SHACK LEASES

The Hon. J.A. DARLEY (15:00): I seek leave to make a brief explanation before asking the Minister for Sustainability, Environment and Conservation questions with regard to rents for shack sites on crown land.

Leave granted.

The Hon. J.A. DARLEY: In answer to my questions on 15 May, the minister stated that the 4 per cent rate of return was based on advice from the New South Wales Valuer-General and an independent valuer from New South Wales. It is worthwhile noting, again, that the independent valuer from New South Wales qualified his report at the beginning by saying that he did not have firsthand knowledge of all the leases, the lease shack sites, the respective locations or the local market.

As I have said previously, the South Australian Valuer-General's advice is that a 2.75 per cent rate of return is the most appropriate rate of return at present, and it has remained at this rate since 2009. The minister also said, on 15 May, that the Department of Environment, Water and Natural Resources had sought advice from the South Australian Valuer-General to determine some of the shack lease rent objections. Given that the minister's response on 15 May was no doubt based on information provided by the department, my questions are:

1. Is the minister aware that, contrary to the advice given to him by the department, the New South Wales Valuer-General did not actually provide advice on the rate of return?

2. Is the minister aware that, contrary to the advice given to him by the department, the South Australian Valuer-General has never provided any advice regarding rents but merely confirmed to the department that the valuation methodology used is a valid valuation method, which is a matter distinctly different to confirming, determining or upholding any individual rent objections?

3. Will the minister concede that the department is providing misleading and/or inaccurate advice to him on this issue?

4. Will the minister accept that a mistake was made in determining the rate of return and refund the overpaid rents?

5. Will the minister or the department request advice from the Valuer-General on the individual unimproved values? If so, when?

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (15:02): I thank the honourable member for his very important question and for his persistence. As I have previously advised the chamber, there are approximately 300 life tenure shack leases on crown land and 100 in national park reserves. Life tenure, obviously, means that the lease expires when the last lessee passes away. It is the terms and the rents payable on these leases that the honourable member has a very great interest in, amongst other things.

As one would expect with any place that is rented, these leases carry an obligation to pay rent. The rationale for rent setting has always been that the state should receive a fair return for the private and exclusive use of its land assets, no different from other land that is rented. Lease conditions for non-transferable shack leases on crown land and in national parks provide for the periodic revaluation of the annual rent to be paid to the Crown for the right to occupy the land.

Shack rents are set by obtaining a land value from an independent land valuer and applying a rate of return to that value. I am advised that the Department of Environment, Water and Natural Resources provides private valuers with a valuation brief for the purpose of determining a rent. This valuation brief does not define unimproved land value per se; rather, it provides the following instructions for the basis of valuation: Crown's interest is the land, excluding any work carried out by the lessee in relation to the land or any improvements on the land which do not belong to the Crown. I am advised that, for rents effective from 1 January 2012, the rate of return was set at 4 per cent. I previously advised that this was based on independent advice from the New South Wales Valuer-General and the New South Wales Valuer in Private Practice.

I am advised that, for rents effective from 1 July 2013, the rate of return was set at 2.75 per cent, and this was based on the advice from the South Australian Valuer-General. I must note again that it is normal for values to change in a fluctuating market. Like other economic assets, prices can go up and down depending on a number of market factors.

I am advised that shack rents and the rate of return have been adjusted periodically over time. I have previously stated in this place that rates of return applied over the years have ranged from 1.5 per cent, for example, at Pondalowie in 2004, to a mid-range of 3.5 per cent for the Coorong in 1994, to a high of 8 per cent for national park leases from 1985. The Department of Environment, Water and Natural Resources will seek advice on an appropriate rate of return for shack sites every two years.

It is important to note that lessees have the opportunity to lodge an objection to any new rent within one month of being notified as part of their lease conditions. I assure all members of this place that the government has ensured, and will continue to ensure, that rent setting is fair, consistent and transparent.