Then we have to take in stock values. They change every Sunday night, depending on the meat companies ringing up their mates and working out what they should pay for sheep or lamb, and I do not want to go into that. The value of stock is something that is not fair and objective at all times. So the valuer has to calculate those two things, then work out the economic return on that land, and then do a calculation—quite a complex one—around what the rent should be.

It is, quite frankly, ridiculous. It is quite ridiculous because the eyes of everyone on the select committee started to glaze over when they thought of the potential for subjectivity in this whole area, and that is not what we want for people running a commercial enterprise. They need certainty. They need to know what their rent is likely to be. So this bill, although comforting a few people in the short term, is not a good long-term solution. We want to see people on the land, farming it well, protecting the environmental values, and protecting the iconic images that sell this country to the rest of the world. Labour cannot support the bill, but we do support the high country farmers. We do support their efforts, and we want to offer them certainty into the future. What the National Government has done is offer them a lollipop, and unfortunately when the sugar runs out, they will have to face reality.

Tēnā koe. Debate on the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill has been wide ranging, and it has gone up-hill and down-dale, much like the lands that it will set the rentals for. Nothing that we have heard in this debate has convinced the Green Party to change its position of opposing the bill. It is a bad bill, which favours pastoral lessees at the expense of the Crown and the public. Some Government members persist in characterising Green and Labour opposition to the bill as an attack on high country farmers. It is nothing of the sort. It is a debate based on principle, on how rentals should be set for the remaining 200-plus pastoral leases covering 1.61 million hectares of the South Island high country, and on how the Crown should manage and treat its interest in these dramatic and distinctive lands. It is a debate on whether we should set rentals in a way that is fair to both lessees and the Crown, or in the way that this bill does, which benefits the leaseholders at the Crown’s expense. The bill charges lessees a rental for their rights to exclusive pasturage, but not for their rights to exclusive occupation, which they also enjoy. This means that the Crown is giving away a significant share of its interest, and depriving taxpayers of a return on the true value of the Crown’s pastoral lease assets.

The Green Party opposes the bill because it represents the failure by the Crown and by Land Information New Zealand to protect the public interest in pastoral leases. The Land Act 1948, as Mr Parker has mentioned, has provided for pastoral leases to have rentals based on 2 percent of the unimproved value, provided you pay on time. That has been in place for many decades, and it is a very cheap rental. By providing for discounted rents that take no regard of location values, quite unlike the rents for most property values in New Zealand, the bill will decrease the value of the Crown’s interest and increase the capital value of the leaseholder’s interest. That division of value in the pastoral lease between the lessee and the Crown changes in favour of the lessee, and that will further worsen the poor outcomes from tenure review. It will lead to the Crown virtually giving away its interest in Crown pastoral leases during the negotiations, because of the bargain-basement price per hectare put on the value of the Crown’s share.

Research by Lincoln University’s Dr Ann Brower analyses the returns to pastoral lessees and to the Crown from tenure review settlements between 1992 and 2012. That research highlights the inability of Land Information New Zealand to advocate for and represent the interests of the Crown. Dr Brower’s work is rigorous, though it is unpopular with National members because they do not want the facts. It shows that since 2007 lessees, on average, have received more than double the per hectare payment from the Crown for land that is retired from grazing and restored to full Crown ownership as conservation land that they received prior to 2007. In tenure review settlements prior to 2007 the Crown paid lessees an average of $159 per hectare to relinquish pastoral lease land. Post 2007 the average jumped to $343 a hectare, yet on the other hand lessees paid the Crown an average of only $67 per hectare to freehold prior to 2007 and an average of $65 per hectare—

💬 Shane Ardern: What did they buy from them?

—after 2007. National members are interjecting because they do not like the results of this research. It has been an objective analysis, going through the returns.

Dr Ann Brower’s analysis—

💬 Hon David Carter: She provided the conclusion before she did the work.

—no—shows that the Crown paid runholders around $22.6 million more to buy the option to graze unforgiving high country land, and often land that was deemed unsuitable for farming use, than runholders paid the Crown for the option to subdivide and develop pastoral lease land. Dr Brower’s research also shows that between 1992 and 2008, 46 percent of the land the Crown sold for $6.9 million has since been onsold for $135 million. So pastoral leaseholders have been able to sell land at between 2,000 and 27,000 times the price at which they purchased the freehold. Land Information New Zealand, representing the Crown, has totally failed to take account of the location and amenity values that are part of the Crown interest. Land Information New Zealand has failed to take account of the option to onsell when it has been negotiating those tenure review outcomes. Lessees have enjoyed windfall gains as a result.

As Dr Brower notes, the fact that the Crown has consistently undervalued the development options in tenure review suggests that the Crown is “pathologically unwilling or politically unable to exercise its power on its side of the table” in tenure review. In just one example, on Rhoboro Downs near Twizel, the former lessee was able to privatise 4,648 hectares for $55,000. Subsequently, 127 hectares of that land was onsold in one parcel for $1.9 million. On Pūkaki Downs the lessee was able to privatise 3,722 hectares for $191,000 and then onsell 582 hectares of that for $4.665 million. National members call this the politics of envy. It is more the politics of stupidity, when we have a $13 billion debt, not to get the full benefits of these assets when they are privatised.

The Green Party’s opposition is also based on the uncertainty in this bill about whether the Valuer-General’s determination of carrying capacity for the purpose of setting a rental will include a thorough ecological assessment of the pastoral lease. Such an assessment should calculate how many stock can graze the land without harming the vegetation cover, such as tussock or native shrublands.

💬 Hon David Carter: It happens already.

It does not. The language in new Part 1A inserted by clause 6 of the bill, and its references in clause 23A(2)(b)(ii) to using “scientific evidence” and “information about the land”, is vague and woolly. The Minister in the chair chose not to take a call during the Committee stage to explain whether there was any intention that ecological assessments would be done to help determine carrying capacity. That is really disappointing, because it suggests that the Government is not interested in determining whether high country lands can be better managed to maintain healthy tussock cover, to reduce soil erosion, to control the spread and dominance of Hieracium, to protect wetlands as natural sponges, to safeguard water quality, and to protect the landscapes on which so much tourism marketing depends. So it would be helpful if the Minister did clarify that.

The landforms we see on many pastoral leases, particularly around the southern lakes and elsewhere, show their glacial past, with their smooth hills. They have got a jumble of moraine boulders, and they have got extensive outwash plains. Those landscapes have been millennia in the making. Privatisation through tenure review inevitably leads to more intensive development, whether it is through subdivisions for second homes or for new vineyards, with their tightly clustered rows of vines. The patterns, the colours, and the texture of the landscape change, and it is domesticated. The indigenous vegetation disappears. This bill will exacerbate that. It will provide windfall profits for lessees, and it will provide for unfair rentals and poor ecological outcomes. That is why the Green Party opposes it.

It is a pleasure to speak in the third reading of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. To open up, I would have to take strong exception to the position that the Green Party has pitched its arguments at, because when we listen to the arguments, nobody has brought up the Crown’s case at Minaret Station. The farmers took the case against the Crown on the way the rents were set, and the Crown lost. When we listen to Labour members speaking and we listen to the Green members speaking, that fact has never come up—that there was this precedent where the Crown was taken to task at the Land Valuation Tribunal and it lost.

Another point that has not been made adequately is that the principles behind the original Act, the Crown Pastoral Land Act, were always intended to take into consideration the earning value of those properties. So what we can say on this side, the Government side, of the House is that we are restoring those principles so that those farmers can have confidence that they can bank their businesses and they can carry on farming in the successful way they have farmed for the better part of the last 150 years. We hear all those wonderful romantic notions about flora and fauna, but let us not forget that these people have successfully farmed through economic cycles and through climatic cycles, and they have maintained an asset at the very best cost back to the taxpayer of New Zealand.

We hear the word “fear” mentioned. When we were on the Primary Production Committee we heard a lot of fear from those farmers because of the uncertainty that was being created by the culture of what we describe as envy, which we also on this side of the House see as a dislike. I would not use the word “hate”—it could be interpreted as that if it were directed at me—but it was certainly a strong intention of unsettling what had been a very fine process.

When you stop and think about it, the money that is directed at looking after these properties that are tenure reviews or pastoral leases is very much a fine balance. We want the Crown in there as well, because with the introduction of rabbits and Hieracium and things like that, these families, these little communities that are surviving up in some of the most inhospitable country in New Zealand, are quite fragile communities and they do need to be able to have certainty. When we reflect on all that we have heard—we have heard dissertations on academic levels—these families need to be able to front up to their banks. To be able to fund their businesses annually they need to be assured that the way the rent is set is sustainable from a business point of view and that they can have confidence in that direction.

One other thing that has not been touched on is the wonderful job that Rob Davison and the economic service do for New Zealand in valuing and understanding what properties can run and how they function. I have absolute confidence, and I know Rob Davison and his team from the economic service will be eager to get into this situation when this bill becomes law, and those 113 lessees at the moment who are before the Land Valuation Tribunal can opt into this piece of legislation because, in conclusion, it re-establishes the principle that rents should be set based on what a farm can produce. Thank you.

I despair of the National Government in some regards, and of the Minister in particular. He appears to have such a profoundly good grasp of the realities of high country farming, as many members on the Government side do, and a very good knowledge of how that farming operation is carried on and of the farming community, yet they have managed to create such a terribly dreadful piece of legislation to address the rate at which rents are set for high country farms.

We have come to the end of the validation process for what is essentially an unnecessary and, in some ways, an onerous piece of legislation. The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill is a bill that sets out to solve a problem that does not exist, and it will very likely create more difficulties than its authors have envisaged at this time. The process by which rents for the high country leasehold land are set was not broken. It did not need to be fixed. It certainly did not need to be fixed in the manner in which this Government is attempting to fix it. We are not going forward with the changes this bill brings; we are going backwards. We are returning to the past, to a system very much akin to the one that was abandoned in favour of the present system in 1979, because it was not working. This bill is a bit like asset sales. It is very much a case of “Well, that didn’t work. Let’s try it again.”

This bill fails to recognise the inputs made to the high country over the last century and a half by six and seven generations of farming families. It fails to recognise the value of those efforts in terms of preserving the iconic value of our most famous landscapes. It fails to recognise the sheer size and cost of the conservation operation that would be needed in order to maintain the high country in the state in which we have all come to recognise it, if it were not for the efforts and inputs of those farmers and their workers. The Department of Conservation would literally need an army of staff in order to carry out the same tasks that the farmers in the high country currently perform at no cost to the taxpayer—quite literally, thousands of workers with vehicles, dogs, horses, helicopters, tractors, sprayers, and guns for pest control; thousands of boots on the ground constantly and tirelessly working to maintain this environment for the benefit of the nation. We are not contemplating, nor could we afford to contemplate, funding the Department of Conservation to carry out this work in their stead.

The Crown would not miss out on anything by leaving the rents as they currently are, nor would the farmers get a free ride. The high country is not off limits to the public under the regime as it stands. As I mentioned in the Committee stage of this bill, in 30 years of hunting and tramping I have never been denied access to a farmer’s land. All you have to do is go and ask. You have to know a little bit about when and where to go and ask, and there are certain times of the year when you do not go and ask—

💬 Shane Ardern: It doesn’t read good, Richard, when you spend your whole speech talking in favour, and then vote against. It’s not a good read.

There are good reasons for that, Shane; there are good reasons for that. There would be no disadvantage to the taxpayer in leaving things as they are and no advantage to conservation.

This bill is an attempt to extract more revenue than is reasonably or realistically possible from the tenuous operation of farming what is very marginal land in a very marginal environment. It is driven by ideology, not by any actual need—financial need or economic need—to get more money. It would not cost the Government anything to leave the present rents at, or even below, the levels that the High Country Accord in 2009 determined were, in many cases, already too high. But it would cost the Government plenty in order to replicate what the farmers currently do, if they were to be removed from the equation. In returning to a regime under which rents are set based on the stock-carrying capacity of the land rather than its unimproved value, this bill fails to recognise that in times of downturn farmers will reduce their maintenance of the land, and thus reduce the carrying capacity. The upshot of this will be twofold: the value of the land itself will fall, both in terms of its monetary value as farmland and in terms of its iconic value to the nation; and as the carrying capacity falls along with this reduced maintenance, so the dollar returns to the Crown will also fall, and the Government will have shot itself in both feet.

New Zealand First believes that the Crown should set the rents at a simple low level based on the unimproved value of the land, recognising the contribution made to the nation by the activity of farming. This is a complicated system replacing a simple one, and history will record it as being one that does not work, either. This is a mean and an unnecessary bill, and New Zealand First opposes it in its entirety. Thank you.

The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill is just about through its third reading, and I imagine that in homes all around the high country of the South Island there will be farming families watching and listening, only wishing that the third reading was over and this could be passed into law. That would then put to an end the most terrible situation that our high country farmers have faced at the hands of the previous Labour Government.

Do you know, Minister David Carter was absolutely correct: David Parker when he was Minister for Land Information callously and in a calculated way introduced the rent-setting regime in order to force farmers into tenure review. And why did David Parker wish to force farmers into tenure review? It was because the Prime Minister of the day, Helen Clark, wished to have the high country farmers off the high country so that she could form a high country walking track the length of the South Island. It is as simple as that. So the Hon David Parker did the will of the Prime Minister of the day and ratcheted up the rents to the degree where for many of those high country farmers that level of rent was unsustainable. They simply could not afford the level of rent that was being proposed.

The stress that that proposal put on high country farming families should not be underestimated. I will never forget the high country farmer with a proposal for his rent increase coming to see me in Ranfurly. The man was in tears, and it is a really hard thing for a farmer to come in to his member of Parliament and be under such stress from the Minister of the day that he was completely broken up by it, because he simply did not know how he was going to pay that level of rent. And why? So that David Parker could force the high country farmers into tenure review.

Well, the high country farmers lost their respect for the then member for Otago and voted accordingly, and I think there is no love lost between that member and that sector of the community. I was not heartened to hear in the Committee stage of this debate a member of the Opposition referring to high country farmers as the privileged few. That said it all to me. The attitude of the previous Labour Government is that the high country farmers of New Zealand are the privileged few and needed to be rented off the land so that that land could be returned for the pleasure of the then Prime Minister, Helen Clark.

This Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill puts right that terrible wrong. How can it be right for a previous Minister for Land Information, David Parker, to say: “If you don’t like your rent increase, come and see me; we’ll talk about it.”? What kind of law is that? What kind of legislation is it for any Minister to say: “Well, I’m sorry if the rent is too much. Never mind—come and see me.”?

Debate interrupted.

The House adjourned at 10 p.m.