No. 139.
Mr. Alexander Mackay to the Under-Secretary, Native Department.

I have the honour to inform you that, in conformity with the instructions contained in your message of the 11th ultimo, requesting me to draft a new Native Reserves Bill, certain alterations in page 100the Act of 1873 have been prepared for embodiment in a fresh measure to be passed this session, with a view to remedy the unworkable character of the aforesaid Act. I append a copy of the proposed alterations, and beg to offer the following explanation of the principles and object thereof:—

It is generally admitted by those who have made themselves acquainted with the provisions of "The Native Reserves Act, 1873," that it is altogether too cumbrous in its operation for the practical and satisfactory administration of the Native reserve property throughout the colony. In the first place, clause 6 provides that an officer should be appointed under the name of "the Native Reserves Commissioner," and constituted a corporation sole. Under clause 8 this officer is invested with certain powers in regard to the estate to be placed under his charge, and under clause 11 the property is vested in him. By section 7 a Board of Commissioners is created, without whose consent no dealing can be effected with any portion of a Native reserve; and clause 19 superadds the necessity of the assent of the Governor being obtained to validate all dispositions of land that may be agreed on by the Board, thereby creating further difficulty and delay in the transaction of business, besides troubling the Governor and his Advisers with matters of local character, of which they can have but little knowledge, however clear the circumstances of each case are explained; while, at the same time, it lays the Government open to the accusation of favouritism in event of a lease being sanctioned in favour of a political supporter in preference to a person holding opposite views.

It will be seen, by the foregoing review, that the Commissioner to be appointed under the Act of 1873 would be placed in a very anomalous position, and that the restrictions placed on his actions are incongruous with the position he occupies in regard to the property. In the first place he is clothed with high powers, and then suddenly denuded of them by making his actions subordinate to a Board of Commissioners, of which he is to be a member with merely co-ordinate authority. The Act, moreover, admits of three modes by which the administration of the property may be impeded. (1.) The Board may be composed of individuals disinclined to subordinate themselves to the object which it is their business to effect; or, on the other hand, it may consist of person too pliable a nature. (2.) The Commissioner, as trustee of the estate, might refuse to indorse the action of the Board in the event of his being placed in the minority. (3.) The Governor might withhold his assent, under clause 19, to the issue of leases sanctioned by the Board.

Another grave objection is the constitution of the Board of Management. Besides opening a way to private designs, it does not effect the object in view—i.e., to give the Natives a voice in the management of their property. It would simply clothe A, B, and C, of the Native race, with the power to deal arbitrarily with the property of tribes to which they neither belong, nor have any sentiment in common. Had the Act of 1873 been brought into effective operation, this intermeddling with lands of other tribes by the Native members of the Board would have had the effect of rousing tribal jealousies; the Natives, as a race, being most impatient of interference in regard to landed property.

The Act of 1873 makes no distinction between the several classes of Native reserves which are clearly distinct in their nature and in respect of the rights which attach to them—namely, lands which are vested in the Governor, subject to the provisions of existing Acts, which have either been reserved by the New Zealand Company, in accordance with their scheme of colonization in the original settlements founded by them, or set apart by the Government for Native purposes, but over which the Natives have no control; and lands excepted from sales by the Natives which have come under the operation of "The Native Reserves Act, 1856," with the consent of the owners, or land of the same class which may hereafter be brought in the same manner under the operation of any law then in force for the administration of Native reserves. In regard to the latter class of lands, the persons beneficially interested might reasonably claim a fair voice in the management of properties so appropriated, and in the application or apportionment of the income derived from them; but, in regard to the former class of reserves, the handing over of these land to the management of the Natives would have been a violation of the principle on which they were originally set apart—i.e., that they should be held in trust, and administered by the Government for the benefit of the families of the ceding tribes.

In preparing the alterations for the amending Act, the whole of the reserves be effected by it have been classified, and a distinction made between lands over which the Natives have no control and lands over which it may be considered advisable to give them a voice in the management. A distinction has also been made in respect of lands which do not come under the operation of the Act, in order to clear up any doubt that might arise as to how certain classes of lands will be effected.

The Assembly, in passing the Act of 1873, having declared its belief that it was advisable that the Natives should have voice in the management of their lands, this right has been extended to them in the case of reserves of the fourth and fifth classes; but, in place of effecting this by Board of Management composed of three Natives and a European Commissioner, it is proposed to abolish the Board, and give the Commissioner to be appointed power to issue leases for any term, not exceeding twenty-one years for agricultural purposes, with the assent of the persons beneficially interested; and, with the same assent, to execute leases for building purposes for sixty years, subject to regulations to be made by the Governor. This will give the Natives concerned a direct voice in the management of their lands, without the intervention of a Board composed of persons holding views probably inimical to the interests of the owners of the land.

It may not be considered out of place to point out that the principle involved in regard to the intervention of the Native owners may probably be found to operate prejudicially to their interests by interfering with the bonâ fide occupation and improvement of the property, besides placing the Natives concerned at the mercy of designing persons having in view their own aggrandizement. The mode proposed also embodies an opposite principle to the law in operation in England in regard to the administration of landed property belonging to persons under a disability. In the case of lands belonging to an infant the guardian in socage can execute leases for years, and transact all affairs in his own name without any intervention or direction of the infant; the view being that the guardian derives his authority from the law and not from the infant; but, to prevent any abuse of such authority, the law requires the guardian to account to the infant on his coming to the age of fourteen. The Court of Chancery is also empowered to authorize leases of settled estates to take effect in possession or within page 101a year from the making—for twenty-one years as to agricultural purposes, forty years as to mining and like leases, and for ninety-nine years as to building leases; and, in order to reduce expense, the Court may vest the power in trustees.

It has been contended of late that it is not expedient, in regard to the Native reserves, to keep the Natives in a state of pupilage, but that the management should be placed in their own hands. The proposition is no doubt a desirable one provided it could be carried out satisfactorily: but it will probably be conceded, on the matter being viewed dispassionately, that the Natives of the present day, although very much advanced in knowledge, can scarcely be considered competent to deal satisfactorily with large and Valuable estates in which the interests of a large class of European tenants are involved. In England the owners of settled estates under the control of the Court of Chancery are not looked on as being under a state of pupilage, because their estates are managed through the intervention of trustees. It will probably be found, by experience, that the most satisfactory and beneficial mode of dealing with the class of Native reserves that will be affected by the Act is to place them under the absolute management of individual trustees, who, without the power of alienation, might make such arrangements for letting them—subject to regulations to be made by the Governor in Council—as would secure the largest pecuniary return for the beneficiaries, to whom they should be required to account, as well as to the General Assembly.

In place of the powers conferred on the Governor under clause 19, it is proposed that the Commissioner should have power to issue leases for certain terms and purposes, subject to regulations to be issued by the Governor, instead of the needless reference of every lease to the Governor in Council. The advantage of empowering the Commissioner to issue leases, subject to certain restrictions, instead of by the mode prescribed by the Act of 1873, is obvious: the question becomes entirely severed from political influence; and, whilst the administration of the property would be subject at regular intervals to a thorough scrutiny, the officer having charge of the estates would be free from that series of references and interferences at every step which paralyses business. It will no doubt be generally admitted that the system for administering these trust estates should be simple, and free from all cause of unnecessary delay and uncertainty; for, if the procedure is to be made tardy or costly, or clogged by the necessity of referring frequently to the seat of Government, and especially or references backwards and forwards, it will most surely tail in its object—i.e., of utilizing those lands to the best advantage—as no bonâ fide occupant would care to subject himself to such a vexatious ordeal.

It is proposed, in regard to the issue of leases for building purposes, that, instead of making them at once for a term of sixty years, power should be given to issue leases renewable for three separate periods of \ years, subject to the payment during the term thereby to be granted of the best and most beneficial yearly rent to be incident to the immediate reversion of the premises that can reasonably be had at the making of such lease. This system, while securing a lengthened term to the occupants, will give an opportunity for periodically reassessing the rent at a sum more proportionate to the increased value of the property than could be obtained if, the lease was issued at once for the full term of years. It is quite impossible in a young country, where the value of, property fluctuates to the same extent as it does in New Zealand, to fix a fair rental for a lease to be issued presently for a term of sixty years. If an attempt to do so was made, it would probably result in one of two things —either in an exceptionably favourable or unfavourable arrangement for the persons concerned. In the one case, the owner would suffer a loss by his property being let at too low a rental; in the other, the tenant would suffer through an oppressive rent. In some respects long leases may be considered disadvantageous to the owner, but the system proposed above would subserve the interests of both landlord and tenant.

A new feature has been introduced into the provisions of the new Bill—namely, the power conferred on the Governor, with the consent of the persons beneficially interested in land let on long leases, to convert the renewable leasehold tenure into a tenure in fee, subject to the payment of an annual rent-charge in perpetuity, in cases where it would be beneficial so to do. The advantage of this plan, if adopted, would be the fixity of tenure secured to the tenant, coupled with the security of a certain and ascertained income in perpetuity to the owner. It is a more preferable mode to selling the land and investing the proceeds in other investments, as the persons beneficially interested would have a paramount security over the property for the payment of the annual rent-charge.

It is proposed, amongst other changes, to repeal clauses 35, 36, 37, 38, and 39 of the Act of 1873, empowering the Governor to appoint competent persons to ascertain the assent of the owners to bring land under the operation of the Act, and to make, it compulsory that all transactions of this nature shall be done through the Native Land Court. It is also further provided that, before any land is brought under the operation of the Act, a scheme of management shall be framed setting forth the wishes and intentions of the owners in regard to the future administration of such land. The Court is also required to determine the proportionate quantity to which each or all of the owners are severally entitled, with a view to assist the Commissioner to determine the proportion of income payable to each; and it is also further provided that, in all cases where doubts may arise in respect of the persons beneficially entitled to the proceeds accruing from any lands under the operation of the Act, it shall be the duty of every Native Reserves Commissioner to refer the question of succession to the Court.

It is proposed, also, to repeal clauses 45 and 46, and make other provisions in lieu thereof; also clauses 48 and 49, as the provisions contained therein usurp the functions of the Native Land Court, and are a repetition, to a certain extent, of clauses 89, 90, and 91 of "The Native Lands Act, 1873." Should it be deemed advisable that such power should be granted by the Assembly, it would be better to authorize the Court to deal with the cases comprised in the aforesaid clauses, and for that purpose the necessary provisions might be tacked on to the Native Grantees Succession Act proposed to be passed this session. Clauses 52 and 62 are also to be repealed.

With regard to the regulations to be made by the Governor under the provision of the Act, it is highly important, for the management of the Native reserves estates, that general directions should be page 102laid down for the guidance of the officers in whose custody the properties may be placed, so as to introduce a regular principle of managing them for the future. I beg therefore to submit the following points for consideration. The general principles upon which the Native reserves ought to be let are as follow: That the lands should be let with a view to secure an immediate return, combined with the creation of a permanent and respectable property at the best improved rent which can reasonably be obtained at the time, the sufficiency of rent to be governed by the consideration on whom the onus of repairs or the cost of improvement is thrown; keeping in view also that the requisites of a good tenant are to be regarded as well as the mere amount of rent to be received. The length of leases granted ought to vary with the description of property proposed to be placed on the ground, or the uses to which it is devoted.

The following scale may serve as a general guide, subject to such variations as local circumstances may require, viz.: (1.) A lease for twenty-one years to be granted for arable or pastoral purposes, conditionally that the tenant makes permanent improvements on the property, within seven years from the date of his lease, to the value of £1 for every acre of such land. The whole of the property to be improved and cultivated during the currency of the term, and left enclosed with a substantial fence. The rent to represent a fair percentage, all circumstances considered, upon the estimated value of the land at the date of granting the lease. (2.) A lease for building purposes for twenty years, renewable for a further period of twenty years, with covenant to build and keep in substantial repair wooden houses to the value of years' purchase of the annual rent, if the tenant before the expiration of the first term should have erected wooden buildings of the required value, or have expended such sums in the improvement of any building which may be standing on such premises which shall be considered adequate to the required value. (3.) A lease for twenty years, renewable for two further periods of twenty years, provided the tenant shall erect buildings of brick or stone, to the value of years' purchase of the annual rent, during the currency of the first term. It should also be laid down as a general rule that the trust will not undertake to repair or improve or receive any such improvements at valuation at the expiration of the lease.

Some such terms as the above might constitute the general rules, but many cases would require to be considered separately and upon other grounds; and it will be especially necessary, in dealing with all existing arrangements, to take each case upon its own merits, and treat it as fairness and equity may require.

In the case of the tenants on the Native reserves in Westland, but more especially in regard to the tenantry at Greymouth, the above rule will have to be faithfully observed in respect of the implied right of renewal, as they have always been led to understand that a renewal of their leases would be granted them, at a moderately increased rent, at the end of the subsisting term, depending on the amount of annual rental hitherto paid. On the faith of this they have erected substantial buildings and improvements to the value of over £40,000, besides raising money for town improvements. This last expenditure, coupled with the outlay needed for other municipal works, has necessitated their levying a tax equal to 10 per cent. on the annual value of their properties. It will be easily understood, therefore, that the Act of 1873 caused considerable uneasiness to the tenants at Greymouth as to how the Board of Management would deal with the question of extended leases, as it was well known that the Natives to be elected for the position must be chosen from the persons who had openly stated their intention was to take possession of the property at the termination of the existing leases. It was looked on by the tenants as a grave injustice, and to a certain extent as a breach of faith with them, after having been led to suppose from the first that the estate would always be administered by the Government, that the Act permitted the handing-over of large and important interests to the mercy of two or three inexperienced Natives, who had no knowledge of the laws of property, and who were unable to appreciate equity. There is little doubt that if the Act of 1873 had been brought into operation the effect would have been most injurious to Greymouth, owing to the uncertainty that would have been created in regard to the renewal of existing leases: the consequence of this would have been that, instead of the tenants being inclined, as they now are, to erect a permanent class of buildings of brick and stone, provided they can obtain a longer term of lease, no further improvements would have been undertaken, and the buildings already erected would have been suffered to fall into decay; as it stands to reason that, if a tenant's interests in his improvements terminate with his tenancy, it cannot be expected that anything would be spent on the property towards the close of the term which would be of benefit to it.

These remarks point out that security of possession to the tenant is indispensable to the improvement of the property. It therefore follows that it is to a system of long leases that attention should be directed, as it is clear that the tenant could not invest money or improve the property unless he held a certain permanency of tenure for a sufficiently continued length of occupation to enable him to recoup the money he had laid out.

It is important that some basis of operation should be laid down for determining the amount or rent to be charged for the various descriptions of leaseholds to be dealt with, so that the fancy or caprice of individual officers may not be allowed to thwart the interests of either intending tenants or persons who may be entitled to renewals. No rule can be laid down with any degree of accuracy with respect to the adjustment of rent, but some general principles could be defined for the guidance of persons whose duty it would be to assess the property. It is unquestionably a most desirable object, although a matter of considerable difficulty, to ascertain the proper rent which premises, whether let for building purposes or farms, will bear in different situations, so as not to deprive the owner of a just remuneration on the one hand or oppress the tenant with too much rent on the other.

With regard to the rent of household property already in occupation and erected at the expense of the tenant, the amount of future rental could be ascertained by making an estimate of the original cost and adding a fair percentage upon the money expended if built within a certain time; and after the building had stood for so many years a certain percentage should be deducted. It will also be necessary to ascertain the value of the premises with and without the improvements in cases where the outlay has been made at the expense of the tenants, as it would be inequitable to make the tenants pay page 103for what they themselves produced, without the lease had been made on those conditions. In England twenty years is the usual time for allowing a percentage upon the amount expended in the erection of buildings. The percentage allowed ranges from 5 per cent. to 7 and 7½ per cent., and the deduction is usually at the rate of 2½ per cent. In New Zealand a building constructed of the ordinary timber in use would require a good deal of repairs in ten years, especially buildings in gold-fields towns, many of which are of a very flimsy character. The rate of depreciation during the first few years is not so rapid as it is towards the end of a long period, say fifteen years; the rapidity of decay would of course depend upon the class of timber used and the degree of attention paid to the up-keep.

The fairest arrangement for assessing the amount of rental to be charged for an extension of the leases would be to arrange that an assessment of all buildings or other improvements erected or situated upon sections within the Native-reserve portion of the Town of Greymouth should be made before a renewal is granted. The value of the section without the improvements should also be estimated at the same time, as a basis for ascertaining the amount of rent. In event of any one but the occupant obtaining the renewal, the incoming tenant should be required to pay the original lessee the amount of valuation placed on the improvements; provided that the occupant had erected or made the buildings or improvements on the land in question, or shall be the representative or assignee of the person who had erected or caused to be erected or made such buildings or improvements. Two modes would have to be adopted in the Town of Greymouth. In the business part of the town, where the rents have ruled high from the commencement, the improvement made by the tenants ought not to be considered in calculating the rental to be paid for an extension of lease, as it would be manifestly unfair to make the tenant pay for improvements made at his own expense; but the case would be different in the back portion of the town. There the improvements may be considered the property of the trust, and should be included in any assessment to be made for the purpose of determining the future rent of the premises, the land having been let at a low rental with a view to encourage occupation, and to enable the tenant to repay himself for the outlay incurred in clearing and improving the property.

One mode in use in England for ascertaining the rent which farming land will bear is to calculate the gross value of the produce derived from the land and divide it into three parts: to set apart one portion for tillage and other incidental expenses, another for the maintenance of the tenant and family, and to consider the third, after deducting tithes and assessments, as the proper rent to be paid. In the case of grazing land, the expense of labour being much lighter, the proportion to be allowed for management would be smaller in order to allow a proper amount of rent for the landlord. Another mode of determining rent is to deduct all the expenses and outgoings, together with the maintenance of the farmer and his family, from the gross produce, to allow 10 per cent. upon the capital employed, and to consider the remainder as rent. Another and more recent mode is to select an acre of the best arable land on the farm, to value the gross produce as well as the labour attendant upon it over a period of four years, and, after taking an average of the profit, to deduct therefrom 10 per cent. for the farmer's stock and capital, the remainder being the rent. The same plan is adopted with regard to an acre of the worst land, and, when the rent of the best and worst land on the farm is thus found, the rent of the intermediate qualities of soil will be readily ascertained: the whole being then added, an average taken of the whole farm will give the rent per acre.

In order to fix the proper rent it is essential to inquire into local circumstances, such as the quality of the land, its capabilities for cropping, and the proportionate quantity of stock it will carry per acre; its contiguity to market; the value of produce; the amount of taxes to be paid, and whether to be borne by the lessor or lessee; the expense of labour; and whether the land lies compactly and is approachable by good roads. In India the Government has always been considered the owner of the soil, and the actual cultivator pays a rent or tax for the use of the land. The amount of rent paid by the tenant-farmer to the Government is fixed at the average money-value of half the average produce, after deducting cost of cultivation. For purposes of assessment the soils are divided into classes and subclasses: of the former there are 5, and of the latter 34. The first are classed as alluvial, ferruginous, calcareous, and arenaceous. The average yield per acre of staple grain crops is ascertained by careful experiment, and about one-fifth is deducted to compensate for the chance of a bad season. The average market price for twenty years, less 8 to 20 per cent. for dealers' profits, is then calculated, and, after estimations of cultivation expenses, half the net profit is taken as the amount due to Government. Allowance is also made for distance from market.

In justice to the original tenants on other Native reserves in Westland, as pioneers of settlement, or to the persons who have since purchased their interests, a renewal of the leases should be granted them at a rate of rental consistent with fairness, irrespective of improvements. The property being indebted for its improvement entirely to their capital, it follows, therefore, that the law by which the ownership of improvements follows the ownership of land would, in this instance, be in the highest degree unjust and inapplicable. In the case of these reserves, the tenants have improved the property on the full reliance of getting an extension of lease at the expiration of the subsisting term, the understanding being that, as the intention is to encourage the occupation of these lands in perpetuity with a view to secure a fair pecuniary return for the benefit of the persons beneficially concerned, there would be no difficulty in obtaining a renewal; yet on a change of management, without a definite arrangement is made with them to that effect, the land in all probability would be reassessed, when the best properties would have the rents raised, the land in fact being worth more in consequence of the tenants' improvements.

The proposition to put leases up to auction will be found as a rule to operate very injuriously to the beneficial occupation of land, as it offers no encouragement to occupiers to improve, in consequence of the insecurity of tenure beyond the subsisting term. Experience has shown that bonâ fide occupants of land are very rarely induced to bid at auction for leases without calculation, and the reason for this is quite obvious to practical men. The practice, if resorted to simply means that it enables persons of the speculative class—without any interest in the matter—to bid for leases, to the detriment of others who are more equitably entitled to consideration.

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It is maintained by writers of the present time that there is too much of the old feudal felling still remaining in the relation between landlord and tenant. They maintain that the proper state of things is that it should be purely a pecuniary arrangement; that the landlord should let his land for a certain period and rent; and that there should be no trace of any other connection remaining than that which necessarily arises from mere business relations between them; in fact, that a fair bargain, honestly carried out on both sides, is the sum of duty reciprocally due between them. This view of the matter would probably meet with strong opposition from persons who regard tenants as merely the retainers or dependants of the owners of the land.

Besides the general regulations to be made by the Governor under the Act of 1873, it is highly important that power should be given to enable special regulations to be made in certain cases; as for instance, the Greymouth reserve, this property having been occupied and improved by the tenants under exceptional circumstances.

The main advantages to be secured to the tenants by the proposed regulations would be—The renewal of existing leases, at a rent proportionate to the increased value of the land, for a maximum term of twenty years, without a covenant to build, provided the buildings now situate on the land, representing the value to be fixed of the amount of improvements to be made during the term thereby to be granted, are deemed to be sufficient. In cases where the occupants are desirous of expending large sums of money on the improvement of their holdings in erecting durable buildings of brick and stone, the option should be given to take leases renewable for three periods of twenty years; both descriptions of tenure to be subject to a condition that the lessee, on application within a reasonable time, will grant to his sub-tenant a renewed lease for a proportionate term, at a rent increased by the amount of the increased rent of the original lease; the tenant-in-chief to have the pre-emptive right to the renewal, and, failing his acceptance, the second tenant to have the next right, conditionally that the improvements made at the expense of the tenant-in-chief—or by the sub-tenant in pursuance of any arrangement on that behalf—should be paid for at a price to be fixed by impartial assessment. The same rule to apply to the case of other tenants, until each had exercised their right of choice. In cases where the sub-tenant has made the improvements, and does not secure a renewal of his lease, the person coming into possession to pay for the value of the improvements made by such tenant, provided no allowance was made in the conditions of the lease. In that case, the value of the improvements should be paid to the person beneficially entitled. The chief object in letting these lands being to secure a present income for the persons beneficially interested, rather than a prospective advantage, it follows, as a matter of course, that the tenant in occupation at the expiration of the subsisting term —in cases where an equitable rent has been paid over the whole term—should, in event of not securing an extension of his lease, be entitled to the value of the improvements from the incoming tenant, provided such improvements have not been made in pursuance with some arrangement or obligation in that behalf. In the case of agricultural holdings, the outgoing tenant's interest in improvements is protected by the Imperial statute (14 and 15 Vict., c. 25) in force in the colony.

It will no doubt be admitted that one of the main objects to secure, with a view to beneficial occupation, is to make the title to land as simple as possible, and its transfer easy; by these means the value of all landed property would be prodigiously increased. For the sake of uniformity, and in order to facilitate the preparation as well as reduce the expense of executing the necessary leases for the occupation of the Native reserves, it would be advantageous in the interests of the tenants if a printed form of lease containing the usual covenants was prepared for use, with sufficient blanks for names and descriptions, and for the addition of special clauses if necessary. It will be found that the more liberal and simple the stipulations contained in the lease the better they will answer the purpose and advance the interests of all concerned, besides greatly enhancing the security the tenant has to offer for the use of money lent to him for the improvement of his leasehold.

Amongst other matters it would be advisable also to provide, in regard to the assessment of rent, that, should the tenant feel the amount fixed to be oppressive, he should have the option of referring the matter to the arbitrament of two impartial persons to be chosen in the usual way, the cost of such appraisement to be borne by the applicant. This would finally prevent an oppressive rent being fixed, and preclude the possibility of the officer having charge of the estate being the sole judge, in case of any diversity or difference occurring between himself and the tenant. One of the grievances complained of against absenteeism is that the agents too often have no good feeling towards tenants, but strive only to raise as large sums as possible for their principals, without regard to consequences.