New Space Settlement Frequently Asked Questions (FAQ)
1.0 Settlement Entitlements
6.0 New Space Regional Aquaculture Agreements
7.0 Settlement Principles
8.0 Roles and Responsibilities
1.0 Settlement Entitlements
The Māori Commercial Aquaculture Claims Settlement Act 2004 (the Act) originally provided
that iwi were entitled to authorisations for a representative 20% of all new space in any Aquaculture Management Areas (AMAs) first consented for aquaculture activities after 1 January 2005. Amendments to the Act in 2011 changed that, so that iwi are now entitled to settlement assets that are representative of 20% of new space (now meaning space first consented for aquaculture activities after 1 October 2011).
Basically, the Act originally ensured iwi would receive rights to 20% of all space in AMAs, but now requires that iwi of a region can decide upon and receive a range of assets – space through authorisations (and ‘top-up’) or cash, or other benefits or any combination of assets that are representative of, or equivalent to, new space.Law changes in 2004 meant that aquaculture was prohibited generally and could only take place within designated AMAs after a plan change went through Resource Management Act 1991 (RMA) processes. This required that the bulk of investigations and planning processes be completed, as well as the Undue Adverse Effects (UAE) test under the Fisheries Act. In the seven years that followed, only the Wilson’s Bay B block in the Coromandel and the Tasman and Golden Bay AMAs were sufficiently advanced to be able to progress through to consents. The 2011 amendments scrapped the prohibition on aquaculture and the compulsory requirement for AMAs and reverted to allowing applications for space under existing regional coastal plans on a ‘first come, first served’ basis. This meant the way the Aquaculture Settlement was to be delivered had to change to keep up, otherwise giving iwi rights in respect of 20% of the space covered by each individual resource consent application would have left them with numerous small, uneconomic parcels of space.
In addition, to assist aquaculture development and to provide opportunities so that iwi were not left behind while all the good aquaculture space taken by other industry participants, the 2011 amendments introduced the concept of anticipated new space, i.e. iwi are entitled to receive assets equivalent to space that will be consented, not just space that has already been consented.
Section 9 of the Act provides that the Crown must ensure that iwi are provided with settlement assets that are representative of 20% of all anticipated new space in each region by:
- Providing iwi with authorisations over particular space in the coastal marine area (CMA), plus a sum of money assessed to reflect the value arising from the greater time to get a consent and the likely higher cost of obtaining resource consents to use the space for aquaculture under the current regime, as opposed to the regime that applied before the 2011 amendments (the ‘top up’);
- Paying iwi the financial equivalent of that space; or
- Entering into one or more regional agreements with iwi.
See also New Space Regional Aquaculture Agreements below.
According to the Act, “anticipated new space” means the amount of space in the CMA) that the Minister responsible for Aquaculture – currently the Minister for Primary Industries - anticipates will become new space after 1 October 2011. This means that the Minister must make a prediction as to how much space will be granted consents for aquaculture activities in the future.
In practice, the forecast the Ministry for Primary Industries (MPI) is preparing to support this prediction looks forward to 2035, estimates the likely growth in world demand for New Zealand aquaculture products and, on the basis of expected productivity (greenweight tonnes per hectare), translates that into the amount of space that will be required to produce enough product to meet that demand for each species.
In forecasting where (i.e. in which regions) growth in aquaculture space is most likely to occur, MPI is weighing five factors:
- Environmental suitability
- Competing uses for coastal space
- Proximity to existing industry and infrastructure
- Levels of regional (i.e. council and community) support for aquaculture
- Controls and limits on aquaculture development set under the RMA.
The reality is that new space is created by someone obtaining a resource consent to undertake aquaculture. If consents are unlikely to be granted in the foreseeable future, that will limit the amount of new space. If there is limited new space, then iwi entitlements are equally limited.
Forecasting what will happen in the future requires a number of assumptions to be made about what is likely. In this case, the MPI forecast has assumed that the offshore sites already consented for farming mussels will not contribute materially to nationwide production over the next 20 years, rather new sites closer to shore will be developed first. That assumption is based on a number of things, including that the first of these sites was consented almost a decade ago, and none are yet in commercial production, though research is underway on some sites. The economic viability of the deepwater sites is not considered to be as strong as potential inshore sites.
There are two important things to bear in mind about this assumption:
- If the opposite assumption was to be made, i.e. that all consented offshore sites would be fully developed and producing mussels at optimum (but guesstimated) levels within the next 20 years, no new space at all would be required in order to meet predicted demand. The MPI assumption therefore works in favour of iwi interests.
- The assumption is made only for the purpose of allowing growth in new space to be forecast. Nothing about the assumption limits parties wishing to develop or invest in the offshore sites.
No. An authorisation gives the holder the exclusive right to apply for a resource consent, but the holder must obtain that consent before the space can be used for aquaculture.
The Aquaculture Settlement isn’t based on any Deed of Settlement or other agreement between the Crown and iwi, just the Act. Rightly or wrongly, the Act never guaranteed iwi space or resource consents from the time it was passed in 2004, only authorisations. The Crown guaranteed in its changes in 2011 that iwi would receive at least the equivalent of what the settlement in the 2004 Act provided to iwi.
Authorisations were a key part of the law as it was written in 2004, when no-one was allowed to apply for a resource consent for aquaculture unless they held an authorisation for the space in question. Since 2011, consent applications can be made anywhere that is permitted by RMA coastal plan rules. Clearly then, authorisations are not as valuable as they would have been under the 2004 regime of AMAs. That doesn’t mean that they have no value at all, just the value of them will depend on the circumstances.
Authorisations granted under the Act have three unique features:
- They give iwi the exclusive right to apply for a resource consent for aquaculture activities in the area they cover – no one else can gain rights to that space through an application for a resource consent without permission from the authorisation holder.
- They also prevent the relevant council from granting a consent for any other activity in that area unless that activity is compatible with aquaculture activities and it has first consulted with iwi.
- They only lapse/are cancelled if:
- A resource consent application for aquaculture activities has been declined in respect of the space;
- A consent is granted but subsequently cancelled because the activities would have a UAE on customary or recreational fishing, or a UAE on commercial fishing and the consent holder refuses to pay the arbitrated level of compensation to affected fishers; or
- The iwi who holds the authorisation transfers it to anyone other than another iwi in that region.
The effect of the authorisation is therefore to keep the space available to iwi until they wish to apply for their own resource consent and to maintain their exclusive rights to apply for a consent for that space even after the term of that consent expires.
Authorisations are therefore likely to have the most value to iwi in circumstances where:
- Iwi aspire to undertake aquaculture in an area but don’t wish to apply for consents for some time, perhaps because the regional coastal plan rules currently don’t allow for the type of aquaculture in question; and/or
- There is likely to be interest in the area from other potential developers.
And don’t forget that authorisations should come with a ‘top-up’ payment to reflect the value loss to iwi from the additional time needed to get a consent under the new regime and the fact that obtaining a resource consent will almost certainly be more expensive than it would have been under the 2004 regime of AMAs.
A methodology for determining the level of top-ups is still being developed, but it’s not a straight-forward exercise. This is because there were only two AMAs set up under the 2004 legislation in two regions with one still in process, so there is very limited of information on how much it would have cost to obtain a resource consent in an AMA in the different regions.
However in an AMA, most of the investigative and planning work was done in the process leading up to the establishment of the AMA, i.e. all of the work necessary to establish that the area was suitable for aquaculture (including scientific surveys), to determine what rules should govern it (e.g. what distance there should be between mussel lines to ensure optimum nutrient flow) and to ascertain the effects aquaculture would have on wild capture fisheries. By the time iwi came to apply for resource consents to use their 20% of any AMA, the amount of work required, and capacity for objectors to challenge the grant of consents, would have been very limited.
The 2011 amendments did away with the mandatory requirement for AMAs. The current rules for aquaculture in regional coastal plans vary considerably across the country and within some regions. Without the preparatory work being done by councils, any applicant must do much more work to provide all the information needed for the council and community to be able to decide if a resource consent should be granted and for MPI to undertake the UAE test. A resource consent application will likely be the first time in many areas that there is an opportunity to debate whether aquaculture is an accepted activity, so in some areas at least, they will also face a high likelihood of opposition and appeals by objectors. Both of those things will make the consent application process more costly and lengthy. It is this additional cost and the loss of value through greater delay to start the aquaculture for which the ‘top-up’ is intended to compensate.
If iwi apply for a resource consent but that consent is not granted, the authorisation over the space lapses and no longer has any effect.
What happens next is an issue that is likely to be the subject of debate and negotiation between iwi and the Crown. One view is that the Crown’s obligations under the Act are satisfied when it transfers the authorisation to Te Ohu (on behalf of iwi). The other is that iwi are entitled to have settlement assets that are equivalent to 20% of new space, and lapsing of an authorisation in these circumstances will mean that they do not, so some replacement asset should be provided.
The Act requires the Minister to develop processes and methods that enable an assessment to be made of the value that would be representative of each of the types of aquaculture expected to be developed in the anticipated new space in each region.
This valuation exercise has four key characteristics that arise from the fact that the thing being valued (anticipated new space) doesn’t actually exist yet:
- It assumes that the forecast space will be consented at some future date
- The ‘value’ of space is estimated as the present (2014) value of farming operations on that space by discounting each year’s revenue minus all costs, including the costs of obtaining a resource consent and the capital costs to establish the farm from the time of gaining the consent
- The relevant farming operations are those that could reasonably be expected to be undertaken using industry-standard technology and deriving industry-standard returns
- Because these values are to be established prior to consent being granted, the valuation methodology must capture all costs, including costs related to the passage of time between the date of valuation and revenue first being generated from the space.
No, although the methodology will have much in common with the one developed by the Crown and iwi at that time.
The aquaculture industry hasn’t been static since 2008 and changes in that time, particularly consistently high foreign exchange rates and the continuing consolidation of ownership of farms in the hands of a few large, vertically-integrated companies, have had an impact on the value of water space.
In 2008 the location of consented space being valued was known and, using localised industry information, the productivity of that space could be sensibly estimated. That allowed a realistic estimate of the value of that space at market rates at that time.
Importantly the valuation being undertaken now is for space that has not yet been consented for use, and that is not forecast to be consented for as much as 15-20 years. Because the space is not yet consented and will be developed in the future, the exact location cannot be known and so future regional productivity estimates must be developed and used. Also logically, space forecast to be consented in 2015 and come into production immediately after that is more valuable today than space forecast to be consented in 2034, because it would have the potential to generate income for the intervening 19 years.
To put it another way, if an iwi wanted to put enough money in the bank today to purchase future aquaculture space, they would need to deposit almost the full value of that space if they were going to buy it tomorrow, but a much smaller percentage of that value if they ￼5 were going to buy it in 15-20 years’ time, because of the interest earned on the deposit invested over those years.
|Pre-Commencement Space (1992-2004)||
Settlement assets equivalent to 20% of all space first granted a licence or consent for aquaculture between 21/9/92 and 31/12/04 that was still in force at the latter date (or for which a consent was applied for prior to that date and subsequently granted) delivered by way of:
|2004 New Space Entitlements (Tasman, Waikato) ￼||Authorisations for a representative 20% of space in AMAs.|
|2011 New Space Entitlements ￼||
Settlement representative anticipated delivered by way of: assets of 20% of new space
6.0 New Space Regional Aquaculture Agreements
The obvious assumption is that agreements are likely to provide for some combination of authorisations (plus ‘top-up’) and the financial equivalent of the anticipated new space. But the Act doesn’t put any limit on what can be in a New Space Regional Aquaculture Agreements (NSRAA) and expressly states that an agreement may provide for settlement of the Crown’s obligations on any basis acceptable to the Crown and the Iwi Aquaculture Organisations (IAOs) representing each of the iwi whose area of interest includes the CMA of relevant region.
Each NSRAA must be agreed between the Crown and the IAOs representing each of the iwi whose area of interest includes the CMA of relevant region. A single agreement could cover more than one region if all affected iwi agree and could, in some circumstances, potentially cover only part of a region, but cannot be with only some of the affected iwi.
No, though it would probably be preferable, as it would avoid delays and disputes and better ensure that the spread of assets agreed with the Crown will collectively advance the aspirations of iwi in the form they wish.
No, but the Crown will apply the same forecast and valuation methodology to all of its regional negotiations. It is therefore in the interests of all iwi to maintain communication and consistency between regions.
If the time allowed by the Act for NSRAA to be concluded expires without an agreement being reached for any region, ‘default’ redress must be provided to iwi, unless the Minister extends the relevant timeframe. That default redress would comprise:
- Authorisations for any Gazetted areas in the relevant region, plus a ‘top up’; and
- If there are no Gazetted areas in a region, or the extent of them is less than the total anticipated new space in the relevant region, then payment of the financial equivalent value of the shortfall in space.
The current expiry dates for negotiation periods by region:
|2 years after the first new resource application for aquaculture activities|
|Northland Waikato (East Coast) Tasman Marlborough||Auckland Canterbury ￼||Chatham Islands Southland||All other regions (based on regional council boundaries)|
However the Crown in May 2014 has proposed an extension to these timeframes:
|2 years after the first new resource application for aquaculture activities ￼|
|Northland Waikato (East Coast) Tasman Marlborough ￼||Auckland Canterbury||Chatham Islands, Southland and all other regions (based on regional council boundaries)|
7.0 Settlement Principles
Authorisations last in perpetuity unless:
- A resource consent application for aquaculture activities is declined in respect of the space;
- A consent is cancelled due to UAE issues; or
- The iwi who holds it transfers it to someone other than another iwi in that region.
Resource consents obtained by iwi are not settlement assets (even if they result from authorisations) and will have a term of not more than 35 years, in accordance with standard RMA rules.
It is presumed that the term of NSRAA will be in perpetuity, but that may be a matter of negotiation. However redress provided through those agreements will be reviewed periodically to ensure that iwi entitlements aren’t frozen in time so that they represent less than the Crown’s obligations to the iwi of the region.
The aquaculture settlement isn’t based on any Deed of Settlement or other agreement between the Crown and iwi, just the Act. Rightly or wrongly, the Act never guaranteed iwi space or resource consents from the time it was passed in 2004, only authorisations. Whether the Act should have provided iwi with something else is an interesting argument, but it is inevitable that the Crown will only be interested in dealing with the law as it is when it comes to negotiating NSRAA.
Even if settlement assets to be transferred under a NSRAA were to include resource consents, those consents cannot be granted in perpetuity, because that would be contrary to the RMA. Resource consents for aquaculture activities both give rights to use the water space and rules for environmental and other standards that must be met in carrying out those activities. If those consents were granted in perpetuity, they could not, for example, provide for environmental changes.
Parliament always has the power to change the law. The Government has to have a good reason to promote amending legislation, though.
8.0 Roles and Responsibilities
The Act established the Māori Commercial Aquaculture Settlement Trust, which operates under the working name of the Takutai Trust. The corporate trustee of that trust is Te Ohu Kai Moana Trustee Limited (known as Te Ohu Kaimoana). In this capacity, Te Ohu Kaimoana is responsible for receiving aquaculture settlement assets and transferring those assets to IAOs in accordance with an allocation agreement between those IAOs. Te Ohu Kaimoana’ s principal responsibility is to facilitate negotiation of NSRAAs between IAOs and the Crown and agreements between IAOs within a region on the allocation/sharing of settlement assets between them.
This is a Group of iwi representatives, drawn primarily from the regions with the most active aquaculture industries, convened by Te Ohu to provide guidance on the national work streams that will provide the basis for negotiating NZRAAs.
An IAO is the entity responsible for receiving and holding for receiving an iwi’s aquaculture settlement assets. An IAO must be a Mandated Iwi Organisation (MIO) for the purpose of receiving fisheries settlement assets under the Maori Fisheries Act 2004 on behalf of an iwi. Each MIO must have a constitutional document that meets the requirements set out in the MFA. For a MIO to be an IAO the constitution must also have clauses in it stating that it holds responsibility for aquaculture on behalf of that iwi.
It is the Crown that has obligations and liabilities to iwi in respect of new space. In this context, the Crown equates to the Government, so the Act sets out that it is the Minister responsible for Aquaculture (the Minister for Primary Industries) who is responsible for administering the Act. MPI therefore has lead responsibility to do the work necessary to ensure the Crown can fulfil its obligations, though it is likely that some decisions in respect of NSRAAs will have to be taken at the highest level of the Government i.e. Cabinet.
|Act||The Māori Commercial Aquaculture Claims Settlement Act 2004 (as amended in 2011)|
|AMA||Aquaculture Management Area – a concept introduced in the 2004 law reforms which provided that aquaculture could only take place with areas zoned as AMAs through council plans. The concept was removed by the 2011 law reforms.|
|Authorisation||The exclusive right to apply for resource consents for aquaculture activities in the area it covers. Authorisations also bar the relevant council from granting a consent for any other activity in that area unless that activity is compatible with aquaculture activities and it has first consulted with iwi. ￼|
Occupation of an area of the CMA for the purpose of breeding, cultivating or on-growing any fish or other aquatic life, including the taking of harvestable spat (if that involves the occupation of the CMA) but excludes any such activity if:
|CMA||Coastal marine area – the foreshore, seabed and coastal waters between mean high water springs and the outer limits of the territorial sea (12nm).|
|IAO||Iwi Aquaculture Organisations – the iwi representative entity responsible for receiving and holding aquaculture settlement assets.|
|Resource consent||Permission obtained under the RMA to do something that would otherwise contravene that Act or a rule in a plan.|
|RMA||Resource Management Act 1991. ￼|
|Top-up||A payment made by the Crown in any case where an authorisation is transferred to iwi reflecting the value difference between being able to commence aquaculture using a settlement authorisation under the 2005 regulatory regime (i.e. in an AMA) compared to a settlement authorisation under the 2011 regime.|
|UAE||Undue Adverse Effects – a test conducted under the Fisheries Act 1996 to assess the effect proposed new aquaculture activities will have on customary, recreational and commercial fishing.|
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