Informing the Debate on Tenure Review

This is an opinion piece by Brian Usherwood, General Manager Crown Property and Investment, Land Information New Zealand (LINZ).

Over the past few weeks, there’s been increased debate about South Island high country tenure review. LINZ welcomes this debate, but believes a healthy debate needs to be fully and accurately informed.

Portraying taxpayers as losers and farmers as outright winners in the South Island high country tenure review programme makes an enticing but misleading headline. And claims that tenure review is destroying the natural characteristics in the South Island high country can evoke very strong emotions.

It is important to consider the full facts about tenure review to develop an accurate and informed view.

The premise that the Government is paying farmers to take the land is incorrect. And the debate appears to overlook the valuable economic, conservation and recreational gains that are being made as a result of tenure review. There seems to be a fundamental misunderstanding of how tenure review agreements are reached between the Crown and lessees.

Some background

The Land Act 1948 created pastoral leases as a form of land tenure. As part of their creation, some property rights were permanently transferred from the Crown, as owners of the land, to the lessee. The most obvious of these rights are that the lessee has a right to perpetual renewal of the lease, and they own any improvements (eg buildings and fencing) to the land, unlike some of the more common leases.

Land with conservation values can be freed from the lease and retained in full Crown ownership as public conservation land. Other parts of the land capable of productive economic use are able to be freeholded to the lessee. To achieve this each party, not just the Crown, buys out the other’s interest in the lease. Tenure review is a voluntary process that enables this, and its objectives are clearly spelled out in legislation.

Like any tenant in a lease arrangement, pastoral lessees have property rights in the leasehold land, including land that is eventually retained in the conservation estate. These rights, like the rights of any tenant, include rights to quiet enjoyment and exclusive access to the property. A common misunderstanding is that the public has automatic right of access to these properties. In fact, it’s the lessees who must give the public permission to access these properties.

If the Crown wants to free part of the land from the lease for conservation or public access, the Crown must purchase the lessee’s property rights in that land. Similarly, to dispose of leasehold land capable of economic use as freehold, the lessee must purchase the Crown’s property rights. The value of each of these respective interests is set by the market as with any other property transaction.

The lessee’s and the Crown’s interests are not the same and therefore their values are not generally equal. Both parties pay each other to buy out their respective rights, and the size of these payments is determined by market valuations. Like any other landowner selling property, LINZ seeks independent market valuations when undertaking each transaction. The debate about the value of each party’s interest needs to recognise that this process ensures the widest possible consideration is given to the various factors that make up ‘value’.

Settlements are negotiated with the benefit of current market valuations on hand, and both parties must agree to achieve a successful tenure review outcome. A recent report by a panel of independent valuers found that the valuation methodology used in reaching tenure review settlements was fair. This report is publicly available on LINZ’s website.

Public benefits

New Zealand benefits from more diversified use of the former leasehold land freeholded through tenure review. New Zealanders have also benefited to date from around 193,000 hectares of land being made accessible by virtue of it no longer being constrained by a lease. Also, five additional leases covering approximately 126,000 hectares have been purchased outright by the Crown for conservation purposes.

The increased public ownership of land important for high country biodiversity needs to be acknowledged, along with significant gains for conservation, public access, recreation, the establishment of high country parks, and the protection of distinctive and rare ecosystems.

A transparent process

In the past, some critics have challenged the transparency of the tenure review process.

The present tenure review programme, which superseded the Land Act tenure review in 1999, is mandated by the Crown Pastoral Land Act 1998 (CPLA). The CPLA was the result of many years of analysis, debate and consultation between the government of the day and stakeholders on the future of pastoral leases.

Transparency of tenure review negotiations is built into the Act in a number of ways. A range of parties, including the Department of Conservation, Fish and Game and iwi are consulted as proposals are developed. All proposals are advertised for public comment before they are finalised, with all copies of submissions and the analysis of these submissions being public information and available on LINZ’s website.

The Minister for Land Information and the Minister of Conservation see all proposals, and every stage of each review is documented on LINZ’s website. Final decisions are made by the Commissioner of Crown Lands (who has statutory independence), who considers all matters that are relevant under the law and is legally accountable. Also, the law provides the public with options for redress if decisions are not properly made.

Land use arguments

The use of land after tenure reviews have been completed has been another area of concern. Like any other freehold land in New Zealand, land use is subject to the Resource Management Act and district and regional plans. This is where the community has the opportunity to air views on appropriate uses of the land. The law provides protections when pastoral leases are turned into freehold and then again regulates land use when the land is held as freehold.

Land already freeholded through tenure review enables diversified economic activity such as viticulture and tourism, which is benefiting communities and the wider economy.

LINZ has recently developed sustainable land management covenants that can be used in tenure review. Covenants, such as QEII covenants administered by the QEII Trust, are agreements that provide legally binding protection for a wide range of significant inherent values in the high country. They also accommodate public access where appropriate. LINZ covenants focus on rehabilitating degraded lands suffering from soil erosion and loss of vegetation cover.

The objects of the CPLA were crafted to reflect the competing interests in the high country. Tenure review outcomes have evoked strong emotional responses, a reflection of how highly valued the South Island high country is for New Zealanders. LINZ values a healthy debate and hopes that this article ensures the debate continues to be fully informed.