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The Forum > Article Comments > Indonesia taking us to the cleaners through NT land purchases > Comments

Indonesia taking us to the cleaners through NT land purchases : Comments

By Brendan O'Reilly, published 8/10/2013

All the indications are that this is just the start, and that a hefty chunk of Northern Australia is set to change hands from Australian to Indonesian ownership at bargain basement prices.

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Correction: purchase of the leases of land, not the freehold title to land, as this article implies. In Australia, all pastoral land is held under lease, usually something like 42 years, and for very specific purposes, i.e. pasturing animals, and no other purpose. Lessees pay annual lease fees, or rent. This has been the legal position in every state and territory since very soon after colonisation.

Think of it this way: if you had a lease on a flat, and you - with the agreement of the owner - passed that lease over to someone else, and he/she thenceforth paid the rent, they would be in a similar position, legally, as an Indonesian holder of a pastoral lease.

If I'm wrong, someone please correct me :)

Joe
www.firstsources.info
Posted by Loudmouth, Tuesday, 8 October 2013 7:52:20 AM
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Joe. You are technically correct.

The pastoral lands in the NT are lease in perpetuity. All the land in the ACT is also leasehold, and most of the rural land in the Western Division of NSW is also leasehold etc. etc. Most of these leases involve ownership in all but in name, though they usually are subject to specific usage clauses, sometimes a modest annual fee, and possibly other conditions.

Referring to "purchase" of leases in perpetuity (or of long term leases that have automatic renewal clauses) is common practice. Legally speaking the consideration paid for taking over any lease is a "lease premium" rather than a purchase price but few people use this terminology.

Brendan
Posted by Bren, Tuesday, 8 October 2013 8:52:53 AM
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Joe, my understanding is the same as yours. What the Indonesians have purchased is a leasehold interest. It is also worth noting that the two properties referred to in the article together represent less than one half of one percent of the NT land territory.

The article also contains a rather too typical element of Indonesian bashing. The author completely fails to note, for example, that US and UK land holdings in Australia are vastly greater than that of Indonesia (or China for that matter).

I would be interested to know just exactly what the author's "private business interests" are now that he is no longer a public servant.
Posted by James O'Neill, Tuesday, 8 October 2013 10:15:38 AM
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A couple of pastoral leases for 35 million! You're joking? Somebody is being taken to the cleaners and it's not us!
Then we wonder why our kids can no longer afford to buy rural land?
I can remember when PASTORAL LEASES changed hands for 15-16 thousand!
After all, all you can do on them is sustenance grazing or even riskier dry-land farming?
If land values had been indexed for inflation since say the fifties, these prices would be just 10% of what is being charged today.
Arguably, the only winners here will be the ubiquitous realtors, who win with each exchange, on over-hyped values; regardless of the outcomes, good or bad, for the current tenants, repeat, tenants!
If you want to make money from pastoral leases, you need to buy a few off farm investments, with every good year!
To set you up for those years when drought, flood, fire or imbecilic govt decisions ravage the land!
Its simply not good enough for poor managers to blame somebody else, especially, when the real cause of their downfall, was say overstocking and then to be confronted with market and or value loss? I mean, floods can do exactly what the Federal govt did, and stall destocking outcomes.
Wild fires can do it for you with little or no financial return.
And its hard to insure something you are just renting or herds whose numbers can go up and down!
This is where a good diversification management outcome comes into its own!
And far better than simply wasting limited resources, buying new tractors or trucks etc, as a bulwark against penury, when there's nothing wrong with the old ones!
Rhrosty.
Posted by Rhrosty, Tuesday, 8 October 2013 10:22:03 AM
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There are a few questions I'd like answered.

1. Will the Indonesians be paying Business Taxes to Australia at the Normal Australian Rate, or will it be a Special Rate for Indonesia?

2. Will the Indonesian owners be employing Australians, or Indonesians?

3. Will the Indonesians be paying Australian Wages, or Indonesian Wages?

4. Which Country will the employees Tax be paid too?

5. Will the Indonesians eventually claim this part of Australia as being now a part of Indonesia's Soverenty?
Posted by Jayb, Tuesday, 8 October 2013 10:57:11 AM
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Were the leases purchased with Australian aid money?
Posted by Is Mise, Tuesday, 8 October 2013 12:31:16 PM
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