Commonwealth Property Disposal Policy

Introduction

  1. This Policy should be read in conjunction with:
    1. Part X of the Lands Acquisition Act 1989; and
    2. Clauses 91 to 95 of Resource Management Guide 500 – Commonwealth Property Management Framework.

General Policy

  1. Commonwealth property, having no alternative efficient government use, must be sold on the open market at full market value, unless agreed otherwise by the Finance Minister.

Criteria for Determining Surplus Property

  1. The Commonwealth Property Management Framework requires that Commonwealth property should only be held where it:
    1. demonstrably contributes to government service delivery outcomes; and
    2. ownership represents value for money.
  2. The contribution to government service delivery outcomes must be tied to one or more of:
    1. a direct relationship with the core business of the entity;
    2. a significant public purpose;
    3. strategic landholdings for future development; and/or
    4. the landholding possessing a unique non-financial quality such that a change of ownership would cause detriment to the operations of the entity.
  3. Value for money for retention must reflect one or more of:
    1. material financial benefit, such as where targeted value uplift strategies would result in a better financial outcome for the Commonwealth than divestment;
    2. the function could not be performed elsewhere at a lower cost without impacting negatively on service delivery;
    3. the land is of low value with limited alternative use and/or high disposal costs due to its characteristics, such as contamination; and/or
    4. the protection of land values (such as for National Parks) would make it unsuitable for divestment.

Alternative use proposals

  1. External parties, such as other levels of government, members of the public and business, may propose alternative uses for Commonwealth landholdings.
  2. Proposals will be considered against the following criteria:
    1. whether the site is essential for Government service delivery outcomes;
    2. whether the proposal is feasible and represents value for money to the Commonwealth;
    3. benefit to the economy, community and/or environment from the proposed use;
    4. whether the proposal aligns with Government policy; and
    5. other relevant factors, including any that may arise as a consequence of the nature and content of the proposal, including special community interest or probable heritage or environmental significance.
  3. Any disposals of land under the alternative use proposal framework will be consistent with the requirements of this Commonwealth Property Disposal Policy.

Affordable housing outcomes

  1. The sale of land that is suitable for housing should include affordable housing initiatives, such as inclusionary zoning, where practical. Entities should work with state, territory and local governments to encourage planning measures that will promote an appropriate proportion of affordable housing at sites where residential development is feasible.
  2. The structure and conditions of all disposals of land suitable for housing are subject to the approval of the Minister for Finance, and will be informed by whole-of-government considerations.

Disposal of Commonwealth Property

  1. Land suitable for disposal should be progressed for divestment at the earliest reasonable opportunity, subject to relevant considerations in respect of Native Title claims, and Indigenous, environmental, heritage and contamination matters.

Off-market sales

  1. Off-market sales are those made direct to a purchaser, usually at market valuation, without the property having first been offered for sale on the open market.
  2. An off-market sale, negotiated at market value, may be appropriate where:
    1. there is a former owner entitlement as defined under the Lands Acquisition Act 1989 (the owner is to be given the right of first refusal at full market value);
    2. sale to a state, territory or local government would:
      1. protect other Commonwealth property interests; or
      2. facilitate Commonwealth or cooperative policy initiatives that could not otherwise be achieved through an open market sale; or
      3. optimise broader Government outcomes including economic or social outcomes, such as increasing housing supply; or
    3. sale of a property to a Corporate Commonwealth Entity is in the Commonwealth’s interests and is agreed by the relevant portfolio Minister and the Minister for Finance.

Concessional Sales

  1. Concessional sales are off-market sales concluded at a purchase price below market value. Concessional sales may be appropriate in some circumstances and require the agreement of the relevant portfolio Minister.
  2. Concessional sale contracts should include security of purpose arrangements that lock in the future land purpose used as the basis of approval of a concessional sale. The inclusion of security of purpose arrangements may be a condition of the Finance Minister’s approval for a concessional sale.
    1. Standard contract clauses which impose the security of purpose conditions and provide sanctions for the breaching of the conditions are available from the Department of Finance upon request.
    2. Departments and Agencies must consult the Department of Finance before making, or agreeing in-principle with the purchaser, any change to the terms of the Security of Purpose Conditions.
  3. Except for the limited instances where an off-market sale can be approved under delegation by the Department of Finance (for example disposals under a legal obligation or for minor transport infrastructure), all off-market sales must be referred to the Finance Minister for approval.
    1. Commonwealth entities must not enter into any sale negotiations with potential purchasers, or discussions that might give rise to commercial obligations, before the Finance Minister’s approval for an off-market sale, whether on concessional terms or not, has been obtained.
    2. In the first instance, any proposal for an off-market disposal of Commonwealth property should be referred to the Department of Finance for discussion, and to the relevant portfolio Minister for consideration.

General

  1. The Minister for Finance may, from time to time, delegate some approvals for Commonwealth Property disposals.
  2. Questions in respect of the Commonwealth Property Disposal Policy should be directed to Finance.

Last updated: 01 December 2017