Sunday, 27 March 2016

Australian Federal Election 2016: how Liberal Senator for Tasmania Eric Abetz is said to have become a millionaire in 2005

Another bona fide millionaire is discovered within Liberal Party ranks? 

This appears to be how Senator Eric Abetz made the grade when he was Special Minister for State in the Howard Coalition Government….

The Sydney Morning Herald, 26 March 2016:

In early 2000, Abetz paid $100,000 for almost four hectares of government land adjoining his house block in the Hobart suburb of Kingston. In March 2005, the area was rezoned from "residential" to "business and civic". Four months later, Abetz sold both the house block and the adjoining land to property developer Robert Rockefeller's company, AAD Nominees, for a combined total of $1.9 million.

Here's where Abetz got lucky. For the big vacant block (3.8 hectares), Rockefeller paid him only $400,000. For the house block (0.6 hectare), Rockefeller paid $1.5 million – more than five times the government valuation. This meant the bulk of Abetz's proceeds from the two sales was not subject to capital gains tax (a person's residence is exempt from the tax). The enormous discrepancy in the two sale prices cannot be attributed to the value of the house, a six-room weatherboard construction which has since been demolished.

In 2014, the capital value of Abetz's vacant former house block was assessed by the Tasmanian Valuer General at just $470,000. John Hawkins, the columnist on the Tasmanian Times website who first drew attention to the land deals, believes an explanation is long overdue. Abetz's attitude is calmly dismissive. The house block had more road frontage than the bigger block, which enhanced its commercial value, he tells me. The whole thing was entirely above board.

The Tasmanian Times, 10 September 2010:

Snapshot of Document 1

Mr Rockefeller through his company AAD Nominees Pty Ltd has applied to Kingborough Council to build a shopping centre, car park and other facilities on the adjoining block of land with Channel Highway street numbers 163, 167, 191 and a section of 203 (Document 1).

Kingborough Councillors have recently knocked back the Development Application (Document 2) which had been approved by the Planning Department of the Council. Two of these lots, 191 and 167 have an interesting recent history, of which I became aware as a result of checking the residential address provided by Senator Abetz on his nomination forms for the 1998 and 2004 Senate elections.

Lot 191 (191 Channel Highway) appears to have been owned by Senator & Mrs Abetz and was their family home. The land area was 0.6206 hectares and on it stood a weatherboard house with an imitation tile roof with six main rooms built circa 1910. The property was acquired prior to the introduction of Capital Gains Tax (CGT) so was free of CGT when the Abetz family decided to sell.

An adjoining block, Lot 167 comprising some 3.894 hectares or approximately 10 acres, was purchased by E and MA Abetz from the Tasmanian State Government on 1 June 2000. Lot 167 was purchased for $100,000. The purchase price was $20,000 less than the Government capital valuation price (Cap) and I can find no trace of it ever being put out to tender.

Senator & Mrs Abetz were lucky with the rezoning of their land as a result of the completely new Kingborough Planning Scheme introduced in 2000. The Kingborough Council prepared a Report for an Amendment to its Planning Scheme, and the matter was referred to the Resource Planning and Development Commission (RPDC). Lots 163, 167,  and part of 203 were rezoned from Residential to Business and Civic in March 2005. (Document 3)

The RPDC archives provide a good background to the matter but do not show who applied for the change of use. The Council Planning Officer, Andrew Goodsell, for some reason incorrectly describes the Abetz land as “167 Channel Highway in two titles (owner E Abetz) ….includes a small title of .3662 ha incorporating the house Lynden Rise” he continues and places emphasis on Lot 167 thus, “Of these lots it is this rear lot of 167 Channel Highway that potentially has the most potential, providing potential for facilities and services that interconnect with those of the Antarctic Division site”.

Interestingly Goodsell in this application reduces the land area of title 191 which gets no mention, only the house is named.

Lot 163, the adjoining house block on a larger land area 0.8232 hectares, had been purchased prior to the RPDC’s agreement to rezone from a Mrs V Wiseman on 10 December 2004 for $565,000 by AAD Nominees Pty Ltd. The Government valuation in 2004 (Cap) was $208,000 (the house was built in 1968). The Capital Value as of 1 March 2009 is $670,000 with a land value of $490,000.

Lot 203 was subdivided from the Antarctic Division block already owned by AAD Nominees Pty Ltd.

In summary therefore the blocks owned by Senator & Mrs Abetz Lots 191 (although not specified) and 167 were attached to 163 and 203 then owned by AAD Nominees Pty Ltd for the purposes of a rezoning in an application referred to the RPDC for approval.

Following approval by the RPDC on 24 Feb 2005, Senator & Mrs Abetz immediately sold 191 and 167, with completion on 18 July 2005, to AAD Nominees Pty Ltd for $1.9m with Abetz apportioning $1.5m to the family home, 191 Channel Highway, and $400,000 to Lot 167, the 10 acres purchased from the State Government for $100,000. It should be noted that the Abetz name does not feature on the Title to Lot 191 in this transfer; why?

Since the purchase, AAD Nominees Pty Ltd has obtained two reductions in the rated value on Lot 191 - the Abetz family home, now a land value of $430,000 and a capital value of $840,000. In a rarity for Kingston this loss of value over the past five years, must put a question mark over the assigned value of the Abetz residence in 2005.

Is it a case of Lot 191 having been overvalued by Abetz? This would reduce his capital gains tax liability on the adjoining 10 acre land Lot 167. Perhaps Abetz can elucidate further.

The Senate requires all Senators to maintain a “Statement of Registrable Interests”. This is kept at the Senate in Parliament House, Canberra.

Regarding real estate, the Register requires that the suburb or area is provided and makes a distinction between residential and investment property, and whether the property is used as a residence, as a holiday home, as a farm, or is held for investment or other business purposes. For all purchases or disposals of real estate, the date of settlement is to be considered the date of alteration of interests and notification should be made within 28 days of that date.

Senator Abetz’s information in his Statement of Registrable Interests for each of his terms of office reveals, in part, his real estate interests. The 1994 Register, his first in Parliament, gives his only property as ”Kingston Tasmania Residence”; in an alteration to Senators’ Interests (Document 4) he cancels his loans but he makes this addition to his interests, “Consultant to Abetz & Co in association with Shields Heritage”.

He declares the purchase of two investment properties at Gagebrook in 1995 and 77 Beach Road Kingston - a block of four units or flats overlooking the golf course - in 1998, with a sale in 1999.

There is no mention on the Register of Assets of the separate purchase from the State Government of Tasmania of Lot 167, yet he informed the Register: “My wife and I have contracted to purchase land adjacent to our residence through a nominee” possibly the Abetz Family Trust on 14 Feb 2000. He later confirmed the purchase but in joint names (Document 5) on 5 June 2000, with no mention of investment that would turn out to be financially beneficial. Eighteen months later, in Dec 2002, still no mention, but he informs the Register that he has paid out the loan.

Someone must have been looking into Erich’s affairs, for his former legal office Abetz Curtis at 83 Davey Street was the subject of Documents 6 and 7. It may be that Gagebrook, Beach Road and Davey Street should be subject to audit if a check is to be run over 167 and 191 Channel Highway.

The acquisition of 10 acres of land, Lot 167 Channel Highway, from the Tasmanian State Government, followed by rezoning from Residential to Business and Civic, must turn this transaction to a “property held for investment” and as such it becomes very much a “Registrable Interest.” This property as 167 Channel Highway has never been declared as either a purchase or sale to the Senate of Australia.

Abetz still gives, “Kingston Residence” as his only property even after 167 and 191 are sold with completion, 18 July 2005, yet he has to inform the Register within 28 days of sale. I ask why the delay? The sale was declared as Residential on 3/Jan/2006 (Document 8)

The sale of Lot 167 within five years, at a declared profit of $300,000 - but arguably an actual profit of approximately $1.3m - makes this a very good investment indeed. If this is so the capital gain is in excess of $1m and the Capital Gains Tax unpaid would be in excess of $200,000.

This begs the question, why did the Tasmanian Government not arrange itself for the rezoning in conjunction with the developer, so as to benefit the people of Tasmania rather than a well-connected Senator?

It is noted that as of 19 March 2008 the very expensively purchased house and land package known "Lynden Rise", 191 Channel Highway, Kingston remained undeveloped and only became the subject of a development application in 2014. While the larger but less expensively acquired Lot 167 appears to remain undeveloped to date.

Google Earth snapshot, 26 March 2016

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