Which state or territory (a decade ago) saw virtually all of its farming lands (some right next to existing urban backyards) privatised for only about $420 a hectare or $80,845 per average 198 ha farm? (While you are guessing), would you also believe that its government (between 2014 and 2017) bought back about 4800 hectares of this same land for over 40 times what it had originally sold it for? Would you also believe that the senior official behind the buyback (rightly in my opinion) described the $43 million odd paid to buy-back nine properties (previously privatised for about $1.25 million) as "a drop in the ocean" and lamented that the buy up did not go further.
The facts above are all true, and the jurisdiction in question is the Australian Capital Territory (ACT). What is amazing is that, while the ACT Legislative Assembly is currently running an inquiry into the buy-back of nine rural properties by its former Land Development Agency (LDA), almost nobody (especially politicians) is publicly questioning why virtually all the Territory's farming lands were sold off so cheaply (a decade earlier) in what had to be a financially disastrous privatisation for the Territory.
The background to this story (in part) goes right back to the founding of Canberra.
When the ACT was created (to avoid the potential for private speculative gains), it was determined that all Territory lands were to be held under a public leasehold system. New South Wales subsequently handed over Crown lands within the Territory, and all privately owned land (former NSW title) was bought up at market value by the Commonwealth over a number of decades. In 1976 the last freehold lands were bought out.
The Commonwealth had no immediate use for most of the farms it acquired, so it leased them back to either the original owners or to third parties. Lessees generally had no security of tenure but only low rents were charged. Even though leases had nominal terms (sometimes several decades), there was a clause in each rural lease that allowed the Government to resume the land (e.g. for housing) at three months notice, with compensation payable only for lessee owned improvements.
An anomaly was that lessees were allowed to transfer their lease to approved third parties, something that in normal tenancy arrangements would be the right of the landlord. Many leases changed hands from the original farming families to business people, public servants, retired professionals etc, though no bank would accept the (insecure) leases as security. The lease premiums (akin to "key money" paid by incoming lessees to the existing occupier) generally were much more than the value of any lessee-owned improvements but a great deal less than the property might bring as freehold land.
(The rural lands became regarded as a "land bank" for future development, and land sales became a handy earner for the ACT Government. In 2018-19, for example, the Suburban Land Agency gained $482.5 million in sales revenue (of which $292.5 million was from residential land sales.)
The ACT achieved self-government in December 1988. Prior to privatisation in the early 2000s, the rentals paid to the ACT government averaged a mere $5,713 per annum per farm (often including an older government-owned residence, woolshed, and other improvements).
In 1996, following lobbying by rural lessees that their insecure tenure provided no incentive to look after the land, the Carnell (Liberal led) government agreed to issue 99 year leases with automatic renewal clauses to most lessees. This in effect changed the nature of leases from rentals to quasi-ownership (not dissimilar to ACT housing blocks). The public was generally oblivious of this, and that the ACT Government was losing control of its "land bank".
All major political parties supported the lease changes, which were dressed up as a Landcare initiative. For example, a report prepared for the Australian and New Zealand Environment Conservation Council announced that: "In March 2000 the ACT Government launched a new rural policy to provide a better basis for sustainable rural enterprises and to secure a high level of protection of natural values in rural areas. The new policy includes the availability of 99 year leases in predetermined areas... For new leases, it requires the development of approved Land Management Agreements for sustainable land use".
The terms on which 99 year leases were finally granted were set out in Disallowable Instrument DI 2005-74 tabled by a subsequent (Labor) Minister for Planning. The process basically involved the surrender of the old lease and the granting of a new lease with only $20 of stamp duty payable.
The prices set were only a fraction of market values, something understood by most insiders. Penalties of 50 per cent of any capital gain applied if the 99 year leases were transferred within 10 years (in order to discourage quick profits and temporarily hide the extent of the pork-barrel). The general public (including perhaps some MLA's) were largely ignorant of the rights being relinquished by the ACT government.
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