Agreement Negotiated With Maori Landowners
10 May 2002
Finance Minister Michael Cullen, Maori Affairs Minister Parekura Horomia and Organisation of Maori Authorities chair Paul Morgan today announced an agreement to a one-off $47.5 million payment to Maori leasehold landowners in recognition of the losses they sustained through their inability to maintain market rents under pre-1997 legislation.
The deal was negotiated between the Crown and the Organisation of Maori Authorities and honours a unanimous resolution made by Parliament during the passage of the Maori Reserved Land Amendment Act 1997. This called on the government to address the past rental losses suffered by the owners of the reserved lands and was incorporated into the legislation as Schedule 5.
This Act also provided for leaseholders, many of them farmers in the Taranaki and on the West Coast of the South Island, to be compensated for the changes to their lease conditions, including a move to market rents from 2001 and shorter rent review periods.
“Under the rules applying before 1997, Maori lessors were paid a fixed statutory rent reviewable only once every 21 years. Rising inflation during the 1970s reduced these rents to peppercorn status, depressing the real incomes of the landowners.
"We started negotiations in September 2001 and they were resolved this week. This brings closure to an longstanding and highly contentious issue that this government was committed to resolving," the Ministers said.
“Both parties accept that this agreement is a full and final settlement of what has been a long-running injustice. The money is exclusive of tax,” Dr Cullen said.
"The peppercorn rents paid for Maori leasehold land in the past have been an issue that has eaten away at the hope and spirit of the owners of that beautiful land.
"This agreement goes some way to finally resolving the reserved land issue in a fair and just way. It will assist owners to gradually regain control of some of their lands through lease purchases on a commercial basis," Parekura Horomia said.
PLEASE NOTE: Additional background information attached
Additional background information
Mäori Reserved Lands
Extent and Location
The Mäori Reserved lands total approximately 26,000 hectares and are held in 2,087 perpetually renewable leases. The main concentrations are in Greymouth, Nelson, Motueka, Wellington, Palmerston North and southern Taranaki.
The reserves were created in a number of ways. In Taranaki, they are made up of land confiscated by the Crown and subsequently returned to Mäori ownership. Elsewhere, they were created following Crown purchases and a commitment, as part of those purchases, to establish reserves.
Administration and ownership
For much of their more than 120 year existence the reserved lands have been administered on behalf of their owners by the Public and Mäori Trustees. In 1977, in response to the concerns and wishes of owners, a number of owner organisations were established to carry out this task and to hold the titles to the lands.
The major owner organisations are: In Greymouth - the Mawhera Incorporation, in Nelson and Motueka - the Wakatu Incorporation, in Taranaki - the Parininihi ki Waitotara Incorporation and in Palmerston North and Wellington - the Wellington and Palmerston North Tenths Trusts.
Provisions of perpetually renewable leases
The reserves are leased to a mixture of private individuals, companies and others. Until 1997, rents were restricted by law to 5% of the unimproved value for rural land and 4% of the unimproved value for urban land. Rents were reviewed only every 21 years.
Reform of lease conditions
The Mäori Reserved Land Amendment Act of 1997 provided for a transition to market rents beginning in 2001. It also moved the rent review period to seven years. The Act allowed these changes to be phased in over seven years beginning this year.
In addition, lessees were required to give the landowners a right of first refusal to buy should they wish to sell or transfer the lease outside their immediate family. The latter proposal was intended to accommodate the desire of some of the owners of the reserved lands to gain full control of their land.
The 1997 Act provided compensation to landowners for the delay in the transition to market rents following the passage of the Act.
Lessees received compensation for the changes to their lease conditions, including the move to market rents and shorter rent review periods.
This compensation could be determined in two ways, through a formula contained in the Act or by a determination of the Land Valuation Tribunal. Those who chose the formula in the 1997 legislation received their compensation in 1998. Those who chose the second option had their ‘test-cases’ heard by the Land Valuation Tribunal in early 2001. An appeal by the Crown against the decision of the Tribunal was heard late last year and the LVT’s approach to compensation was upheld. Of the 169 applications to the Land Valuation, 150 have now been paid the compensation determined by that Tribunal. A further 11 are expected to be determined and paid shortly.
During the passage of the reform legislation Parliament also heard representations from the owners of the reserved lands about past rental losses. In response, Parliament unanimously agreed that past rental losses to the landowners should be addressed by the Government.