Market Insight

Queensland rural land decision: What it means for renewable energy projects

The Queensland Court of Appeal has handed down its decision in Valuer-General, Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development v Western Downs Green Power Hub Pty Ltd, which refused leave to appeal by the Valuer-General against the decision of the Queensland Civil and Administrative Tribunal (QCAT). The QCAT had granted a declaration that a large parcel of land in Hopeland, Queensland is ‘rural land’ under s 13 of the Land Valuation Act 2010 (Qld) (LV Act). The decision is relevant to how land is assessed for land tax purposes in the context of large scale renewable projects in Queensland.

Whilst ultimately unnecessary to determine in the Court case, the decision touches on the important distinction between renewable energy facilities and other forms of electricity generation. Fossil fuel generated energy is not low impact. In contrast, land used for the purposes of a solar farm can occur in conjunction with the agistment of stock¹ and returned to a complete agricultural use upon removal of the solar farm at the end of its temporary life.

As the energy transition increases in scale and pace, the circumstances of this case also raise questions for Government more broadly in terms of balancing the potential for a decline in tax revenues associated with fossil fuel electricity generation whilst seeking to avoid barriers to investment in large scale renewables which create uncertainty for the market.

Owners of land with existing or pending renewable energy facilities in Queensland should consider how their land has been classified and be aware of their options under the LV Act should they disagree with the classification based on the nature of the use.

Background

Western Downs Green Power Hub Pty Ltd (Western Downs) is the owner of a large parcel of land in Hopeland, Queensland approximately 38km from Chinchilla. Western Downs constructed a large solar farm and battery storage facility over part of the land. The site was previously used for grazing and the surrounding land is either used for farming or is vacant land.

The land is zoned ‘rural’ under the local planning controls, namely the Western Downs Planning Scheme. The development approval to construct and operate the solar farm was a material change of use approval for a Renewable Energy Facility (500MW solar farm), which was granted in 2018.

Section 11 of the LV Act states ‘[z]oned rural land ceases to be zoned rural land and becomes non-rural land if, under a development approval approving a material change of use, it is used for an urban purpose.’

The concept of ‘urban purpose’ is undefined in the LV Act.

Once the subject solar farm was constructed and became operational, the Valuer-General determined that the land had ceased to be rural land on the basis that under its development approval, the land was being used for an ‘urban purpose’.

This resulted in an increase in land value of 328.6%. Western Downs lodged a Rural Land Application seeking that the subject land be declared rural. The Valuer-General declined to make that declaration and an appeal was heard by the QCAT.

QCAT Decision²

Section 13(2) of the LV Act provides that ‘[t]he valuer-general may declare land as rural land only if the valuer-general is satisfied –

at least 95% of land in the State used for the same purpose is, under section 10, zoned rural land; and
the land’s zoning, under section 10, in a zone other than rural makes a material difference to its value. ‘

Section 10(1) of the LV Act provides that ‘[a]n area of land is zoned rural land if more than half the land is zoned as rural land, however called, under a planning scheme.’

Under the appeal, the QCAT ‘stands in the shoes’ of the Valuer-General.

The QCAT accepted that the requirements for the exercise of the discretion to grant the declaration under s 13 of the LV Act were enlivened. In particular, the expert town planning evidence of the applicant that 100% of land in Queensland used for the same purpose of a commercial solar farm and battery storage facility is on rural land. Furthermore, that the aforementioned increase in land value as a result of the Valuer-General’s application of s 11 of the LV Act exceeded the statutory threshold for material difference (i.e. greater than 30%).

The QCAT did not accept the submission of the Valuer-General that the discretionary power to make a rural land declaration under s 13 of the LV Act was constrained by the Valuer-General’s application of s 11 of the LV Act.

Judicial Member Stilgoe OAM stated:

The clear parliamentary intention of the [LV Act] was to simplify the State’s statutory land valuation process consistent with other Australian jurisdictions, provide a more credible, transparent and less contentious valuation system, and to provide landowners with the opportunity to alter their statutory valuation methodology only once to rectify anomalies in categorisation.

The Judicial Member was satisfied the power under s 13 of the LV Act was enlivened and accordingly granted the rural land declaration. The Valuer-General’s prior decision to decline to grant the declaration on the basis the land was used for an urban purpose was set aside.

Urban purpose

The QCAT also considered the meaning of ‘urban purpose’ in the absence of a statutory definition. The QCAT stated, ‘[t]he place to start in interpreting the meaning of the term is its natural meaning.‘ The Macquarie Dictionary definition of ‘urban’ being:

‘of, relating to, or comprising a city or town, living in a city or cities, occurring or situated in a city or town, or characteristic of or accustomed to cities; citified’.

Both parties obtained expert town planning evidence on the characterisation of use of the land. Evidence on behalf of the applicant included that a renewable energy facility is a code assessable use in the rural zone and that the use is still a ‘rural use’. Furthermore, the QCAT noted the evidence of the Valuer-General’s town planner that whilst considering the use to be urban akin to other forms of energy production, ‘[h]e conceded that large solar facilities are more likely to be situated in rural areas because they need expansive areas of land.’

The Valuer-General’s submission that the definition of urban purpose from the Western Downs Planning Scheme should be adopted was rejected on the basis it amounted to ”cherry picking’ one definition from one regional planning scheme and inserting it into legislation. ‘ The QCAT also considered the definitions of ‘urban purpose’ from State planning legislation but found the meaning of ‘urban purpose’ is the same as the natural meaning, being a purpose ‘for which land is used in cities or towns.’

Each of the definitions considered by the QCAT contained a threshold factor. As a result, ‘if the use is not in a city or town, it is unlikely to be an urban purpose.’ In the circumstances, further consideration of the purpose of the use was not considered necessary.

Judicial Member Stilgoe OAM stated, ‘[t]he [renewable energy] facility may power a city or town, but it is not of a city or town.‘

Queensland Court of Appeal

The Valuer-General raised the following grounds of appeal to the decision of the QCAT:

The Judicial Member erred in determining that s 11 of the LV Act did not operate to deem the subject land as non-rural land on account of it being used, under a development approval for a material change of use, for an urban purpose.
The Judicial Member erred in relation to s 13 of the LV Act by:

a. concluding that the power in that section to declare land as rural land arose irrespective of whether s 11 of the LV Act had operated to deem the land as non-rural land; and

b. in purporting to exercise the s 13 power to declare the land as rural.

The Court of Appeal held that Grounds 1 and 2(b) raised mixed questions of fact and law to which leave is required. As Ground 2(a) is a question of law only, leave in respect of that ground is not required.

The concession by King’s Counsel for the Valuer-General was noted to the effect that if the power to make the rural land declaration pursuant to s 13 of the LV Act is not constrained by s 11, then the appeal would fall away. Accordingly, Ground 2(a) was considered first.

The Court of Appeal agreed with the QCAT to the effect that s 13 of the LV Act contains no exclusion for land impacted by s 11 of the LV Act.

Furthermore, the practical benefit of s 13 of the LV Act was acknowledged by the Court – that a land owner facing uncertainty as to whether s 11 applies can seek a declaration, rather than incurring the costs of litigation for a determination of the contentious issue.

As Ground 2(a) did not succeed, leave to appeal was refused with costs.

Although unnecessary to determine, the Court nonetheless observed that the meaning of ‘urban purpose’ is open to legislative clarification. In the absence of an unambiguous definition of urban purpose, the Court expressed doubt as to the location of the use as a threshold factor. That is, the purpose must be urban, not necessarily the location.

HFW acted for Western Downs Green Power Hub Pty Ltd in the QCAT and Queensland Court of Appeal. If you have questions on any of the issues addressed in this briefing, please do not hesitate to contact Ruth Dawes.

James Whelan, Paralegal, assisted in the preparation of this market insight.

Footnotes