Sage Eugenie: Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill — Second Reading 
Sage Eugenie: Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill — Second Reading 
[Volume:678;Page:842] 
EUGENIE SAGE (Green) 
: 
 It is with pleasure that I rise to speak on the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill because like the previous speaker Damien O’Connor I have enjoyed the hospitality of a number of pastoral lessees. I would like to pay tribute to the late John Aspinall for his contribution on walking access on biosecurity his passion for getting rid of wilding pines his stewardship in the high country and the generous recreational access he provided near Mount Aspiring National Park. 
The Green Party supported the introduction and referral of this bill to the select committee in order to hear submissions. I certainly agree with the sentiments expressed by Federated Farmers in their submission in that the legislation should provide certainty and be enduring and that it must be transparent and demonstrate fairness and equity to both parties namely the Crown and leaseholders. But this bill fails to do that. It introduces a system whereby pastoral lease rents are disconnected from the value of the land and potentially it advantages leaseholders at the expense of the Crown particularly during tenure review and it will potentially compromise the ability of the Crown to get a fair share and a fair rate of return on its high country assets. That is why the Green Party opposes this bill. It is because rental income helps determine the extent of the Crown’s interest and its equity in a lease and those valuations that are done as part of the whole tenure review process rely on that rental income so calculating rents on the basis of stock-carrying capacity does not take account of the full span of benefits that pastoral lessees enjoy. It will significantly increase the lessees’ interests in leases and that will be at the Crown’s expense. The bill will significantly increase the cost to the Crown of achieving tenure review settlements. 
The Crown will have to pay more to resume full ownership and protect lands with conservation and recreation values or “significant inherent value” in the language of the Crown Pastoral Land Act. So less land is likely to become part of the conservation estate and less high country land is likely to be available to the public as a result of tenure review. Just as the Government’s asset sales will benefit major corporates at the expense of our ability to influence New Zealand’s strategic direction this bill will benefit those wanting to privatise high country lands and it will make good tenure review outcomes much more difficult to obtain. 
There are around 230 pastoral leases that are part-way through or have yet to enter tenure review. They cover 1.6 million hectares. That is a significant chunk of the high country. The whole method of setting rents since 1979 has been based on a fixed percentage of the value of the land: 2.25 percent of the value of the land exclusive of improvements with a discount for prompt payment. Under that system the rent can take account of amenity values that are present on many leases—the views of lakes the views of sprawling mountains tawny tussock grasslands—and as the High Court has confirmed the lessees’ rights of exclusive occupation give them the exclusive use of those amenity values. For a recreational user to go on to the land they need the lessee’s permission. 
It is inequitable then that the Crown and through it the public can receive no benefit from the fact that the lessee has these rights of exclusive occupation. Those rights are clearly recognised in the high values that are paid for pastoral leases when the leases change hands on the private market. If rents are calculated on the basis of stock-carrying capacity you will not get that exclusive occupation benefit being taken into account. 
No private landowner would lease their lands commercially without taking account of location value so it is ridiculous for the Crown to be doing so in these circumstances. It is those location and lifestyle values rather than stock-carrying capacity that now comprise a substantial portion of the market value of pastoral leases. Shania Twain did not buy Motatapu Station because it was a good farm the US billionaire Julian Robertson did not buy Brooksdale Station near Porters Pass and Lake Lyndon because it was a good farm so the Crown should not have to subsidise through these rentals overseas celebrities or investors who are buying for capital gain. 
It was an economist Dr Basil Sharp in his 2007 paper on valuation issues relating to high country tenure review who said that the rent if it was based on stock-carrying capacity alone would not adequately reflect the Crown’s interests. Dr Basil Sharp said: “The exclusive right to occupy and enjoy amenity values has been attributed to increasing value in the market and this value should be included in the values assessed for the calculation of rent. … The rental stream deriving from the right to occupy might turn out to be a major component of the lessor’s interest omitting the market value of this stream of rent will result in the Crown’s interests being under valued and the lessee’s interest being overvalued.” In her analysis of tenure review Lincoln University’s Dr Ann Brower described it as “a massive transfer of … wealth from the public to a lucky few farmers.” This bill will exacerbate that. 
High country leaseholders have been the major beneficiaries of tenure review. Members opposite ask for some examples. Well on Hillend Station near Lake Wanaka the lessee paid the Crown $120000 to freehold 73 percent of Hillend Station and then was able to subdivide it into 36 smaller sections and onsell these for more than $26 million. If the Crown’s equity in pastoral leases is undervalued then past trends in tenure review are likely to continue or worsen. If amenity values are not included as part of the rental then the Crown’s assessment of development potential as an element of property valuation will be much lower. 
If the affordability of pastoral lease rentals was a genuine issue for some high country pastoral lessees then a better solution would be to do what the Royal Forest and Bird Protection Society suggested in its submission and that was to provide a reduced rental in return for practical benefits for the Crown. Some of those benefits might be increased public access more widespread control of biodiversity pests or implementing a farm management plan that promoted sustainability. Those options were available to the Government. It has not chosen to take them up. This bill will exacerbate the poor return that there has been for the Crown in tenure review in the past. That is why the Green Party opposes it. Thank you.