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Wednesday, 11 November 1964

Senator WRIGHT (Tasmania) .- We switch back, now, to the subject of leases. This clause concerns itself with assignments and surrenders. I carefully abstained, in any reference I made to leases in my previous speeches, from the question of assignments and surrenders because I wanted to isolate the original creation of the lease for simplicity purposes. I have already explained the position and in relation to leases it is not at all satisfactory. So far as 1 have attempted to understand the position with regard to assignments and surrenders, it seems to me to be much less satisfactory and, if I might indicate it to the Minister for Civil Aviation (Senator Henty), my difficulty arises in understanding, particularly, sub-section (4.) of the section which stales -

Where, after the twenty-second day of October, One thousand nine hundred and sixty-four, improvements are made on land the subject of a lease with the written consent of the lessor of that land, sections eighty-five, eighty-seven and eightyeight of this Act do not apply in relation to those improvements unless -

(a)   the written consent was given on or before that date; or

(b)   the Commissioner is satisfied that, on or before that date, the lessor had agreed, whether absolutely or subject to conditions, to give that consent and the written consent was given within a period after that date that the Commissioner, on the joint application in writing of the lessor and the lessee made or within such further times as the Commissioner allows, has approved (whether before or after the giving of the consent) as reasonable for the purposes of this sub-section.

Quite frankly I do not begin to understand that and I rise to seek some explanation of what is meant by this section in relation to assignments and surrenders of the lease. Old section 85 provided that if the terms of a lease required that improvements were to be made on the leased property, or if the landlord gave in writing his consent to improvements being made, the lessee was entitled to a deduction of the cost of those improvements over the term of the lease. This afternoon I mentioned the enormity of some transactions in which, mainly, subsidiaries of parent companies took leases of land and agreed to erect on them buildings costing, say, £1 million over a lease of, say, 40 years. They would then become entitled to a deduction of £1 million over the 40 years. Due to the enormity of that situation, we have given up taxing improvements for which a landlord has bargained, and abandoned the idea of giving the tenant a deduction for improvements that he has made to the landlord's property under covenant.

That seems to me to be a most odd idea for the Labour Party to accept, but honorable members opposite are apparently accepting it holus bolus in this Bill to have some election point on which to go to the country, Here is a situation in which a lessee is bargaining in his lease to make improvements - often very substantial improvements - to the freehold. Previously he has been entitled to a deduction in respect of them. In the case of ordinary improvements, this would seem to me to be a very reasonable proposition, but the Labour Party now has abandoned any concern for the interests of lessees and is letting the Bill go through, trusting to the discretion of the Commissioner.

I am not advocating the cause of a lessee subsidiary company that erects a building costing £1 million on the freehold of its parent company and then gets a deduction of £1 million over 40 years. That condition has been carefully preserved to the lessee in the Bill, and I am amazed to find that the Labour Party is not even concerned about that situation. It has renounced the right to have a select committee scrutinize the position or object to the clause. Here we have a situation where, in relation to assignments and surrenders, the conditions set out in sub-clause (4.) seem to make it almost as difficult as it is for the proverbial camel to get through the eye of a needle for an assignee to gain any benefit from the improvements that he has made to his leasehold. I pray for light.

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