Infrastructure Reform in Queensland Part 3 - Removing Land Act obstacles

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8 August 2012

This is the third article of a three-part series on infrastructure reform in Queensland

Queensland’s outdated legislative framework is delaying the development of important infrastructure projects in that state.

The current framework was designed for a bygone era when government was virtually the sole supplier of infrastructure. Its failure to accommodate the increased role of the private sector in major projects is affecting both government and private entities across a variety of sectors and projects.

Part one of this article looked at the generic conflicts and challenges experienced by most industry sectors in trying to operate under the current framework.

Part two focused on the specific challenges faced by the water, gas, electricity and rail sectors and also the major project risks for proponents and financiers of linear infrastructure.

In this third and final instalment we address challenges arising from Queensland’s Land Act.

The Land Act plays an important role as in most cases, a linear infrastructure project will traverse some form of State land.  A number of issues arise  when dealing with State land and in particular lessees of State leasehold land.

Temporary construction requirements

Where an easement corridor traverses large parcels of land, the constructor may need temporary access to areas outside of the corridor for construction activities, for example, workers’ camps, pipe lay down and stockpile areas, the use of access tracks, truck turning bays, communications towers, heli-pads, demountable offices and sanitary facilities and stringing yards.

If those temporary areas are on freehold land, the landowner is able to grant a licence for those purposes.  In contrast, there is no similar mechanism for a lessee of State leasehold to grant a licence under the Land Act.  There is uncertainty as to whether a licence can be granted under the Land Act as well as the types of rights that can lawfully be granted.

Even if the lessee can grant a licence to occupy, there is still an issue with the restrictions in the Land Act.   Leasehold land can only be used for the purpose of the lease, which in most cases, will be grazing.  The temporary construction requirements will be inconsistent with this purpose.

The Land Act does allow for construction trustee leases over reserves and deeds of grant in trust.  However those provisions are limited to the construction of transport infrastructure and the provision of transport services on the land. 

For other types of construction (eg workers camps, pipe lay down etc) an alternative option to gain access rights over leasehold land is  section 136 of the State Development and Public Works Organisation Act 1971 (Qld). Under the SDPWO Act it does not matter if the use is inconsistent with the purpose of the lease.

While this sounds like a good alternative path, section136 is only available for projects carried out under the authority of that Act and is only available for preliminary activities and construction camps.  Therefore it is generally not a viable option to gain access rights.

The upshot is the Land Act needs more flexibility to recognise and facilitate the temporary construction requirements of projects, particularly where the most efficient and cost effective location for those requirements is on State land.

The need for caveats

For most projects, tenure will need to be secured for the entire easement corridor before financing arrangements can be “closed” and construction can commence.  The usual method of securing tenure is for the proponent to negotiate with the landowners for an option for the grant of an easement.

Upon signing, the option will generally allow for the proponent to immediately access the land for preliminary activities such as site and soil surveys and geotechnical investigations and, upon the exercise of the option, to commence construction on the basis that the easement terms become binding at that time. 

If the project traverses  State leasehold land, the easement can only be granted with the Minister’s consent.  Thus, it is usual for a proponent to obtain the State Land Asset Management’s “approval in principle” to the easement before negotiations with the lessees commence.

Regardless of whether the easement will be on freehold or State leasehold land (or both), this process of finalising the easement takes a considerable amount of time.

Usually, the easement corridor cannot be fixed until construction is completed. The option will usually cater for this by including some parameters around the dimensions and location of the final easement area.  At that point, a survey of the easement area can be undertaken and the easement registered. 

This means that there usually is a significant delay between the grant of the option, the final survey being undertaken and registration of the easement. 

For freehold land, the proponent can protect its interests under the option during this time by registering a caveat.  If registered with the consent of the landowner, the caveat is non-lapsing.  The caveat will ensure that the landowner cannot sell, transfer, reconfigure or otherwise deal with the land without the consent of the proponent.

There is no similar mechanism for protecting the proponent’s interests under options over State leasehold land with a caveat.

The Land Act needs to recognise these delays and provide for caveats or equivalent protection for projects where the easement corridor traverses State leasehold land.

A fixed form of indemnity

In approving the easement over State leasehold land, one of the Minister’s mandatory requirements is the inclusion of the Minister’s standard indemnity.

The indemnity relates to the grantee’s obligations under the easement.  It is very favourable to the Minister, the State and the lessee.

If the grantor is not the State, the proponent should be free to negotiate a less onerous indemnity with the lessees (just as it would negotiate an indemnity with the owners of freehold land).  This would result in consistent indemnities across (freehold and leasehold areas of) the corridor .

Specialist pipeline owners

The approval process for easements over leasehold land is further complicated by current policy of Queensland’s Department of Natural Resources and Mines. 

DNRM requires the entity owning the infrastructure to also be the grantee under the easement. This is restricting the development of specialist pipeline owners because they are unlikely to be “public utility providers”

There doesn’t seem to be any basis for this policy which is depriving the sector of potential investors interested in owning and operating pipelines (rather than developing and selling the water, gas, etc).

Conclusion

Clearly Queensland’s Land Act needs to be amended in a number of areas to make it easier for private developers to secure easements over State land, particularly State leasehold land. 

The private sector already plays an integral role in the delivery of infrastructure in Queensland and this is likely to grow in the foreseeable future.  The successful development of private projects requires a legislative framework that is transparent, flexible and simple to navigate.

The recommendations proposed in this series on infrastructure reform (Part one, Part two and this article) will assist to modernise Queensland’s legislative framework and prepare it for the 21st century.





The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


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Contacts

Daryl Clifford

Partner. Brisbane
+61 7 3228 9778

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Jo-anne Atkinson

Special Counsel. Brisbane
+61 7 3228 9801

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