Crown land tenure reform in WA

Articles Written by Teresa Lusi (Special Counsel), Lydia Litton (Associate)

Overview

The WA Government is proposing to reform Crown land tenure in the State. In June 2016, the Land Administration Amendment Bill 2016 (Amending Bill) will be introduced into Parliament. Broadly, the Amending Bill seeks to make focused changes to Part 7 of the Land Administration Act 1997 (WA) (LAA) dealing with pastoral leases, with a view to accelerating and encouraging the future sustainable development and diversification of the Rangelands region.

In April 2016, the draft Amending Bill will be made available for public consultation and submissions. Holders of WA pastoral land interests should consider the impact of the proposed changes on them and monitor the timetable for the feedback sessions and submissions on the draft Amending Bill. Times for the stakeholder forums to be held in major centres around the State are available on the WA Department of Lands’ website. For more information, please contact Teresa Lusi.     

 

Image source: Rangelands NRM WA                   

The Rangelands

The WA Rangelands, which comprises of Crown owned land, covers 87% of the State’s total land mass and is divided into seven sub-regions, as shown on the map. Pastoral leases are currently granted over approximately one-third of the Rangelands. The Rangelands contribute significantly to the wealth of the State and Australia, not just economically, but also socially, culturally and environmentally. Following an extensive consultation process with government agencies and other stakeholders, the Minister for Lands has proposed changes to Part 7 of the LAA in an attempt to increase the future economic viability of the Rangelands, create opportunities for innovation through sustainable development and diverse land use of the Rangelands, and achieve greater security of tenure for pastoral lessees so as to encourage investment.  

Key changes

The LAA currently focuses on the administration of pastoral leases. The permitted use of land subject to a pastoral lease is currently limited to grazing of livestock and some agriculture and horticulture. However, over half of the Rangelands is used for non-pastoral purposes such as mining, petroleum and gas operations, conservation and tourism. This means that these land uses are outside of the LAA and the pastoral lease system. The Amending Bill aims to create a modernised land tenure process known as a Rangelands lease. This lease will allow for a wider range of activities to be conducted on the land including agriculture, horticulture, tourism, conservation, Aboriginal economic development and land management and environmental offsets by mining companies, with the ultimate aim of attracting new entrants into underutilised areas of the region to undertake these activities.

 

Below is a table summarising the key changes to the LAA in the Amending Bill.

 

Current position

Proposed change under Amending Bill

New rangelands lease
  • Pastoral leases only permit use for ‘pastoral purposes’ including grazing, agriculture and horticulture and other activities ancillary to grazing such as production of stock feed.
  • Other specific activities relating to pastoral purposes may also be permitted under a diversification permit such as sowing non-indigenous pastures for fodder, pastoral-based tourism or clearing land.  
  • New Rangelands lease to be granted, which will allow multiple and varied land uses (including agriculture, horticulture, tourism, conservation purposes, Aboriginal economic development and land management, environmental offsets and rehabilitation obligations by mining companies), and which will co-exist with native title and other interests in the land.
  • The grant of a Rangelands lease will not extinguish native title rights and interests so the grant will be subject to compliance with the Native Title Act 1993 (Cth). The future act process1 will need to be followed before the grant of a Rangelands lease, or the lessee/applicant may negotiate an Indigenous Land Use Agreement for the lease with the native title holders or claimants. Given that ILUA processes can take a long time to finalise, this may impact on the grant of a Rangelands lease. The time and resources required to achieve this compliance needs to be a large consideration in any decision to invest in a Rangelands lease.
  • The Rangelands lease is not intended to replace pastoral leases so both forms of land tenure will co-exist. However, the Amending Bill will provide for the conversion of pastoral leases into Rangelands leases. There is no obligation to convert an existing pastoral lease so it will continue in force to the extent it is not affected by these amendments.

Statutory right of renewal for compliant pastoral leases and extension of term

Currently, pastoral leases are granted for terms between 18 and 50 years, with no guaranteed right of renewal upon application.
  • Statutory right of renewal for pastoral lessees who comply with the LAA and lease conditions, providing increased security of tenure.
  • Pastoral lessees to have right of appeal to the State Administrative Tribunal (SAT) if the Minister for Lands decides not to renew the lease.
  • Short term pastoral leases may be increased to a maximum term of 50 years (subject to the native title future act process).

Transfer of diversification permits

Diversification permits granted under Division 5 of Part 7 of the LAA currently permit a leaseholder to use the land for other purposes beyond grazing and limited agricultural and horticultural purposes (discussed above). However, note, the permit is tied to the lessee of the pastoral lease, not the lease itself. Consequently, an incoming lessee on assignment of the pastoral lease must apply for a new permit. Further, the asset value of the pastoral lease may not fully reflect income streams from diversified activities.
  • The Amending Bill will allow the transfer of diversification permits to a purchaser/assignee of the pastoral lease ensuring that a lessee is able to realise the full value of their pastoral business/investment upon sale, and increasing attractiveness to purchasers/investors.
  • A Rangelands lease will not require a diversification permit.

 

Annual return lodgement date

Time for lodging annual returns is financial year end.

Lessees will be required to submit annual returns by calendar year end, to better suit their operational needs. This requirement will apply to both pastoral leases and Rangelands leases.

Pastoral and Rangelands Advisory Board to be established

Pastoral Lands Board has joint responsibility with the Minister for Lands to administer pastoral leases.

 

 

 
  • Pastoral Lands Board will be dissolved and its statutory powers transferred to the Minister for Lands.
  • New Pastoral and Rangelands Advisory Board to be established comprising of up to ten persons with expertise covering pastoral, Aboriginal interests, tourism, natural resource management, regional, business or industry development.
  • The new Board will be responsible for providing strategic advice and guidance to the Minister for Lands.

Breach of land management laws deemed to be breach of LAA and lease

Breach of certain land management laws relating to bushfire and control or eradication of pests, weeds and feral animals, is not necessarily a breach of either the LAA or the pastoral lease.

The Amending Bill will deem a breach of certain land management acts (such as the Bushfires Act 1954, the Soil and Land Conservation Act 1945 and the Environmental Protection Act 1986) a breach of the LAA and therefore a breach of the pastoral or Rangelands lease, potentially resulting in forfeiture of the lease.

Combined maximum area increased

The combined maximum area a lessee may hold under a pastoral lease is 500,000 hectares before the public interest test under section 136 of the LAA applies. Due to modern and improved pastoral techniques, this area cap is now considered unduly restrictive for pastoral leases. Additionally, the requirement for the Minister for Lands to apply the public interest test causes administrative delay and unnecessary red tape.

To reflect the reality of the changing size of pastoral lease holdings in the Rangelands, under a pastoral or Rangelands lease or a combination of both, a lessee may hold a combined maximum area of 1.5 million hectares before the public interest test applies. The public interest test requires that the Minister for Lands is satisfied that the transfer would not result in so great a concentration of control of pastoral land (or Rangelands lease land) as to be against the public interest.

Rent reviews
  • Pastoral lease rents are reviewed every five years as at 1 July.
  • Payment of rent can be postponed while an objection to the reviewed rent is dealt with by the SAT.
  • Pastoral lease rents are to be reviewed every five years. However, the review begins 6 months before on 31 December and is introduced on the following 1 July.
  • Pastoral lessees must pay the rent at the reviewed rate from the rent determination date, irrespective of whether an objection to the new rate has been lodged.
  • Rent under a Rangelands lease will be reviewed on the date and in the manner set out in the lease in consultation with the Valuer General at 3-5 year intervals.

Obligations at lease end

Compensation is payable for lessee’s lawful improvements which remain on the land after lease end.

 

 

 

 
  • The Amending Bill sets out 3 categories of pastoral leases in relation to payment of compensation for lawful improvements, when the lease ends. These are:
    1. expired or section 114(4a) leases – compensation is payable for lawful improvements remaining on the land under the lease;
    2. forfeited leases (terminated by the Crown for breach) – the lessee has a right to remove improvements (lawful or unlawful) that are easily removed but no compensation entitlement exists; and
    3. expired leases that expire by the effluxion of time or are not renewed due to non-compliance with the lease terms or the LAA – treated in the same manner as category 2 leases.
  • No compensation will be payable for improvements when a Rangelands lease comes to an end. However, the Minister for Lands may permit improvements to be valued to enable the price of the improvements to be included in the purchase price to be paid by an incoming lessee or purchaser. This is consistent with the general policy relating to improvements on Crown land when a lease comes to an end in section 92 of the LAA.

Penalties

Most penalties in Part 7 of the LAA are $10,000 for actions such as making use of pastoral land beyond pastoral purposes without a diversification permit.

Penalties will be increased in line with CPI increases to ensure they remain current in today’s dollar values.

 

1     A future act is a proposal to deal with land in a way that affects native title rights and interests. Examples of future acts include the grant of a mining tenement or compulsory acquisition of land by the Crown. A future act will be invalid to the extent it affects native title unless it complies with the procedures set out in the Native Title Act 1993 (Cth). These procedures vary depending on the nature of the future act.

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