LAND TENURES

Evening Star, Issue 17367, 1 June 1920, Page 2

LAND TENURES

) THE FUTURE OF OUR CROWN LANDS. i .more; security needed. i " I MR HOT'S.CONTENTIONS CANVASSED. i' ■ < [By Mr Johx Axstey, ex-M.P.]

r ' My attention has been drawn to some of the evidence given before the Land ■•' Coii'irisnon at their recent sittings, particularly to that portion of -it relating to the disposing of the National and ; Education Endowments to private freeholders. . This question of maintaining under a leasehold tenure the National and Education Endowments fcr education and old age pensions has two main features!— (1) The earmarking of the revenues for the stated purpose; (2) The fullest yossible development 11 and economic settlement of these lands. The first of these is probably what most appeals to educationists. The second is what most strongly appeals to me. Regarding the first, I have for many years persistently advocated—both in public speeches and in correspondence * with bodies controlling these reserves—thut the securest tenures 'should be given to the occupiers of these lands. These v ! appeals have been unheeded, and with , « few exceptions, and then only to a partial extent, most of these bodies have refused to give any but the most insecure of tenures, with the result that thousands of acres, much of it the finest land in New Zealand, remains under-developed, " under-improved, ill-cultivated, -and much of it held in aggregation with other lands owing to the impossibility of bui'.ding homes on land under these insecure tenures. The rents received .-we less than could be obtained under a secure tenure, and the production much below its possibili- - .ties, involving loss to the State. I have pointed out that the time must come when the public would rebel against these con- - difcions, and that, while ■we all agree that the best possible must be done for education, there is not the slightest need for - the • requirements of education to, block '' ' settlement . and the development of and .production, from the land ; and I want to say here that if the present agitat'on for handing over these endowments to the private freeholder to aggregate, profiteer with, and to trade in is successful, the parties mostly to blame are the educational and other bodies .who control these endowments, and persistently refuse to >e- . cognise their responsibilites as landlords if and the rights of those* who are prepared '. 'to do the strenuous work of development, improvemert, aad production from these .lands. * Begarddng the second, I think that the ' .administration of all these endowments dhould be taken out of the hands .of the ,Education authorities. They are and have .proved themselves incapable' of properly -administering ■ them.' , An educational is composed of educationists, and . "ban hardly bo expected to be experts in land administration, and I think all these endowments should be administered by .the Land Boards under the Land for 'Settlement and Land Acts, the rentals •-being earmarked for the desired purpose. . Jit most cases these Acts do provide a . secure tenure, -and much genuine settle- , ' jnent and increased production have taken * place under them. Among other things •they provide for limitation of area, resi- , dence that;. J is bona fide settlement (the y .phly effiaptive safeguard against aggrega- ; 'Jtionj, a-minimum of improvements, etc. -'—Lam_4iware that these Acts are not perfect 7 -and that their present administration leaves much to be desired; but these faults should be corrected by the Legislature.' Mr W. D. Hunt gave some lengthy ■ evidence before the Commission, the bur- • then of which was that nothing but' the granting of the freehold would induce the farmers tjo improve and develop their holdings;., t&at Government leases were insecufe,- : l_especially those of pastoral and smalljjrazing runs. Surely Mr Hunt must know-that almost all tenants of both 0 settlement' and Crown lands have had since 1912-13-14' the right to acquire the freehold,; and, if the conditions of these lands-are as.bad as, he describes them, it' is-;, clearly_ not the lack of freehold /.•lights that is the cause; nor does it •..appear that the granting of freehold /•rights to tenants of National Endowments would have any better results. Mr Hunt must be wilfully blind if he really believes his assertion that tenants will not improve or develop leasehold land even under ■secure tenures. The extraordinarily rapid improvement and development of L.I.P. and R.L. holdings long before freehold rights were granted are patent to everyone. We all know of large estates where '.a, J>art h»d been sold to small freeholders, .and the Government, on purchasing the "rest of the estate, settled it under L LP. av R.L., and I challenge any unprejudiced man to contradict the statement that the improvements on the leaseholds proceeded more rapidly, and their development and cultivation were at least equal, if not superior, to that on corresponding freeholds ; not that there was any special virtue in the leasehold, but from the fact that the leaseholder was free to devote his whole means to development instead of sinking some of it in paying a portion of • the purchase price. Mr Hunt contends that the right of renewal u<"not satisfactory, and that tenants will not improve because they will have £.■ their improvements taken away at the end : - •of the lease. The renewable lease came j.into operation in 1907, just 13 yen.Ts ago, -•so that it is 20 years in the case' of settlement and 53 years in the case of Crown •" land before any trouble of this sort will . arise 5 and as the conditions of renewal may not be generally known, it may be useful to state them here. Not sooner than three years nor later than one year and a-half before the end of the lease the Land Board must value the land ai d the improvements separately, and must offer the tenant a renewal of .the lease at per cent. on # the value of the bare land without.the improvements, which are and remain the pjopertv of the tenant. If the tenant considers the rent demanded too high, he can claim an adjusta.'mt by arbitration by one arbitrator and the Government the other, and the umpire, if required, _ selected by these two. If the tenant is still not satisfied with the valuation agreed to by his own arbitrator, he Iks the, option of givinj; tip the land and receiving payment in full from the Government for all his improvements. • These " rights of renewal apply also to small grazing runs and pastoral "leases, with the ox- . caption that these may be subjected to subdivision if suitable, in which case the tenant eaii retain one subdivision at the rent Rx»d a3 above, and he gets fall -compensation, any improvements ho may nave made.on the surrendered portion. I Mr Hunt must be a bit disingenuous in calling this an, insecure tenure, under which no man will impure hi« holding. The keen competition of this sort and their rapid improvement and development entirely fjelie his assertion. Mr Hunt is*' mislcading".in quoting old and long- discarded tenures to compare with freeholds and leafefalrjr .suppressing reference to the secure leasehold tenure now in existence. To give one instance.! A portion of the Benmore>'rnn. (some 60,000 to 70,000 acres), the lease'.,of which expired about four years ago,"■"was a University endowment. Twenty-ffve : .years earlier this run was tmlettable, owing to the insecure ~ tenure .insisted on by the leasing aufchoriand- the Government took over its and leased, it, together • • Crown land, in one block of ""ifimf2sQfiQo acres. About four years

ago this part of • the rap was cut into some 10 small runs and let by auction miner recent legislative secure conditions, but without, freehold rights. The rents obtained were about 60 per cent, above the upset price,' which latter was very much higher than the previous rents, proving conclusively that the secure tenure offered was attractive, and so far from Mr Hunt's contention that tenants • will not improve under any leasehold tenure, most of these small" runs have already very extensive improvements made on them. On one that I know of and have seen there is already probably more spent on improvements on this small run than was spent on the whole cf the Bermore run of 250.000 acres during the last 20 years, excepting that there may, of course, be less spent in miles of fencing. I do not think that the freehold is" a particularly suitable tenure for pastoral country. This, country must be held in fairly large areas; it is remote, rough, and subject to severe climatic conditio/"* • mortgage, if obtainable, would require a very wide _ margin, so that the occupier would require large means; hence it would be held by investors or speculators, probably absentees, rather than by working resident sheep-farmers. But if held on leasehold in moderate areas, a working sheep-farmer of modest means, if accompanied by experience and industry, could easily finance the stock and other working expenses of such a holding. But what does all this cry of freehold versus leasehold amount to? Strictly speaking, we have almost no freeholds in this country, nor shall we ever have. Itis true that, there has been a considerable increase in the number of freeholds under recent legislation, but there has been a still greater increase in the amount of the mortgages. If we take the total unimproved value of all the freehold land in New Zealand, it is of less value than the amount of the mortgages; in other words, the freeholders own less than the value of their improvements. How does this differ materially from the leasehold? In fact, in no country nor in any age, so far as my researches go, does the* occupier of the land really own the land he occupies, nor will he ever do so under present economic conditions. A man that actually owns a fair-sized farm and capital to work it has sufficient wealth to live in comfort on the interest- of his capital, without the bother and risk of working a and generally adopts the course of handing his farm over to someone without the means to buy, but under the necessity of working to live on some terms of hire either as rent_ or interest; and this is the ultimate destiny' of all our lands—viz., that the occupier will hold his land on terms of hire from the real owner,, be he private freeholder, mortgagee, the Crown, or other leasing authority. Why, then, tliis cry for the freehold? The answer is simple: If land can be acquired at low initial value, and disposed of later at a high price, there is clearly a profit in this trade outside the return from occupation. The right to acquire the freehold at the original value pf an l.i.p. or an r.l. is of no value to the occupier while he remains m occupation, but if he wants to sell, it enables him to pocket any increase in value in addition to his return from occu* pat-ion.

The instance given by Mr Hunt is a case in point. He says the total Tents received from pastoral runs and small KJTf'ng runs in Otago and Southland is w61,591, which works out at a caoital value of about 4s per acre. He savs*that the frehold lands adjoining have "largely increased in value, but the leaseholds have not. Of course, if leases were granted any time within the past 25 years the rentals cannot have increased since thev were taken up, although the value of the land may be . much higher, and if Mr Hum\ and his friends can succeed in getting the freehold of these lands at the original capital value, it would be a prize for a few lucky individuals well worth fighting for, and no doubt we shall soon heai« of these gentlemen selling out at great increases in price, which would be heralded as an increase i owing to the granting of the freehold, and ! the tact that the purchaser was occupying on terms of heavv mortgage would of be suppressed. _ While strictly speaking we have no freehold, neitner can it be said that we have any real leaseholds or secure leaseholds, the L.I.P. may fairly be described as possessing all the advantages of the freehold with none of its obligations. It can be traded with. It does not involve the sinking of monev in the capital value It pays no Land Tax. The R.L., owing to its length of lease, has nearlv the same advantages. The only drawback to the occupier m these tenures is the limitation of area, The trading j n these tenures is nearly as bad as the trading in freeholds. Most oi the tenures granted by educational, church, and public bodies are in-' secure, and are a great bar to settlement, production, and development. • I believe that all our Crown, endowment, and publicity owned land should be retained under a leasehold tenure under Government administration. Tbo lease should be au interminable one, but subject to revision of ground rent otilv, at much shorter periods, say 10 Tears eleven less. This would largelv 'kill this trading, m goodwills and would largely meet the objection that values of "improvements are unaseertainable through lapse of time. We all seem to be impressed with the Idea that land will always rise in value, but land must inevitably periodically decrease in value in the future as it» has done in the past, and a shorter period for revaluation may be of advantage to the occupier. In any case, occupation would be secured to him for all. time so long as he desired it at a fair rent. His improvements would be secured to him while ho occupied and paid for at full value if from any cause he desired to give up possession ol his holding. As population increases and access ajid conveniences increase) areas not too large to-day. will have to be closer settled and provision for sub-division must be made; but rights of sub-division must always carry with them the right of the occupier to retain undisturbed one sufficient sized •sub-division and full payment for any improvements he may have made on the surrendered portion. I believe that under such a system improvement would go on just as well as under the freehold. We must riot forget that this buying of land to sell again does not mean real settlement. Improvements are not always made from a production point of view, but sometimes just to sell, and there is always a loss oi tune and production during the periods of exchanging owners. Many farms have changed hands several times lately, leaving the final occupier saddled with an incubus of debt that must increase the cost of production and keep hini poor all his life, while the lucky trader in these lands walks off with his profits, perhaps invested in tax-free securities; he can then live in idleness on the toll from his speculation in public land. What the country needs just now Is that onr lands should be occupied in economic sized areas by settlers obsessed with the need for the maxium of production and not simply to acquire land to sell out again at a big profit.