Proactive and well-prepared farmers and lenders stand to gain from the introduction of the Farm Debt Mediation scheme, according to Scott Abel and Bridie McKinnon from law firm Buddle Findlay.
She introduced a discussion document — ‘Enduring Stewardship of Crown Pastoral Land’ — that sets out proposals in relation to Crown pastoral land. Public feedback is sought on:
- The implications of ending the tenure review
- The outcomes the Crown is seeking for Crown pastoral land
- What changes should be made to the Crown pastoral land regulatory system to achieve those outcomes? Submissions should be made by 5pm on Friday 12 April 2019.
There are 171 remaining Crown pastoral lease properties covering about 1.2 million ha of Crown pastoral land. The leases are perpetually renewable on 33-year terms that give the leaseholder rights akin to ownership, i.e. provided they comply with the terms of the lease they are entitled to exclusive possession of the land in perpetuity.
There are some limitations on the use or activities to which the leaseholder can put the pastoral land: the land can only be used for pastoral farming; and consent is needed to, amongst other things, disturb the soil, which limits development of the land.
Why tenure review?
The rationale behind tenure review is that it enables the Crown to negotiate with a leaseholder a surrender of some of their leasehold rights in return for an option for the leaseholder to purchase the freehold of some of the land. This means that areas of significant ecological or conservation value are returned to full Crown ownership and control, in exchange for the leaseholder gaining full legal ownership and control of the remainder of the land.
From the Crown’s point of view, because the leaseholder paid for their freehold land, which was set off against what the leaseholder was paid by the Crown for selling part of the pastoral lease, tenure review didn’t require the amount of government funding that would be required if the government was simply purchasing the leaseholder’s interest outright.
Tenure review came in for some criticism, partly because having obtained the full freehold ownership of land the freeholder was free to do with it what they wished which led to claims of profiteering at the Crown’s expense. The fact that significant areas of conservation land reverted to full Crown (public) control was often overlooked.
The discussion document, however, focuses more on the fact that tenure review hadn’t worked out as well as the government hoped.
One of the objectives of tenure review was that the Crown’s role as lessor of Crown pastoral land would end. Yet the tenure review process has been underway for at least 20 years and there are still many pastoral leases.
Tenure review will, however, now definitely end. Given the government’s desire generally to maintain control and use of important conservation and ecological areas now subject to leases, what does the discussion document propose in place of the current regime? Three basic methods are suggested:
- Protective mechanisms, such as covenants, to protect inherent values or easements to secure access
- More effective management of the Crown’s interest as lessor
- Purchasing the leaseholder’s interest in the land so that it can be protected within the conservation estate.
The discussion document proposes tightening up this process and requiring consents to focus on broader environmental impacts rather than farming activity alone and also to look at the cumulative impacts of discretionary consent proposals across a number of pastoral leases.
Whether or not the end of tenure review will enhance the Crown’s ability to manage sensitive ecological and conservation areas that are subject to pastoral leases remains to be seen. There doesn’t seem to be anything in the proposals that limit a leaseholder’s rights to exclusive possession. Rather leaseholders are likely to face a more rigorous oversight regime by their landlord.
It is interesting to see the proposal for the Crown wanting to purchase the leaseholder’s interest in these properties. The Crown may face the same criticism it is trying to avoid if it uses public funds to purchase leaseholders’ perpetual rights.
• Neil Dent is a partner in Hastings law firm Gifford Devine. The article was first published in Rural eSpeaking (Autumn 2019), the client e-newsletter of NZ Law Limited member firms. Gifford Devine is a member of NZ Law.