By Gavin Forrest, Federated Farmers Chief Advisor
In February last year Federated Farmers was made aware that the Department of Conservation was seeking to increase what it charged a small community water scheme in Otago for an easement involving 0.16 hectares of DoC land (worth approximately $345) from $300 to $32,684 per year.
This raised a number of significant and worrying issues for the scheme and Federated Farmers.
The Otekaieke Community Scheme has been operated continuously for 90 years providing community water supply to farmers, rural residential and lifestyle blocks, and public facilities from its take from the Otekaieke River. The Water Scheme has been operated by the local community since taking it over from the Waitaki District Council in 2011. It operates on a cost recovery basis, covering all scheme works related on the land they cross over or under and paying for the restoration of any land disturbed by their works.
By way of background, it is conservation’s worst kept secret that the Government systemically underfunds DoC and has done so for some time. The same applies to the Queen Elizabeth II Trust, which has not received an increase in baseline Government funding since 2015.
DoC faces a number of significant challenges ranging from an explosion in animal pest numbers and a significant reduction of income via the International Visitor Conservation and Tourism Levy through to successive Governments increasing the size of the DoC estate without appropriately matched funding. So, we have some sympathy with the situation they face.
Does this situation explain some rather bizarre attempts by DoC to substantially increase their income from private landowners – a situation that DoC is being forced into through no fault of their own? The Department has a common practice of making money from the private sector that uses the DoC Estate to make money. This includes a wide range of tourism and hunting operations through to the location of private buildings and easements – all called “concessions”. Interestingly, because it is not a principle that is applied by the private sector, the more financially successful the private sector operators are, the more DoC charges them. DoC claims that its concession charges are based on market values even where a market does not exist and where DoC is the monopoly provider.
The Otekaieke scheme involves an open settling pond and 8.65 km of underground pipe traversing a variety of land tenures by way of legal easements. The pond and 170 m of the pipe involves DoC land. Based on the proposed new DoC charge, that’s $204,000/ha/year for the land or $192/m/year based on the length of the pipe – equivalent to $1.66 million per year for the whole pipeline.
DoC has justified its proposed $34,684 charge based on how much money the end users of the scheme make on their properties. They have spent hours and hours investigating the nature of each property and using a secret methodology (they refuse to provide the report they use to justify their calculations) to calculate the benefit each property gains from the water they receive and what DoC’s share should be for allowing the Otekaieke Community Scheme to cross their land. This logic does not apply to easements in the real world.
Imagine the outcry if farmers charged Transpower, Wellington Water, Auckland’s Watercare, or the DoC staff who enter onto their land for that matter, an annual charge based on what end users make from the service they provide. Private landowners do receive compensation for damage to their properties and where the actions of others have a permanent non-negligible impact on the land. They do not receive annual rental payments for the passive effects of easements across their properties.
Federated Farmers believes it is unfair and inequitable for DoC to so swifty deviate from how easements are supposed to work – and have worked for so many years now.
The simple fact is the market price for Otekaieke Community Scheme’s easement on and under DoC’s land is zero. Federated Farmers, acting on behalf of the scheme, has raised the issue formally and informally with Conservation Minster and DoC over that past 14 months. When this article was written DoC had not budged. Neither are we as they are wrong and we are right.