Questions about Sage ending the South Island high country freehold rort
By Richard Harman (author)
Conservation Minister Eugenie Sage has finally clamped down on one of the biggest privatisation rorts we have seen in New Zealand.
Yesterday she announced further moves to protect the iconic South Island high country.
Effectively she has ended the process whereby prime South Island pastoral land has become available for high priced residential subdivisions.
But last night environmentalists were questioning whether what she was planning would still not protect the iconic South island landscapes such as the Mckenzie country.
Her move effectively marks the end of a process which has seen South Island lakefront and high country properties be sold to usually wealthy Americans like Shanaia Twain or the US TV star Matt Lauer.
Last week she stopped the tenure review of the South Island high country leases whereby previously leased crown land was able to be privatised and was inevitably sold on for literally of millions of dollars of capital gain while the crown got a paltry return.
And yesterday she announced a review of the management of high country crown land held in pastoral leases.
The University of Canterbury researcher, Anne Brower, has described the tenure review process as “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.”
The purpose of tenure review was to enable the environmentally sensitive tussock land, mainly on the tops of the hills, to have stock removed and to be allowed to revert to their natural condition. The Crown then ran it as conservation or reserved land.
In return, the runholders got to freehold the land, mainly on the flats, which had less conservation value but which proved to have substantial commercial value.
The process has led to two outocmes – both of which have dramatically changed the shape of South Island high country farming.
On the one hand, the ability to freehold has led to the growth of irrigation and dairy farming in iconic high country areas like the McKenzie basin.
And, on the other, many run holders have been able to sell off their freeholded land for massive capital gains to often overseas investors (like The American singer, Shanaia Twain or PayPal founder, Peter Thiel) for huge multiples of the sum they paid the crown.
And, perhaps just as importantly, it is a process which has seen the NZ taxpayer effectively deprived of hundreds of millions of dollars which went instead as windfall gains to the original farmer leaseholder.
There have also been positives, most notably that public access to high country land for trampers and hunters has improved under DoC ownership.
So there are questions about what ending tenure review might mean for the future of the high country.
“We are surprised that the Government has already decided to abandon tenure review rather than consult on that proposition,” said Environmental Defence Society CEO Gary Taylor.said yesterday.
The EDS has been at the forefront in opposing the “greening” of high country land with its long fight against the McKenzie District Council and Federated Farmers over changes to planning laws relating to the McKenzie basin which were prompted by the freeholding of some big stations there and their conversion to dairying.
One current proposal would see 5000 cows run on land adjacent to Lake Pukaki.
Thus Taylor is now concerned about how the high country will be managed.
“The Government is presenting the public with a fait accompli on the big issue and then consulting on secondary matters,” he said.
He said the issue was not tenure review itself, but the way it was administered.
“Tenure review, if run properly, could be a useful tool.
“The problem has arguably been in its implementation which has seen the public ripped off and leaseholders given exorbitant profits.
“ Past administrative errors and processes could have been addressed whilst retaining the ability to use tenure review to achieve reversion of full ownership of highly valued land to the Crown.”
“Instead, the only remaining tool to achieve that outcome is buying out a leaseholder’s interests.
But there is no commitment to funding that.
“Without dedicated funding being part of the new policy settings, we are left with a pretty empty toolbox.”
The previous Labour Government addressed these issues by purchasing outright all of the land in five pastoral leases including, St James station which it bought for $40 million financed through the Nature Heritage Fund.
But National ended that policy and accelerated the review process including pristine lakefront properties.
The tenure review process turned a number of South Island runholders into multi-millionaires overnight.
The University of Canterbury geography lecturer, Anne Brower, has conducted a huge volume of research into tenure review.
One example she quotes is the 2002 freeholding of part of 1214 hectares of Alphaburn Station adjacent to Treble Cone skifield for $202,500. The freeholder then on sold 193 ha as a housing subdivision for $10.1 million.
Brower has found that by 2015, a third of runholders who had freeholded their land had subdivided that land for residential purposes.“
“Some 74,000 hectares - about a fifth of what the Crown sold for $65 million - has since sold for $275 million,” she wrote in her 2017 study.
“On average, those who have on-sold land have done so at 693 times the Crown’s selling price.
“In other words, at only 65,700% of the purchase price, the capital gains realised at Alphaburn are decidedly below the median of 69,200%.”
Sage says that her review of Crown management of high country land is intended to ensure that the natural landscapes, indigenous biodiversity, and cultural and heritage values are secured and safeguarded through the Crown’s management of the land.
At the same time, it should allow for “pastoral and non-pastoral activities that support economic resilience and local communities.”
In short, the high country real estate boom looks like it over.