SHACK LEASES

The Hon. J.A. DARLEY (14:48): I seek leave to make a brief explanation before asking the Minister for Sustainability, Environment and Conservation questions about shack rents.

Leave granted.

The Hon. J.A. DARLEY: On 15 May this year I asked the minister a number of questions regarding shack rentals. The minister provided a lengthy response but no answer to any of my specific questions was given. However, the minister did say, and I agree, that the rationale for rent setting has always been that the state should receive a fair rent return for the private and exclusive use of its land assets.

How can the minister say that using 4 per cent as the rate of return for shack rentals is fair when the state expert on this matter, the South Australian Valuer-General, has advised that 4 per cent was too high and that 2.75 per cent would be much more appropriate from 2009 through to now? Will the minister now agree to refund the overpaid rents?

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (14:50): I thank the honourable member for his important question and for persevering on this subject with me, and eventually we will undoubtedly get to the sunlit uplands that we all aspire to. As previously advised, there are approximately 300 life tenure shack leases on crown land and 100 in national park reserves. Life tenure means that the lease expires when the last lessee passes away. It is useful, once again, to have a quick discussion about the history of these leases.

As you would expect, these leases carry an obligation to pay rent. The rationale for rent setting, as the Hon. Mr Darley has said, has always been that the state shall receive a fair return for the private and exclusive use of the state's land assets. They are the state's assets. They are often in very picturesque places—on the foreshore of beaches, on the riverfront—and they are lovely assets. I have said in this place many times that these conditions—

Members interjecting:

The Hon. I.K. HUNTER: Well, if we want to talk about this. It was the Liberal government in its time that freeholded a number of shack leases and then said that there were a number of shacks, because of their position or the facilities around them, that should not be freeholded, and we are doing nothing different. We are doing absolutely nothing different. Shack rents are set by obtaining a land value from an independent valuer and applying a rate of return to that value. As I have said here before, those valuations go up and down over time as there are fluctuations in the economy.

The Hon. J.M.A. Lensink: They're just going up.

The Hon. I.K. HUNTER: Well, that is not quite true because if the honourable member listened to my previous reply, she will know that the rates have been up much higher at about 8 per cent in the past. They are currently down at 2.75 per cent.

The Hon. G.E. Gago: They don't worry about facts, though.

The Hon. I.K. HUNTER: No. Facts are—

The Hon. G.E. Gago: They don't worry about facts, they just make things up.

The Hon. I.K. HUNTER: Facts are very inconvenient for some people, but the Hon. Mr Darley is not one of those people. He understands the basis that the shack policy stands on and he also understands the history. Indeed, as a former valuer-general he certainly would know and understand it.

For rents effective from 1 July 2013, the rate of return was set at 2.75 per cent. This was based on advice from the South Australian Valuer-General. I am also advised that previously for rents 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 a New South Wales valuer in private practice.

It is normal for the rate to change. Just like prices of many other goods that we deal with—the share market, housing market, petrol market—prices can go up and down depending on a number of factors, and the local economic conditions are amongst them. Just like with these items and commodities throughout the history of setting shack rents, the rate of return has been adjusted periodically. I have previously stated in this place that the rates of return applied over the years have ranged from 1.5 per cent (that was Pondalowie in 2004, I understand) to a mid-range of 3.5 per cent (for the Coorong in 1994) and a high point of 8 per cent for national park leases from 1985.

The Department of Environment, Water and Natural Resources will seek appropriate advice on an appropriate rate of return for shack sites every two years. It is important to know 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 and, again, I assure all members in this place that the government has and will continue to ensure that rent setting is fair, consistent and transparent into the future.