Cunliffe David: Land Transfer Bill — First ReadingText is incorporated into the Bound VolumeCunliffe David: Land Transfer Bill — First Reading[Sitting date: 15 March 2016. Volume:712;Page:9684. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn): Every now and again in this House a seemingly technical and innocuous bill comes before us for reasons that I would warrant are not innocuous or technical. This bill was languishing at around about No. 90 on the Government’s Order Paper and yet it suddenly sprang up to No. 2 today and it is before us at the moment.So today in my brief remarks I am going to firstly outline what the bill contains and then go from the what to the why—why we are debating this now and what it says about the Government’s attitude to landholdings in particular at a time of great stress in our rural sector. First let us consider the substance of the bill. As the Minister for Land Information has pointed out this is—some would say—a much overdue amendment to the basic legal framework for land tenure and land registration. It follows from the Land Transfer Act first written in 1952—it is older than most members of this House—and it follows from the Law Commission’s report of 2010 entitled A New Land Transfer Act.Labour is supporting this bill to the select committee—supporting it for its first reading—so that we can hear from the legal fraternity in terms of their submissions about what is right and wrong about this drafting overhaul. One of the things that seem promising is that the bill integrates the 1952 Act with two subsequent amendments: one from the standalone 1963—a fine year that—Land Transfer Amendment Act and the Land Transfer (Computer Registers and Electronic Lodgement) Amendment Act 2002. It would be helpful all things considered to have those three pieces of legislation properly integrated into one single piece of law.As the Minister has said this bill does retain the essence of the Torrens system where title to land is acquired by registration. It is as far as possible secure and indefeasible—one’s home is one’s castle; one’s title is the anchor of one’s home. A purchaser should not need to go behind the register to investigate the root of the title—that is the title itself is gold-plated. That is also a strong tenet of tenure so to speak.The bill does make two significant changes which the select committee is going to need to consider carefully. The first is in relation to indefeasibility where the bill introduces a limited judicial discretion to order the alteration of the register in situations where immediate indefeasibility would result in what is termed a manifest injustice. So it is introducing a little more flexibility into the law provided that clear grounds can be established on which to proceed without change would be manifestly unjust and that is useful in situations where an unexpected complication has arisen between a mortgagee and a mortgagor. Sometimes that mistake results from the passage of life into an estate.The second significant change to the status quo is in respect of compensation. The bill retains the State compensation that currently operates but it makes a few modifications. Compensation will be available for loss through a registrar’s error of the operation of the land registration system in having acted in reliance on a guaranteed search but those guaranteed search periods are shortened. That is if a citizen acts in reliance on the statute and on the operation of the registry and for some unforeseen reason is thwarted and their title is “defeased” then they may in certain limited circumstances be entitled to compensation.The bill clarifies that the amount of compensation payable where the claimant has been deprived of an estate or an interest in land is the value of that estate or interest. So it rules out by implication pecuniary damages and for mortgagees compensation only extends to the value of the security and excludes any amount beyond that.There are a number of measures in the bill that the select committee will wish to hold to the bill’s stated purpose of enhancing clarity and certainty: provisions clarifying that the registered title may be limited by overriding interests in other statutes—and we will come on to some examples of that that are very important—provisions clarifying the nature and scope of the registrar’s powers of correction; removing inconsistencies around existing legislation that protects administrators from some kinds of personal liability but not others; and limiting the effect and use of covenants in gross for consistency with the original policy intent.Much of that goes to what we call good housekeeping of the law. It goes to the periodic updating of the legislative framework in part because of the 2010 review. But that is where I think the mystery starts—that is that a 2010 review has slowly wound its way through the system and was languishing well down the Government’s Order Paper until today where it leapt to the Government’s highest priority bar one. None of us would argue with the previous priority the Kermadec sanctuary and its wonderful and bipartisan innovation but this one is a little bit of a mystery. It has been around for years; it is seemingly administrative and innocuous—why now?Here I think is the reality: media over the last week have been focused on New Zealand’s growing rural land crisis—and it is a land crisis; it is driven by a sustained collapse in dairy markets. It has resulted in what Dairy New Zealand and the Reserve Bank in its publication the Reserve BankBulletin of December 2015 forecast in its worst-case scenario which was a payout of $4 per kilogram of milk solids sustained for 2 years and then rising. We are worse than that worst-case scenario now at $3.90. It forecast in this document a 40 percent decline in rural land values—a 40 percent decline. Even in the mid-case scenario where prices are rising back to $6—and that seems fanciful on today’s money—that is a 25 percent decline in land values.These are the technocrats; these are the economists. This is a matter—this analysis—that is not political but the implications start to get political. I do not think that the Government wanted to debate on this bill in 3 or 4 weeks’ time or 2 months’ time because this situation is rising to be one of the most severe economic crises that New Zealand has faced. If land values collapse by 40 percent as the Reserve Bank is predicting what is going to happen to the incomes of farmers? What is going to happen to rural towns and communities? What is going to happen to the broader New Zealand economy?The National Government is arrogant and out of touch. It is not being straight with New Zealanders about the magnitude of this challenge. If all of those banks foreclose on those farms and we see a 40 percent collapse in farm prices the knock-on effects will be huge. And I think we all know where the pressures will be. There is the National Government caught between two core constituencies: the big banks on the one hand and the dairy farmers on the other. Something is going to have to give. Do you know what it is—and this is where this bill comes in—it will be fire sales overseas. That is why it wants this legislation on the way through because it is preparing for a massive swathe of fire sales on New Zealand farmland to overseas buyers. Iwi are not that stupid; iwi do not sell their land overseas.We should be very vigilant and we are saying today in this debate that the Labour Opposition is going to be extremely vigilant about this issue. Because who takes the haircut? Is it going to be the banks that have made in technical terms a freaking killing of profit on the lending they have done to both the rural sector and residential urban real estate? Are they going to take the haircut? Is it going to be the farming families—the sharemilkers and the farmers—who get foreclosed on? Are they going to take the haircut? Is it going to be rural New Zealand communities—are they going to take the haircut when this bill facilitates the fire sale of New Zealand farmland?And what is the Government doing about it? You know if this was a rugby game it would be a brawl and the referee just abdicated the field. The Government is not even playing the role of a decent touch judge.Hon Michael Woodhouse: He’d have given you a yellow card.Hon DAVID CUNLIFFE: That has got Mr Woodhouse’s attention because he can understand football even if he cannot understand immigration. The Government is out of the game. That is why New Zealanders need a Government that can take a long-term view of land sales with secure tenure and good strategy and protect it for future generations.