Recent legislative amendments

Snapshot

• 18 October 2017 – Pastoral Land Legislation Amendment Bill 2017 (the Bill) introduced into the Assembly where it was referred to the Economic Policy Scrutiny Committee (The Committee).
• 20 October 2017 – The Committee called for public submissions by 8 November 2017.
• 13 March 2018 – Economic Policy Scrutiny Committee handed down the ‘Inquiry into the Pastoral Land Legislation Amendment Bill 2018’.
• 7 August 2018 – Cabinet approved the introduction of an Assembly Amendment to the Bill 2018.
• 16 August 2018 – Changes to the Pastoral Land Act passed in Parliament minus the sub lease provisions to allow for further consultation with key stakeholders including Land Councils and the Northern Territory Cattlemen’s Association.
• 26 September 2018 – Updated Pastoral Land Act commenced.

New methodology for calculating pastoral lease rents

The major change that has resulted from the legislative amendments is to the way pastoral rent will be calculated from 1 July 2019. From this time rent calculation will be based on the productive capacity of the land rather than the unimproved capital value of the land, which can fluctuate dramatically and may not accurately reflect current earning potential. 

The Estimated Carrying Capacity (ECC) of a property will be the basis of the new rent calculation formula. An ECC effectively provides an indication of economic return on land leased from the Crown held under pastoral lease tenure. 

An ECC for every pastoral lease in the Northern Territory has been generated based on the ability of the landscape and associated native vegetation types to sustainably support stock. Stock are expressed as animal equivalents (AEs) based on a 450kg non breeding beast. The proposed methodology for using ECCs for rental income is calculated by multiplying the assessed ECC of the lease by a stock unit rate, referred to in the Act as the Pastoral Lease Rent Factor.

The good news is that carrying capacity based on native vegetation is relatively static. The new methodology will prevent the dramatic spikes in rent that were seen in recent years resulting from rapid increases in land value. 

Importantly the Act defines ECC to include the reference to ‘unimproved’ native pastures. This ensures that where a pastoralist has invested in improvements, including improved pastures, these will not increase the ECC and subsequently rent.

The ECC for each pastoral lease is based on the assessment undertaken by Herron Todd White in 2015 that used a defined methodology based on the latest published land system mapping, pasture growth and utilisation modelling. 

The ECCs for each lease was provided to lessees in June 2016.

Like the UCV model before it, pastoralists can ask that their rent calculation under the ECC model be reviewed, or they can voice their concerns directly to the Pastoral Lease Administration and Board Branch on 8999 4667.

A more diverse Pastoral Land Board

The Pastoral Land Board at Henbury Station in September 2018. Left to right: Chair: Paul Zlotkowski and members: Steve Craig, David James, Leigh Hunt and Anne Kilgariff-Stanes.

An Expression of Interest for a new Pastoral Land Board member will be advertised shortly right across the Territory. Once appointed this will be the first time that Board membership has exceeded five members. The former cap has been removed by the recent legislative changes. The proposed membership of six will make it easier to achieve the required quorum of four for meetings and decisions. 

The Expression of Interest will encourage persons with ‘an understanding of Native Title interests and Aboriginal cultural heritage’ to apply. This specification has stemmed from the Economic Policy Scrutiny Committee ‘Inquiry into the Pastoral Land Legislation Amendment Bill 2018’ in which the Committee expressed the view that there is merit in further expanding the composition of the Board to increase diversity and experience in key areas.

The position is to be advertised for six weeks from mid-November 2018. Expressions of interest will close Friday,  4 January 2019. Following receipt of all nominations the 
Northern Territory Government will convene a selection panel to determine the most suitable applicant.  Go to www.denr.nt.gov.au/pastoralandboard for more information.

Interest on late rent

The establishment of a penalty interest rate under the Pastoral Land Act is predominantly intended to deter late payment of pastoral rents. 

Under the previous Act, if rent was not paid, the interest rate was determined by a specific overdraft rate that was not publicly released and therefore could not be applied. The interest rate will now be consistent with the Northern Territory Taxation Administration Act (currently eight per cent).

Lease transfers

A pastoral lessee is required to obtain the Minister for Environment and Natural Resources’ consent to transfer a pastoral lease as part of the sale to a new owner. 
Prior to the recent changes to the Act, consent to transfer was not required if the lease was secured through the acquisition of shares in the lease. This situation has been amended (refer to definitions at sections 30A and 30B of the Act) so that the Minister can now apply a consistent process and standard of assessment to each lease transfer irrespective of how it occurs. 

Under the new transfer requirements the Minster will always be made aware that a lease has changed ownership and can ensure the prospective purchasers meet the pre-requisites for transfer. 

These measures include: Foreign Investment Review Board requirements, details of any other beneficial interests in NT pastoral land (ie consent is required if more than 
13 000km2 of pastoral land is held by one lessee) and has experience in the pastoral industry. 

The process also ensures that the purchaser is aware of all the lease covenants, conditions and reservations associated with holding a pastoral lease and ensures that all rent and monies due have been paid by the lessee.

Additional minor amendments to the Pastoral Land Act

• Removal of the 10-year timeframe for review of the pastoral rent methodology allowing for its review ‘at any time’ either at the initiative of the Department or at the request of the leaseholders.
• An increase in the penalty for those found guilty of denying an Aboriginal person access to pastoral land to follow traditional pursuits from 40 to 60 penalty units.
• Additional administrative changes have been implemented to contemporise the language used in the Pastoral Land Act. 
• The full suite of changes can be viewed online by searching for the Pastoral Land Legislation Amendment Bill.