Australia: Land and Other Legislation Amendment Bill 2014: opening Qld for agribusiness?

Last Updated: 28 March 2014
Article by Kirsty Rourke and Brian Healey
Most Read Contributor in Australia, September 2016

On 19 March 2014, the Minister for Natural Resources & Mines presented the Land and Other Legislation Amendment Bill 2014 (Bill) to the Queensland Parliament. Describing it as a landmark Bill, the Minister said the Bill was "the first step in addressing long-standing issues with Queensland's State land tenure system and providing greater security of tenure and certainty for our leasehold landholders".

Designed to drive investment in agriculture in Queensland by updating processes and removing outdated restrictions, this update takes the view that in respect of a number of the changes proposed by the Bill, it could be argued that it opens Queensland for agribusiness, insofar as agricultural land tenure is concerned.

Summary of Changes

The Bill proposes a number of changes to the leasehold land regime in Queensland. Presenting the Bill to Parliament, the Minister said there were four key initiatives in the Bill:

  • a more affordable rural leasehold land rent and purchase price regime
  • the introduction of rolling leases for primary production leases
  • a more streamlined approach for converting leasehold land to freehold
  • removing restrictions on who can hold rural leasehold land.

Whilst the Holding Redlich Agribusiness & Rural Industries Group will review these initiatives over coming weeks, this update highlights two key changes proposed by the Bill.

Key Changes

Rolling lease term extensions

Said to be the centrepiece of the initiatives in the Bill is the introduction of rolling lease term extensions which will simplify the renewal process for rural leases.

An eligible lease (essentially a lease for a term for agriculture, grazing or pastoral purposes over 100 hectares) will be rolled over by extending the lease generally by a term equal to the original term of the individual lease. For example, a lease originally issued for 30 years will be extended for a further term of 30 years, such terms to be rolling. It does not apply to leases of reserves.

A lessee will be able to apply for an extension in the last 20 years of the term of their lease (or earlier if the Minister is satisfied of special circumstances). For a 30 year original lease term, a lessee may apply for an extension after the first 10 years of the lease has elapsed and then be entitled to a further 30 years on top of the 20 years remaining in the original term. In this way, there is genuine security of tenure for at least a period of 50 years.

There will be no restrictions on the number of times a lease can be extended and it may be extended regardless of how many times it has previously been extended.

This update argues that the new regime of rolling term lease extensions does indeed provide greater certainty for agribusiness by providing more security of land tenure for existing leaseholders and for those who may wish to invest in rural leasehold land.

Removal of corporation and aggregation restrictions

The Bill will also remove the majority of chapter 4, part 2 of the Land Act 1994 (Qld) which contains the corporation and aggregation restrictions. These restrictions operated to prevent:

  • corporations from holding certain pastoral leases
  • individuals holding two or more holdings if they equate to more than two living areas.

This legal update argues that those changes do indeed open Queensland for agribusiness and do away with outdated restrictions contained in the Land Act 1994 (Qld).

Previously, certain leases for grazing and agriculture (such as grazing homestead perpetual leases) were restricted from corporate ownership (except in extremely narrow circumstances) so that they may only be held by individuals. Those outdated restrictions did not reflect current business practice and their removal will now allow:

  • corporate ownership by family companies (for asset protection and for succession planning purposes by family companies for example)
  • investment into such tenures by larger corporations with broad shareholdings where those lands are part of an investment strategy and portfolio
  • Aboriginal corporations to hold pastoral leases in accordance with modern business practices of Aboriginal corporations.

Repealing the restriction which permitted individuals from holding multiple pastoral holdings will also allow land holders to hold sufficient pastoral holdings to ensure the viability of their pastoral holdings and agribusinesses rather than be thwarted by outdated restrictions from a past era.

Prior to the Bill, individuals were prevented from owning, for example, grazing homestead perpetual leases in family company structures (a modern business practice), from entering joint ventures with corporations with significant capital, or indeed from selling to corporations with much needed capital. It also prevented Aboriginal owned corporations from pursuing their desires in relation to certain types of agricultural leases.

Whilst the abovementioned changes to the Land Act 1994 (Qld) are proposed to commence on a date to be fixed by proclamation, it is likely that the Bill will be passed and become law.

Holding Redlich's Agribusiness & Rural Industries Group will be closely following the progress of the Bill and the probable implementation of these landmark changes to agricultural land tenures in Queensland.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Kirsty Rourke
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