The government has found a way to resolve a Catch 22 challenge regarding unproductive Maori land. To encourage development and increase productivity, it will exempt the land-owners from having to pay rates and will enable local authorities to wipe off rates arrears.
Alas, other owners of unproductive land should not expect similar exemptions from their rate-paying obligations.
The dilemma that is being resolved is that Maori owners of unused land get no income from the land and can’t settle the rates bill.
But they won’t take development plans to the local council because they might then be called on to cough up the money they owe.
Exempt the non-productive land from council rates and allow councils to wipe off the debt.
It’s a limited exemption applying only to unused Maori land blocks. If a block has been partially developed, the whole of the block is rateable.
But councils will be encouraged also to ease the rates burden for Maori land-owners to encourage development, including the building of houses.
In effect, she will heap a greater share of the rates burden on other ratepayers while granting dispensations to Maori landowners (flexing her local government ministerial muscle) to encourage the Maori development that is the aim of her other portfolio.
According to the announcement, proposed changes to the Local Government (Rating) Act 2002 will reduce rating barriers for owners of Māori land who want to use and develop their whenua.
There are around 1.4 million hectares of Māori freehold land, much of it unused or under developed.
“Owners of Māori land have aspirations to use and develop their whenua, but they face a number of unique challenges including unpaid rates arrears.
“This package of changes will break the deadlock where rates arrears prevents development from happening, and the emphasis will be more on enabling whenua to be developed in order to meet rating expectations, “ says Local Government and Māori Development Minister Nanaia Mahuta.
Under the proposal, local authority chief executives will have the power to write off rates arrears on all land (including general land) if they consider the rates are unrecoverable, including rates arrears inherited from deceased owners of Māori land.
Most of the rates arrears on Māori freehold land are on unused land and the majority of this is from non-payment of penalties rather than the original rates bills, Mahuta said.
“While the retention of Māori land is paramount, inheriting rates arrears on land that can’t be sold discourages landowners from engaging with their whenua.
“This proposal would give current owners a ‘clean slate’ so they can start afresh. Owners will be able to bring proposals to their local council without the fear of having to pay rates arrears before starting any kind of development.”
Most unused Māori land will be made non-rateable, including Ngā Whenua Rāhui kawenata. This is Māori land that has been set aside for conservation purposes.
Any rates arrears on unused or Ngā Whenua Rāhui kawenata will be removed.
“At present, the rating policy on wholly unused land or Ngā Whenua Rāhui kawenata varies from council to council. The proposed legislative changes will ensure that there is greater consistency across the country and provide greater clarity on what kind of Māori land is non-rateable”, says Minister Mahuta.
To encourage the development of Māori land, including the building of houses, a statutory rates remission process will be put in place for Māori land under development.
“This will encourage local authorities to provide landowners some rates relief while owners are in the transition phase of making their whenua more productive. The development of whenua Māori will ultimately benefit the whole community.
“The changes will also put owners of homes on Māori land on the same footing as other home owners and retirement village residents when it comes to accessing the rates rebate scheme” she said.
This will be done by giving multiple homeowners on one block of Māori land the option to be rated individually. This will ensure low income homeowners are eligible for rates rebates.
“Some of these changes are about ensuring equitable rating practices for Māori and general land, while other changes are designed to release Māori landowners and local authorities from being stuck in a situation that neither party can easily resolve,” says Minister Mahuta.
The rating changes are part of the Government’s ongoing commitment to support whānau development through whenua. The cross-Government programme includes targeted amendments to Te Ture Whenua Māori Act 1993, new and enhanced Māori Land Court services, the launch of a whenua knowledge hub and website, regional advisory services and investment.
The Minister expects a Bill to amend the Local Government (Rating) Act 2002 will be introduced in the first half of 2020.
Mahuta’s announcement – should we be surprised? – was greeted by loud cheers from an audience of about 300 at a Kaikohe vineyard, described in the New Zealand Herald as “the first event of a packed Waitangi week”.
Regional Economic Development Minister Shane Jones brought good news, too: he announced further grants from the Provincial Growth Fund “to unlock the potential of Māori-owned land”.
Seven Whenua Māori initiatives in the Northland region (his home patch) would receive over $6 million.
Jones recalled that at Waitangi last year, the Government announced a $100 million Whenua Māori allocation aimed at creating new economic opportunities on Māori-owned land through loans or grants.
This year he was bringing news that the government has approved 30 initiatives across eight regions worth about $30 million.
Another $40m in applications are under assessment.
“The Whenua Māori allocation assists Māori with access to financial capital which remains a challenge for landowners as the special status of their land means commercial banks are less willing to lend to them. I’m pleased that through the PGF, we’re in a unique position to be able to support these landowners.
“Some landowners need to do some very fundamental work to remediate their land after poor lease arrangements over long periods of time or because land has reverted to gorse or unproductive scrub.”
In Northland, the Waima Tohu B Ahu Whenua Trust could now focus on pasture reinstatement, like scrub clearing, fertilising and fencing, and the Whangaroa Ngaiotonga Trust Farm would be able to carry out essential remedial work to bring their land in line with optimal farming practices.
Other landowners nationwide were forming collectives with neighbouring landowners to increase commercial viability, Jones said.
Point of Order followed up on Mahuta’s announcement regarding unused Māori land being made non-rateable, including Māori land that has been set aside for conservation purposes …
Is any thought being given to providing similar rates relief to farmers and others who have put land aside for conservation purposes – or for other privately owned unused land?
And if not, is there a reason(s) for ruling it out?
The reply came from a spokesperson for the Department of Internal Affairs :
“Any Bill presented to Parliament must deal with a single topic or policy. These proposals deal with matters relating to rating Māori land. These matters have been largely ignored since 1924. Extending non-rateable status to other private land set aside for conservation purposes is out of scope of this work.
Ngā Whenua Rāhui kawenata are particularly important to Māori landowners. About 1/8th of all Māori land is in such kawenata, and the average size of a covenanted area is 845 hectares. By contrast, the average size of a QEII trust covenant is 38.6 hectares.
The impacts on Māori owners of rating this land is therefore much greater than the impact on owners of general land.
In terms of unused land generally, much Māori land is landlocked or has no practical road access. Where that land in general title, it would almost certainly have been added to the conservation estate, which is also non-rateable.
In relation to other unused land, we have got ourselves into a situation where owners cannot pay rates because they get no income from or use of the land, but will not engage with the council about developing the land because they fear they will be pursue for rates arrears. By making this land non-rateable and writing off existing arrears we will cut through this impasse, enabling it to be developed. Experience shows that when developed, owners of Māori land pay their rates.
The rates exemption proposed for unused Māori land is only for land blocks that are entirely unused. Where a block has been partially developed, the whole of the block is rateable. This will maintain parity with general land such as back country farms which are only partly developed, with some land left in bush.”
The Herald pointed out that the scrapping of rates arrears is likely to have a big impact in the Far North, where the Far North District Council is owed about $20m in unpaid rates on Māori land.
In 2018/19 the council collected $82.8m in rates.