Mike Butler: Rights of first refusal fishhooks

Auckland tribe Ngati Whatua’s demand to be first in line in plans to develop Crown land in Auckland for housing shows the folly of including of rights of first refusal (RFR) in treaty settlements.

Ngati Whatua sought legal advice when it looked like the Housing Minister Nick Smith might cut them out of the process by using Section 136 of the Tamaki Collective settlement legislation that says:

An RFR landowner may dispose of RFR land that is held for State housing purposes if the Minister of Housing has given notice to the Limited Partnership that, in the Minister's opinion, the disposal is to achieve, or to assist in achieving, the Crown's social objectives in relation to housing or services related to housing.

Rights of first refusal have been included in treaty settlements for 20 years, starting as rights limited to specific properties and widening to a long-term RFR over 175 years to surplus property.

For instance, the Waikato-Tainui deed in 1995 specified a right of first refusal over certain named Crown properties. Yet the Tamaki Collective settlement that involved Auckand mountains and islands had 172-year RFR to surplus Crown properties with 10 paragraphs of Section 118 identifying what was and was not RFR land without specifying properties.

At first sight a long-term RFR is a way of enabling tribes to get assets often at bargain prices without having to front up with cash and assets.

But such deals mask the value of the privatisation of government assets in that the capital gains and rental income are not visible and are difficult to assess, especially for taxpayers not directly involved.

Moreover, offering a tribe a right at first dibs at government property over such long periods of time means the government is constrained on what it can do with that property.

Fishhooks with the little-discussed RFR clauses in treaty settlements were largely invisible until this week when Ngarimu Blair of Ngati Whatua spluttered that he wasn't consulted about the decision and only discovered it wouldn't be getting first option on the land after 3 News called.

Ngati Whatua are unlikely to succeed in this latest demand, because of Section 136 of the Tamaki Collective legislation, and because the land in question is clearly not surplus but is needed for housing.

The problem is what is the government going to give Ngati Whatua as a sweetener. Tribes have learned they always get something when they kick up a fuss.

Blair also told the world that Ngati Whatua have assets worth $700-million, making it difficult for him to play the “hard done by” card.

Sources
Ngā Mana Whenua o Tāmaki Makaurau Collective Redress Act 2014, http://legislation.govt.nz/act/public/2014/0052/latest/whole.html?search=sw_096be8ed80eb5bf0_rfr_25_se&p=1#DLM5322680
Iwi calls urgent meeting over Crown land sell-off, http://www.3news.co.nz/nznews/iwi-calls-urgent-meeting-over-crown-land-sell-off-2015060218#ixzz3c2SXLHtt