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The Squattocracy’s 2nd Land Grab
Who Owns the High Country? by Ann Brower
Craig Potton Publishing, $30. Reviewed by RICHARD THOMSON
Let’s hear it for Ann Brower. There has been a spate of book about the South Island high country recently, emphasising rugged yet photogenic individualists, resource-intense recreation, its rich and yet degraded history and just larking about. But Brower’s book is the one you really need to read.
Others had grumbled about tenure review – the process by which the most valuable parts of many leased farms in the South Island’s high country have been privatised, in exchange for the reservation of other leased land with ‘high conservation values’. But Brower, it seems, was the first to ask: ‘When privatising nearly 20,000 hectares of Wanaka shoreline, why did the Crown pay the recipients over a quarter of a million dollars?’
Brower is American. She arrived in New Zealand in 2004 on a Fullbright scholarship. She decided to look at land reform in the South Island. The government, she discovered, was giving away clear title to the most developable Crown land in the high country, while taking back the rights to graze the poorest Crown land. And, realising that no one knew the answer to her question, she proceeded to figure it out for herself.
We could ask our own question: Why did it take a foreigner – an American, even – to point out to us that farmers were putting themselves in a position to realise staggering profits through this process of selling off Crown-owned land?
The high country, Brower suggests, is a place where myths of rugged individualism, self reliance and struggle to overcome the harshness of nature have more force than the reality. Our version of the American West. Our need for such a place to exist is deep-seated, because we use it to idealise our national character and society.
It has has been so important, in fact, that the farmers have been able to take advantage of the myth to obscure the reality, which is the suburbanisation of the myth of the Southern Man into lake-shore lifestyle blocks.
This isn’t only happening here, mind you. The American documentary Brave New West, screening in the Reel Earth film festival in Wellington this month, shows how the Utah deserts made famous in John Ford westerns are also being carved up. And pointedly, that film suggests that today’s hardy and iconoclastic individualists – like its subject John Stiles, who runs a self-published newspaper with the tagline ‘Clinging hopelessly to the past since 1989′ – are battling developers rather than the weather.
Until the Labour Government called a halt to the high country privatisation process in 2006, the Government had bought back the grazing rights to 197,000 hectares land. Almost all of this is unproductive high-altitude country. Runholders have gained clear title to 270,000 hectares. This is the most valuable land for farming, but once it is in private ownership, owners are able to apply for consent to develop – which encompasses subdivision, building, irrigation and tourism.
In exchange for giving up leases to land for which they had little use, runholders were paid a total of $18.5 million dollars.
At Glendhu Station, for example, the runholder gained the right to develop 2368 hectares on the shore or within sight of Lake Wanaka. The Crown, by buying back the option to graze from the runholder, gained fewer than 300 hectares for conservation and recreation purposes.
Surely, says Brower, the option to develop land is worth more than the option to graze. Yet exactly the opposite happened. The Crown paid the runholder $584,000 for those 300 hectares. The runholder paid $579,000 for the option to develop his 2000-odd hectares. The Crown paid 10 times more per hectare. The runholder made $5000 and gained control of 91 per cent of the lease. He then applied to the local council for consent to build a golf course and luxury villas.
If consent was not forthcoming, he said, he would then apply to build a piggery on the lake shore.
The golf course was approved.
This story suggests another set of reasons why farmers were so successful in gaining ownership of Crown land. That threat to build a piggery was a demonstration of contempt for processes of regulation. The modern-day Southern Man believes governments of any kind have no right to interfere in how individuals speculate on their property. And regardless of the legal reality, I think you’d find that many if not most inhabitants of the shores of the Otago lakes – for whom a word such as ‘bureaucracy’ easily shades into a phrase such as ‘communism by stealth’ – found it distasteful that the state should retain any form of control over runholders’ activities.
In Queenstown and Wanaka, where tourism is the 21st century goldrush and greed is synonymous with property prices, it’s likely that a combination of avarice and envy stopped a lot of people from complaining about what they themselves would have been doing – if only they had had the chance.
The peculiar cultural bubble of Central Otago is one reason it’s no accident that it wasn’t until tenure review began to affect the lake shores in Canterbury – in particular Lake Tekapo – that public disquiet about the process reached a point where the government felt it had to act.
Farming in the high country is not easy. But although it does seem to be tolerably lucrative, it is subdivision where the real money is. This – the logical outcome of purchasing the ‘option to develop’ was not raised by runholders when they sought to privatise their leases, but more disturbingly it does not seem to have been seriously considered by the Crown.
One reason was that the Crown did not actually participate in the negotiations. Instead, Land Information New Zealand (LINZ) decided that it was not its role to take sides. So there was no one to present the Crown’s interests. Secondly, it contracted out the negotiations to private firms, who were told to act as ‘referees’ and not to let money stand in the way of a deal. And, of course, the quicker the contractors settled, the sooner they got paid.
As a comparison, if the new government is really serious about settling historical Treaty of Waitangi claims by 2014, perhaps this is a model they should consider.
Although Brower has clearly played a pivotal role in halting an outrageous land-grab, she thinks that the farmers themselves are not at fault. They were acting logically to maximise their own interests, she says, and the problem was that there was no one on the other side, sticking up for the interests of the Crown, tax-payers and the general public.
The whole tawdry tale, up to and beyond the point in 2006 when the Labour-led government was finally convinced to call a halt to the lolly scramble, is laid out by Brower, side by side with her own involvement. As an example of how academic research, modelling and analysis can be used to explain real-life situations, it’s wonderful. As a polemic to inspire outrage, it has an unusually happy ending (so far – you’d expect a National-led government to be instinctively friendlier to farmers’ interests, and the privatisation process had already resumed, albeit under new more prescriptive policy settings). It’s also a textbook demonstration of how good information and the public will to use it are critical to making political change.
Having read and cheered over this book, two things stand out.
The first is the enormous social, economic, cultural and political power that farmers have and continue to wield in this country. It’s something so colossal and seemingly immovable that perhaps we often don’t see just how all-pervasive it is. Maybe we do, but choose to ignore it. Brower has chipped away at the monolith with the innocence and clear-sightedness of an outsider, and she’s made it seem possible, to me at least, that a major study of farmers’ dominance could become the defining text of Pakeha history in this country.
Secondly, the story is not yet over
LINKS
Richard Thomson is a Wellington writer and reviewer.
His last review for the SRB was of Buying the Land, Selling the Land by Richard Boast
Your reviewer, like Browers book is simply wrong in fact and even in theory.Pastoral lease land is alienated crown land just as freehold land is. We have freehold land rights to hold these lands against the crown just as a pastoral leasee does. In fact Pastoral lease land is already private land. If not why did the Crown pay 40 million to buy back land(St James stn) your reviewer says the crown already owns. Its a bit like saying that a person who owns 95% of a company but owes money to the bank doesnt have any right to claim ownership of the company because of a bank holds a mortgage.
I largely agree with Brower’s book, applaud the review above, and disagree with the preceding comment. The problem, as I see it, is that the pastoral leases are an eccentric form of land tenure, given that New Zealand is a common law jurisdiction, and we are in the 21st century. “Eccentric” means the law if flying without instruments, lacking precedent. Business law should rightly abhor eccentric practices.
The key eccentric detail of pastoral leases are that they are perpetually renewable, a contractual feature that is just too weird for words. No residential landlord would rent to anyone on that basis. Perpetual renewability feeds the mistaken perception that pastoral leasehold = freehold, and that leaseholds are alienated Crown land.
Also, until 2007, the rents the Crown charges on pastoral leases have average about $1/hectare/year. These low rents are yet another way the Crown bends over backwards to favour pastoral lessees. Low rents encouraged the persistence of low return sheep farming as opposed to other land uses.
Real property consists of a bundle of legal/economic rights, and the bundle that make up a pastoral lease is a highly curious one. I am not surprised that there are fierce disagreements as to who owns what. But what is crucial is the right to vary the land use and, most important, the profit from such variation. The Land Act 1948 is clear on this: the Crown retains the development rights, although that fact is badly obscured by the perpetual renewability.
I am less hostile to privatising the pastoral leases than most critics of tenure review are. But here’s how privatisation should proceed. The Crown should purchase the lessee’s interest in his leasehold. The land to be privatised should then be put out to tender, with the Crown setting a reserve price. Harcourt’s or the like should be retained, and paid their usual commission based on the selling price. The existing lessee would be welcome to bid, but would not be privileged in any way except that he could bid using the cash he received in exchange for his leasehold.
If the shorelines of southern lakes are to be converted into lifestyle blocks, I want the taxpayer to be included among those who profit.