Property Rights Australia

David Kempton Guest Speaker St George 2008

PROPERTY RIGHTS AUSTRALIA
ST GEORGE AGM
29th June  2008
Speaker:
David Kempton                                                          Ph       07 40320780
Land Tenure Services                                               Fax     07 40321755
Cairns                                                                         Email dkempton@bigpond.com
HOW SECURE IS LEASEHOLD TENURE IN QUEENSLAND
Introduction


I have spent most of my professional life in Cape York working on behalf of the pastoral industry throughout Queensland in respect of land tenure issues. I have owned and managed a cattle property affected by the WIK claim and have tested Government policy and legislation in the Courts on many occasions. I am, however, a strong advocate of resolution by negotiation and only use the Courts as a port of last call.
I should say at the outset that many of the issues I raise in this discussion paper are opinion only based upon my experience and may well, in practice or as a result of judicial intervention, eventuate to  a different outcome than that I suggest.  Put more simply, I might be wrong.
I have, however, deliberately put in issue some of the concepts of the State Rural Leasehold Land Strategy (Delbessie Agreement) in a hope that the pastoral industry and its representative bodies will be a more vigilant in protecting future security of tenure and will address in advance some of the problems of implementation of the strategy.
Security of tenure is after all a cornerstone of the cattle industry.

Tenure types in Queensland.
There are two distinct types of tenure in Queensland.
The Land Act 1994 recognizes tenure in the form of Freehold (an estate in fee simple), and
Crown leasehold (which covers 80% of Queensland and a vast majority of the rural properties.)

There are now only two types of leasehold: term leases and perpetual leases.
60 % of  leasehold in Queensland is Rural Leasehold land affected by the Delbessie agreement.  Within the next 5-10 years 65% of those leases will be due for renewal.
A change in direction
There were two significant events in the early 1990's which began a process of change in land tenure and the manner in which State land was administered in Queensland.

The first was the enactment of the Nature Conservation Act 1992 and the second was the amendments to the Land Act 1994.
This process saw the gradual shift of the responsibility for land management of certain estates to the Environmental Protection Agency (EPA) with the ownership and administrative function being left with the Department of Natural Resources and Water (NRW as it is presently known.)
Since the early 1990's there have been a raft of policy decisions, regulations and Acts of Parliament, including the 2008 amendments to the Land Act 1994, which have seen this management process metamorphose.
There is no doubt that prior to this time (and it is still the case today) there are land management practices throughout the State which required intervention and positive management.

These include salination, broad scale tree clearing, land degradation, loss of rare and threatened species and biodiversity.
The legislative response to these issues has too often been at the behest of non government lobby groups for political expediency rather than based upon sound principles of sustainability and good management.
Management by Regulation versus Co operation
I have advocated for many years that with few exceptions farmers are the best managers of rural lands and should be encouraged to undertake more appropriate management  practices by cooperation rather than coercion.

Examples of this can be seen in  Land Care and in the studies that lead to the Wild Rivers Act 2005 it was stressed the codes of practice should be voluntary not mandatory.
There are many advantages to the cooperative approach including flexibility to deal with local considerations, cost effectiveness, enduring outcomes, positive stakeholder involvement and ownership.
Compulsion often fails to engage landholders and does not produce the best long term outcomes.
Case examples of diminution of tenure by policy and legislation.

In 1996 the Goss Government announced it would compulsorily acquire 11 pastoral lease properties in Cape York to be included in the East Coast Wilderness Zone.
This proposal arose from collaboration between the State, The Wilderness Society and representatives of Aboriginal interests, without any consultation with pastoralists.
The Lessee's argued there had been no scientific study undertaken to identify the special features that the proposal was trying to protect and the Hill family sought have the decision reviewed by the Supreme Court. The State resisted the action however when the Court ordered the documents evidencing the science behind the proposal be produced, the proposal was scrapped.
In the late 90's the State entered into regional forest agreements with Green groups that would see all State Forests and Timber Reserves in Queensland included in the National Park estate. These agreements provided that upon expiry grazing leases would not be renewed and would be replaced with grazing permits. There had been no consultation with the Lessees affected.

The P and L families from Kilkevan who had purchased their leases in good faith and borrowed substantial amounts of money against the leases sought to have this decision reviewed by the Supreme Court on the basis that the Minister for NRW had refused to renew the leases at the behest of the EPA.
There was no scientific study supporting the inclusion of the areas in the national park estate and the reason for inclusion was entirely tenure based.
The lease areas had been grazed for many years and are viable cattle properties. There was no suggestion of land degradation and no special conservation features were identified that would warrant the leases not being renewed.
It was a conservation land grab based on tenure alone.

As a result of the court action the decision was overturned and the leases were renewed.
The lease areas were ultimately included in the National Park Estate and continue to be managed in a profitable and sustainable manner by the Lessee's today.
There are, however, many Lessees across the State that have had their leases reduced to grazing permits through this process.
In 2004 the H family from Georgetown purchased a property for over 20 million dollars. They made the usual enquiries and obtained the Ministers consent to the transfer of the lease.

Imagine their surprise when just one year later they received notice that over 1 million acres of the property would be included in a declaration under the new Wild Rivers Act 2005.
 
Initially the declaration prohibited all but simple grazing and did not recognize the need for infrastructure such as roads fences, dams, yards and so on.
The Wild Rivers Act was the brainchild of green groups and again there had been no consultation with affected Lessees.
The H family sought review of this decision in the Supreme Court on the basis that there was no scientific basis for the proposal and the legislative requirements could not be satisfied. They were successful having the initial declaration invalidated. A fresh declaration was challenged however before it could be determined by the Court the State legislated making the declaration valid and taking away all rights of consultation and review.
Following further representations the State did however amend the legislation to allow Lessees to enter into a voluntary property management plan to replace the compulsory codes of conduct.

In 2005 a company C purchased a station near Mt Garnet which included a term lease and a special lease over a camping reserve. An application to renew the special lease was in place at the time of purchase. The usual enquiries were made and the Ministers consent obtained. The special lease was a pivotal part of the enterprise and was taken as security by the bank.
The company has recently been advised the special lease will not be renewed and they will be offered in its place a grazing permit which cannot be transferred, mortgaged or sublet.
The company intends to seek a review of this decision.
On the day the floods inundated Emerald earlier this year the B family were advised their lease over a state forest would not be renewed and they would be offered a grazing permit.

The B family have owned the lease for 15 years and have invested their life savings into what was a run down block to turn it into a viable and sustainable cattle enterprise.
This family stand to lose their home and family property without offer of compensation.
The decision not to renew the lease was not based upon any scientific study or in fact on any study at all but an email from an officer of EPA who was simply stating policy without any actual knowledge of the property
The B family will seek review of that decision.

There are several points arising from these case examples
·        Lease tenure is under constant review in Queensland, and
·        Pastoral lessees can no longer assume that leases will, as a matter of course, be renewed
·        The EPA now figures as a very dominant player in respect of the management and control of all rural leasehold land in Queensland.
The Lease renewal process
Until the Delbessie agreement the lease renewal process was relatively simple. After 80% of the lease term expired the lessee could apply for e new term pursuant to s158 Land Act. It was just a matter of filling out a Form 204 and paying the relevant fee.

  • The applications were generally dealt with at the regional level and following a property inspection and input from some referral agencies the Minister or his delegate made a decision.
    S159 Land Act 1994 sets out the matters the Minister had to consider when making a decision to renew a lease.
    These included[1]
    Interests of Lessee
    Forestry Act requirements
    Public interest
    Environmental and conservation needs
    Land degradation
    Compliance with lease conditions
    Appropriate use from a planning perspective
    Special features
    Public purpose
    Required to build up other lease area
    Subdivision issues
    The Minister had to make a decision and notify the lessee[2].

It was not unusual for roads to be re aligned and small excisions for public purposes to occur however by and large the leases were renewed as a matter of course irrespective of the underlying tenure.
The  State Rural Leasehold Strategy (also known as the Delbessie Agreement) is encapsulated in the amendments to the Land Act 1994 which were passed into law on the 1st January 2008.
The NRW fact sheets provide a very good summary of the strategy so I will confine my comments to the renewal issues.
The agreement was reached in collaboration with the Premier Anna Bligh, Agforce and the Australian Rainforest Conservation Society and I am of the view that on this basis without consultation with the vast majority of affected leaseholders in Queensland.

The two types of tenure term leases and perpetual leases are retained.
Whereas previously leases for pastoral purposes could be for a term of up to 50 years (there are still some pre 1994 leases for 53 years) a lease for rural leasehold land cannot be granted for more than 30 years.
If, however, Minister is satisfied the land is in good condition[3] a term lease for 40 years may be issued.
Further if the Minister considers the land is in good condition and if he considers the land should be the subject of a nature conservation agreement or covenant[4]  and if the Minister considers it appropriate there is to be an indigenous access and use agreement a lease may be issued for 50 years[5].

It is interesting that in the case of a 40 year lease the Minister must be satisfied that the lease land is in good condition[6] which means he must take into account all the relevant material and satisfy himself as a matter of fact that the lease land is in good condition whereas in the case of a 50 year lease the Minister need only consider that the land is in good condition [7]and does not have to be satisfied that it is in good condition.
I cannot imagine this distinction was intentional and may be the result of sloppy drafting.
It should be noted that in the case of a 40 and 50 year renewal period this is a once only extension and all following renewals can be for 30 years only.
It appears term leases over rural leasehold land may be extended if there is a land management agreement [8] but not by more than 10 years.
The old section 159 lease renewal conditions have been maintained with some very important new conditions[9] and by the inclusion of a new subsection[10]. This will be discussed later.
The following tables indicate the relative differences in the lease renewal process prior to and after the Delbessie agreement and amending legislation.
 Pre Delbessie

2007

30 yrs
Renewal
50 yrs
Renewal
50 yrs
Conversion
Perpetual
Conversion
LMA
No
No
No
No
ILUA
No
No
Yes
Yes[11]
NCA
No
No
No
No
UAA
No
No
No
No
EPA
consent
Referral
agency
Referral
agency
Referral
agency
Referral
agency
Post Delbessie

2008

30 yrs
40 yrs
50 yrs
50 yrs
Renewal
Perpetual
Conversion
LMA
Yes
Yes
Yes
Yes
Yes
ILUA
No[12]
Yes
Yes
No[13]
Yes
NCA
Maybe
Maybe
Yes
Yes
Yes
UAA
Maybe
Maybe
Yes
Yes
Yes
EPA
consent
Yes[14]
Yes
Yes
Yes
Yes
Analysis

LMA    means  "Land Management Agreement"
ILUA   means  " Indigenous Land Use Agreement"
NCA    means  " Nature Conservation Agreement"
EPA     means  " Environmental Protection Agency"
UAA    means  " Indigenous Use and Access Agreement"
In the Delbessie model where the word "Yes" appears in the NCA and UAA columns the Minister does have a discretion.[15]
Land Management Agreement
A land management agreement is required for all new and renewed leases over rural leasehold land.

The agreement will require as a minimum
·        an assessment to identify natural  and physical features
·        an assessment of condition of land at time
·        management to improve or maintain good condition
·        identify land degradation
·        agreed management conditions
·        cultural heritage protection
·        monitoring and reporting
·        performance assessment
·        dispute resolution
·        review[16]
 
A land management agreement may take years to complete and will be expensive to prepare and implement. I have been involved in the development and negotiation of many similar agreements throughout Cape York and Queensland and they are far from simple.
The agreements are be mandatory and the onus is upon the Lessee to bear most of the cost and responsibility for implementation.
When read in conjunction with the "duty of care" provisions[17] the Lessee will need to
·        maintain pastures dominated by perennial and productive species
·        maintain native grasslands free of encroachment from woody weeds
·        protect riparian vegetation
·        control or eradicate declared pests
·        avoid causing or contributing to salinity that reduces productivity or causes damage
·        conserve soil, water resources and biodiversity.

What exactly biodiversity means in this context and who will determine it is anyone's guess.
Indigenous Land Use Agreements (ILUA's)
ILUA's are essentially a voluntary agreement between the Lessee and the relevant native title party providing consent of native title holders to an act affecting native title that would otherwise be unlawful by virtue of the Native Title Act 1993.  ILUA'S often include the State as a party.
Such an act is called a future act and might be conversion of a lease to freehold, more intense land use and so on.

Extensions of lease terms, were what are called permissible future acts and do not require the consent of the native title parties. In such cases The Native Title Act 1993 provides for a notification and objection process in respect of an extension in the term of a lease.
At present the State considers this would result in the acquisition of native title rights and have indicated they will not follow the process set out in the Native Title Act
Instead the State will pass that responsibility to the Lessee by requiring future act consent and an ILUA.
I have negotiated many ILUA'S for pastoral properties eg  in the WIK, Bar Barrum and Yalanji claims.

ILUA's require an exhaustive identification, consultation, authorisation and registration process and can take many years to complete. In my experience they can be very costly.
           
What makes it even more difficult in the case of a lease extension application is the engagement of the native title claimants in a lengthy process in respect of which they have no interest in the outcome.
Use of and access to pastoral leases, in the past, has not proven to be a sufficient drawcard  to enter into negotiations in view of the resources required to negotiate an ILUA.
If there are no identified native title parties or if there is no claim over the leases then the added problem of who to deal with emerges.
This legislation contemplates that you can simply walk into a supermarket and pluck an ILUA off the shelf.

Indigenous Use and Access Agreement (UAA)
I am unsure what an "indigenous access and use agreement" looks like.
What I am sure of is that it will not provide for future act consent.
I would advocate the negotiation of regional use and access protocols (based upon the WIK model) which could be applied to all properties and included as a lease conditions.

That the State has imposed a future act regime in respect of the extension of pastoral leases where none previously existed beggars belief.
It is also unclear as to why the State would only introduce access to native title holders in respect of 50 year leases and not 30 and 40 year terms.
As it stands the extension of the term of a lease or the conversion of a term lease to a perpetual lease is a permissible future act and does not require the consent of the native title parties.
On current policy the State intends to require the consent of the native title holders as a condition of offer of any extension of term. It is my view that such a condition is unlawful and will be subject to legal challenge in due course.

In the meantime the way forward for Lessees is far from clear.
Nature Conservation Agreements
The creation of such an agreement involves the declaration of the area as a nature refuge pursuant to the Nature Conservation Act[18] and the entering into of an agreement with the EPA[19] for the preservation of special features through management practices.  A NCA can attract funding from various sources.
The catch is that the Nature Conservation Act requires consultation with landholders before an area can be declared[20]. Landholder includes a person having interest in the land.[21]

The State considers native title holders to be      landholders and this includes the nebulous group known as "traditional owners."
Whilst the nature conservation agreement is made between the Lessee as landholder and the State, and the Act only requires notification to and submissions from persons having an interest in the land[22], the State will not enter into a nature conservation agreement without the consent of the "traditional owners".
The State has indicated that this consent must be in the form of an ILUA.
A nature conservation agreement is clearly not a future act as contemplated by the Native Title Act.

Again there is no incentive for aboriginal people to expend resources on negotiating an ILUA for a conservation agreement in respect of which they have no interest in the outcome with the exception maybe for some cultural heritage mapping.
I do not raise these issues in any way to diminish the importance of determining the rights and interests of native title holders but rather to draw attention to the complexity of the new tenure arrangements.
A nature conservation agreement can be an insurance policy against future compulsory conservation regimes however the implications of the declaration as a nature refuge should be considered.
Access

  • Upon renewal land may be excised from the lease to allow public access to places of interest or community significance. This power has existed for some time and is of no real consequence to the renewal process
    Future involvement of EPA.
    The 2008 amendments to section 159 Land Act 1994 provide:
    The lease land must be assessed for its most appropriate form of tenure.[23] It would be quite open in the future to reduce pastoral leases to grazing permits if it were considered this were more appropriate (as in the case of leases over state forests and timber reserves)
    The level of compliance with the Land Act is a now direct issue to be considered upon renewal.[24] This clause consolidates the Ministers powers on renewal in the event the Lessee has not complied with any part of the Land Act any condition imposed or any agreement reached in accordance with the Act
    The natural environmental values of the land.[25] The Minister must seek and take into account the view of the EPA when considering the lease renewal application[26].

            It is now beyond doubt that the Minster must seek and take into account the views of the EPA when renewing leases over rural leasehold land in Queensland.
Future Conservation Areas
At the recent Herron Todd White seminar the State speaker said that where EPA decided an area had high conservation value in a lease area it would be reserved as a future conservation area in the lease and the end of the lease period any further lease that might issue would not include that area.
This can be found in the new section 159(3) Land Act 1994
"If the lease contains a reservation that part of the lease land is a future conservation area the chief executive can not offer a new lease for that land"

How this works is that from 1st January 2008 when any lease over rural leasehold land comes up for renewal as part of the renewal process NRW will seek advice from EPA [as it now must[27]] as to whether any part of the land might be required for future conservation purposes.
If EPA decides a lease contains an area that might be required for future conservation needs then it provides a map to NRW and upon renewal the lease must contain a reservation to the effect that once the renewed lease expires any new renewed lease cannot include the described future conservation area. There is no scientific basis required nor is such a decision easily reviewed.
 
The speaker was asked if there was a register of such conservation areas a current or prospective lessee might search. There is no register.
The speaker said the term high conservation value is defined (however it is not defined in the Land Act or the Nature Conservation Act)
The speaker said EPA would not impose such areas without consultation, negotiation and agreement (EPA does not presently undertake any consultation or negotiation with lessees)

We might consider high conservation values to mean pristine rain forest, special features, habitat for rare and threatened species and so on.
We need look no further than the Wild Rivers Act for an example of how this is not the case.
The Wild Rivers Act is designed to protect wild rivers by declaring "high preservation areas" on the basis these so called areas have "high conservation values".
No one will be surprised to learn EPA made declarations on the basis of high conservation values on waterways in the Gulf that are non existent.

The following photograph depicts a washout which has been declared as a wild river restricting activity in, on or within 1 kilometre of this so called wild river.

I would suggest any lease area having a riparian area for example may have such a reservation imposed.

  • If a future conservation reservation is contained in the renewed lease the landholder must ensure
    that any use of their natural resources for agriculture or grazing is be ecologically sustainable;
    that they are to be maintained predominantly in their natural condition; and
    that their significant cultural and natural resources are to be protected[28]
    If a lessee does or allows anyone else to do any act or omission that is inconsistent with the above principles then he is liable to prosecution.
    Penalty $166,500[29]
    Summary

            The amendments to the Land Act may on first consideration seem simple enough however
30 year lease
·        Where a Lessee previously held a 30 year lease he can now apply to renew it for a further term of 30 years provided he has a land management agreement.
·        The Minister may also decide to require a nature conservation agreement, an ILUA, a use and access agreement[30] and
·        The Minister must consider the views of the EPA.
40 year lease

  • The Lessee may seek a 40 year term however the land must be in good condition, and
    The Lessee must have a land management agreement, and
    The Minister will require an ILUA as he considers the additional 10 years to be a future act, and
    The Minister may also require a nature conservation agreement and a use and access agreement.
    The Minister must consider the views of the EPA.
  • 50 year lease

    The Lessee may seek a 50 year term however the land must be in good condition, and
    The Lessee must have a land management agreement, and
    The Minister may require a nature conservation agreement and a use and access agreement, and
    The Minister will require an ILUA as he considers the additional 20 years and the nature conservation agreement to be future acts, and