Ex-minister wants to waste more money

August 8, 2009

The ex-Minister of Lands David Parker is urging the Crown to appeal the Otago District Land Value Tribunal’s decision that amenity values shouldn’t be taken into account when setting rents for pastoral leases.

He said last week’s Otago District Land Valuation Tribunal ruling meant the rent-setting methodology created a large discount to what he considered was proper rent, and would increase land prices to the point where only wealthy overseas investors could afford to buy the land.

He was the one behind the inclusion of amenity values in pastoral rents. The subsequent legal battle ahs already cost the taxpayer and pastoral lessees hundreds of thousands of dollars and the ruling makes it quite clear he was wrong.

He didn’t understand the issue when he was a minister and still doesn’t.

Rent for pastoral leases is based on land exclusive of improvements and leases tightly proscribe what leaseholders can do with the land. Regardless of the beauty of the surroundings, pastoral leases are for pastoral farming. Meat, wool and leather don’t earn a premium because the sheep and cattle from which they came enjoyed the view while they were grazing.

Fortunately Parker’s no longer in government and the people who are have a much better grasp on the issue.

Agriculture Minister David Carter told the ODT he expects pastoral lessees to welcome the new policy for the high country which is to be released soon.

Asked about last Friday’s land valuation tribunal ruling on rent-setting methodology, which found in favour of pastoral lessees, Mr Carter said it was a victory for farmers. High-country farmers had a role in managing the “difficult and fragile environment, in many cases better than some Wellington-based bureaucrat,” he said.

High Country Accord chair and Minaret Station owner, Jonathon Wallis said in a newsletter to accord members:

As a result of the decision, the rent on Minaret Station will increase by 400 per cent from the previous rental set 11 years before, but this a sixth of the rent proposed by the Crown.

 “For many farmers, the rent sought by the Crown exceeded the gross income from the farm. There is nothing rational in that,” states Mr. Wallis.

 He says the persistent attacks and treatment of high country farmers by the previous government were cynically motivated.

 “The tribunal reflects this in its criticism of the previous government for choosing ‘to direct and demand of its valuers a process that is intended to achieve a particular outcome’.”

 This issue has caused a lot of anxiety for farmers, some of whom had been farming the land for generations. Had amenity values been taken into account when assessing rents pastoral farming would no longer have been viable on many properties.

That may well have been the ultimate aim of the previous administration which failed to understand the role pastoral farming has played in the conservation of the high country.

David Carter has made it clear the current administration has a much better understanding of the issue and while it is up to LINZ to appeal the decision or not, it is obvious the government would not be in favour of wasting any more money on this exercise in futility.


Carter questions court action – Updated

May 15, 2009

Agriculture Minister David Carter is questioning Fish & Game’s leadership  after its failed attempt to gain public access to pastoral lease land.

“I seriously question the use of hunting and fishing licensing fees in taking this action, and I will be discussing this further with the Minister of Conservation.

“I am concerned this divisive action was taken when there was no foundation for Fish and Game’s claim for greater public access to high country stations.

“A pastoral lease gives the runholder the right to say who has access to their leasehold land. This is no different from private property owners,” says Mr Carter.

“The fundamental duty of Fish and Game is to advocate for hunters and fishers, and to help enhance their relationship with rural landowners. . . “

How refreshing to have a Minister who stands up for farmers and rightly questions whether Fish and Game should be using licence fees for its political and litigious campaigns.

Anecdotal evidence from hunters and fishers suggest the Minister is more in touch with their concerns than the body their licence fees funds.

This misguided court action was expensive for licence holders, tax payers and farmers and it’s not just money but goodwill that was wasted.

UPDATE:

Federated Farmers said the court action was a disaster:

The challenge was a failed attempt to by-pass all the work associated with walking access and it is a spiteful and damaging waste of the fishing and hunting license fee money. . .

“This decision brings relief for affected High Country farming families, as they now know Fish & Game members won’t be entitled to walk all over them,” says Donald Aubrey, Federated Farmers High Country chairman.

Both Federated Farmers and the High Country Accord played an instrumental role in the formation and development of the Walking Access Commission.

“We have contributed positively to the development of rules for public access that give pastoral leaseholders and their families security and certainty. Meanwhile, Fish & Game’s Executive has sadly played nothing but a negative and destructive role. . .

“High Country pastoral leases impose strict conditions on us as farmers. The judgment acknowledges that leaseholders are responsible for much more than just grass.

“It’s only right that farmers have the ability to control and manage access to such land. This decision enables pastoral leaseholders to operate a business and maintain authority over their property rights contained in their leases. 

“The High Court’s judgement also recognises that pastoral leaseholders perform a stewardship role. In other words, we farm with the High Country and not against it. . .

“Fish & Game chief executive, Bryce Johnston, now needs to take a long hard long look at his and his Council’s decision to waste a vast amount of license fee money on this challenge.

“Federated Farmers consider it also time for the Government to look at the legislative privilege that enables Fish & Game to fund such frivolous litigation. This inappropriate use of license fee money should not go unchecked by Government,” Mr Aubrey concluded.

High Country Accord chair Jonathon Wallis issued a media release in which he asked if the action was a misuse of funds.

“Not just the huge amount of money farmers have been forced to direct into these proceedings away from rejuvenating our economy through expanding and maintaining agricultural production, but both the vast amount of tax payer funds that went into jointly defending it and the allocation of precious funds more commonly used for the protection and establishment of habitat for our fish and game.”

“The latter are funds generated by the sale of Fish and Game licenses sold to hunters and anglers who for almost a century have respected the goodwill and relationships established between farmers and recreationalists regardless of it being a matter of privilege as opposed to right.”

“The question also has to be asked whether this was not just a personal crusade by an executive distorted from the opinion of the general membership of Fish and Game itself.”

Wallis said he allowed licensed duck shooters on to his property on opening morning because he wasn’t blaming them for the actions of the national council.

Alf Grumble and The Bull Pen also post on the issue.


High Court backs property rights for pastoral lesees

May 14, 2009

The High Court has ruled in favour of pastoral lessees’ right to exclusive use of  their land.

In his judgement, Justice France said pastoral leases were consistent with a land leasing arrangement. The land leasing arrangement conferred exclusive possession to the farmer.

“The obligations the lessee undertakes would make it surprising if he or she were obtaining only a licence to occupy.”

. . . The Crown maintained control over the land to preserve it environmentally, and any proposed use other than pasturage required Crown consent.

But a clear indication of the relationship between lessor and lessee was that a recreation permit granted by the Crown to a third party required the consent of the lessee of the land.

“The need to obtain a lessee’s consent is, in my view, a very clear indication of the nature of the lessees’ possession.”

This ruling establishes the property rights of lessees and confirms their right to undisturbed occupation .

Fish & Game took the case to the court, contending that because the Crown owned the land it could give other people access to it.  

Farmers were furious about the case and the grapevine suggests that the new Minister of Land Information New Zealand was not impressed either. His department administers pastoral leases and was a defendant in the case, which in effect meant  it was a statutory body taking a government department to court.

Fish & Game used to be well thought of by farmers  for its work augmenting fisheries but that relationship has been strained in recent years as F&G has fought landowners on access issues and shown an unfortunate tendency to challenge property rights.

The expense to farmers of defending the case, which the ODT puts at more than $200,00, will have done nothing to improve matters. If F&G wants to rebuild postive relationships with farmers they should stay out of the courts and put their energies back into improving fisheries.


Healing the rift in the high country

March 26, 2009

Pastoral  lessees head for court with LINZ today to defend their property rights  against an attempt by Fish and Game to establish the right to roam in the high country.

High Country Accord chairman Andrew Simpson estimated it would cost pastoral lessees $200,000 to defend but said the stakes were high.

“It’s a direct threat to our way of life and the ability of pastoral lessees to farm the land. We can’t farm if we don’t have some form of control over who enters our properties,” he said.

The case is being heard in the High Court at Wellington, and if successful would grant the public as-of-right access to pastoral lease land for recreation – so long as it did not interfere with the lessee’s exclusive right to pasture for grazing livestock.

 . . .  Fish and Game chief executive Bryce Johnson said his organisation was seeking a declaratory judgement on whether pastoral leases granted under the 1948 Land Act offered exclusive possession or exclusive occupancy of the land.

He will argue that pastoral leases only grant runholders exclusive rights to the pasture.

I hope the judge is familiar with Shakespeare because I think this argument is similar to the one which prompted Portia’s speech in The Merchant of Venice.

Tarry a little;—there is something else.—
This bond doth give thee here no jot of blood;
The words expressly are, a pound of flesh:

The words expressly, with pastoral leases, are land exclusive of improvements.  The land is publicly owned but the improvements which include the fertility, grass, crops, tracks, trees, fences, gates, and buildings, are the property of the lessee.

I reckon that would preclude the right to roam because no-one could enter the property without touching at least some of those improvements.

Regardless of the outcome of the case, we can be grateful that the government wants to heal the rift which developed between pastoral lessees and the previous administration.

Lands Minister Richard Worth said the relationship between lessees and the previous government had collapsed, with farmers feeling there was no trust between the government as landlord and the lessee.

Mr Worth said in an interview he was committed to a relationship based on three policy planks his party campaigned on at the last election: voluntary, good-faith negotiations between runholders and the Government; ensuring rentals were tied to the earning capacity of the property; and recognition that runholders could be as effective land stewards as the Crown.

The inclusion of amenity values in determining rents for leashold land led to court because some lessees are being charged rentals which exceed their gross income just because the sheep and cattle have a view while grazing.

The case concluded last month but the judgement has yet to be released.

Without pre-empting that, there is no doubt this government has a more reasonable attitude to pastoral leases than the previous one.  As Agriculture Minsiter David Carter says:

“The land is not easy to manage and the fundamental question we now have to ask is how will the Doc manage its already 43% hold of the South Island.”

Mr Carter said Doc and other interested parties needed to work more closely with farming families who, in many cases, had farmed the land for several generations.

“They are the ones who have delivered us the landscapes we see today. They are the ones with the ability to manage it far more sustainably than any government department,” he said.

 The previous government was hung up on ownership. But conservation can be assured and access negotiated without wasting taxpayers’ money on purchasing land and the on-going costs of ownership.


Property rights foundation of economic & social progress

February 20, 2009

New Zealanders’  high level of home ownership ought to ensure a high regard for property rights but this is disputed in a paper by Professor Lewis Evans and Professor Neil Quigley of the Institute for the Study of Competition and Regulation at Victoria University of Wellington with Kevin Counsell of NERA Economic Consulting.

Protection of Property Rights and Just Compensation argues that we have a poor record of safeguarding property rights and puts the case for including them in the Bill of Rights Act because they are a human right and essential for economic and social progress.

The authors undertook five case studies of the harm done by the current lack of protection of property rights, one of which looked at the confiscation of the value of crown pastoral leases and concluded:

In our view this taking of the lessee’s property right should be possible only if the lessee is compensated for the loss of income. This conclusion holds whether the taking is actually the destruction of the economic viability of the lessee’s pastoral farming by the change in the rent, or whether it is the taking of public access rights or conservation land in exchange for remission of the new rental charges back to the level at which pastoral farming is viable.

Another case study of particular relevance to rural property owners was on the destruction of value of pre-1990 forests under the Emissions Trading Scheme. But a threat to any property right is a threat to all so the other case studies are equally interesting: the destruction of Maori land value by Crown pre-emption rights; the nationalisation of petroleum; the confiscation of the foreshore and seabed; and the attack on the value of shares in Auckland International Airport Ltd.

The study looks at legislation which devolves the ability to take property rights:

 

The RMA is particularly notable for the power that it provides for local body administrators to routinely set aside private property rights without compensation.

 

The authors also took issue with Fish and Games’ challenge to pastoral leaseholders’ right to exclusive use of their land.

. . . Fish and Game New Zealand is advocating confiscation of rights which Crown pastoral lessees have long presumed that they held (albeit that this is to be determined by the courts). . . because Fish and Game is taxpayer funded, its actions illustrate the substantial asymmetry that may exist between rights holders and special interest groups who ‘represent’ popular causes that are supported by politicians: the resources of the latter are very often vastly in excess of those of the rights holders. . . property rights are a solution to the problem of the commons created by open access. Overriding rights of exclusive occupation will create an outdoor commons that will itself require regulation and inhibit socially desirable multiple-use activities in a world of increasing scarcity.

 

Investment and growth depend on confidence. Safeguards to property rights would give businesses and individuals greater confidence to invest and from that would come growth with obvious economic and social benefits.

 

HAT TIP: Matthew Hooton & the Exceltium Quarterly.


What’s a view worth?

January 28, 2009

What is the value of a view and how much should you pay for it?

 

If you are a tramper or climber it is priceless and you pay little or nothing for it. If you are involved in tourism or film making it is worth a lot and what you pay for it depends on negotiation. If you want a scenic hideaway it is worth even more and the market generally ensures you pay what it’s worth to you when buying it. If, however, you are grazing sheep, cattle or deer on crown pastoral leasehold property it is not worth much.

 

That is not to say that farmers do not appreciate the often spectacular views on and from their properties, but the average pastoral lease allows a leaseholder to do nothing else but farm. While a grand vista might make advertising fodder it does not feed animals; and a sheep or cattle beast is going to be worth no more if it grazed in beautiful surroundings.

 

This was the reasoning which has governed rent reviews for pastoral leases. They are based on land exclusive of improvements and until now that has been taken to be the land as it was before it was settled.

 

We have a very good idea of exactly what that is because our pastoral leasehold property boundaries a large tract of reserve which is owned by the crown and administered by DOC. On our side of the fence is pasture, tussock and some bush. We spend a lot on weed and pest control and it shows. On the other side of the fence there is tussock and bush too but there is also scrub and lots of weeds.

 

We run about 10 stock units to the hectare on our farm; the DOC land would struggle to support one sheep or cattle beast in many hectares and that poor animal would be competing with the rabbits, possums, pigs and deer.

 

A crown pastoral lease precludes the lessee from realising any potential for subdivision for building purposes or any commercial or industrial use. The leases also have restrictive land use controls so lessees who wanted to do anything else on their property except graze it require permission from the commissioner of crown lands and the rent would increase to take account of any diversification.

 

This has been regarded as fair to both lessees and the crown since the Land Act of 1948. But the Labour Government believed that amenity values were part of the unimproved value and rents should reflect that.

 

There is no doubting the beauty of the high country but it is subjective. One set of eyes might delight in the uninterrupted view of tussock; another will see weeds between the golden clumps and recognise fire danger in uncontrolled growth.

 

Beauty also changes with the weather. We love our leasehold property but it is at the end of the aptly named Mount Misery Road and the beauty is difficult to appreciate in a howling blizzard or when you can’t see past your nose because of fog.

 

The idea that anyone should pay more to lease farm land because of the views from which they earn nothing at all is ludicrous.

 

But the previous Government changed the rules which forced some leaseholders to pay more than they can possibly generate from pastoral farming because their properties have views from which they get no financial return. Labour thought a view was worth more than a livelihood so a group of pastoral lessees has taken a test case on the issue to the Land Valuation Tribunal.

 

It’s the final day of the hearing today but the change of government may make the judgement academic anyway because National’s agriculture policy stated that it would ensure the sertting of high country rents was tied to earning capacity so runholders could maintain their properties at an acceptable level.


Feds’ election wish-list pt 2

November 4, 2008

Federated Farmers’ election manifesto is 42 pages long.

I looked at the first 16 pages a couple of posts back, and continue from page 17:

* Employment legislation particularly the Employment Relations Act and Holiday Act, to be reviewed with a view to reducing compliance costs and encouraging labour market flexibility and productivity.

* The minimum wage retained at its current level (ie adjusted only for inflation).

* Paid parental leave to remain unchanged.

I agree with the first two points, but have philosophical difficulties with PPL because I don’t believe having a baby by itself is sufficient reason to require tax payer assistance. Giving money to a couple earning six-figure salaries when so many people are in desperate need of help shows the government has its priorities wrong.

* A robust efficient regulatory regime that provides assurances to consumers, both in New Zealand and overseas, of food safety.

* A continuation of voluntary country of origin food labelling.

Our reputation for producers of safe food must be maintained.

A growing number of consumers, and I’m one of them, want country of origin labelling  (COOL) where practical but I think that should be driven by consumers. If we opt for COOL food the people who sell it will soon get the message but that doesn’t need government intervention.

*  Acceptance of the principle and application of gene technology in agriculture, providing appropriate controls exist.
* Support of the regulatory frameworks established to scientifically assess and manage any risks to the health and safety of people and the environment from the application of gene technology.

* Recognition by the state that gene technology can provide benefits to New Zealand producers.

* Endorsement of individual farmers’ right to determine what technologies are used in their farming systems.

* Enshrining consumers’ right to information relating to the products they are purchasing by way of active risk communication by regulatory bodies and the supply of information to underpin consumer confidence.

* Recognition gene technology involves significant issues of intellectual property and the need to ensure this property is protected globally.

Gene technology is an area where emotion often beats science. This policy rightly recognises the need for regulation, safeguards and communication.

* Recognition of the property rights of affected land owners and lease holders.

* Continuation of the Tenure Review process with objective evaluations of Significant Inherent Values (SIVs).

* More recognition given to the use of protective mechanisms for SIVs as provided for in the Crown Pastoral Land Act 1998 (CPLA).

* Where large areas of land have both productive and environmental values, greater use of ‘sustainable management covenants’ under freehold titles as provided for in the CPLA.

* Amenity values be excluded from pastoral lease rent reviews.

They’ve got my vote on all of these points which address areas where Labour has caused hassles and heartache.

* Recognition that farming is a skilled occupation by Immigration New Zealand.

* Increased flexibility in immigration policies.

* Inclusion of more farming categories on the occupational skills shortage list.

Immigration policy needs to acknowledge that overseas experience isn’t necessarily helpful here and that attitude and work ethics are often more important than relevant experience.

* Review of the Local Government Act 2002 and local government funding to define council core functions.

* Councils to be given the flexibility to decide representation arrangements.

* More consistency in the process of setting user charges (eg dog registration).

* Any changes to dog control laws not to impose unreasonable impositions and costs on responsible owners of farm working dogs.

Yes again to all of these points.


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