Selling off the high country
Special investigation
We’ve paid $65 million to get rid of some of our most treasured landscapes, through an obscure process critics have described as a vast wave of privatisation. Wealthy foreigners are snapping up valuable land once owned by the public, who in some cases paid to dispose of it. As gated estates and manicured golf courses spread through our wild places, it raises the question: Who owns the high country? Charlie Mitchell investigates.
1. Alpha Burn Station:
The billionaire, his empty land and the public who tread the dusty path around it.
Thousands of people each year make the pilgrimage along this narrow and dusty path, which twists through a bushy terrace overlooking a lake in the heart of New Zealand’s high country.
It is a landscape millions of years in the making, composed by the rise and fall of ancient glaciers, a place where colours converge; the lake’s deep shade of cerulean, the muted and sun-tinged tussocks of gentle hills, the colossal white peak of Mt Aspiring.
The trail is important, not for where it leads but for where it does not. It follows a strict path around a spectacular piece of land, covering about 190 hectares, separated from the public path by a network of fences emerging from the scrub.
‘‘That track is one of the most popular things that brings people to Wanaka,’’ says Julian Haworth, secretary of the Upper Clutha Environmental Society.
‘‘It boosts the local economy massively.’’
If you were to stand on the land at its highest point, on a ragged knob rising about 400m above Damper Bay, to your east you would see the huddled line of lakefront houses known as Millionaire’s Row, which became symbolic of Wanaka’s growing elite; to your west would be farmland, sheep grazing on the flat paddocks which quickly curve upwards into rugged peaks.
This land, where the old Wanaka meets the new Wanaka, is recognised as an Outstanding Natural Landscape, a legal definition offering it a level of protection only surpassed by a national park. Not long ago, it became perhaps the most sought after piece of land in the country. But only a decade earlier it had been a scrubby sheep paddock on the eastern arm of Alphaburn Station, one of the many sprawling high country farms where the myth of the Southern Man was born.
The farm covered thousands of hectares, mostly on steep, mountainous land above the lake – but it was the fate of that one section at Damper Bay that caused a local outcry, foreshadowing a much wider debate that would continue for many years.
The dispute had been kicked off by a Government-led process called tenure review, which had been occurring, in some form or another, since 1992. It was the biggest change to ever come to the high country, an area covering more than 2 million hectares, a space larger than Israel.
Like much of the high country, Alpha Burn Station was owned by the Crown. The Crown had bought the high country from South Island Ma¯ ori through a series of meagre payments, for which Ma¯ ori were promised reserves and continued access to their resources. Those promises were broken by the Crown, for which it would apologise to Nga¯ i Tahu in 1998 for acting ‘‘unconscionably and in repeated breach of the principles of the Treaty of Waitangi’’.
After buying the land, the Crown leased it to farmers, who would pay rent and look after the landscape primarily by grazing sheep. They needed express permission to do anything else, like subdivide. In the mid-20th century, when wool prices were soaring, it was ideal; but then they
‘‘That track is one of the most popular things that brings people to Wanaka . . . It boosts the local economy massively.’’
Julian Haworth, secretary of the Upper Clutha Environmental Society
weren’t, and it needed to change.
The change took the form of tenure review, a voluntary process in which the Crown’s lease is broken up. Some of the land is privatised and sold back to the farmer; the rest is kept by the Crown and added to the conservation estate.
In 2004, when Alpha Burn went through tenure review, dozens of farms had been through it but hundreds had yet to begin the process, which many had viewed with cautious suspicion.
There was huge interest in Alpha Burn, which is a few minutes from Wanaka and shares around 5.5km with the lake front. For some, it was seen as a test for how tenure review would work in areas with enormous landscape potential.
When the outcome was proposed, the 190ha section at Damper Bay had been earmarked for privatisation, not conservation, resulting in a brief but furious campaign to keep it as a public reserve.
At the time, Wanaka had not been overrun with gleaming mansions like it has today, but many locals could see the way the wind was blowing; the rich and powerful were moving in, house prices were rising, and there were precious few opportunities to protect valuable land for the public.
Despite the likelihood the land would be developed, it was not put into the conservation estate or protected in any way with a covenant. It was handed back to the farmer, unshackled from the rules which had left it bare for so long.
The land was ultimately privatised, without protection. About 18 months later, it was sold to a group of wealthy developers, among them Sky TV founder Craig Heatley, one of the country’s wealthiest men. They sought to subdivide the land for six houses, which did not come to fruition, in part due to vigorous opposition from local advocacy groups.
They failed to get their development, but they did win consent for one house. They sold the land in 2015 for a record price, setting a new precedent in the local housing market, which was already spiralling skyward, far out of reach of most New Zealanders.
For those who had lobbied for the land to be retained for the New Zealand public before it was too late, the new buyer was particularly objectionable.
It was a company called Second Star Ltd, seemingly an homage to Peter Pan: the mythical paradise of Neverland is the ‘‘second star to the right’’ in the Disney adaptation.
Its sole shareholder was American billionaire Peter Thiel, the Libertarian futurist who had become a New Zealand citizen, unbeknownst to almost everyone, after spending 12 days in the country, which allowed him to buy the land without approval from the Overseas Investment Office.
The thousands of people who walk this part of the Millenium track around Damper Bay each year are on the fringes of land that was once owned by the public.
The land it trails around is empty, a locked jewellery box on the edge of town, symbolic of the wider changes facing the high country; once a mythic space that reflected the country’s ethos of stoic individualism, now carved up for the exclusive few who can afford the luxury of a mansion by a lake.
2. The crown jewels:
A wave of privatisation in the high country, and how the taxpayer footed the bill.
There is another branch to the story of how valuable, publiclyowned land came to be owned by an American billionaire. It is the price for which we gave it up.
Every tenure review involves two transactions. The Crown, as the landowner, buys the lease from the farmer, setting aside the land it wants to keep for conservation. The farmer buys the rest from the Crown as freehold, now entirely theirs. The two sides, effectively, buy out each other’s interests.
Because the Crown is buying leasehold land (that it already owns) and selling freehold, it should, intuitively, be making money. In 1995, a Treasury policy paper estimated the Crown’s share in a lease was 58 per cent, and the farmer’s 42 per cent – meaning that, in theory, what the Crown was selling was worth more than what it was buying.
When the review at Alpha Burn concluded, the Crown kept one third of the land for conservation, and sold the remaining two-thirds to the farmer.
It was later revealed the taxpayer had paid $590,000 for the lease, and sold most of the land back as freehold for $640,000. The farmer, ultimately, paid $50,000 for exclusive ownership of thousands of hectares on Lake Wanaka.
It is astonishingly cheap, given what happened next. The disputed section at Damper Bay – comprising just 6 per cent of a farm bought for $50,000 – was sold almost immediately for $10.2m, property records show. A decade later, it was sold to Thiel for
$13.5m.
The chain of custody went like this; the taxpayer gave up its land for an effective rate of $190 per hectare, which was on-sold for
$51,800 per hectare, which was onsold again for $70,000 per hectare.
The capital gain over a decade was roughly 37,000 per cent, none of which was realised by the taxpayer, and has ultimately put a prime piece of land into the private ownership of an America-based billionaire while the public is confined to a thin strip of land circling around it.
And because capital gains from property are not generally taxed, the taxpayer sees very little of the money that accumulates like a snowball as the value of magnificent land rises and rises – land it once owned.
Critics see it as a worst case scenario for the management of Crown-land.
Once land is put into freehold, it can typically only be returned by buying it back. As land prices soar, that becomes more and more difficult.
The ripples of the Alphaburn sale are continuing more than a decade on. It’s likely that Thiel will soon have a neighbour – the empty section next door, with 1.3km of lake frontage, has been listed for sale for the first time, with an unspecified price. It offers buyers the chance to obtain ‘‘one of the most prestigious positions in New Zealand,’’ the listing says.
The bare land has a rateable value of around $5.6m, but could sell for much more – Thiel, for example, bought his land for nearly double its rateable value.
When Alphaburn was up for tenure review, the biggest opponent to the land’s privatisation was Julian Haworth.
He had sent mailers to most of the houses in Wanaka, urging them to lobby the Crown to keep its Damper Bay land for a public reserve, warning of likely development.
It was a nasty fight; farming had a large presence in Wanaka, and many accused Haworth of trying to undermine the farm’s viability. He was, ultimately, vindicated: What he said would happen largely did.
‘‘It’s a completely ridiculous process,’’ he says about tenure review.
‘‘First of all, the land should be retained as public land, but if there’s going to be huge profits made it should come back to the state, the people who own this land.
‘‘This has happened behind closed doors, as far as I can see. They’re not looking at the interests of the public or the wider country at large.’’
In the dozens of tenure reviews before and after Alpha Burn, the same disparity has been repeated time and time again, often without public scrutiny: the taxpayer has not only given up valuable land, it has paid to do so.
Over the 150 tenure reviews which have been completed, not only has the public privatised nearly half a million hectares of the high country, it has paid many millions of dollars to do so.
An analysis of all tenure reviews completed since 1998, based on data released under the Official Information Act, shows the taxpayer has paid nearly $65m to privatise land it owned, which in some cases has been on-sold for significant capital gain, pushing up property prices at the taxpayer’s expense. (Data for around 36 reviews completed before 1998 was not released by Land Information New Zealand.)
For its many millions of dollars, the public has gained around 370,000ha for the conservation estate, which has expanded the areas the public can access and protected some rare and threatened landscapes.
It has also gained covenants and walking access to some areas of privatised land – about 14 per cent of privatised land has some form of covenant.
The public has, however, given up all rights to 430,000ha of the high country’s most productive land, parts of which have become luxury retreats, gated developments, tourism ventures and intensively farmed land.
It has happened under both Labour and National governments, and is continuing to this day. Over the last few years, more land has been privatised than conserved, and the taxpayer is still paying to privatise its own land.
‘‘It’s going to transform the landscape of the South Island, and it’s something we should take very seriously,’’ says Dr Ann Brower, an academic at Lincoln University who has written extensively about tenure review.
‘‘We’re talking about 10 per cent of the country. And even if it weren’t [that much land], it’s been done behind closed doors, and people should be concerned about that.’’
Once Crownowned, a sheep farm will soon transform into a championship golf course
At the summit of Roy’s Peak, the picturesque mountain which ascends above Wanaka, lines of tourists wait to pose for selfies.
It is one of the most popular tracks in the country, and came into existence through tenure review – it passes through Alpha Burn Station, which is why it closes during lambing season.
The track has become so popular that cars line the road for hundreds of metres, the small car park overrun by demand. In recent months, the Department of Conservation (DOC) built an extension to the car park, doubling its capacity. It did so by buying land from Alpha Burn Station: the taxpayer paid $18,000 for one third of a hectare by the road. It effectively bought back land it had sold for an effective rate of $15 per hectare in 2004 for what amounts to $55,000 per hectare in 2017.
From the summit of Roy’s Peak, you can see Thiel’s land in the foreground. To the west, you can see the beginnings of a golf course, irrigators spraying the starkly green lakefront, heavy machinery pushing away at the dirt above.
Glendhu Bay is on the corner of the lake where the road turns toward the national park and its centrepiece, Mt Aspiring.
On a thin strip of land on the lakefront, dozens of campervans are parked almost nose to tail. The land is a council reserve used as a campsite, and is one of the few
‘‘It’s been done behind closed doors, and people should be concerned about that.’’
Ann Brower
public areas nearby. It is backlit by the austere tussocks of Glendhu Station, which, like neighbouring Alpha Burn, was once Crownowned but is now in private hands.
The lease originally covered around 3100ha, much of which overlooks the lake. As a result of the tenure review, the farmers bought freehold rights to around
90 per cent of the property, giving up a few hundred hectares for conservation land.
Except it wasn’t bought, per se – despite gaining 90 per cent of the land, they were paid money by the Crown to take it. There were covenants and walking access tracks placed on the private land, which count towards how prices are calculated in a review.
The farmers paid the equivalent of $200 per hectare, while the taxpayer paid the equivalent of
$2000 per hectare, for land that should, in theory, be inherently less valuable. The taxpayer paid a net $5000 to privatise nearly 3000ha of land on Lake Wanaka, securing around 300ha for the conservation estate and public access tracks.
Soon afterwards, an application to build a golf resort was filed, with at least 42 luxury homes and what would be the region’s fourth championship golf course. After many years of battling the Environment Court, consent was granted to build Parkins Bay, which is now under construction.
As Julian Haworth describes it, the finished product would be an extensive development on the lakefront .
‘‘It should never have got consent,’’ he says.
‘‘It’s not a golf course, it’s essentially a subdivision with a golf course attached.’’
During the public submissions process of the farm’s tenure review, renowned conservationist Professor Sir Alan Mark called the deal ‘‘unacceptable,’’ given the property’s significant natural values, some of which would be privatised.
Glendhu station, as it once existed, is now in three parts. One, the partly finished golf course, sold last year for $16.7m, property records show.
Another section is valued at around $8.5m, and the other is worth $3.4m. All figures are for bare land value, not including improvements; Land the taxpayer paid $5000 to privatise is now worth around $28m.
There are few public spaces at Lake Wanaka, between Alpha Burn and Glendhu stations, which make up a large part of the lakefront. As Wanaka’s profile has boomed, particularly among tourists, the public spaces are increasingly filled out.
Both Alpha Burn and Glendhu stations are owned by one family, who collectively paid the taxpayer
$45,000 for around 6000ha of the Wanaka lakefront, land that today is valued around $45m, a capital gain of 100,000 per cent.
As far as tenure reviews go, it was a good deal. An analysis published last year by Ann Brower found the median capital gain was
69,200 per cent.
During each review, the market value of the entire lease, the land to be freeholded, and the conservation land is established. By looking at the differential between what the land was valued at and what was paid for it, you can see how tenure review has worked in the favour of landowners.
Across all reviews since 1998, land valued at $320m was bought by farmers for $143m, while land valued at $78m was bought by the Crown for $208m.
4. Politics: The ‘strange behaviour’ of several Governments over many years.
When deals like the ones around Lake Wanaka were revealed, the then-Labour Government started to wonder if tenure review was doing more harm than good.
In 2007, the process briefly hit the spotlight when details of a review at Richmond Station near Tekapo were released; it was proposed that 9km of lakefront land be privatised, in an area where lax rules around subdivision were seen by some as a threat to a nationally significant landscape.
In a highly unusual step, the local authority, Environment Canterbury, asked the Government to stop the review.
As pressure grew, the Government’s response was to withdraw from around 40 reviews of lake-front stations, citing the risk of subdivision. At the time, then Conservation Minister Chris Carter said the Government had learned its lesson: ‘‘What happened at Lake Wanaka was a wake-up call for us.’’
The problem, critics said, was that tenure review was not designed to take into account the so-called ‘X factor’ – because they were traditionally sheep farms, spectacular views and private access to lakes didn’t matter, but commanded a premium on the international real estate market.
But not long after the reviews were stopped, the John Key-led National Party came to power, and in 2009 restarted the process.
The new Conservation Minister, Kate Wilkinson, said the Crown did not need more conservation land: instead, it would seek covenants on privatised land as a means of protection, something conservationists have long criticised as weak.
And so tenure review continued, again out of the spotlight. Since 2010, once the new Government was firmly in place, the taxpayer has paid more than
$30m to farmers, taking 120,000ha for conservation and privatising
145,000ha.
As recently as May this year, seemingly questionable deals have been secured. The leaseholders at Airies Station, near Burkes Pass, bought the entirety of the station as freehold, for which they paid around $2.8m.
Even though the Crown took no land for conservation, it also paid
$2.8m, cancelling the payment out. The payment was likely due to a covenant on the land, which covers about one quarter of the property, prohibiting development. But the payment implies that a covenant on one quarter of the land, with no public access arrangement, is of equal value to 100 per cent private ownership, most of which has no added protection at all.
In her 2008 book on tenure review, ‘Who Owns the High Country?’, Ann Brower described her research topic as ‘‘unravelling the puzzle of why a government would behave so strangely’’.
Today, she says she has yet to unravel the puzzle of what she called ‘‘an obscure but vast transfer of wealth and resources’’.
‘‘It’s hard to see why we continue with it,’’ she says.
‘‘Is it better now than when I started? No, I don’t think so.’’
5. Lake Wakatipu:
The mansions by the lake, and the millionaires buying their slice of paradise.
The Flyer used to be the pride of Kingston, but now it rots in the rain.
The steam train was the symbol of the small town on the southern tip of Lake Wakatipu, where fog creeps from the surrounding mountains and descends like smoke, hanging above a long, stony beach.
While the train slides further into decay, expansion plans for the community are enormous. Huge demand for housing in Queenstown, which is quickly becoming hemmed in by its geography, is putting responsibility on towns such as Kingston to ease the pressure.
Its 200 houses may soon become 1100, based on a private, billion dollar development consented behind the township, which would all but swallow the town.
The Kingston Village development includes 740 residential sections, a school, and an upgrade to the local golf course. It has been granted resource consent, and last year the local council received millions in funding from the former National Government to improve the area’s infrastructure, to make way for such a development.
High above the road leading to Kingston, the steep tussocks of Glen Nevis station look over the lake. The farm had been owned by one family for many decades by the time it entered tenure review in the early 2000s.
It was one of the first reviews to proceed under the new legislation set in 1998, and for critics of the process, became evidence-in-chief for its flaws.
The offer privatised land high on the face of the Hector Mountains, which had significant natural values – a covenant allowed grazing at an altitude of nearly 1700m, too steep to construct a fence to stop sheep wandering onto adjoining conservation land.
An earlier report by DOC staff had said there was little economic use for land at that altitude, and its natural features were of ‘‘the highest value’’, but it was privatised anyway, seemingly to get an agreement with the leaseholder.
While most of the farm was kept by the Crown, the rest – with a market value around $2m – was sold back for $75,000. The farmer quickly on-sold the station for just short of $5m to Kingston Village Ltd, a subsidiary of Australiabased property developers Goodman Holdings.
The Goodman family, from Nelson, is collectively worth more than $1b, according to the NBR
Rich List. A paddock across the road from the station – which was not included in the review but had been added to the property, likely through a deal long ago relating to construction of the main road – is the site for the proposed development, which would permanently change the town and has potential for enormous capital gain.
What happened at Lake Wanaka is starting to happen at Lake Wakatipu, the long, narrow lake shaped like a backwards ‘S’ with Queenstown at its centre.
The lake’s water levels rise and fall in 20 minute intervals, a phenomenon local Ma¯ ori likened to a heartbeat; as the legend goes, the lake is a fallen giant from the mountains, slain by a warrior who set it alight, filling its body with melted ice and leaving only its heart unscathed, forever beating in the water’s depths.
Today, luxury housing dot the fringes of the lake, filling out the forested edges above the winding road to Glenorchy and the town beyond, appropriately called Paradise.
The northern stretch of Wakatipu has become symbolic, in many ways, of the social and physical evolution of this part of Otago. What used to be sprawling sheep farms is now dotted with luxury lodges and Hollywood film sets; wilderness replaced with exclusive developments, glistening mansions on land that used to be desolate and remote.
Shortly before Glenorchy, there is a lakefront terrace beneath the winding trails and rocky outcrops that form the town’s backdrop that is home to one of the country’s most exclusive properties.
It used to be part of a farm called Wyuna Station, which looks like an American ranch you might see in a state like Montana;