Outcome 3: Best use of Crown Assets

LINZ has a regulatory and standard-setting role for aspects of the acquisition, management and disposal of Crown lands. LINZ also manages the Crown land on our balance sheet, and works to resolve land-related Crown liabilities. This work is done in the context of the Government's desired economic, social and environmental outcomes.

Impacts:

• the Crown realises a fair return on its leases
• the public has access to high country land, and
• sensitive lands are protected.

Measured by:

• reviewing government acquisition and disposal processes to improve transparency and statutory compliance, and
• the amount and quality of our collaboration with central and local government as appropriate to manage and resolve Crown land-related issues.

Managing Crown pastoral land

What we set out to achieve

The Crown owns about 1.6 million hectares of environmentally sensitive land in the South Island high country that is leased or (in a few cases) licensed for pastoral farming purposes. Pastoral leases have a 33-year term with a perpetual right of renewal. Leases allow grazing of the land for pastoral farming purposes, but leaseholders are subject to a range of restrictions on other land uses.

Crown pastoral leases are managed and reviewed in accordance with the Crown Pastoral Land Act 1998 (CPLA). As at 30 June 2009, LINZ administers 226 pastoral leases. The Commissioner of Crown Lands is the statutory officer who exercises rights of ownership and has statutory responsibility for all Crown land held under the Land Act 1948, including Crown pastoral leases.

In 2008/09, LINZ continued to focus on improving the quality of our decision-making processes to ensure we delivered greater responsiveness, transparency and relationship management. Specifically, we built our expertise to bring the management of strategic land portfolios – previously out-sourced – in-house, enhanced our external relationship management, and continued to develop system and process capabilities to improve decision making.

What we achieved

Review of the South Island high country policy

A major change in Government policy during the first half of 2008/09 meant the areas of focus for the South Island high country, specified in the 2008/09 Statement of Intent, were revised. The Government requested a reassessment of the policy and legislative settings for the South Island high country, which included setting high country rents to the earning capacity of the farm property, and recognising that high country leaseholders can be as effective in their stewardship of the land as the Crown.

The review was led by LINZ, with the Ministry of Agriculture and Forestry and the Department of Conservation. Proposals were prepared for Cabinet that included the recommendation to rescind the previous Government's policy of excluding lakeside properties from tenure review.

In October 2008, the Land Valuation Tribunal heard a case into the rental valuation of the pastoral lease for Minaret Station, which concluded, after an adjournment, on 28 January 2009. This was a test case of the Crown's methodology of land valuation for rent assessment.

The tribunal released its decision in August 2009 in favour of the Minaret leaseholder. The Crown subsequently decided to seek clarification of the correct legal interpretation of 'capital value' in relation to valuing pastoral leases. In the Crown's view, the decision left this unclear, and this would mean valuers would have difficulty interpreting the tribunal's ruling.

By seeking this clarification, the Crown is aiming to receive a clear direction as to the proper interpretation of the relevant statutory provisions, so that it can, where appropriate, be applied to other cases before the tribunal and to other valuations of pastoral leases in future.

Tenure reviews

Under the CPLA, LINZ operates the process of tenure review, which seeks to determine what land should be retained by the Crown for conservation purposes and what the lessee can gain as freehold title. Tenure review is a negotiated agreement between the Crown and lessee. It is a voluntary process for both the Crown and lessees, and the Commissioner of Crown Lands has exercised the Crown's discretion not to participate in tenure review in some cases.

As at 30 June 2009, 72 pastoral leases eligible for review under the CPLA have had their tenure reviews completed or unconditionally agreed. This amounts to approximately 396,000 hectares of land of which 188,000 hectares (47%) has been or will be returned to the Crown as conservation land, and 208,000 hectares (53%) that has been or will be disposed of as freehold to the former lessees. An additional five pastoral leases covering approximately 126,000 hectares have also been bought outright by the Crown for conservation. Of the remaining 226 pastoral leases, 92 are in some stage of tenure review.

In 2007, the Government adopted further protection mechanisms for iconic lakeside landscapes and lowland biodiversity. These included lakeside land being retained in Crown ownership or covenanted to restrict subdivision and protect significant landscape, biodiversity and access values. As a result, the Government decided only to fund tenure reviews where these conditions were met. This meant fewer tenure review agreements were achieved than anticipated, with 12 preliminary and four substantive proposals put to leaseholders during 2008/09.

While these protection mechanisms were being developed, tenure review negotiations on 38 properties were affected. Subsequently, leaseholders of 21 of these 38 lakeside properties agreed to meet the new conditions and these tenure reviews are now continuing. In 2008/09, one preliminary and one substantive proposal involving lakeside properties were put to leaseholders.

Managing Crown property

What we set out to achieve

As a land-holding agency, LINZ manages almost three million hectares of Crown land outside the conservation estate, which is around 8% of New Zealand's land area. This includes around 1.6 million hectares of high country land in the South Island, Crown forest land and approximately 4,000 properties.

What we achieved

Review of land of potential interest

Land of potential interest is land owned by the Crown that is considered sensitive. During 2008/09, a review of the land of potential interest process was undertaken and proposals were presented to Cabinet for streamlining this process to eliminate unnecessary duplication.

Reduction in revenues from Crown land disposal

LINZ identifies properties from our Crown property assets that the Crown no longer needs and are available for sale or transfer. Each year, we manage a disposal programme of these properties. Given the lack of demand (resulting from falling property values due to the global economic recession), our budget revenue target of $6 million was reduced to $3.1 million. However, only $2.5 million was actually received from property sales.

Successful negotiation of Crown forest licences with iwi

LINZ administers 72 Crown forest licences (CFLs), covering approximately 480,000 hectares, under delegation from the shareholding Ministers (Finance and State-Owned Enterprises). CFLs are provided for in the Crown Forest Assets Act 1989. This Act empowered the Crown to sell its exotic forests and related assets, while retaining the land for use in Treaty of Waitangi claim settlements.

As part of the Central North Island iwi collective settlement, 23 CFLs (or approximately 180,000 hectares) were to be vested on 1 July 2009. These were satisfactorily negotiated and considerable effort went into building relationships with iwi to ensure a successful outcome. The number of CFLs has now reduced to 49.

Remaining committed to our biosecurity obligations

LINZ manages biosecurity on Crown land under our administration and, in doing so, works with landowners, regional councils and other agencies. The main weeds and pests that LINZ controls are gorse, broom, wilding pine trees, rabbits and lakeweeds. Our programmes typically follow the intent of Regional Pest Management Strategies developed by regional councils with public input. Much of our biosecurity works are undertaken on LINZ-administered riverbeds and lakes.

Expenditure on the programme is prioritised to obtain the best biosecurity outcomes.

Two major programmes are currently underway to control lakeweeds at Lake Wanaka and Lake Karapiro. Significant progress is being made in controlling the introduced lakeweed lagarosiphon in Lake Wanaka, as part of a 10-year Lagarosiphon Management Plan implemented in 2005. Large areas of hornwort were successfully controlled in Lake Karapiro during 2008/09, and LINZ will continue this work in the build-up to the World Rowing Championships to be held at the lake in 2010.

Continuing to build and maintain our stakeholder relationships

LINZ continues to improve our relationships with other agencies and the community. Given the variety and extent of our functions in managing Crown land, the quality of these relationships are fundamental in obtaining the best possible outcomes in terms of the public interest.

We operate in an environment with competing demands from central, regional and local government, lessees and licensees, iwi, and public interest groups. These groups all affect our management of assets and our decision-making processes. We have focused on building the capabilities of staff who manage often complex and dynamic situations.

Our commitment to increasing our relationship management capability remains a focus for LINZ and will be especially important as we contribute to the Treaty settlements process to 2014.