Friday, August 22, 2008

Charter and the land issue

Charter and the land issue
LAISENIA QARASE - Friday, August 22, 2008

The subject discussed under Pillar 6 in the draft People's Charter is: "Making more land available for productive and social purposes". Land has always been an important but rather sensitive issue in Fiji. The problem is compounded by the politics of land and also by the fact that about 90% of the land in Fiji is owned by Fijians and the tenants are mainly from other communities - the race factor.
In this short discussion the focus is on agricultural native land. It is assumed that there are no real problems in native leases for industrial, commercial, and residential purposes.
In discussions over land it is unfortunate that political interests become more prominent and the real issue is often forgotten.
The real issue, in my view, is this: that any tenancy arrangement must be fair and equitable to both landowners and tenants and that it should be in the best interests of the country.
The second dot-point under Pillar 6 says that:
"The principal issue regarding land in Fiji is not one of ownership; it is about access, its productive use and ensuring an equitable sharing of benefits. The issue of ownership is fully protected under the Constitution, and must remain so."
I accept that the principal land issue is not about ownership. But I do not agree that land ownership is "fully protected under the Constitution".
Although the Native Land Trust Act (NLTA) is an entrenched legislation it can be amended by a small majority vote in the House of Representatives and in the Senate, compared to another entrenched legislation, the Agricultural Landlord and Tenant Act (ALTA) which requires a much greater majority vote for any amendments.
Landowners must know that there is much stronger legal protection for ALTA than NLTA. ALTA took away the key operating provisions of NLTA, thus weakening the Native Land Trust Board (NLTB). NLTA which deals with ownership of native land can be changed by a much smaller majority in the House of Representatives and in the Senate, as mentioned.
I do not agree with the statement in the Charter that the principal issue regarding land "is about access, its productive use and ensuring an equitable sharing of benefits". I believe that the land issue can be resolved if key stakeholders agree:
* That all native land be administered under one legislation, the Native Land Trust Act (NLTA);
* That rent on agricultural land be fixed at no less than 10% of the Unimproved Capital Value (UCV) or at market rate; and
* That the lease term on agricultural land be at not less than 50 years, with a right of renewal.
If these proposals are agreed to by stakeholders then access to land, its productive use, and the equitable sharing of benefits will follow as a matter of course.
Passed in 1976, ALTA took away the key operating powers of the NLTB. Two ALTA provisions have caused serious problems on the land issue. First, ALTA fixed the rent on agricultural land at "up to 6% of the UCV". This is one of the lowest rate of rent on agricultural land in the world.
To make it worse lawyers have had a field day since 1976, fighting on behalf of tenants, to lower the rent actually charged by invoking the "up to" provision in the rent formula.
A recent study showed that, in fact, landowners have been receiving rental income of only about 2% of UCV.
The same study showed that if the land rent was at market rates, the landowners would have received $1 billion more.
In other words they did not receive the $1billion which was rightfully theirs. Put another way, landowners have subsidised agricultural development in Fiji since 1976, not out of their own freewill but because of a Government decision now entrenched in ALTA.
Second, under ALTA the lease term is fixed at 30 years, without a right of renewal. This lease term does not encourage investments in agriculture. It is far too short. Farmers, like other investors would like to receive reasonable returns on their investments. Given the high risks in agricultural development a longer lease term is desirable. A lease term of not less than 50 years, with a right of renewal would provide a good incentive for more investments in agriculture.
ALTA is an unjust legislation. ALTA was passed for a particular purpose at the time - to increase and sustain sugar production.
That purpose has been achieved and ALTA has now outlived its usefulness. NLTA is the original legislation for all native land. There is no good reason why all matters relating to native land cannot be incorporated in the one legislation, NLTA. Many Fijians have been unhappy with ALTA over-riding the key provisions of NLTA.
They have perceived ALTA as an instrument to weaken the NLTB by gutting the key provisions of NLTA.
Many Fijians have questioned the motive of Fijian leaders in Parliament in 1976. They were rather careless in agreeing to ALTA. They certainly failed to do their arithmetic right when it came to fixing the land rent.
Only Sakeasi Butadroka and Apisai Tora protested against ALTA.
So long as ALTA remains the effective law on native agricultural land, Fijians will remain agitated because of the relegation of both NLTA and NLTB to minor roles. It is important for key stakeholders to agree that the ALTA provisions relating to native land be incorporated into NLTA, the legislation designed for that purpose. This step would remove a significant obstacle to the resolution of land issues in Fiji.
There is no reason why protective provisions for both landowners and tenants cannot be contained in NLTA.
One of the measures and actions to be taken as proposed in the Charter is to establish a Land Use Advisory Board, a National Land Register and a Land Use Development Plan.
We know that Mahendra Chaudhry, leader of the Fiji Labour Party has been pushing for the establishment of a Land Use Commission (LUC). I believe the current proposal in the draft Charter is really the LUC presented in another form. The motive behind the LUC is to establish an agency with legal powers to decide on land use and associated matters.
In effect the LUC will take away more powers and functions of the NLTB. If both ALTA and LUC are allowed to work side by side, then NLTA becomes virtually ineffective and the NLTB could be reduced to an agency which merely issues leases and collects and distributes rental income.
In other words, the NLTB would not be making key decisions relating to native land. Instead these decisions would be made by agencies in which landowners may not be represented.
I return to the finding of a recent study, that since 1976 landowners have lost about $1billion due to the very low rent fixed under ALTA. Our Parliament in 1976 was responsible for this unfair decision, over which the landowners had no say. It was a mistake by the State. In my view, there is a case for compensation due to landowners by the State.
This compensation could be effected via a "resource tax" which can accumulate in a trust fund to be invested for the general good of the Fijian people.
In 2005 the SDL Government introduced into the House of Representatives amendments to both ALTA and NLTA. These amendments related to the issues discussed above: restoring laws on native land to NLTA; the fixing of rent on agricultural land at not less than 10% of UCV or at market rate; and the fixing of lease term on agricultural land at not less than 50 years with a right of renewal. These amendments to ALTA and NLTA were rejected by Mr Mahendra Chaudhry and his Fiji Labour Party, despite general agreement on the issues at multi-party 'talanoa' sessions.
As trustees for landowners, the NLTB, and indeed all landowners should work towards one goal to achieve the following:
* Ensure that the NLTA becomes the only legislation for all native land;
* Ensure that rent on agricultural land is fixed at not less than 10% of UCV or at market rate; and
* Ensure that the lease term for agricultural leases is fixed at not less than 50 years with a right of renewal.
These changes must be effected first before any discussion on issues such as land use and other associated matters. Failure to do this would be another "sell-out" of Fijian interests on land.

* The views expressed in this article may not necessarily reflect those of The Fiji Times.

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