15 May 2014

NSW Crown land - a field of opportunities

by Brendan Bateman, Eugene Tan

Changes to NSW's Crown land laws have the potential to open up new business and operational opportunities for the private sector.

What is promised to be the biggest package of changes to NSW Crown lands governance in more than 25 years is poised to unlock the potential in the Crown estate, with leases being granted on regular commercial terms and a more competitive approach to the continued use of Crown land.

The reforms recommended by the White Paper currently out for public comment seek to increase the community's and the private sector's ability to access Crown land on a competitive basis.

Mining, agribusiness, and tourism are three sectors which should be looking at the White Paper now, and getting ready for the new legislation.

What is Crown land?

Roughly 42% of land in NSW is Crown land (not including national parks and state forests) with a total value of over $11 billion.

Crown land will often be in the form of:

  • beaches, estuaries and waterways;
  • parks, ovals, walking tracks and other recreational grounds (which are Crown reserves managed by Councils or community trusts);
  • land used for community halls (such as Scouts, Guides and surf clubs);
  • land used for caravan parks and other tourism facilities;
  • land used for grazing; and
  • land used for commercial ventures such as marinas, restaurants and aged care facilities.

Why is the law changing?

Crown lands are currently governed by eight different pieces of legislation – some of which is of limited relevance as their historical purpose has diminished or disappeared. The multiple instruments have resulted in duplication and inconsistency between their provisions.

The proposal is for one new comprehensive Act to replace the existing legislative framework and simplify the management of Crown land.

The recommendations in the White Paper demonstrate a shift in the use of Crown land towards private entities and opening it up for the benefit of the wider community. They're focused on simplifying Crown Lands legislation and minimising delay and complications.

Who will be affected?

Changing the way Crown land is utilised could potentially have broad effects across NSW on existing and potential users, both community groups and businesses alike.

Crown land is used by a large proportion of the population on a regular basis via local surf clubs, parks, golf courses, showgrounds, etc, so any change to its governance or use may resultantly impact a large number of people and community groups.

Additionally, a significant number of businesses rely on use or tenure of Crown land, from grazing livestock to running a restaurant.

How will the use of Crown lands change?

It is expected that the new legislation will:

  • establish the Crown Lands Division as a public trading enterprise with the objective of maximising the return to the government and the community from the use of Crown land;
  • provide for the payment of market rent as the default position under leases of Crown land (with rebates and waivers applied where appropriate);
  • standardise the way in which Crown land is valued (having regard to the hypothetical value of the land as if it was a freehold parcel);
  • require an entity administering Crown land to evaluate the expected return to be provided to the Government and the community when permitting the use of an asset (and taking into account the opportunity cost of allowing an asset to be used in such a way); and
  • implement stronger compliance and enforcement provisions which will provide penalties for damage and unlawful use of Crown land.

What does this mean for the private sector?

For the private sector, the reforms have the potential to open up new business and operational opportunities.

Tenants under Crown land are currently bound by certain provisions of the Crown Lands Act which make it impracticable to operate standard business and development models. Removing restrictions to enable leases to be granted on terms and conditions more regularly found in commercial leases will provide greater flexibility in the use of Crown land.

What does this mean for community groups?

For community groups, the streamlining of administration should provide greater certainty in relation to use and tenure. Clubs, organisations and institutions using community facilities will benefit from the reforms which will make governance and management processes simpler and more efficient.

How can I make a comment on the proposed changes to Crown land legislation?

NSW Trade & Investment is currently calling on submissions in response to the White Paper and you can have your say until 20 June 2014.

To find out how Clayton Utz can assist you with your interest in Crown land contact Brendan Bateman or Eugene Tan.

Thanks to Amna Qureshi for her help in writing this article. 

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.