Ann Brower: For the sake of our high country, stop tenure review
OPINION: Sometimes the best thing to do is to just stop doing something bad. Last week's Environment Court decision says there's a strong case to stop freeholding the South Island high country. The new Minister of Lands, Mark Mitchell, and the acting Commissioner of Crown Lands, Craig Harris, would do well to listen.
The case was about the majestic Mackenzie country. Since 1992, the Crown has been carving up the Mackenzie, and freeholding the more productive bits. Since about 2007, the Mackenzie District Council has been trying to amend its plan to protect the Mackenzie from "inappropriate subdivision and development", particularly on the new freehold land. Not surprisingly, the landowners opposed the change.
The 184-page decision takes183 pages to say yes, the council has the power to change its plan to protect the Mackenzie landscapes. Then on page 184, it says: "There is quite a strong ecological (and economic) case for an immediate moratorium on further freeholding of any land in the Mackenzie Basin."
It is time to stop tenure review everywhere, not just the Mackenzie. Here's why.
South Island high country tenure review is a land reform that has been quietly transforming the South Island high country since 1992. Though obscure, it affects 10 per cent of NZ's landmass, or one-fifth of the Mainland.
The Crown has owned the high country since the 1850s, and leased it to around 300 pastoral runholders. The leases grant very narrow use rights, of pastoral sheep farming, at low rent for 33 year renewable terms. While under lease, runholders cannot irrigate or develop without Crown consent. Subdivision is prohibited.
In 1992, the Crown started offering an option to buy the freehold rights under tenure review. In tenure review, the Crown and runholder negotiate to divide the leasehold – some is privatised as freehold, some shifts into public conservation land administered by the Department of Conservation. The Crown purchases the runholder's interest in land going to conservation, and the runholder buys the freehold.
In 25 years, the Crown has purchased leasehold rights to more than 330,000 hectares for about $117 million; and leaseholders have purchased freehold rights to more than 370,000 hectares with higher production potential for about $62 million.
On average, the Crown price to purchase leasehold rights is about 3.5 times the runholders' price to purchase freehold. This translates to large payouts to runholders at the end of tenure review – more than $50 million so far.
If you're confused by this, it means you understand. If you're thinking, "hang on, aren't freehold rights worth more than leasehold rights? When the Crown sells freehold, shouldn't we make money?", it means you understand.
In the Mackenzie Basin itself, the Crown has freeholded 65,000ha in tenure review. For that freehold, runholders have paid about $28 million (or $423/hectare). This land is, by law, capable of development and commercial production. It's the valley floors and the lakefronts.
At the same time, the Crown has shifted 54,000ha from pastoral lease to public conservation. To retire the pastoral rights, the Crown paid runholders $36 million (or $656/hectare).
In total, the Crown has freeholded 10,000 more hectares than it conserved, and paid runholders more than $8 million on net.
This is not farmers' greed, it's the Crown's choice. An old cartoon springs to mind: "We have met the enemy, and he is us."
After freeholding, much of the land gets on-sold. In the Mackenzie, six of the new owners paid the Crown a total of $700,000 all up for the freehold, and have so far realised a total of $26 million by on-selling. Another former leaseholder on-sold his new freehold for $9 million before the government published details of the freeholding. Land has also been on-sold from three more newly freeholded properties, but the prices are not yet on record.
If you're scratching your head, you understand tenure review.
What's more, after land is privatised, it takes on a whole new life, from irrigation in the Mackenzie to subdivision in Central Otago. What used to be about 120 leaseholds is nearly 4000 parcels of freehold.
Across the high country, about 20 per cent of the new freehold land has been on-sold. One-fifth of what the Crown sold for $62 million, has on-sold for over $300 million. On average, new freehold land sells for 493 times the Crown selling price. The Crown realises none of that capital gain.
To all appearances, the Crown is subsidising the conversion of the South Island high country at our expense.
High country tenure review continues to be a huge transfer of land and money from the Crown to a few hundred runholders. To call it anything but a boondoggle is strategic hypocrisy. Good on the Environment Court for calling for it to stop. Let's hope the Commissioner of Crown Lands heeds the call.
The best, easiest, and cheapest thing New Zealand could do for the land and water of the South Island is to stop high country tenure review. Better late than never.
Dr Ann Brower is senior lecturer in environmental management at Lincoln University and author of the book Who Owns the High Country?. She also chairs the NZ committee of the International Union for the Conservation of Nature (IUCN). A more detailed analysis of tenure review can be found in her latest article in the journal Case Studies in the Environment at http://cse.ucpress.edu/content/ecs/early/2017/04/13/cse.2017.sc.348268.full.pdf
- The Dominion Post