Pastoral Lease Rents

15-Nov-2012

Mr VAN HOLST PELLEKAAN (Stuart) (11:30): I move:

That this house—

(a) calls on the Pastoral Board to re-form the rent review committee over its decision to increase pastoral rents by up to 230 per cent;

(b) condemns the Weatherill Labor government for once again failing to consult with those affected; and

(c) notes the important contribution of South Australia's pastoral sector to primary production.

This is a very important motion that I bring to this house. The 230 per cent example that I alluded to is from a Stuart constituent, whom I directly represent, but, of course, through this motion I represent many people in the pastoral sector of our state, including yours, Madam Speaker, and other electorates as well.

This is critical for many reasons, but let me concentrate on the first part about re-forming the pastoral rent review board. The reason it is so necessary is because of the exorbitant rent increases we have seen in the last few years. My office has acquired these rent changes over the last few years. From 2008 to 2009, on average pastoral rents went up 1.92 per cent. From 2009‑10, on average pastoral rents went up 17.5 per cent. From 2010 to 2011 pastoral rents went up on average 26.4 per cent. Over those three years that is a whopping 51.4 per cent increase in rents on average—some higher some lower—but the whole industry had to bear in excess of a 50 per cent rent increase in those years, which by any standard is exorbitant.

I will turn briefly to how pastoral rents are calculated. They are calculated as a percentage of unimproved capital value. That is very important, because the improvements on the land, the land that belongs to all South Australians, are actually owned by the leaseholder and include things like roads, fences, pipelines, watering points, shearing sheds, other sheds, yards, homes and so on. They actually belong to the lessee and not to the taxpayer. It is fair to charge the rent on the unimproved capital value, which essentially is the land value.

The rates are 2.7 per cent for pastoral industry use, 2 per cent for unstocked or destocked pastoral industry use (and that happens during drought or when set aside for conservation use), 5 per cent for tourism use and zero per cent for heritage use, for pastoral leases set aside for heritage or conservation use. People would, of course, like to pay less rent, but broadly speaking they do not object to those percentages. It is the land valuation that causes the problem. This is publicly-owned land—it is owned by all South Australian taxpayers—so it is fair to charge the rent which, just like council rates, land tax and many other levies, is based on a percentage of the valuation, but the valuation is key.

The way the land has been valued has actually changed very much from a commercial and stocking capacity basis in previous years to a vegetation-type and land system basis, and that has changed things enormously. I think that is one of the single biggest factors that has created high values and so higher rents. What these higher rents can do is completely exclude market and business realities which are, of course, what give people a capacity to actually pay their rent.

There is an argument to say that rents were kept low during the drought. That may or may not be the case, but the reality is that they cannot be increased by in excess of 50 per cent in three years because the drought has finished. It takes many years in pastoral country for people to recover. By its very nature, it is pastoral country, not cropping country, and that is why it is so hard for people to recover. It takes a long time to rebuild your stock and for your feed to regenerate, so reinstating this pastoral rent review board is very important from an equity position.

Let me also advise that the most recent Pastoral Board annual report says that they have received 36 objections to rent increases in the last year. I believe there were only two in the year before and, in fact, it is something they have not even reported on in previous years so, clearly, this is a very important issue for this industry. Let me just read from the Pastoral Land Management and Conservation Act 1989. Section 23—Rent, subsection 2(a)(v), provides:

(2) The annual rent for a pastoral lease is to be determined as follows...

(v) the views of any consultative committee established by the Minister for the purpose of assisting in the determination of pastoral lease rents.

This capacity is very well within the minister's grasp to set up this rent review committee so that this very important issue can be addressed. No industry in our state can absorb 26 per cent rent increases across the board in one year and 51 per cent rent increases across the board over three years. There is absolutely no basis upon which these rent increases should not be reconsidered.

I now turn to paragraph (b) of my motion, that is, to condemn the Weatherill government for once again failing to consult with those affected. Let me say at the outset that I predict a government amendment to try to completely reverse the intent of my motion in this area. I know the government will stay within the rules and not do a 100 per cent reversal, but I suspect that it will change the words in a way which I think is very sneaky and inappropriate. I think every member of parliament and every person aware of this issue will understand exactly what the government is trying to do here.

In regard to consultation, these rent increases have come as a complete surprise to the industry. There was no consultation with pastoralists. This is very much in the old style of the Rann 'announce and defend' government that Premier Weatherill said he would step away from. Clearly, there has been no change. Just like it did with the Cadell ferry, the government is now trying to rip off pastoralists all over our state. The Cadell community stood up, as did all the communities up and down the river to support them, and I hope that other communities will support our pastoral areas on this very important issue.

The government clearly has no appreciation for the long-term nature of the pastoral industry. You just cannot increase rents in this way. It is true to say that every now and again a pastoralist gets extremely lucky, purchases a station with debt, has a couple of great seasons and is really up and running and financially well off quite quickly. But let me tell you that far more people get very unlucky. Overall, the long-term difficulties that apply to this industry far outweigh the short-term benefits, so for the government to try to accrue a short-term benefit for itself on this issue is completely inappropriate and has the capacity to really demolish this industry.

Pastoralists have millions of dollars invested in this industry; it is not easy to get into. There is not only the purchase price of acquiring a pastoral lease or of holding a pastoral lease, but the cost of earthworks for dams, pipelines, fencing—it goes on and on. There is the cost of providing electricity and, Mr Deputy Speaker, you may or may not be aware that it costs at least tens of thousands of dollars a year to supply electricity to a pastoral lease off the grid. There is the cost of diesel for electricity provision and also for all the work that is required running vehicles and machinery and, with the cost of building fences, materials, roads, this is all an exceptionally expensive business.

Many hundreds of thousands of dollars can be earned and lost in just a few years. It is not fair to try to overcharge rents in the good times because pastoralists are not paid back quickly after the bad times. Price cycles associated with selling and buying of stock in line with climate are very important. Pastoralists are at the whim of international markets when it comes to the prices of stock they sell. They are also at the whim of climates, and it is very rare for pastoralists to get both lined up in a positive way at once; but it is not rare at all for them to get bad prices and bad climate come and hit them at the same time. They are also subject to devastating droughts and a myriad other issues, including the scourge of dingoes, which I have talked about many times in this house.

Pastoral business incomes to do fluctuate significantly and, of course, as I hope members here would know, wool, beef and sheep meat are the three key incomes for pastoralists; they fluctuate. They go up and down, but their operating costs only ever go up. It is not only the rent: it is the labour, it is the diesel, it is the materials, and it is the ever-increasing red tape and compliance costs that affect pastoralists and the whole primary producing industry at the moment. I believe the government really has no understanding or no desire to include what they do know in this area in their discussions, I think that they are really just trying to tax pastoralists by these very significant rent increases.

Now, let me turn to the third part of my motion. I note the very important contribution of South Australia's pastoral sector to primary production, and this is undisputed—undisputed at many different levels. Let me start, first of all, with history. The first stock (which were sheep) brought into South Australia came from Tasmania in 1838; so, this has been an exceptionally important industry for us for a long time.

The Pastoral Board in South Australia was established in 1894, which is well in excess of 100 years. The importance of the sheep and pastoral industries stems right back to the beginning of our settlement. It really is one of the foundations of our economy, along with many other sectors which are vital to South Australia. This is one of our longest serving sectors, and also has a very positive future for us.

The pastoral zone covers approximately 410,000 square kilometres in South Australia: 230,000 square kilometres running cattle outside the Dog Fence and 180,000 square kilometres running sheep and cattle inside the Dog Fence. The Dog Fence runs for 2,250 kilometres, and that is just within South Australia. There are 328 individual pastoral leases, operated by 220 station runs or management units. South Australia has the largest sheep and cattle stations in the world: Commonwealth Hill, run by the MacLachlan family, and Anna Creek Station, run by S. Kidman & Co.

These are very important for our culture. Our culture in South Australia has grown up with sheep and cattle stations, and that is something that should not be underestimated. We should be incredibly proud, in South Australia, of our part in this national industry, in our past, present and future. There are many future opportunities: food and fibre; increased recognition of heritage, both Aboriginal and settler; tourism; mining; petroleum; environment; and communities that exist in our pastoral regions.

A wonderful example of all of these combined together is Innamincka Station, which encapsulates the history of Burke and Wills on Cooper Creek, and is held by the famous S. Kidman & Co pastoral company. It includes the Cooper Basin petroleum and gas reserves in the same area. And the Innamincka Regional Reserve and the Coongie Lakes Ramsar site are a very important environmentally in that part of the state. The Innamincka township in an important tourist location.

In closing, let me say that pastoralism is absolutely vital to South Australia for so many things. All these other industries that I have mentioned rely on pastoralism for their success. Pastoralism and pastoralists are actually the glue that holds together all of these very important elements, including mining, tourism, petroleum, community, and environmental perspectives. Pastoralists are the people who live there. Nobody knows more, and nobody puts more work into our environment in outback South Australia than pastoralists themselves.

We actually do it better in South Australia than in any other state, but pastoralists, working with NRM boards, DEWNR, PIRSA and other government departments, are the ones who hold it all together. None of those departments could achieve a thing without pastoralists doing it for them, so it is incredibly important that our government supports our pastoral industry because, if the government keeps jacking up the rents, the pastoral industry will suffer.

If the pastoral industry suffers, all these other incredibly important industry, environmental and community areas will suffer. Pastoralists should be supported in our pastoral zone. They should not be throttled by vicious rent increases, and I call on the government to take this issue very seriously. I call on the government to reinstate the pastoral rent committee to look at this very important industry. Pastoralists are just looking for a fair go. They are looking to be fairly represented.

Time expired.

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