Shack Sites

The Hon. J.A. DARLEY (14:52): I seek leave to make a brief explanation before asking the Minister for Sustainability, Environment and Conservation a question concerning crown shack site valuations.

Leave granted.

The Hon. J.A. DARLEY: Yesterday, I asked questions with regard to the use of private valuers by the department to determine the unimproved values for shack sites on crown land. Specifically, I asked for information on how many valuations have been conducted by private valuers, what the cost is and why the department is not utilising the Valuer-General for this purpose. In the minister's response yesterday, he stated that he had answered my question and advised me to review Hansard. As a matter of fact, I listened intently to the question and I've now read Hansard and none of my questions have been answered, so I ask again for the third time:

1. Why does your department waste money engaging valuers from the private sector when the Valuer-General already determines land values for all crown shack sites on an annual basis for other government purposes?

2. Can the minister advise the total number of valuations and the amount of money spent on private sector valuations used for the purposes of reviewing rents on crown land shack sites for each of the past four financial years?

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Climate Change) (14:53): I thank the honourable member for his follow-up question from earlier in the week. I say at the outset that I reject outright the premise of his question. He is just wrong in that matter. Let me try to give him a little further information to put his mind at rest in this regard.

Further to the information I have given previously—and I won't repeat that and read that back into Hansard even though it does give some continuity in terms of the argument but I am quite sure that members who have an interest can go and read that from I think it was Tuesday—I am informed that up until December 2010 most shack rentals were determined as market rental, without a rate of return applied.

This involved direct comparison with market rentals, having regard to variations on lease terms and locational factors. This valuation was carried out by an independent valuer in private practice. In 2010, the former minister agreed to seek independent advice from another jurisdiction regarding the rent setting method. The New South Wales Valuer-General and a New South Wales valuer in private practice provided this advice, which specified a need to apply a rate of return.

This led to the adoption of the current rent-setting policy which is to obtain an unencumbered market value from a valuer in private practice and apply a rate of return to calculate the rent. The initial rate of return, as I mentioned earlier, was set at 4 per cent. I have previously advised that DEWNR provides private valuers with a valuation brief for the purposes of determining rent. I think I mentioned that in previous answers given earlier in the year.

This valuation brief does not define unimproved land value per se, rather it provides the following instructions for the basis of the valuation.

Valuation basis: the 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.

Rent-setting for all crown land leases is based on the market value being obtained for the exclusive use of state land. That seems fundamentally quite reasonable, I think.

As to the honourable member's further question, I understand that the Valuer-General currently provides figures for rating and taxing purposes that use mass appraisal techniques set out in the definitions of the Valuation of Land Act 1971. That is obviously going to mean a lot more to the honourable member than it does to me given his previous career. In comparison, the unencumbered market value of a shack site is prepared using a different approach which, I am advised, has reference to current market conditions and provides greater scrutiny of the property concerned.

I am advised that in the 2014-15 financial year a total of 239 valuations were carried out by the independent valuers in private practice to determine the unimproved market value of the shack sites. I am further advised that these 239 valuations cost approximately $46,000, inclusive of GST. A summary of the number of valuations carried out will be provided to me, as is normal, and if the honourable member wishes it I will provide it to him when it is given to me.

In essence, that should give him comfort in relation to further information about the answer I gave early in the week. There is no question of being money wasted; it is actually to get to a valuation of a property that is real, that represents market value which is assessed, as I understand it, somewhat differently from the process the Valuer-General utilises.