The State Government has introduced a Bill which it says is the first stage of a number of reforms to provide greater security and help drive growth for rural lessees.
The reforms include:
Rolling leases introduced
A concept of “rolling leases” has been introduced, allowing a simpler renewal process for certain term leases, ie most pastoral holdings, pastoral development holdings and term leases used for primary production where the area is over 100 hectares.
The concept does not apply to leases of reserves, ie state forests, camping and water reserves etc.
Where the concept applies, and an extension application is made at any time in the last 20 years of the term (or earlier if special circumstances exist), the Minister must automatically grant an extension (subject to limited exclusions).
The length of the extension will generally be the original term of the lease but does not include any subsequent extension.
There is no limit to the number of times a lease may be “rolled over”.
Land Management Agreements no longer required on renewal
Under the “rolling lease” concept, Land Management Agreements will no longer be required.
Existing Land Management Agreements can be cancelled with the approval of the Minister.
Land Management Agreements will still be used where the lease is at risk of degradation or the lessee is not complying with the lessee’s duty of care.
Removal of corporate and aggregation restrictions
The current restrictions on corporations holding perpetual leases, grazing homestead perpetual leases, grazing homestead freeholding leases and subleases of any of those leases are to be removed.
Similarly, the requirement restricting an individual from holding two or more of those leases if the aggregation would be “substantially more than 2 living areas” is also to be removed.
These restrictions have been in place for decades and were designed to protect “family farms”.
The State Government takes the view that these provisions are “outdated, inflexible, anti‑competitive and a financial impost for both lessees and governments”.
This is one of the more radical reforms with long‑ranging implications for the future of agribusiness in Australia.
Protection of state forest products on land being freeholded
The concepts of “forest consent areas” and “forest consent agreements” are being introduced which, in time, will replace the use of “forest entitlement areas”.
The intention is to allow the State to retain its ownership of the forest products when leases are converted to freehold.
The forest consent agreement will be registered on the title to the land as a “profit à prendre” resulting in a cleaner, more efficient and modern tenure.
The changes are designed to avoid perceived problems with the current system when the State no longer requires forest entitlement areas and wishes to have the affected land acquired by the land holder.
More flexibility for lease amalgamations
Currently lessees holding adjoining term leases and perpetual leases issued for the same purpose cannot amalgamate their leases into a single tenure as of right.
This restriction is to be removed to allow the lessee to consolidate multiple adjoining leases as long as the leases are held by the same lessee, have been issued for the same purpose and native title has been addressed.
The latter requirement may mean that the proposed reform has little application in practice.
The need for term leases to be converted to perpetual leases before being allowed to be converted to freehold is also to be removed. While potentially this offers lessees greater flexibility, the need to address native title again means that this change may have limited application. Furthermore, the introduction of the concept of “rolling leases” and the resulting increased security may render conversion to freehold less appealing.
The State Government states that there has been no community or stakeholder consultation on the specific provisions of the Bill relating to the reforms but that they reflect stakeholder aspirations and the Government’s response to the Parliamentary Inquiry.
For more information, please contact your Agribusiness advisor.
This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.