Diversification Leases — Opportunity with Responsibility

What is a Diversification Lease?

The diversification lease (DL) was introduced in Part 6A of the Land Administration Act 1997 (WA) (LAA) under the Land and Public Works Legislation Amendment Act 2023 (WA) as a lease to conduct single, or multiple, land uses on a large area of Crown land, where the proposed lease purpose(s) can coexist with other land uses.

A significant opportunity exists through diversification leases for proponents of large-scale renewable energy projects to utilise Crown land in WA. The Minister for Lands has a broad discretion to grant a DL over Crown land for any purpose or purposes (section 92B of the LAA). A DL can include multiple options to renew and cannot allow a fee simple sale of land (Section 92C). DLs do not confer rights of exclusive possession over the land the subject of the lease (s 92D).

The Minister must be satisfied that the land under a DL is managed using methods of best environmental management practice appropriate to the area where the land is situated, having regard to the permitted use or uses of the land (s 92F).

The Minister can issue a forfeiture notice to a lessee for breach of the LAA or the diversification lease (Section 92G).

When will Diversification Leases be Granted?

While no diversification lease has yet been granted by the Minister, the policy framework for guiding the use of such leases (released in July 2023) provides an outline of what the Minister will require and consider when dealing with an application for a diversification lease.

Crucially, applications will be considered on a case-by-case basis and may be granted where:

(a) a large area of Crown land is required;

(b) the proposed use provides social, economic or environmental benefits to the State, the relevant region or locality;

(c) the land is appropriate for the intended use;

(d) if possible, the grant will provide social, cultural and economic opportunities to Aboriginal peoples/communities; and

(e) the proponent has, or will have, demonstrated the capability, capacity and experience to deliver the intended outcome.

Where applications would be better addressed through the grant of a different type of lease (for mining purposes or highly intensive land uses), a diversification lease will not be granted.

The Minister may grant a diversification lease by private treaty or through competitive process, and where there are competing applications for a grant of a diversification lease, the Minister will consider the following:

(a) the benefits to the State, the relevant region or locality;

(b) the rights and interests of existing land users/interest holders;

(c) ensuring a diversity of investment;

(d) the proponent’s record in engaging with Aboriginal people and communities, their capacity to provide social and economic benefits to Aboriginal people and communities in the long term, and a record of respecting and protecting Aboriginal culture and heritage; and

(e) any other considerations the Minister may deem relevant.

Benefits to Traditional Owners?

The non-exclusive nature of diversification leases means that there is no extinguishment of native title rights or interests. Traditional Owners may at any time enter any ‘unenclosed and unimproved parts of the land under a DL ‘to seek their sustenance in their accustomed manner’ (s 92E), a right which aligns the right to access land covered by pastoral leases (s 104). Traditional Owners may also enter the aforementioned areas to undertake activities consistent with their rights under the Native Title Act 1993 (Cth) (NTA).

Concerns have been raised by Traditional Owner representatives, such as the Yamatji Marlpa Aboriginal Corporation, that while an Indigenous Land Use Agreement would be required to satisfy the future act requirements of the NTA, it should be matched with required consideration of the principle of Free, Prior and Informed Consent to ensure that native title holders are adequately protected. No such requirement is currently reflected in the LAA or its supporting documents.

Last year’s policy guidance that ‘if possible, the grant [of the diversification lease] will provide social, cultural and economic opportunities to Aboriginal peoples/communities’ does not necessarily provide an assurance that Traditional Owners will see the benefits of partnership and participation that has been touted as being accessible through the grant of diversification leases.

It will likely be on proponents to ensure that local Traditional Owners truly benefit from projects undertaken through diversification leases, and that the intention of the legislature to create a new form of land tenure that benefits all parties, and the State as a whole, is effectively realised.