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Te Ture Whenua Maori Bill explained

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Brookfields Lawyers partner Linda O’Reilly outlines new provisions for rating of Maori land.

There are 1.4 million hectares of Maori freehold land in New Zealand and it is estimated that 545,000 hectares, or 36 percent, of it is unused. Rates on that unused land are largely uncollected and uncollectable, but may still pose a considerable liability for the owners and considerable frustration for local authorities.

Maori Development Minister Te Ururoa Flavell last month announced that Cabinet had agreed to provide local authorities with “more workable and equitable tools to deal with issues around the rating of unused and unoccupied Maori land”.

This should be good news for local authorities, who have long been frustrated by the provisions of Part 4 of the Local Government (Rating) Act 2002 that relate to the rating of Maori freehold land.

The problem is that it is often difficult to collect rates on land with multiple owners, and that is largely undeveloped, because there is no income stream for the owners to cover this cost. In fact, there is a specific limitation on the liability of trustees in section 93 of the Act that provides that trustees are liable for rates only to the extent of the money derived from the land.

No income means no liability. Rates arrears can accrue quickly, and the enforcement of collection is limited to a slightly complex system involving charging orders, and requiring an application to the Maori Land Court.

Section 102 of the Local Government Act 2002 requires local authorities to have policies on the remission and postponement of rates on Maori freehold land, and there is provision in section 116 of the Local Government (Rating) Act for Maori freehold land to be made exempt from rates by Order in Council with the consent of the local authority.

The latter provision is not widely used. It is proposed to replace this provision by giving local authorities the ability to make unused and unoccupied Maori freehold land non-rateable. Rates arrears will be written off once there is evidence of a commitment to use the land.

Further proposals include the removal of the two-hectare limit on non-rateability for marae and urupa. Land held under Nga Whenua Rahui covenants (protected indigenous ecosystems on Maori-owned land) will also become non-rateable. In both cases any rates arrears will be removed.

The intention is to remove some of the barriers in the way of Maori engaging with, and actively using, their land. The Minister says “this ratings proposal will create a clean slate for owners who want to use or occupy undeveloped land but are laden with ratings debt”.

It will also assist local authorities with large areas of Maori freehold land in their districts to resolve longstanding issues related to rating and rates collection. Although the proposals may result in a lesser area of rateable land, in reality they will not significantly reduce the value of rates actually collected.

Further they will remove the need for a frustrating and largely futile collection process in relation to unused Maori freehold land, and a source of irritation between local authorities and Maori landowners.

As an added benefit to local authorities the Minister, wearing his hat as Associate Minister for Economic Development, suggests, “this ratings change will incentivise Maori land owners to use their land which will in turn provide a boost to the local economy”.

The changes are proposed to be made through the Te Ture Whenua Maori Bill, which is still in draft form, but available on the website of Te Puni Kokiri. Amendments will also be made to the Local Government (Rating) Act and the Local Government Act.

 


This article was first published in the April 2016 issue of NZ Local Government Magazine.

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