Wednesday, May 22, 2024

Covenantors queue up for trust action

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The QE11 National Trust is getting close to 5000 approved and registered covenants over nearly 200,000 hectares at the beginning of its fifth decade in existence.
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The trust also has a new chair, former Federated Farmers president Bruce Wills, and three new directors appointed by Conservation Minister Eugenie Sage towards the end of an eventful year.

The 2020 annual report to June 30 disclosed a total of 4761 registered and formalised covenants, up 110 during the financial year, with a further 342 underway.

If not before, the total covenanted area in New Zealand will reach 200,000ha when Dick and Jillian Jardine’s gift of 900ha of the Remarkables Station, Queenstown, will be enacted in 2022.

Their intention was announced late last year to protect in perpetuity the iconic landscape and significant biodiversity at the foot of the Remarkables Range.

The gift to QE11 Trust will coincide with the centenary of Jardine family ownership of the station being run as a working farm under lease, which will continue.

The Remarkables transaction to come fits the trend of much larger covenants in Otago region compared with the rest of the country.

Otago’s average size is 310ha, versus the national average of 37.6ha, and the region contains the largest QE11 covenant in the country at 21,909ha.

Numerous smaller protected areas means that several regions have more covenants than Otago’s 235 – Auckland with 298, Canterbury 404, Hawke’s Bay 263, Manawatu-Whanganui 421, Northland 767, Southland 389, Taranaki 481, Waikato 710 and Wellington 365.

Auckland has the smallest average size of 12.8ha, followed by Northland at 14.1ha, although Northland is the region with the largest number of covenants.

The records show that QE11 took the first decade (1980s) to reach 500 covenants, doubled the rate of growth to 1500 by the year 2000, maintained a steady pace to 3500 in 2010, and the prospective 5000 just over a decade later.

But with greater numbers comes a larger workload and maintenance requirements, and outgoing chair James Guild says there had been only one increase in baseline funding during his nine years in charge.

Bruce Wills | February 03, 2021 from GlobalHQ on Vimeo.

“During that period the area protected has increased by 42%, the number of covenants by 30% and our operating costs, such as fencing, surveying, monitoring, legal fees, rents and staff costs, continue to rise,” Guild said.

In his final financial year the trust had a surplus of $912,000 instead of a budgeted deficit of $1.2 million, but that was due to one-offs like revaluations, bequests and settlements.

“Much of the surplus relates, unfortunately, to intangible balance sheets changes,” chief executive Dan Coup said in his first annual report, having been appointed in November 2019.

“Seven weeks of no field work (due to covid-19 lockdowns) coupled with restrictive weather events made for challenging circumstances.”

Instead of the planned 2000 covenant monitoring visits, the staff managed only 1427.

QE11 Trust has 26 regional representatives plus its head office staff members and spends about $2m annually on salaries and entitlements.

Total covenant expenditure during FY2020 was $1.56m, including about 10% on enhancement projects by landowners from the Stephenson Fund, set up in memory of Gordon and Celia Stephenson, the founders of the trust and the first people to register a covenant.

The annual government grant of $4.27m has remained unchanged for several years and Coup says the underlying operating result in 2020 was a significant loss.

“We do not intend to reduce the amount of work we do with existing covenantors or in establishing new covenants, so the operating loss will need to be addressed by improving revenues,” Coup said.

Wills says some new funding was coming from the Jobs for Nature initiative for post-covid economic recovery, but that would not be applied to business as usual.

He hoped it would lead to some new type of legal protection for plantings funded by the taxpayer, from perhaps as early as three to five years after planting.

Demand for protection of open spaces, geological and water features and regenerating bush was stronger than ever before, which he put down to the covid-19 impacts on landowners.

“They have been confined to home base, reawakened to what is important and for the need to protect in perpetuity,” Wills said.

The 5000 QE11 areas required more upkeep and it made sense to hold to a high standard what the country had already protected before funding new blocks.

“In general, too, our existing covenantors are getting older and we don’t want biodiversity declining because of climatic, health or financial reasons,” he said.

The increasing workload led the directors to make deficit budgets and draw down on reserves.

Wills says the trust’s balance sheet looked strong, but that was partly due to an historical obligation to repair and/or replace fences around pre-1995 covenants, for which a $9m provision was held.

“As the fences are mostly maintained by landowners on a day-to-day basis, the trust’s objective is to reduce the provision over time,” the annual report said.

Hawke’s Bay-based Wills is also chair of the NZ Poplar and Willow Trust, Apiculture NZ and Primary ITO.

The new directors are Neil Cullen of South Otago, also president of the NZ Farm Forestry Association, Alan Livingston of Hamilton, chair of the Waikato Regional Council, and Karen Schumacher of Taranaki, a farmer, covenantor and chartered accountant.

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