Hon MAURICE WILLIAMSON (Minister for Land Information) : I move, That the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill be now read a first time. At the appropriate time I intend to move that the bill be considered by the Primary Production Committee, that the committee present its final report on or before 5 July 2011, and that the committee have the authority to meet at any time while the House is sitting except during oral questions, and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 187, 189(a), and 190(1)(b) and (c).

I am really pleased to speak in the first reading of this bill tonight. It amends the Crown Pastoral Land Act 1998 to set in place what I think is a robust and fair new system for charging rent for South Island high country pastoral leases. In July 2009 the Government agreed that lessees would be charged rent on the basis of the earning capacity of a property. We did that because the present rent system, which is based on the land value, is both unworkable and a source of dispute between the Crown and lessees. It is quite clear that those properties do not earn a lot of money just because the sheep can get a lovely view of a lake or a mountain. Therefore, it is wrong to charge just—

Hon Clayton Cosgrove: Careful.

Hon MAURICE WILLIAMSON: Well, Mr Cosgrove may have a different view of sheep, but all I can tell him is that that is not our view.

I am happy to report a high degree of support from high country farmers for the approach that we have adopted in this scheme. Notably, environmental groups who have views on pastoral lease management have not raised any concerns about what we are proposing in this legislation.

It has been a lot of work. We went right back to the drawing board to achieve our goal of implementing earning capacity rents for Crown pastoral leases. This bill proposes replacing what I think is an unworkable land value system with a system based on the productive capacity of the land. Rents will be set by capturing the carrying capacity of a lease in standard stock units and applying a dollar value to those stock units, using objective information about the current economics of high country farming.

Under this bill, scientific information about the characteristics of the land in a lease, such as aspect and temperature, along with a detailed assessment of the land itself will be used as an easily calculated proxy to determine the carrying capacity of the land in its original state. That is a very important element—in its original state. We do not want to penalise people who actively work to increase that capacity. The base carrying capacity will be set once for each lease and will not change. That alone will remove a major source of contention between the Crown and lessees when setting rents.

The process will then assess how much stock the land can plausibly carry at the time a rent is reviewed, so we can measure how far production has increased. The Crown will collect rent on the base production, plus 15 percent of the increase. In other words, somebody who is farming the land really well and gets a substantial increase across the base carrying capacity can extract 85 percent of that gain for themselves, with the Crown taking 15 percent. Ministers gave careful thought to the setting of this percentage. We agreed that rent must be paid on the base production and 15 percent of the increased production; that is what was finally determined. We felt it fairly represents the land and the development opportunity the Crown has provided to the lessees. Implicitly, as I said, the other 85 percent of the increase is attributed to the work lessees have done on the land and paid for over the years. Their own work and investment will not increase the rent they pay.

Crucially, this 15 percent figure conforms to the property rights inherent in a pastoral lease. We sought assurances on those property rights issues and other elements of the proposed system from an independent peer review panel, comprising a former senior civil servant, a retired Supreme Court judge, and a highly experienced valuer. The peer review panel endorsed the overall package of recommendations as a significant improvement over the current system.

Finally, the system takes the productive capacity of the lease—that is, the base plus 15 percent of the increase—and calculates any rents that are up for review by using an up-to-date rate that is calculated each year. This rate captures the current value of the production already assessed.

I will mention two further features of the new system. First, the bill sets out a cooperative approach to assessing the productive capacity of a pastoral lease, including a modern disputes resolution process for those cases where the Crown and the lessee cannot agree.

The final part of the new system that needs mentioning is that the bill contains an opt-in provision to allow lessees currently disputing rental valuations to have their rent set by the new system. As I mentioned before, the existing system encourages disputes. As I speak, 113 leases are currently before the Land Valuation Tribunal. At this rate, over half of all pastoral leases will be in dispute by the time this bill comes into force. This opt-in provision is a vital part of the bill. It allows for the equitable resolution of those disputes and a return to normality for the affected lessees. Those lessees and other lessees in the future will be able to get back to the business that they know best: productive pastoral farming that contributes to the New Zealand economy.

Finally, I along with my colleagues the Minister of Agriculture and the Minister of Conservation extend the Government’s gratitude and thanks to all those who have been instrumental in developing this bill. A lot of work and consultation was required to get here. I particularly mention the peer review panel, as I did before, which did a sterling job; Jonathan Wallis and his colleagues from the High Country Accord, who obviously had an interest they wanted to pursue—

Hon David Parker: They won.

Hon MAURICE WILLIAMSON: I do not believe that. I actually believe this balance gets—

Hon Clayton Cosgrove: You got rolled, Maurice.

Hon MAURICE WILLIAMSON: What?

Hon David Carter: It will be interesting to see how they vote in a minute.

Hon MAURICE WILLIAMSON: It will be. I will be very pleased to tell South Island farmers that Labour members think they rolled us, because I do not think that is how they see it.

As I said, I thank the High Country Accord. I pay a real tribute to the officials from Land Information New Zealand, the Department of Conservation, the Ministry of Agriculture and Forestry, and the Ministry of Justice. This is a particular example of legislation done in consultation with the interested parties, in what I think was a fairly iterative process of getting to a place and a space where we all felt there was balance.

Hon Christopher Finlayson: And Crown Law.

Hon MAURICE WILLIAMSON: How could I have not mentioned Crown Law, I ask “Sir Geoffrey”—I mean Mr Finlayson? How could I have not mentioned Crown Law? I commend this bill to the House.

Hon DAVID PARKER (Labour) : The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill is yet another example of the way that this Government rules for a very, very narrow subset of New Zealand. This Government has in the last year given tax cuts of which over 40 percent went to the top 10 percent of earners. It has announced the abolition of gift duty, so that rich people can split their incomes by giving assets to the people in their family with the lowest rate of tax. Now it is giving absolutely unjustified rent reductions to millionaires.

Just about every one of these farmers is a millionaire. These farms are not worth just $1 million; they are sometimes worth $10 million—$10 million. They are more often worth about $4 million, yet the Government of New Zealand is saying that in all cases, whether or not lessees can afford to pay the rent, they will get a discount. Some of these properties have been purchased by the likes of Shania Twain’s family. I do not have a problem with Shania Twain or her family; they are, no doubt, very good people.

Hon Maurice Williamson: She’s not even here any more.

Hon DAVID PARKER: Well, “Mutt” Lange, her partner, still is. In fact, at the moment he is applying to buy a third high country station, I say to Mr Williamson. They paid $10 million for those stations. They are multimillionaires, yet the Government is giving them a rent discount because they do not want to pay the rent that is set out in the lease.

These leases are contractual documents. They are statutory leases—statutory leases. There has been absolutely no doubt in the minds of any of these purchasers that they are obliged to pay rent at a derisory 2 percent of the land value excluding improvements. The lessee’s improvements will be at least half the total value, so let us say the land value of a property worth $4 million is $1 million or $2 million. That means the lessee of a property that is worth $4 million is paying only $20,000 or $40,000 rent to the Crown at the moment under the existing formula. Yet the Government has said that if the lessees say they cannot afford it—actually, it is not even interested whether they can afford it; it will give them a discount anyway.

The previous Labour Government looked at these issues in great detail. We found that some farmers cannot, on the basis of pastoral farming, afford to pay rents that fully reflect the terms of their lease—that is, 2 percent of the land value excluding improvements. We said in respect of those farmers that we would not force them off the land; we would give them a discount. We might try to get them to fix up the wilding pines; we might try to perfect access through to rivers and lakes where there is no access for the New Zealand public. But if we did not need to do those things and they could not afford to pay the rent, then we would give them a discount anyway. That seemed to me to be a pretty fair and reasonable basis for the Crown to approach this issue.

The lessees came back and said that their properties might be worth $10 million when they sold them—and they wanted that $10 million in their pocket; they would not give that back to the lessor—but they would not pay 2 percent rent. They said they would go to the incoming Government, their National mates, and ask for a discount. Those millionaires on occasions can afford to pay it, but they are not willing to, and they want to change the terms of the lease.

Well, I say to the lessees and to National that property rights run both ways. There are private property rights to be respected and there are public property rights to be respected. A precedent is being set that the lessees ought not to forget. What goes around comes around, and I will never put up with an argument now from the lessees coming to me and asking me to please respect their property rights under this lease. What goes around comes around, and this is a licence for a future Government to go in, fix up these things, and change the terms of the lease.

The previous Labour Government never overrode the terms of the lease. The lessees came to me when I was the Minister for Land Information and asked me to respect their legal rights. I am a lawyer; I respect legal rights. My response was to say that I would absolutely respect their legal rights. They could enforce their legal rights, and it was my duty as Minister to enforce the Crown’s rights. The shame, I say to Mr Williamson, is that he is not enforcing his right as lessor in respect of the lease. He is giving away millions of dollars in value to the lessee. He is giving that money away for no consideration; it is a transfer of value from the Crown to the lessees.

This issue was considered in the 1980s by a group of experts, who produced what was called the Clayton report. The Clayton report found that if one gives a discount to lessees of below the market rent, they capitalise an increase in value to the lessee’s side of the ledger, so that the relative division of value between lessor and lessee becomes even more weighted towards the lessee.

Jacqui Dean and Nick Smith pretend that they are trying to get a good landscape outcome in the Mackenzie Country. They are setting up what they call a consultative approach. The outcome of that will be that in tenure review even more of the land will go to the lessee, and even less of it will come to the Crown.

I am told that there is a proposal now for the freeholding of a property around the shores of Lake Tekapō. Of that land, 90 percent will go to the lessee and 10 percent will go to the Crown, and the 90 percent that goes to the lessee will be extensively developed into dairy farms with centre pivots and the like, with extensive changes being made to the landscape. None of that development is permitted under a pastoral lease, but this Government is both encouraging that sort of outcome through tenure review and making the arrangements in tenure review outcomes even more weighted towards the lessee because it is devaluing the Crown’s interest in the lease by reducing the rent. Therefore, the relative share of the property owned by the lessee will increase, and the Crown’s interest will diminish.

This is another example of governing in the interests of a narrow few. No one in Labour was saying that we should drive lessees off the land. Everyone in Labour was saying that if the rent is unaffordable for lessees who are pursuing pastoralism, then we would give them a discount.

But what about the people who have a fractionalised ownership structure? I will give members an example. A property up the Shotover River—I forget what it is called; it is the former Borrell station—is now owned by a large number of people who all own a fractional interest. It is actually a great big crib now. It is effectively a time-shared holiday resort for the people who own it. We are giving them a discount. Some of the wealthiest people in New Zealand have interests in this station. That is without exaggeration. Some of the wealthiest people have an interest in this station, and we are giving them a discount, despite the fact that they paid large amounts of money—

Hon Maurice Williamson: We’re not giving anyone a discount. We’re asking them to pay based on the productive value of their land.

Hon DAVID PARKER: No, the Government is actually giving them a discount below 2 percent of the land value excluding improvements. Two percent of the land value excluding improvements is the statutory value of the lease. It has been for many decades and it is fair. The land values have increased because people pay a lot of money for these wonderful properties, and they are beautiful properties. Most of us would love to own one of them. But we would not expect the Crown, which is the lessor, to give it to us for nothing. It is getting very close to that—it is getting very close to that now.

These properties trade for millions of dollars, yet the Government is now charging less for these properties than the rent on a lot of residential properties in Auckland, despite the fact that these properties are thousands of hectares in area, they sometimes abut lakes—Lake Wānaka, Lake Wakatipu, Lake Tekapō, or Lake Pūkaki—and they are some of New Zealand’s most valuable and most beautiful properties. The National Government is giving those 200 lessees a discount, despite the fact that the lessees are pocketing the money when they sell. Labour said that we should give them a discount if they need it, but if they do not need a discount, then we should charge them the full rent. They bought the property on the basis of that rent. I ask what is wrong with that and what is unjust about that. Again, this measure is an example of this Government governing in the interests of a very small number of people, who are getting millions of dollars in value at the expense of taxpayers.

Mr Williamson said that all of the environmental non-governmental organisations think this is a good idea. That is not correct, I say to Mr Williamson.

Hon Maurice Williamson: I didn’t say that. I didn’t say those words.

Hon DAVID PARKER: The member did not say that? OK, I am happy to say that the environmental non-governmental organisations actually do not think that this is a good idea, because they know it will result in poor tenure review outcomes. We will not have the leverage to sort out things like wilding pines, and we will not have the access to our rivers and lakes that all New Zealanders should have.

Hon DAVID CARTER (Minister of Agriculture) : Of all the contributions I have heard in the House, the previous speech from David Parker was the most full of jealousy and spite. It summed up Labour members’ attitude to the farmers of New Zealand. The Government wants to protect property rights, but Mr Parker calls the farmers filthy rich millionaires and says he will deal to them.

Labour has rolled Damien O’Connor. Here is what Damien O’Connor said on 4 August: “High country rentals based on earning capacity is a good principle to base lease payments to the Crown.” He went on to say: “I am sure farmers will welcome the decision and get on with farming and protecting their leasehold properties.” I agree with Damien O’Connor, but David Parker and Mr Hodgson have obviously rolled Damien, because they have changed tack. It sounds to me—though Mr Parker was not prepared to say so—that Labour is now going to oppose the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill.

I am proud to be part of this debate, because it gives some finality and surety to a small group of people who were treated in a despicable manner by Mr Parker and Helen Clark and the previous Labour Government. Mr Parker does not realise that the high country farmers of New Zealand are a very special breed of people. They live in the harshest environment in New Zealand. They live and farm there over a long period of time in order to bring up their families. On the whole, they do a superb job for the environment. They certainly do a substantially better job than any Wellington-based Government department could ever do with the area, but Helen Clark never believed so. For some reason, she had a real snitcher against the high country farmers. I thought it was just Helen Clark who had that attitude, but we have seen tonight that so does David Parker. Every National member in the caucus should send David Parker’s speech to every farmer they know. We now know the respect that David Parker has for property rights.

Over the 9 long years of the previous Labour Government, Helen Clark’s Government ran a concerted campaign to run high country farmers off the land. The first tactic was effectively to stop tenure review by demanding that the Department of Conservation become totally obstructive, grabbing more and more good pastoral land for the Department of Conservation estate. When that failed, Helen Clark and David Parker then announced they would automatically exclude a good number of the properties from tenure review because they might have a water view. That is what David Parker did, and that approach did not kick the farmers off the land, so the previous Labour Government came up with the final strike and raised the rent by hundreds, sometimes thousands, of percent. I tell Mr Parker that I know of farms where the rent he proposed for the high country station was actually higher than the gross income of the farm property. How was that ever going to work? It was not.

We are finally giving some security back to the farming families. We are going to leave them with a rent that is based on income-earning capacity. It is a rent that is affordable. It is a rent that will leave those farmers with some money to spend on things to address weeds and pests, so that they can maintain the environment. I ask Mr Parker to think how unsettling his and Helen Clark’s vendetta on these people was for the 9 years that Labour was in Government. Mr Parker laughs, but he should have got to know these people. He came from the area. It is no wonder they kicked him out as the member of Parliament for Otago. If he had any empathy with these people at all, he would know what his and the previous Labour Government’s policy did for them.

I am very proud to support this legislation. It finally brings resolution to what has been a very difficult issue for our high country community. It gives a clear demonstration that the National Government actually respects the property rights of the high country farmers. They had a lease in perpetuity, which Mr Parker was inclined to completely ignore and then come up with all these other very devious ways of trying to drive them off the land. The bill provides an equitable settlement for all parties. It will be simpler to administrate. It will be more transparent. It provides a fair rent. It allows the guys who live in that environment to get on with the job of farming and to look after the high country. I will guarantee to Mr Parker that those guys will do a substantially better job than any Government bureaucracy could ever do.

Hon DAMIEN O’CONNOR (Labour) : The member David Carter and the previous speaker from National, Maurice Williamson, ought to take a lesson in history and read some of their own speeches. A lot has happened in the high country. Back in the 1990s the then National Government did two things. It tried to resolve a couple of anomalies in the leasehold area—one with Māori reserve lands and the other with Crown pastoral lands. Two Acts were passed, one in 1997 and one in 1998. The then National Government drove tenure review because a couple of reports had stated that “Successive Governments have agreed in principle with the commission’s findings that the pastoral leases should be freeholded to release their potential and to offer the opportunity for better stewardship.” That is effectively what tenure review did. It was set in train by the then National Government, with the idea being that some areas of the high country were better in private ownership and some areas would be better put back with the Department of Conservation. The then National Government drove that situation.

The previous Labour Government came in, and did not disagree with it in principle. But some of the easy transitions had occurred and it was getting more difficult, so we ended up with the situation where some properties that had been freeholded had been onsold. The valuation set in the tenure review process for the high country land was proving to be way below that of its market valuation. The Crown, as the owner of the land, was left in a difficult situation. Should it just ignore the market valuation of high country land that people like Shania Twain, Tom Sturgess, and a number of New Zealanders were paying big money for?

Sandra Goudie: Yes.

Hon DAMIEN O’CONNOR: National members say yes. In fact, the law states that a valuation must be taken on an equivalent area of land and that gives a fair indication of the value of the property being looked at. “Equivalent” is a simple term for it. Mr Carter has run off because he does not like hearing this. The fact is that the Crown had a legal obligation to charge a lease based on the valuation of the land. Now, we run into the technical and difficult issue of unimproved land value. In fact, the high country lessees have taken the issue to arbitration and have won their case, which is why we have the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill.

I do not disagree, as I said in my press release, with the general principle of the affordability of rents based on the productive capacity of the land, but it is hard to establish. In a bad year, if a farmer is running just dry stock and beef, they might not get very much income, at all. If a farmer is running fine merino, they might get a slightly better income. If a farmer is running a very profitable tourism operation, they might have a very worthwhile operation. How then do we identify the productive capacity of the land? I put it to the House that the answer is something that we will establish through the select committee process. The changes to land use in the high country have been well known and well publicised. In fact, they are not limited by what we are doing today.

The issue of the productive capacity of the land will be difficult to establish. Labour, when in Government, offered some compensation and some right to negotiate with high country lessees. I went to the Treble Cone ski field, spoke to the high country lessee, and laid out that offer on behalf of the previous Labour Government. Labour is still committed to that approach, but the issue of principle is then about passing on, through tenure review or another process, the right to have control of that land. If that right is onsold, the question is who should then retain the extra value, the unrealised value, when the rents have been set. Some might call it a super-profit. If we have paid on a productive capacity of, say, $300,000 gross income, we will work out our rent accordingly—at 2 percent or whatever the Government will do. But then if that block of land is sold for $10 million or $20 million, some would question whether it was of a very low productive capacity, and that may be the case. The high country lessees have argued that the valuation should not take on board other values beyond that of productive capacity.

If we accept that in principle, then I would go to the Maori Reserved Land Act, which is another piece of legislation passed by a National Government. They then had three kinds of land. There was agricultural, commercial, and residential land. I have had constituents walk from their homes because they have not been able to afford the increased lease on their leasehold property. Briefly, the argument goes like this. The Māori people who own the land have leased it on a 21-year rent review process with perpetual right of renewal, just like the high country people, but in 1997 the then National Government said that it would change the rules. It said this had been unfair to Māori landowners and it needed to straighten it up. I agreed with that in principle, but the lease was based on unimproved land value for the people who had their homes on those properties. When it came to calculating that lease, could the valuers identify unimproved land value? No, they could not. They were obliged by the Rating Valuations Act to say that the value of that property was equivalent to a freehold property of the same size in the same block, and that was what the rent would be charged on. So people in their homes had their leases go up—to quote the Minister—not by hundreds of percent but by thousands of percent, and some of them had to walk from their homes.

Where is the National Government when it comes to affordable leases for those people? Nowhere. If the National Government is to be consistent and if it is to stand on principle and talk about affordability, which I believe in, then it should do something for Māori reserve lessees. There will be a number of farmers amongst members opposite who know full well what I mean when it comes to some of the Taranaki leases. There are 1,000 of the 2,000 leases in the electorate that I am now campaigning in, so I know a little bit about it.

The issue of affordability is rejected by the National Government when it comes to State housing rentals. Do those members ask what the tenants in State houses can afford to pay? Well, they are doing it for high country lessees, and—[Interruption]—stop your squawking—I in principle agree with that. But if we are to have—[Interruption]

Mr DEPUTY SPEAKER: I ask the member to withdraw that comment.

Hon Clayton Cosgrove: Which one?

Mr DEPUTY SPEAKER: The comment that the member just made to the Government member. The member will withdraw that comment, please.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I would like to know which comment you are talking about.

Mr DEPUTY SPEAKER: The member said a very unparliamentary term, and I would like him to withdraw it.

Hon Clayton Cosgrove: Was it “you’re gone”?

Mr DEPUTY SPEAKER: No, it was not that one. It was the one following it.

Hon Clayton Cosgrove: Oh, “Shut up! You’re gone.” I withdraw.

Mr DEPUTY SPEAKER: I want the member to withdraw and apologise.

Hon Clayton Cosgrove: I withdraw and apologise.

Hon DAMIEN O’CONNOR: I have a passion for the high country, too. I have skied there. I have been out in those areas. I have enjoyed time at Molesworth. I have been to Minaret Station. These are iconic, spectacular locations. I admire the strength, the determination, of the people who farm those areas. But times have changed. It is easier now to farm those properties than it was 10, 20, or 30 years ago.

Sandra Goudie: Oh, rubbish!

Hon DAMIEN O’CONNOR: Oh, I wish that member would get off her butt and get out and find out. Now, thankfully, those farmers use helicopters for mustering. Now we have the aid of mechanical means to get around, and that is great. It is a different way of life in the high country now from what it was 20, 30, or 50 years ago, and that is something we welcome. But there is also a new appreciation of the value of that iconic land. It is appreciated by a lot of foreign investors. They are willing to come and buy, and they pay huge amounts of money for land that bears no resemblance to its productive capacity. As long as people are in those areas and farming them, looking after them, and protecting them as they have done in the past, and appreciating and loving that land, then we should give them affordable leases. I do not have any problems with that. The question is, when that comes to transfer on, who gets the right to the excessive valuation above and beyond that of productive capacity? That is the value at which many of those lands are transferred on. The reason that Labour is opposing the bill is that this Government is not consistent when it comes to affordability.

Hon CLAYTON COSGROVE (Labour—Waimakariri) : I raise a point of order, Mr Speaker. I ask you to rule on the following matter. The issue—without relitigating it—that you asked me to withdraw on I do not challenge, but I would like to know this, in terms of what is considered to be unparliamentary language, because I did put it to Speaker Smith. I just want to know whether you are ruling that the term “Shut up!”, which is neither foul language nor anything else, is now deemed to be unparliamentary.

Mr DEPUTY SPEAKER: I made a ruling that in the context of what the member said against a Government member, the term was out of order, and it was unparliamentary. I have ruled on that matter, and that is the end of it.

Hon Clayton Cosgrove: Point of order—

Mr DEPUTY SPEAKER: There is to be no further discussion; I have ruled. There is no further discussion.

Hon Clayton Cosgrove: Point of order—

Mr DEPUTY SPEAKER: I have just said to the member that I have ruled and that that is the end of the matter.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I am taking a point of order. Bearing in mind that I am not challenging your ruling but just want to clarify your ruling, I ask whether it is clear that when a member constantly barracks another member, we cannot retaliate in kind with English language out of the dictionary.

Mr DEPUTY SPEAKER: The member has the right to retaliate, and this has been a robust debate. The words that the member used I deemed to be out of order—unparliamentary—and I ruled in that fashion. There is nothing to stop the member rebuking a member over what has been said; this has been a robust debate. I have not interrupted during the course of this debate, but what the member said I found offensive, and I ruled on that matter.

SHANE ARDERN (National—Taranaki - King Country) : It has been interesting to listen to members opposite debate the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. Certainly, we have seen the true colours of Labour in this debate. Labour members do not like the words “farming profits”. They are opposed to any kind of agricultural profit. The word “agriculture” annoys them, and the word “profit” sends them into a complete tailspin. They cannot stand it. That is all that the difference is.

Under the 9 years of the previous Labour Government we saw what happened to a group of unique people in this part of the world. They are unique because of where they live and how they derive their income. They were trying to eke out a living in a very inhospitable area—sometimes not achieving that very well—and we had a Government that wanted to run them off the land. Let us look at the previous Government’s track record as custodian of those high country areas. Labour sees them as iconic and worth millions of dollars, and says they should not be managed in the way that this bill proposes. Let us look at what Labour has been like as a custodian. The Clark Government went out and spent hundreds of millions of dollars on buying up high country leases and other freehold high country land to include in the conservation estate. Most people do not realise that the conservation estate in the South Island currently occupies more than 50 percent of the total land area in the South Island. People need to look at it. Although that land is some of the most beautiful and iconic, the condition of it is a disgrace. Under the 9 years of a Labour Government that land deteriorated; it eroded, and it became covered in weeds and pests. The State has become the neighbour from hell in some cases because of the way the Labour Government valued that ownership.

What we have here is a group of individuals scattered across the South Island who, over a long period of time, have established a property right—a lease with the Crown—and have managed that land in a way that is sustainable. Labour members used to use the words “sustainable” and “sustainability” in every speech they gave. That land is being managed in a sustainable way. The weeds are being controlled. The pests are being controlled. The landscape is enhanced. There is a productive outcome for the nation. Those people pay taxes. There is an export earning capacity at the end of it. But, no, Labour members cannot stand that. They say it is Crown land and therefore the Crown should have total control. Presumably, Labour would want to send some bureaucrat from Wellington to manage it. That is exactly what a Labour Government would do with the conservation estate.

Let us look at what is happening in that regard. The example of public access is one that always sets me alight. When the Crown bought some of these iconic high country stations—and paid four times the value that a sheep farmer would have paid—it got control and put it into the conservation estate, then locked the gate. The Crown would not allow public access. In one case public access had been allowed by the private owners for over 100 years, yet the State got control and locked it up. No one was allowed to have public access.

I come back to the bill at hand. The bill proposes a substantial step forward in bringing some certainty to those high country farmers with regard to their commitment to the State. We will go back and honour the intent of the original legislation, which was passed by a previous National Government. That legislation was endorsed by the Labour Government, because it did not step in and change that legislation. This bill will bring some certainty in terms of what the costs are. A couple of members opposite asked what would happen if one of those high country stations came on to the market and was sold to a foreign investor—one who was a multimillionaire, a billionaire, or whatever the case may be—and the lessee captured a higher amount of the value than the State deemed should be the amount that the lessee should capture.

Hon David Parker: No, what their lease says.

SHANE ARDERN: Well, if that is the case, then under this bill the lessee would have to pay a percentage to the State. That is what the bill says. Mr Parker, who says he is a lawyer, should be able to understand that. The lessee will have to pay a predetermined percentage to the State. So the only debate is about whether that percentage is high enough. Of course, in Labour’s eyes, unless it is 100 percent it is never enough. Because those guys were billionaires or whatever, then even if it were 100 percent Labour would say it was not enough. Labour would say we should find another way to get at them.

I tell Mr Parker that the State cannot run the whole of New Zealand. Countries that have tried to do that have failed. Welcome to the real world! We want people to farm this land. We want people to maintain the condition of it, to prevent erosion, to control weeds, and to control pests. The State is not doing a good job of that in the substantial estate that it already has control over. What is the compromise? Members opposite offer no compromise. They want State ownership or nothing, and no profits. They think that if people want to live in those areas, then that is their choice but the State should not ever allow them to make a profit.

Hon David Parker: That is not what we said at all, and you know that.

SHANE ARDERN: That is exactly the position that some of those people have found themselves in.

Hon Damien O’Connor: Listen carefully.

SHANE ARDERN: The Hon Damien O’Connor will have his moment in the select committee. The Minister has said that the bill will be referred to the Primary Production Committee. I will value the member’s input, and generally it is sound.

It will be interesting to listen to the submissions. It will be interesting to hear the State side of the argument. It will be interesting to see what happened under the 9 years of Labour and how this whole thing became an absolute mess and was going backwards. There was no forward progress. No doubt those submissions will come forward. I welcome them and look forward to them. We have no choice but to look at an alternative to what the status quo delivers, because that has been a failure. I look forward to the passage of this bill through the select committee and the report back to the House.

Hon PETE HODGSON (Labour—Dunedin North) : The previous speech was a confused contribution, a somewhat bigoted contribution, and certainly a bewildered contribution from the member of Parliament for Taranaki - King Country. It was a strange contribution, because Shane Ardern, of all members, was part of a Government that voted to rapidly and significantly increase the rentals of farms in his electorate because it was deemed to be the right thing to do in terms of sorting out the balance of property ownership and property rights. Yet that same member is now speaking in favour of legislation, the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, that reduces the property rights of the owner and increases the property rights of the lessee. The legislation is a law change that has no basis in economics and that is being done entirely on the basis of lobbying.

If the story is to be told, we need to be reminded that when the previous Labour Government came to power 11 years ago, some lessees of high country stations were paying less than State house tenants were paying for State houses in Dunedin.

Hon David Parker: One was $1,200 a year plus GST.

Hon PETE HODGSON: One was $1,200 a year plus GST. Do we hear any stories about that situation from National members? No, we do not. Instead, we get from the Minister of Agriculture a vein-popping, shrill, and strident contribution that Labour is driven by jealousy and spite. That is not the case. The member to my right, David Parker, against whom the allegation was made, does not have a jealous or spiteful bone in his body, but he does believe in people having a fair suck of the sav.

It is reasonable, is it not, for the Opposition to ask National members—themselves great defendants and guardians of property rights—to please defend and guard property rights where the property right is owned by the taxpayer, not by the individual? All we want is a fair return, which was the case during the time of the previous Labour Government. A fair return was secured, except that an opportunity was given to leaseholders if they thought for whatever reason that the rental was not payable or not affordable. The leaseholders then had the opportunity to go to the Government and say, as they might to any other landlord, “Look, this is too tough. It is too rough. We do not want to walk off the land. Give us a reduction.” And do members know what?

Shane Ardern: They did, time and time again.

Hon PETE HODGSON: I ask the member for Taranaki - King Country whether he would like to tell me how many leaseholders came forward to get a reduction in their rental when the opportunity was presented to them in a statutory framework.

Shane Ardern: They came forward on many occasions, and many of them.

Hon PETE HODGSON: Many occasions, he said. The member for Taranaki - King Country says “They came forward on many occasions”. That is what the member for Taranaki - King Country says, but here is the truth: the answer is none—diddly squat, not a single one, zero. Leaseholders were written to individually. They were written to individually three times, so we cannot have an argument from National members that leaseholders did not know that the landlord was prepared to negotiate.

The leaseholders decided to play the longer game. They decided to socialise their losses, wait until they could get a change of Government, lobby the Government for a change in legislation—which is what is in front of us now with this bill—and say to themselves that it was just as well they did not go cap in hand to that dirty, rotten, stinking Labour Government for a reduction in rentals, because they have got a substantial reduction in rentals and a substantial increase in their property rights as a result, whether or not they need it.

You see, some rich people from the US and Indonesia have bought up bits of the South Island high country as personal bolt-holes. That is the case, and those people sit alongside real, live, ordinary, iconic sheep and beef farmers. I know a few of those farmers; I used to be a veterinarian in the high country. I still wander into the high country in Otago from time to time. In fact, when I was Minister for Land Information, I met many, many runholders in that capacity. I have probably met more runholders in my time than the member who has just resumed his seat, who considers himself to be a cocky.

Sandra Goudie: Oh, rubbish!

Hon PETE HODGSON: “The Orange Roughy” said that is rubbish. Well, she would not know the high country. A good question would be to ask the low country farmer who just resumed his seat why he feels good about high country farmers getting a deal that would never be contemplated for the lowlands—never.

You see, there has been a cave-in by a Government that likes to think it can get away with giving a bunch of money to 231 people, some of whom do not need it—in fact, nearly all of whom do not need it. When we wrote to them three times to ask whether any of them needed the money, none of them said yes. That is the size of the problem. We are accused of running the farmers off the land. We wrote to them three times, asking whether they would like a reduction.

Hon David Parker: Not one of them left.

Hon PETE HODGSON: Not one of them left. What they will do, of course, from now on, when the legislation is passed, is capitalise their gains. When the next lease changes hands, it will be at a higher price than before. Should tenure review persist, then the amount paid by the State to get back its own land will go up—

Hon David Parker: Or the amount the State gets will go down.

Hon PETE HODGSON: Or the amount the State gets will go down, but usually it is the former of those two options. The process will be expensive in any respect.

What do we want for the high country? I think what New Zealanders want for the high country is this—[Interruption] The member who just resumed his seat has had his chance to have a say, and I did not interrupt him. I cannot hear him, and he did not make any sense when I could. The people of New Zealand all enjoy the idea of there being some productive use of the high country. Whether we take a romantic, iconic, sort of Shrek, Driza-Bone approach or a more informed, understanding view of the value of fine wools depends on a person’s point of view. But all of us like the idea of a bit of high country production, especially after tenure review when we have been able to see more of the productive land being used, including for horticulture. It is great; it is wonderful. That is one thing we want the high country for.

Another thing I think we would all agree on is that it would be very good for New Zealanders to have, in perpetuity, reasonable access to the high country. “Reasonable” means all that stuff about whether the sheep are lambing, and on it goes—reasonable access to the high country.

A third thing on which I think we could agree is that we would like the high country to be managed in such a way that there is not a whole bunch of unplanned activity, especially in relation to waterways, or a whole lot of buildings going up along Lake Tekapō, let us say, or whatever the next lake is that will come into the sights of developers, as is happening in the Twizel area at the moment.

Although we did not get this balanced view from the member who resumed his seat, the member for Taranaki - King Country, another thing we could agree on is that managing the exigencies of the high country, whatever they may be—wilding pines, or rabbits, or anything in between—is hard work. It is hard work. We can say, as the member who just resumed his seat—what is his name?

Hon David Parker: Shane Ardern.

Hon PETE HODGSON: —Shane Ardern, says, that the Crown is the landlord from hell. In some cases, that will be true—undoubtedly. But I spent a bit of time in the area when I was the Minister for Land Information, and I can say that some leaseholders are neighbours from hell. Some shocking mistakes have been made, including mistakes made by people who really were trying hard not to make mistakes. They were really trying hard not to. Pinus contorta might be an example of that situation.

We can agree that there have been abuses of the land, including abuses that people really, really tried hard to avoid. But there is no point in getting into a blame game about it, as Shane Ardern did. It will have to be managed by all folk. In the future, the effective managers of the high country land will be a mixture of Crown leaseholders. That is probably what New Zealanders want, and, frankly, if we do not charge leaseholders what the land is worth, and if we give away property rights, then we will see all of those aims reduced and we will go backwards in our management of the high country of this country.

COLIN KING (National—Kaikōura) : It is quite clear that debate on the Crown leases is very emotional. It is interesting that there are 230 leases. I have learnt a lot tonight from listening to various debaters.

It is quite clear that we were in a situation, in my view, where there was a mess to be tidied up. The mess that was left was not addressed adequately by the Labour Government of the time. It is interesting to look at a comment in the Otago Daily Times dated 10 October 2008 that states: “News this week of the historic property’s purchase came on the eve of Monday’s start of a two-week hearing by the Land Valuation Tribunal in Dunedin to consider an appeal over the way Land Information New Zealand sets rent on pastoral lease land.” That epitomises what happened to Minaret Station when it was taken to a hearing, a tribunal, as to the formula that was then in existence.

As somebody who would not be so bold as to say he has been to as many stations as all the other learned speakers said, but as somebody who enjoyed the hospitality and the convivial treatment of having shorn on some those stations, mixed with some those people, and picked up the vibes before I even came into Parliament, I have to say how fragile the communities were.

I want to speak about a community that I am reasonably familiar with up in the Awatere Valley, where there are not what one would call any iconic views of Mount Cook or lakes or things like that, but it does have quite a nice view of Mount Tapuaenuku, which is the highest mountain in the inland Kaikōura Ranges at just under 10,000 feet. It has a major problem with rabbits. It has a major problem with Hieracium, and it has a major problem with being able to pay rents that could potentially rise by 600 percent.

I have heard the arguments put forward from the other side as to the inadequacy of farmers to address the Government in a man-to-man fashion—to use a term—but a lot of them were head down, tail up trying to make ends meet. I appreciate that there will be exceptions to the rule, but that is mainly brought about because, as the point was made, these are very, very different times from those when the leases in perpetuity were struck back in the 1860s. Resources are scarcer today and there is much more claim held to those areas of land than there was in those earlier days. In actual fact, if one lived in the Mackenzie country, even when I began shearing back in the 1970s it was a bit of a joke—

Hon Pete Hodgson: In the Mackenzie?

COLIN KING: Absolutely. If one was a merino farmer, it was a bit of a joke.

However, times change, and I take great courage and encouragement out of what the Parliamentary Commissioner for the Environment said about how we manage those very fragile properties, notwithstanding the argument that people will privatise the gains and—

Hon Pete Hodgson: Socialise the losses.

COLIN KING: —socialise the losses. That is externalising the problems and there will be difficulties around it.

However, in saying all that, I say that the Primary Production Committee will handle this diligently under the chairmanship of Shane Ardern. We will make sure that submissions are heard clearly and we will listen to the arguments of the Opposition.

However, it is very important to address the issue because under the Labour administration we ended up with 80 lessees having appealed the new rent levels. That in itself is not a reason to totally dismiss it.

• Debate interrupted.