Perpetual Leases



About this Item
SpeakersColless The Hon Rick; Kelly The Hon Tony
BusinessQuestions Without Notice, QWN



PERPETUAL LEASES
Page: 27833

The Hon. RICK COLLESS: My question is directed to the Minister for Lands. How many perpetual leases have been transferred to freehold agricultural land since 2005? How many of the leases that are now freehold have restrictive management covenants imposed on their freehold status? What is the compliance requirement? What ongoing compliance costs are incurred for each of those covenants?

The Hon. TONY KELLY: I thank the honourable member for his question and continued interest in the transfer of perpetual leases and enclosed roads throughout the State. Obviously the question is very detailed and will require further responses. However, in 2004, the then Treasurer, Michael Egan, mentioned in his Budget Speech that the Government was undertaking a process to address anomalies caused by the huge complexity in leaseholdings throughout the State. As the Hon. Rick Colless will be aware, often people are confused by the term "perpetual lease" and think that the leases are finite and will terminate at some point. They do not.

The Hon. Rick Colless: Not like the 99-year leases.

The Hon. TONY KELLY: They are not like the 99-year leases in Canberra. Perpetual leases are forever and ever, and even beyond that. They are literally perpetual. In 2004 the Government took the view that virtually no equity was held by the Crown in those leases and that they were an administrative nightmare for very low return. From memory, I think the return was $140 a year, and in many cases that did not cover the costs of administration. The Government undertook over a period to sell perpetual leases to the leaseholders as freehold. During the term of the previous Coalition Government, approximately 3,000 of the leases were held back and a moratorium was declared because of environmental issues. The Labor Government agreed to closely examine the environmental issues to see whether the properties could be converted and sold. For example, some of the properties had environmental issues in relation to only a particular corner of a 400-hectare farm.

The Hon. Duncan Gay: The moratorium was 16 years ago.

The Hon. TONY KELLY: Yes, but there was a moratorium. The Government undertook the process and, from memory, we allowed three years in which the sales could proceed. We extended that period a couple of times because we wanted people to avail themselves of the opportunity. Despite repeated attempts to contact some people, we had difficulty in getting them even to respond to us.

The Hon. Duncan Gay: You were trying to make money out it.

The Hon. TONY KELLY: We are not trying to make money out of it.

The Hon. Duncan Gay: You had a pecuniary interest in this.

The Hon. TONY KELLY: We are not trying to make money out of this. The Government engaged KPMG, which made an assessment that our interest was between 2 per cent and 4 per cent, and the then Treasurer selected 3 per cent. We offered the properties for sale at 3 per cent of the valuation. I recall that at one stage there were approximately 800 properties remaining whose lessees had not responded. We wrote to those lessees and I recall that we spelled out the likely increase in rent under the lease at the end of the period. It was often the case that the annual rent was higher than the cost of freehold purchase of the property.

The Cabinet framework that utilised the environmental assessment and protection of the identified conservation values is based on several principles. When relevant, covenants will protect existing environmental values while permitting existing lawful land use to continue. Lessee concerns about the fairness of applying covenants are unfounded. I know there have been some specific instances. As recently as in the last couple of days I signed a letter in response to a member in the other place stating that, in relation to some covenants, the department was re-examining the issues.