Emerging environmentally-friendly businesses in Australia's rangelands are being constrained by pastoral lease arrangements according to a Productivity Commission report.

Pastoral leases exist on around 44 per cent of Australia's land area in the arid and semi-arid areas and the tropical savannas. Pastoral leases administered by State and Territory Governments are designed primarily to facilitate and support pastoralism.

The Commission Research Paper — Pastoral leases and non-pastoral land use — reviewed pastoral lease arrangements and constraints on non-pastoral land uses such as tourism, farming of livestock other than cattle or sheep, and conservation of native wildlife.

The report found that pastoral lease arrangements are characterised by extensive and prescriptive legislation and regulation. The lease arrangements control the use of land for pastoralism. For example, lease conditions typically specify the type and the maximum and minimum number of stock that can be grazed.

Commissioner Neil Byron said, 'Less prescriptive and more 'neutral' leasing arrangements would be likely to lead to better long term management of Australia's rangelands — economically, ecologically and socially.'

Native title is a key element of the broader institutional framework. Where applicable, any changes to land use would need to be consistent with native title.