Local Government (Rating of Whenua Māori) Amendment Bill

The House in committee on the Local Government (Rating of Whenua Māori) Amendment Bill, the Regulatory Systems (Transport) Amendment Bill, and the Financial Market Infrastructures Bill. Members, we turn first to the Local Government (Rating of Whenua Māori) Amendment Bill. The question is that Part 1 stand part.

Just by way of introduction to the committee of the whole House stage, can I firstly acknowledge the hard work and effort of the Māori Affairs Committee and their thorough consideration of the submissions that came before them. I very much appreciate their work and also the advice of the officials and the Parliamentary Counsel Office.

The Local Government (Rating of Whenua Māori) Amendment Bill has two purposes: firstly, to support owners of Māori freehold land to engage with, use, develop, and live on their whenua; and, secondly, to modernise some aspects of the Local Government (Rating) Act 2002 that are inconsistent with today’s expectations of Māori Crown relationships. Part 1 addresses changes to the rating Act to support these two purposes, proposes supporting the development of and provision for housing on whenua Māori, our inability for a local authority chief executive to write off rates arrears, provision of a statutory rates remission process for whenua Māori under development, making unused whenua Māori non-rateable, treating multiple blocks of whenua Māori that are used together as one rating purpose, and allowing individual houses on whenua Māori to be rated separately from other houses and land uses on the block.

Four proposals in Part 1 support modernising some aspects of the rating Act, which are: removing arbitrary two-hectare land area limits from rates exemptions for marae and urupā; clarifying the current exemptions for marae, meeting places, and meeting houses; providing protection to whenua Māori made general land under the Maori Affairs Amendment Act 1967 from the ratings Act abandoned land and rating sale provisions; and providing an obligation on trustees to provide evidence to support any claim they make that the income from land is insufficient to pay rates. The bill is the next stage of reform to address significant issues with the current approach to rating whenua Māori, which in turn will support the objectives of the wider whenua Māori programme. Provisions supporting these two purposes, including some consequential amendments, are covered in Part 2. Can I say that while there may be representations throughout the House, this should be dealt with through a comprehensive reform of Te Ture Whenua Maori Act. These Acts stand outside of Te Ture Whenua Maori Act, which is why we’re progressing them in the way that we are.

Can I say thank you Minister for being prepared to talk through our questions that we’ve got today and to discuss this bill. I guess the first thing is really—I’ve got probably three questions really, all around problem definition and exactly what problem are we trying to solve for and why, and trying to get a good understanding of that.

If you don’t mind, the first question is really fundamentally around if our problem is defined as we want to facilitate and utilise land that’s underutilised and not being utilised so that it can be more productive and we can improve the productivity of that land, then what is the thinking that leads the Government to only look at the problem through a Māori-only lens versus looking at it through a broader New Zealand lens? And I guess—because it’s not just Māori that have unproductive land or who have land that they own collectively or who may benefit from rates remissions, but general landowners also have that same challenge—if we’re interested in improving productivity, why not allow all New Zealanders to have the same flexibility and actually do it for both as we go through this piece of legislation? I just genuinely don’t understand, from a local government portfolio point of view, why general landowners are being dismissed and excluded when the same problems sit with them as they do with Māori. And I just wonder whether you could help us clarify that.

The question is germane to the whole consideration of whenua Māori issues, and this debate has been around for a long time, because, essentially, New Zealand has two land tenure systems. The introduction of the Native Land Court, in effect, tried to individualise title, which was uncommon in terms of the historical way in which whenua Māori was held. That said, we have a system now that recognises that whenua Māori can be multiply owned, and that at its heart, Te Ture Whenua Maori Act assures Māori land owners that the inalienable nature of whenua Māori is at the forefront of the way in which you approach Māori land interests.

But coming back to the point specifically in terms of facilitating the use of Māori land. What you will find around the country when you travel through and look to land blocks that perhaps sit dormant within the context of other developments that are happening in the area are likely to be Māori land. It’s really difficult in practical terms for whānau to succeed to their land and develop it if there’s a big breaking penalty sitting on that land, and that’s a practical challenge that some landowners have faced, which has a whole domino effect in the way in which whānau may or may not succeed to the land or want to organise themselves in governance units to be able to develop the land. So at the heart there, part of the change is the intent that if there is the provision to remit rating arrears, primarily penalties that have incurred over a period of time, then there would be an opportunity for whānau to actually say, “I can now go back to the whenua and start to organise my whānau, succeed to land, and then have a conversation with council to be able to really contemplate the development and utilisation of land.”

This solution is borne out of practical examples and challenges that have been longstanding. Many of the members of the Māori Affairs Committee could probably point to examples that they are very familiar with which better illustrates what I’ve tried to do in my response to the member.

Thank you, Madam Chair. I rise to say a few words at this committee stage. I thank the Minister for her willingness to engage on the questions in a respectful, back-and-forth manner—appreciate it. Just listening to the Minister’s answers to the good question from my colleague Christopher Luxon, I felt that she addressed the rationale as she sees it from a policy perspective for reflecting on a more, perhaps, suitable, from her perspective, mechanism for Māori non-productive land, but I do not believe she suitably addressed the question that Christopher Luxon posed with respect to non-Māori non-productive land and the fact that, really, if you are to apply a model or a framework to seek enabling of that non-productive land, be it in Māori ownership or non-Māori ownership, there should be a consistency of approach. And I feel that that specific question was still not addressed.

The second issue that I’d like to put on the table sort of builds, again, on Christopher Luxon’s comment around problem definition. In the second reading, Minister, we heard a number of speeches from those of us on the Māori Affairs Committee who talked to the fact that a number of Māori, be they iwi or hapū, in various guises, have sat down with local government and reflected on the historic constraints of rates arrears on their particular commercial opportunities and have come to agreements with councils as to how the council could assist them in being able to deliver on those commercial visions through rate relief. And, Minister, that has happened and continues to happen today. So again we ask the question that if Māori land has attracted rates and has not, because it’s unproductive, been able to pay those rates and those rates have accumulated over time—if Māori have the ability today to sit down with local government to work out mechanisms to write off those arrears and then partner with local government to create potential commercial models that work for local Māori, then what is the problem definition?

It remains our contention that this is a piece of the puzzle that has been prioritised by this Government because the broader challenge of actually fundamentally resetting the constraints on Māori land through te ture whenua reform has simply not been progressed, and our view is that that is the greater focus. It is harder, it is more complex, acknowledging that, but that should be the focus of this Government, as opposed to what we would see, Minister, is tinkering around the edges, creating a legislative solution when there is already a practical solution that local governments, partnering with Māori, use on an annual basis. Thank you.

I disagree, because this approach sits alongside the whole focus of certainly our Government’s response to arresting the challenge of unproductive Māori land, and it came in three parts. Firstly, to have targeted amendments to te ture whenua based on a lengthy consultation of the previous Government and bringing forward, actually, the critical aspects that would make a difference immediately. We’ve done that.

The second aspect was to introduce this particular provision which sat outside of te ture whenua remit and was highlighted through various consultations as a high area of concern and an impediment to developing Māori land, so we are currently in that stage. The third part of ensuring that unproductive Māori land could be better utilised was to have access to finance because, again, while it sits outside of the remit of Te Ture Whenua Maori Act changes, it was critical to ensuring that Māori had access to finance to be able to develop their land.

So we’ve taken a different approach. It’s not the one that the member was speaking to but, again, it’s one that has enabled whānau Māori to be able to look towards the potential of their land and change some of the fundamental barriers so that they can become more engaged with the potential opportunity that they have sitting in front of them.

Can I come back to the issue of a consistency of approach. Again, this change is linked very critically to the bigger challenge that we had, which was what could we do usefully to ensure that we could introduce changes that would help Māori move more into a development space and opportunity. So that was at the heart of our general policy intent. The point was also made around councils using rate relief already under the existing powers. Look, I want to acknowledge those councils that are doing it, but they’re not doing it uniformly across the country in areas where you could actually make a critical difference. Interestingly, a former member of this House from Northland actually provided some of the solution around why we’re taking this approach too. Insights from the Far North District Council show that if we were able to generate a change such as this to initiate a different conversation, then that would very much open up quite huge parcels of land in some districts to be able to be used in different ways to the greater advantage of the region. So I just want to acknowledge councils such as that, who did initiate the type of change that we could learn from and improve in a more comprehensive way.

Thank you very much, Madam Chair. I’ll just make a small contribution to the committee stage tonight by asking the Minister in the chair, Nanaia Mahuta—and I know this has been canvassed in other areas, but I’d just like to bring a focus into other parcels of land, such as Queen Elizabeth II (QEII) National Trust covenanted land, marginal strips, significant natural areas, Schedule 2 wetlands. We’ve got family-owned land, we’ve got trustee-owned land with multiple trustees. These seem to fit also into the same area where the land is non-productive because of the nature of it—it’s exclusive. It’s been fenced or protected, or it’s owned by multiple owners. So can the Minister please give some rationale for why we shouldn’t also be capturing these parcels of land in this debate as well?

The question is that the Minister’s amendments—

💬 Hon Nanaia Mahuta: Oh no, no—no, no. Sorry, I was just looking for the exact part of the bill, Madam Chair, sorry.

CHAIRPERSON (Hon Jacqui Dean): Well, you should’ve called, because I have started.

Look, just to clarify—I was looking through the bill to find the exact clause, but in terms of the policy approach, what we wanted to ensure is that what applies to the QEII lands would equally be applied to whenua Māori. So we have extended the provision that applies to QEII lands to whenua Māori in a very consistent way. I apologise for the slowness of the response.

Thank you, Madam Chair. So we’ve heard about the provisions to remit rates and the reason why it’s important to do that. What we haven’t heard is how local councils, local government, which depends on rates revenue to fund infrastructure and to fund services, which these communities also benefit from, should replace the revenue and the funding that will be lost through this rates remission. We haven’t heard whether the Government intends to compensate local councils to the same value of rates that they remit, and, in fact, I, having joined Parliament only in the 53rd Parliament, haven’t heard any recent information about the likely estimates of the value of rates that are likely to be remitted.

We know that local government is facing a significant infrastructure deficit and a very large funding deficit. Most recent estimates, $170 billion over 30 years for water, but we don’t know the extent of the deficit, in terms of climate resilience and climate mitigation, and all the infrastructure for roading and connections that are still outstanding. I understand, whenua Māori land that is held is often in rural areas, or places that are more remote from towns and cities, which is much more difficult to get infrastructure to and to develop. Local councils often require significant development contributions in order to get this land made ready for housing. So what this bill doesn’t cover and what we don’t understand is what provisions will be made to make sure that the rates revenue that councils depend on will be made good and that provision of infrastructure to this land by councils, if that’s required, will be possible in future without the revenue and without the ability of rates to cover those costs.

So I’d appreciate hearing more about that, Minister. Thank you.

Kia ora. Can I first just clarify—I was remiss, which is why I was slow in responding to the member’s question in relation to Ngā Whenua Rāhui. Just to clarify, the remit and the scope of this bill enables us to ensure that Ngā Whenua Rāhui lands are not rateable. You’re correct. It doesn’t apply to QEII lands, because that’s outside of the scope of this particular bill, but I acknowledge the point.

In relation to the financing issues, I mean, that’s also not a part of the land, but the question is valid to the extent that if we find ways to engage Māori with their land—so, not leaving land dormant and unproductive—removing the rates, and then enabling whānau to re-engage with their land, succeed to their land, and then be able to form their governance entities, the opportunity there then is to have the conversation with councils and align their development horizon to the rating of their land. So it is the intention, as land becomes more productive, that they will also be rated in time.

But it doesn’t serve any purpose or opportunity for the community, the whānau, or the council to leave this land dormant. So what we tried to ensure was that a different conversation could happen between councils and Māori land owners. When I think about the opportunity and some of the feedback and conversations that helped to inform certainly my thinking around this issue, as had been mentioned by members on this side of the House, some councils enjoy very good relationships with Māori land owners who have significant other avenues to generate finance.

However, it would still mean that a conversation direct with Māori land owners would be required. So, for example, in the settlement context, if there was the potential to marry up the land opportunity with Māori land owners with potentially access to finance through an entity, a Māori incorporation or a trust, for example, that there in itself will see land development occurring.

There are examples up the coast that we could point to, but my simple point is, we need a different conversation. This issue has been around for far too long and, really, remained dormant. This approach will mean that not only will Māori land owners have a different conversation with themselves around the potential of their land, they will be able to have a different conversation with councils around the cumulative opportunities if they thought about what partnership could look like.

Thank you, Madam Chair. I just want to expand on the question around other unusable land and the consideration to include that in this bill. I point to two specific examples. David Parker’s new freshwater regulations have rules requiring greater setback from rivers. We considered that that land should be non-rateable and ask if the Government has considered that issue and whether that could be included in this bill as well. The second is that a lot of farmers, presently, plant large parts of their properties in trees and they don’t necessarily come under the carbon trading regime because of the size of it but it’s still substantial and it’s for the purpose of improving the environment. I would ask if the Government has also considered rates relief for those farmers to recognise the good work they are doing planting trees to improve the environment—

CHAIRPERSON (Hon Jacqui Dean): Order! Order! The member is getting very close to being out of scope of the bill. If he can bring his questions to the Minister back to within the scope of the whenua—rating of Māori land.

Thank you, Madam Chair. My question is whether these other unused areas of land can be incorporated into this bill. You know, I would ask for the benefit of these other communities whether there is scope to bring it into this bill.

Just in the spirit of again trying to get clear on a problem definition and what we’re trying to solve, you know, I guess the Minister’s alluded to it a little bit but I’d like to unpack it a little bit more. Having talked to former and current mayors across the country, a lot of them would say that they as mayors—and councils—feel that they can actually do a lot of this today. They can actually partition land into one block, into many blocks, in order to help ratepayers access rates rebates. Likewise, they can take multiple blocks and amalgamate them together today. Others would also say that they do write-offs. I spoke to mayors that actually have said there’ll be six years of arrears that have been accumulated on Māori land and they go to that owner and they actually sit down and say, “Hey, listen, we will actually write those rates off if you reset and actually pay those rates for the next six years. And at the end of that term, we will actually write those off.” And you’ve got a going concern and you’ve got productivity happening.

So I guess I just sort of, you know—we’ve got a lot of former mayors on our side and in our caucus, as you’d appreciate, and some of them said, “I can do all of this today and have been able to do this under existing legislation.” Whether it’s been, you know, Maungakiekie ward out of Auckland or whether it was, you know, a former mayor of Napier—even, you know, when I look at what John Carter’s been doing in Northland—there’s been some creativity that councils are able to do today. So my question is: what’s the marginal net benefit of creating this piece of legislation that is not being solved by today, but with existing legislation?

I acknowledge that there are a few councils that have best practice in regard to the treatment of whenua Māori and writing off rates for unused land. However, it’s not extensive enough. Interestingly, when we made this announcement in Northland, John Carter came up to me and said, “Well, you know, effectively, these debts are sitting on our books as non-recoverable and it equates to”—at the time, he said—“around about $29 million.” But he said, “The potential of having a different conversation in our region with Māori land owners, with Treaty settlements coming online, and with the Provincial Growth Fund”—at the time—“opportunities has an exponential effect.” That’s just one area.

What I would say without, I guess, sounding too smart about it, is we just want to see the benefits of best practice extended to all councils. Some regions will benefit more than others because of the profile and characteristic of the Māori landholding in their area; Northland and the East Coast are very kind of easy to point to. But the other substantial challenge, which is an impediment to the development of Māori land, is landlocked land. And that will be the next big challenge for regions like the Manawatū, who really would want to again break down the barriers of unused Māori land so that they could get greater economic and social benefit from, you know, again breaking down the barriers and assuring access to whānau to their whenua.

Kia ora. Kia ora koutou. Thank you, the Hon Mahuta, I appreciate that you reminded us that the complete redoing of the ture whenua Act was off the table tonight. We’ll focus on what we’re looking at today. The Greens have already made clear our support for this bill, particularly because it makes it easier for Māori to engage with our whenua and to lift the burden that we have because of considerable—years and years of—rates arrears, particularly for unusable and inaccessible land.

One of the things that I really focused on is that we know that for some councils it’s hard for iwi rūnanga and our trust boards to engage with our councillors. Part of the work of trying to get Māori wards in is to actually make some councils say, “Hey, you have to have some representation in here.” One of the things I’m wondering about, and ask your response for, is how we make sure that then councils are adhering. If it’s hard for our trust boards and rūnanga, which generally have some pretty solid infrastructure and have paid staff, often, for some of our landowners in groups—they may or may not be a legal entity, or they might just be a group of people that get together once a year to say, “Hey, what are we going to do with this or how do we move forward.”, and quite often do not move anywhere. How do we have confidence that councils will adhere to best practice, but also make sure that those whānau are going to be—we don’t expect them to be looked after; we expect people to develop some capacity and be organised around what they want to do. But how do they make sure if council goes, “Mmm, this is not a priority right now.” or “We’re just not wanting to deal with this.”? Kia ora.

Thank you for the question and the consideration around the real-life challenges of whānau engagement with councils and the process. Clearly, the intention, or the practice, would be that as councils undertake the process of applying the rates remission approach, they report on it annually within their annual reports.

However, I think, if I get to the nub of the point that you’re making in how challenging it is for whānau, or even hapū, to engage with councils, the onus will still be on the whānau or the hapū to engage with councils and have the conversation. That’s what we’re trying to encourage here: a different conversation with councils.

For far too long, many whānau have not felt that they could walk through the council doors and have the conversation they really wanted to have. In many cases, it’s our kaumātua whose name is on the succession to a particular bit of whenua and whatever they can pay they will pay. They’ll corral the whānau to try and pay a little bit off, because it’s better paying a little bit off and remaining connected to your whenua that way than, I guess, having this burden of debt.

What we want whānau like that to be able to feel like is that they can walk through the council door and they can say, “Look, we’re in this stage. We haven’t got all the succession sorted. We’re still going through the process of succeeding to our whenua. It’s going to take us maybe three or four years to really get to a point and a position to really develop our land. We’re going to generate some finance”, or whatever. But that’s the conversation we need, because we need the council then to understand what is realistic and an opportunity there if the council can continue to support whānau down a road of using their land rather than sitting aside from it.

It may well be also that whānau have conservation or biodiversity aspirations for their whenua. That’s another conversation in itself. But the point is councils can report on the remission decisions that they are making in their own rohe so that there is greater visibility for everybody around what’s happening.

The question I’ve got is really around the one that we talked to before, which is has there been any cost identified in a hard sense around the rates write-off and therefore what cost burden that gets shunted across to other ratepayers to pay. That’s the first question.

The second question, fundamentally, is, having implemented this bill, what does success actually look like and how will we measure it?

No further calls? I’ll put the question—

💬 Simon Court: Madam Chair?

CHAIRPERSON (Hon Jacqui Dean): Simon Court—just in time.

💬 Hon Members: Oh!

CHAIRPERSON (Hon Jacqui Dean): If members want a call—

Thank you very much, Madam Chair. So, following on from that question and just reframing back to the question I asked before, we don’t yet understand the value of the rates remissions and we don’t understand how councils, which will be able to—and, in fact, what appears to be obliged—provide rates remissions; because this is a far more kind of permissive approach rather than an enforcement approach to rates recovery, and we understand why that is your intention, having brought this to the House. But what we don’t understand is how much are councils in the hole for, what’s the value currently outstanding of rates on whenua Māori land, and how are they supposed to make this up when they have a huge infrastructure deficit? I’m asking this question again because, despite your answer before, which did address other matters, these absolutely critical matters to the delivery of infrastructure and provision of services to these communities remain unanswered. The ACT Party is not able to support this bill without understanding that matter as well as what other opportunities there are to actually solve this problem, apart from this piece of legislation.

So I would like to be able to take away from the House tonight and go back and talk to the stakeholders that I’ve committed to respond to exactly where the money that is going to be sacrificed—because it must be sitting on an accounts receivable (AR) ledger in many dozens, maybe all 67, of the territorial authorities and the regional councils; it must be sitting there in AR. There must be accountants saying, “You know what? We’ve got budget for water projects, we’ve got this budget for footpaths, for parks and reserves and community facilities, libraries”—whatever it is that that council has a budget for—“but we don’t have the money, because we’ve got this outstanding number in accounts receivable. It’s not like we can call Baycorp. It’s not like it’s Penny Bright—she’s not out there protesting every day in Avondale, so, you know, it’s not like we know where she is.”

The problem is that this is, essentially, a fiscal black hole for local government. While we understand your heartfelt and compassionate approach to these families, to these whānau, who want to develop their land and feel this is a big barrier to walking through the doors of the council—and I can only imagine what it is like when you discover an unpaid parking ticket in your glove box and you realise it has probably been referred to justice and it is going to cost you a lot more. I know that sinking feeling. I’ll admit to having a parking ticket, but no more than that in my life, OK?

💬 Kieran McAnulty: Take some personal responsibility, come on!

Well, you know, I did pay it—I did pay it. I didn’t ring up the council and ask to be let off. I’m not one of those people writing long letters, Mr McAnulty.

But what we do need to know, and what I will ask for again, is a detailed explanation of the value of the rates remission that is forecast by the officials, and how Government, having passed this legislation, proposes to make that up to those local authorities which are already suffering a significant reduction in income, some of them due to COVID and a lack of tourism. Auckland Council, we know, is suffering terribly because they haven’t been able to recover a lot of costs through facilities, through events, and so on, and there must be others—Northland, for example, is missing out on tourism; we know that the West Coast of the South Island and other parts are also missing out on revenue. Local councils are missing out on tourism revenue. This is just another black hole. So I would appreciate, Minister, you filling us in exactly on the value of the rates that will be remitted and how the Government proposes to make that up to their partners in local government. Thank you very much.

It is true, rates arrears have built up on Māori land to eye-watering levels. You only need to go to Māori land owners who are struggling with this issue and ask the question and they will tell their story. So, you know, this is more than a heartfelt approach; this is the reality that many Māori land owners are facing.

And I could never really understand why, over a long period of time, several councils continue to adopt the practice of applying penalties to rates that had been unpaid for a long period of time. So the member makes a point about a fiscal black hole being created. In fact, what happens for several councils in this situation is that this debt after a period of time will sit on the books as non-recoverable. So 100 percent of unutilised land is nothing; the economics are simple. What we need is land to be utilised so that some income can be earned, as you know, developed, income earned, and then rates paid. We are not in that situation with these lands. There’s no fiscal black hole. These arrears sit on council books as non-recoverable. Money is not being lost because money is not being earned.

That is the challenge, is where we need to get into a space of ensuring that land can be used, and then councils and Māori can have a real conversation about what’s the horizon of rates that could apply to this land. And I think that it’s important that we change up the conversation, because this issue has been around for a long time.

OK, so what’s the impact of the change? The change means that we’re writing off arrears, or we give the opportunity for councils to make the decision to write off arrears so that the forecast opportunity in use and the conversation space about what type of development could occur on that could be happening sooner rather than later. I really want to make that clear, because I don’t want there to be a pervading view here that this bill is about giving something to Māori and councils losing something. Councils who are in this situation know very well what the opportunity space is here. And I’m sure, were select committee members able to point to some of the submissions or examples in their patch, they might even point to those examples.

The question is that the Minister’s amendments to Part 1 set out on Supplementary Order Paper 10 be agreed to.

The question is that Part 1 as amended stand part.