Lessees await rent test case outcome

The Government's $40 million purchase of St James Station in Canterbury is further evidence the Crown has given away its rights to amenity values on Crown pastoral lease land, farmer advocates say.

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.

Farmers and the Government have agreed the hearing, over rent-setting methodology involving Minaret Station at Wanaka, would be a test case for the way future rents would be set.

Up to 80 lessees have appealed their new rent levels, in anticipation of a favourable outcome in the Minaret case.

Last year, the Government commissioned an independent review on rent setting, the Armstrong Report, which concluded rents were fair and in some cases excessive.

It recommended basing rents on stock-carrying capacity rather than on land exclusive of improvements.

But the Government ignored those findings and decided amenity values, such as scenery and access to lakes and mountains, should be included in rents, which saw some rent levels increase by up to 600%.

In many cases, the new rents exceed the gross farm income earned from the property.

A counsel for the High Country Accord, Kit Mouat, said in an interview that the price paid by the Crown for St James Station, and before it Birchwood Station, showed the lessee owned the amenity values and the Crown had given away all rights to those values by granting perpetual leases to the land under the 1948 Land Act.

"It tells us the lessee owns a huge slice of the value."

The Crown paid $10 million to the Birchwood Station lessee, when the land excluding improvements was $600,000, he said.

The High Country Accord has labelled as irresponsible the Government's decision to spend $40 million buying the 78,196ha St James Station, given gloomy forecasts about the state of the economy.

Accord chairman Ben Todhunter said the Prime Minister, Helen Clark, was guilty of "misallocation of taxpayer funds" by increasing its ownership of the high country, given the warnings of economically difficult times ahead.

Taxpayers would now have to foot the bill for weeds and pests, when previously it had been paid for by the lessee.

"The prime minister has just handed this burden to taxpayers and the Department of Conservation (Doc), a department that struggles even in the best of times to control weeds and pests on its vast estate," Mr Todhunter said.

High country farmers have long complained that the Government was taking over too much of the high country, and Mr Todhunter said since 2002 it has acquired for conservation an area twice the size of Stewart Island through tenure review and whole property purchases.

He said that by May 31 this year, 48%, or 165,266ha of land that had gone through tenure review had been transferred to the conservation estate and 52%, or 189,539ha, bought by the lessee from the Crown.

Four lessees totalling 49,242ha - Twin Burn, Michael Peak, Birchwood and Hakatere stations - had been bought outright.

In addition, the Crown has said it would not renew grazing licences on the Soldiers and Mount Ida syndicates in the Maniototo, with the land to go to Doc, although the Soldiers has been the subject of a court appeal.