CSG Part 2 - Powers sought by the Commission in relation to managing CSG

Posted by: Nick Purcell

I recently wrote about the formation of the GasFields Commission in Part 1 of this blog series, including its role in managing the coexistence of rural landholders, regional communities and the CSG industry.  Given the impending passage of the legislation creating the Commission, I thought it might be worthwhile to identify the powers which were sought by the Commission and then briefly discuss the more interesting aspects of those powers in a series of blogs.  The Commission asserts that all powers sought by it are to serve its objectives, which are to manage and improve co-existence and sustainability between regional communities, rural landowners and the onshore gas industry. Those powers fall under eight “heads”, which are:

• Assessing the potential for co-existence
• Power to review regulatory frameworks and legislation
• Powers to get information
• Dispute resolution
• Power to publish and communicate information
• Leading practice/management
• Ability to seek external advice
• Miscellaneous Issues

Of those powers, it seems to me that the one with the greatest potential for controversy is the power for the Commission to provide advice and recommendations to the Government on the ability of the onshore gas industry, regional communities and landholders to effectively co-exist within an identified area.  The Commission’s Chairman, Mr John Cotter, recently emphasised that, whilst the Commission would provide advice and recommendations to Ministers and Government agencies, the ultimate decision on whether the CSG Industry could effectively co-exist within an identified area would rest with the Government of the day. On the face of it, such a power seems pretty straightforward. However, it seems to me that the concept underlying the proposed power represents a seismic shift in the rights of landholders. As far as the landholder is concerned, the current resources legislation permits resource companies to enter onto land to explore for resources and, ultimately, to develop those resource deposits. In both cases, the landholder’s interests are usually addressed by way compensation. The result is that the resource activity takes priority and the rural activity must surrender to it. If this proposed power were granted, then it would signal an intention from Government that, where the CSG Industry cannot co-exist with regional communities and landholders, then it is the CSG Industry that must go. This would reverse the existing statutory framework and exert a new primacy for rural landholders. Whether the Government of the day would act on a recommendation that the CSG Industry co-exist in an identified area is a question for another day. However, there seems little point in granting the power as it is currently formulated unless there was a preparedness to act. To do otherwise would merely preserve the status quo, and no change is needed for that.

CSG Part 1 - LNP's Resources and Energy Strategy Policy turning Landholders into Activists?

Posted by: Nick Purcell

Over the past few years I have acted for a number of rural landowners who had experienced, at first hand, the frenetic activity of Queensland’s resource boom. Some of those clients were affected by coal and gas exploration activities, whilst others had gas pipelines constructed across their lands. With that background in mind, I read the LNP’s “Resources and Energy Strategy” Policy, which was released prior to the last election, with some interest. You can find a copy of it here. The Policy had three key principles:

1. Fairer compensation to landholders, and land access arrangements;
2. Ensuring greater direct local benefits for the communities impacted; and
3. Rigorously monitoring industry impacts and enforcing stringent operating conditions.

 

Some of the key commitments underlying those principles included:

1. Legislating “items and actions” that are subject to compensation for landholders;
2. Providing clarity that partnerships between landholders and CSG operators should not be limited to compensation arrangements;
3. Rigorously monitoring impacts to protect the natural environment and resources, including the establishment of a “dedicated” inspection and enforcement unit.
4. Establishing a Gasfields Land and Water Commission to manage the coexistence of rural landholders, regional communities and the CSG industry;
5. Establishing a Gasfields Community Leaders Council consisting of local Government, industry and community leaders;

 

Some months have now passed since the election and the implementation of this particular policy seems to be well underway. The now LNP Government has established both a Gasfields Commission and a Gasfields Community Leaders Council. Appointments have been made to key positions for both bodies, including the appointment of seven Commissioners to the GasFields Commission. It is also expected that the powers of the Commission will soon be legislated. In addition to that, the GasFields Commission has also convened a number of community forums in rural Queensland.

Without exception, clients who have sought advice from me about a proposed entry onto their land by a resources exploration company have told me that same thing: they are uncertain about their rights about the entry onto their land or compensation, they are anxious that the exploration activities will adversely impact on their property and livelihood and they feel that they have no control over what the exploration company can and can’t do on their property. In short, the landowner reposes very little trust in the explorer.

The CSG Industry should have been an unmitigated success story for Queensland: an abundant resource in great demand by a world energy market turning to a new source. But the Industry’s public relationship exercise has been so badly implemented that its only success seems to be the rate at which it has converted landholders into activists. 

Whilst it is early days, a properly functioning GasFields Commission and Gasfields Community Leaders Council, with the right people to guide its activities, may provide the means to bridge the schism between landholders and resource companies.

Friendly Fire - Flesh Wound or Fatal

Posted by: Scott Thompson

We may have handled the GFC better then most countries but the current slow economy is full of testing times for business owners.  The danger for businesses now is even greater then during the GFC as we experience a slow down due to economic lag and overseas financial fallout. Some businesses who struggled through the GFC and the couple of years that followed, will now be realising they have not rebounded as planned – they have been mortally wounded, business death for them is not far away.  As entrepreneurs and businesses discover, the tighter lending policy from the banks results in reduced cash flow funding options.  No matter how great your business runs tight fiscal control and management - you are always exposed to collateral damage.  Do not become default bankers for your clients by providing interest free unsecured loans. Complacency is your enemy. You must be vigilant in hunting debtors. This requires registering secured interests, a debtor recovery policy and quick results. Does this aspect of your business need attention?

Budget boon for first home owners and construction industry

 Posted by: Tony Allen

In the Joint Statement of Premier, The Honourable Campbell Newman and Treasurer and Minister for Trade, The Honourable Tim Nicholls on Monday, 10 September, 2012 it was announced that:

First home buyers will receive "$15,000 - up from $7,000 - when purchasing a newly constructed home or property off the plan, under the re-shaped First Home Owner Construction Grant (formerly First Home Owner Grant)" [FHOG].

The relevant facts about the FHOCG are:

• The Newman Government’s First Home Owner Construction Grant is worth $15,000
• The FHOCG is for first home buyers who are buying a newly constructed or off-the-plan property
• The FHOCG replaces the First Home Owner Grant which was $7,000
• Those first home buyers who are about to purchase an existing dwelling will have until October 11 to finalise their contract (to be eligible for $7000 grant)
• First home buyers signing contracts for new properties before September 12 will receive $7000 and those signing on or after September 12 will receive $15,000
• The program will be administered within existing arrangements in the Treasury department
• Major banks and financial institutions will continue to advertise the FHOCG in their loan marketing material, reducing the cost for taxpayers

The following eligibility criteria still apply:

• It must become your principal place of residence within one year of taking ownership.
• It must be your principle place of residence for at least six months.
• You must not dispose of all or part of the property within one year after you start to occupy the residence as your home.
• The property must be bought or built at a value under $750,000

If you would like to know more, contact our Tony Allen on 07 3234 3112 or email.

 

Minister "calls in" Jewel Development on the Gold Coast

Posted by: Megan Tilbrook

I read this week that the Deputy Premier and Minister for State Development, Infrastructure and Planning has made a decision to "call in" the proposed $1 billion Jewel development proposed for Surfers Paradise. This is an astonishing turn of events as it essentially means that two valid submitter appeals which were made to the planning and environment court against the Gold Coast City Council's approval will no longer have any effect. Mr Seeney will now make the final decision on the project in accordance his powers under the Sustainable Planning Act 2009. According to the Ministerial Media Statement from 11 July 2012, the aim is to kick start the slumped construction industry on the Coast, and to "ensure applications such as this do not languish or get bogged down in protracted legal proceedings". It is clear the Minister is of the view that some submitter appeals are creating "red tape" for approvals, potentially undermining the important role that members of the community can play in the planning process. The ability to appeal against an impact assessable development is a right that should not be taken away lightly. This is the first time a ministerial "call in" has been made by the Newman Government and will no doubt raise an interesting argument on the competing interests of submitters having their say and the significant delay that can occur as a result of court proceedings brought by submitters. Mr Seeney's decision on the proposed development is expected to occur by early August. The Ministers decision will not be able to be appealed on planning grounds.

Sustainable Planning & Other Legislation Amendment Bill 2012 introduced into Parliament today

Posted by: Megan Tilbrook

The State Government announced proposed amendments to the Sustainable Planning Act introducing the amendment bill into parliament today.  According to the Government there will be some significant changes to the planning legislation in an attempt to "restore efficiency and consistency to Queensland's planning and development system".  Some of the key changes to look out for are:

1. the streamlining of the development application process, allowing developers to deal with one single officer, rather than multiple departments when seeking State Government assessment of development applications;
2. the removal of master and structure planning arrangements;
3. the discretion on the part of Councils to accept development applications that do not contain all of the required supporting information; and
4. the expansion of the Planning and Environment Court's powers to impose cost orders, with the general rule being that costs of a proceedings are at the discretion of the court but follow the event, unless the court orders otherwise.

The proposed amendments will have an impact on the way applications are handled and on how the court process runs.  I am sure there will be much more discussion in relation to these amendments, and in particular, I wonder what an "event" will be for the purpose of the costs provision. For more information, the Bill can be found by following this link.

Future glimmers of hope amongst uncertainty

Posted by: Dale Ellerman

I attended an interesting legal industry lunch last week that had speakers addressing Australia's economic prospects in a world of uncertainty. The take away message for me was that there is an elevated risk of another shock from Europe but that it is unlikely to be as bad as the GFC. The mining boom will fall away as Chinese development moves away from public expenditure on infrastructure to consumer driven spending (not as reliant on coal/steel which is far and away our most valuable export). When the dollar falls the expectation is that our  manufacturing, education, tourism and agriculture will pick up to fill the gap.

Overall, a few 'bumps' but the future has glimmers of hope.

Well Drafted Default and Termination Provisions in Leases

Posted by: Denis Stephenson

Prove to be very beneficial

It is now quite clear since the case of Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 that:

1. The ordinary principals of contract including that of termination for repudiation or fundamental breach applies to leases;
2. The presence of an express proviso for the entry in a lease does not exclude other common law rights available to the lessor for termination or damages.

 

A contract may be determined for any breach of a fundamental or essential term. A lease (as well as granting an estate in land) is a contract.  A breach of an essential term may also constitute a repudiation of the lease, also entitling termination. The recent CMA case again illustrated the importance of specifying essential or fundamental terms of the lease.

In the CMA case, the lease specifically stated that the tenant had an obligation to:

1. Keep the premises in good repair and condition; and
2. Promptly repair any damage to the premises for which it was responsible, and
3. and that the tenant's obligations with respect to repair were essential terms of the lease.

 

The tenant was in breach of the obligations to repair.

The Tasmanian Conveyancing and Law Property Act (Act) has a provision similar to our Property Law Act section 124 (1) providing that "a right of entry or forfeiture under any provision or stipulation in a lease, for a breach of any covenant or condition in the lease, shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice specifying the breach complained of...requiring the lessee to remedy the breach...and the lessee fails, within a reasonable time thereafter, to remedy the breach...

In the CMA case the landlord sent a letter to the tenant (not a specific notice under the Act but saying it was a notice) requiring the tenant to remedy the breach within a reasonable time and pointing out that the breach was a breach of an essential term of the lease and advising that if the tenant failed to comply, the landlord would at its election either forfeit the lease or accept the tenant's repudiation of the lease.
After 18 days after the date of the letter, the landlord re-entered the premises and locked the tenant out. It affixed a notice to the premises stating that the landlord had accepted the tenant's repudiation by failing to comply and terminated the lease.
The tenant commenced proceedings against the landlord seeking a declaration that the landlord re-entry was unlawful and ineffective to terminate the lease. The court held that the landlord had validly terminated the lease and denied the tenant relief against forfeiture.
The court found if the landlord terminates and re-enters under an express term of the lease it must comply with giving a notice to remedy in accordance with the Act (our section 124 (1) of the Property Law Act). However it found that if the landlord terminates and re-enters pursuant to its common law right it may do so without serving a notice.
The court followed the authority of the High Court in Progressive Mailing House Pty Ltd v Tabali Pty Ltd.
In summary, in the CMA case the landlord by having specified in the lease the obligation to keep the premises in good repair and to promptly repair was an essential condition was able to validly terminate the lease notwithstanding that the landlord had not given a notice to remedy under the provisions of the Act and notwithstanding that in the particular circumstances the court found that the tenant's actions did not constitute repudiation.
For more information please contact Denis Stephenson on 07 3234 3107 or email.

Superannuation Contributions from 1 July 2012

Posted by: Tony Allen

Superannuation contributions - excess contributions tax alert!

Did you know that the tax deductible superannuation contributions cap of $50,000, including salary sacrifice amounts, if you are 50 or older will stop on 30 June 2012?
From 1 July 2012, the cap will be limited to $25,000 regardless of your age and any excess over $25,000 will be taxed at an additional rate of 31.5%. With 15% tax already paid on the tax deductible contribution, the additional 31.5% tax on the excess brings the total tax liability to 46.5%.  Excess concessional contributions are also counted against your non-tax deductible superannuation contributions cap.
Tax deductible superannuation contributions (also known as concessional contributions) include any contributions made by your employer such as 9% superannuation guarantee contributions and salary sacrifice contributions and personal tax deductible superannuation contributions.

What should you do?

If you are 50 or older, and your concessional contributions in the 2011/12 financial year will be more than $25,000, you should:

1. Contact your employer(s) to review the total amount being contributed to superannuation so that you won’t exceed the tax deductible contributions cap.
2. Make sure amounts claimed as personal tax deductible superannuation contributions from 1 July 2012 do not exceed the cap when combined with all other tax deductible contributions to superannuation.

Don’t forget:  it is the total of your tax deductible superannuation contributions (concessional contributions) made to all superannuation funds which is counted against your concessional contribution cap. If you are a member of more than one superannuation fund, make sure the total of your tax deductible contributions made to all funds are counted.  This also includes payments made by your employer or claimed by you as a tax deduction for superannuation insurance premiums.

How can we help?

If you need to reduce your tax deductible superannuation contributions we can assist by calculating the impact on your taxable income and your projected retirement benefits. We can also review your tax planning strategies, your retirement planning goals and assess other retirement funding options. 

There are circumstances when contributing amounts in excess of the $25,000 cap, and incurring excess contributions tax, may not have a material impact on your overall financial situation. Reducing your tax deductible superannuation contributions in these circumstances may not be necessary. We can help you to assess the impact of excess contributions tax and to determine the appropriate course of action given your individual circumstance.

If you have any concerns, or wish to obtain advice in these areas, please do not hesitate to contact Tony Allen on 07 3234 3112 or email.

Demystifying Estate and Succession Planning

Posted by: Kylie Wilson

What are Estate and Succession Planning?

An estate plan is essentially a plan about a person’s ‘estate’ (property and assets). A succession plan is an estate plan, which includes plans for succession (our ‘successors’ are those who ‘succeed’ to our estate). Both types of plan can be an extension of the business plan.
Proper succession planning will give the next generation the opportunity to succeed to a viable and financially successful family farm or business. Without it, the family farm and family unity often do not survive the succession. This is usually the result of three major factors: the financial overburdening of the farm; advice unrealistic expectations of family members; and a lack of appropriate expert advice.
Part of the reason for poor estate and succession planning is poor communication. Older generation members tend not to discuss their plans with other family members. Younger generation members are often left guessing what the future may hold. Many stay on the farm in the mistaken belief that there will be a sound economic future, when in fact the farm cannot cope economically with all that is asked of it.

Why isn't enough to make a Will?

A Will covers only the event of death and does not come into operation until death. On its own, it provides for no plan until death. An estate and succession plan needs to have immediate operation.

Factors to be Taken into Account

Economic Viability

Economic viability is really a matter of affordability. It starts with the question, ‘Can I afford to do all the things I would like to do?’ It will be very important for parents to prioritise what they see as their opportunities and obligations. They will want, for example, to provide for the security of their own future lives, to provide an economic opportunity for the son or daughter on the land, and then to make provision out of their estates for the family. Sometimes not all of these can be achieved to the extent that they would like, and they need to be able to prioritise them. Generally the highest priority is the parents’ own financial security.

Asset Protection

Our society is becoming increasingly litigious. If the business is carried on in the same name as the assets are held, then all of the assets will be ‘at risk’ if there is a liability action.

Use of Structures

To cope with all the likely factors and events, it may be necessary to create different structures, such as companies, discretionary trusts and self-managed superannuation funds. However, the use of these structures does complicate the estate plan. Where these structures are purely tax-driven and succession is overlooked, greater difficulties can occur, leaving fertile ground for dispute in the next generation. Many advisers overlook the fact that the assets of a discretionary (“family”) trust or Superannuation Fund cannot always be left by a Will.

Tax

The plan should include structures which minimise the effect of income tax, capital gains tax and stamp duty, not only on a year by year basis, but also on a ‘transactional’ basis when children are brought into ownership of part or all of the farming entities. Tax minimisation taking the steps which the legislation itself encourages or legitimately allows to minimise the effect of taxation. Planning for tax minimisation should be kept in perspective with the whole range of factors and events which must be planned for.

How to Get Started

There can be no blueprint for succession or estate plans. Each person’s estate and succession plan will be different, depending on a range of factors, such as the size and viability of the present farming operation; the number of family members and their needs, hopes and desires; and a range of philosophical decisions.
Getting started is sometimes the most difficult part of succession and estate planning. It all starts with establishing priorities and finding the right professional advisers who have appropriate experience.
The cost of proper succession and estate planning can be substantial. However, while the cost of ‘getting it right’ may be substantial, it is certainly much less than the cost of ‘getting it wrong’.

How Not to Save Money!

Posted by: Tony Allen A business colleague recently mentioned to one of our Directors that he self acted in a conveyance of a property he purchased at auction. Problems continued to  'float to the surface' 90 days after settlement when he received a $1,600.00 fine from the Brisbane City Council for not providing Pool Safety Certification in compliance with new pool safety legislation.    "In the past my lawyers have made these transactions look so easy I thought I would handle the conveyance myself to save some money.  The transaction was a nightmare from start to finish and even three months later continues to cost me money.  I will never self-act in these transactions again."   The sooner you involve legal advisors to protect your interests the better off you will be. We can assist in designing customised legal support to assist you reach your goals and to ensure your interests are fully protected. Please contact Tony Allen to discuss further on 07 3234 3112 or send us an email.

Clouds Looming for Solar Subsidies

Posted by: Scott Thompson

From 1st July 2012 the Federal Government's Renewable Energy Subsidy significantly reduces for those considering installing photovoltaic systems and inverters (PVS).  This has led to a frenzy of activity in the solar industry as comsumers and installers rush to beat this deadline.  The online media and commercial TV ads have multiplied and frequent advertising material is being left in letterboxes all over Queensland.

Some solar supply companies are heavily promoting the 44 cents a kilowatt Feed in Tariff (FIT) and use that rate to demonstrate attractive return on investment (ROI) calculations.  The FIT is an incentive and solar bonus to encourage the installation of PVS.  What many suppliers are failing to advise their clients is that there is no guarantee the FIT will remain, especially with the newly elected LNP looking to reduce expenditure whereever it can.

Currently, any excess power generated by an installed PVS, is fed back into the grid and the owner of the PVS is paid as per the FIT.  This means the owner receives more than double the price per kilowatt for any surplus electricity fed back into the grid, when compared to what they pay for the power consumed.

To enable this to occur the owner of the property enters into a Network Connection Agreement with Energex which is an agreement whereby Energex permits the customer to generate electricity and to feed it back into the grid.  The State Government Electricity Act provides that when this occurs the customer is entitled to  44 cents a kilowatt for any excess power fed into the grid.  However, this rate can be altered by regulation or indeed by a further review at certain trigger points as outlined in the legislation.  It can of course, as any legislation can be, subject to review by the Government at any time and if the FIT component is not appropriate for whatever reason it can be revoked.

For example, the removal of the FIT could possibly occur on the 1st July 2012.  This is the date the Federal Carbon Tax comes into effect.  By removing the (State Government) FIT as a solar bonus and incentive and replacing it with the flow on effect of the (Federal Government) Carbon Tax which, by default, could also act as an incentive to encourage home owners to install PVS on their property.    Therefore, by default, or by design, a PVS incentive would continue to exist at no cost to the LNP State Government.

This is purely speculation on our behalf, but helps illustrate the many variables in this industry.  The issue for consumers is to ensure they are fully informed of these possibilities before they purchase and install a PVS on their properties.

If you have any concerns, or wish to obtain advice in these areas, please do not hesitate to contact Scott Thompson on 07 3234 3100 or email.

2012/2013 Federal Budget - Be Wary of your contributions to Superannuation

Posted by: Kylie Wilson 

As a consequence of the Government's 2012/2013 Federal Budget announcement, the Concessional Contribution Cap for superannuation for all individuals regardless of their age or account balances in superannuation will be $25,000 from 1 July 2012 until 1 July 2014.

The Government had previously announced a measure that would have provided a $50,000 Concessional Cap for individuals over 50 with superannuation account balances under $500,000 from 1 July 2012.  This has now been deferred until 1 July 2014.

Therefore the higher caps for Concessional Contributions for individuals over 50 will no longer apply, regardless of the individual's account balance in Super, from 1 July 2012.  Care will need to be taken to ensure that Excess Contributions Tax is not incurred by breaching the $25,000 cap after 1 July 2012.

In a further, although not unexpected measure, the Government has doubled the contributions tax on concessional contributions for indivduals with adjustable incomes of $300,000 or more.

If you need assistance with your SMSF or asset protection and succession planning, contact our senior specialist, Kylie Wilson on 07 3234 3102 or email.

Alert! Office of Fair Trading investigating Real Estate Agents

Posted by: Denis Stephenson

As advised by the Office of Fair Trading (OFT), it has recently received a number of complaints about real estate agencies in a particular area advertising properties with incorrect or misleading information, especially regarding the suburb in which a property is located.

A number of complaints have been investigated and agents put on notice about the consequences of breaching legislation that outlaws misrepresentation in advertising. Agents may see it as relatively harmless to advertise a property as being in a neighbouring suburb which is perceived to be more prestigious than its actual location.  In reality however, this is a clear example of misrepresentation.

Any advertising which contains incorrect information, whether intentionally or otherwise, would constitute a breach of Australian Consumer Law legislation. Penalties up to $1 100 000 currently exist for corporations and $220 000 for individuals who present any false or misleading information.  

In a real estate setting there are several factors agents should keep in mind when advertising:

• An agent must find out or verify the facts material to the lease or sale to avoid error, omission, exaggeration or misrepresentation.
• An agent must encourage their client (the seller) to disclose all relevant facts about the property.
• If an agent has information about detrimental features of the property they are engaged to sell, the agent is required to disclose this information to prospective buyers.
• An agent is guilty of misrepresentation if they wilfully conceal a material fact about a property, such as a previous flooding.
• An agent must not make misleading statements about the layout of a property.    
• An agent must not give the impression to buyers that a property in located in one suburb when clearly it is not.

OFT will continue to monitor this issue and not hesitate to investigate likely cases of misrepresentation where they become apparent.

For further information or assistance please contact Denis Stephenson on 07 3234 3107 or email.

 

Coal Seam Gas Exploration - Where do you stand?

Posted by: Nick Purcell

Coal Seam Gas (CSG) exploration and drilling issues affect land owners interests, whether that interest be freehold or leasehold.

We act for many rural clients that have extensive farming interests and are impacted by the dramatically accelerating CSG industry.

Our experience and knowledge in this rapidly changing area of law enables us to provide the landowner with prompt accurate advice and practical solutions. 

If you would like to know more, then please phone or email Nick Purcell for a confidential no obligation discussion to see how we can assist.