A new bill introduced by the Alberta government Tuesday would allow the province to collect more money from grazing leaseholders, tweaking an outdated system that has been heavily criticized for its economic inefficiency.

But the legislation would not address one of the major criticisms from a blistering 2015 auditor general's report that found leaseholders could personally profit by charging oil and gas companies higher fees to access the same Crown land.

Bill 16, The Public Lands Modernization (Grazing Lease and Obsolete Provisions) Amendment Act, would phase in higher rental rates for grazing leases, consistent with the price of cattle, over a five-year period.

The amount of money the province collects from grazing leases has been frozen at $2.9 million since 1994.

"Ranchers understand, as government does, that it is time to update the system so that it is fair for everyone," Environment Minister Jason Nixon said at a news conference Tuesday afternoon.

If the bill is passed, the government would hike the rental rate by an annually increasing percentage beyond the base rate, beginning with a 20-per-cent increase in 2020. The new formula for how much a leaseholder pays would also take into account the nature and location of the land.

Had the proposed new system been in place in 2019, the average rancher would have paid about $500 more in leasing fees, factoring in the price of cattle — and the government would have collected an additional $2 million in revenue.

The government would always receive a minimum of $2.5 million from the leases, and 30 per cent of any revenue above $2.9 million would go into a dedicated revenue stream to support sustainability initiatives.

All major stakeholder groups supported the legislation, the government said, including the Alberta Grazing Leaseholders Association and the Alberta Beef Producers.

Rich Smith, executive director of the Alberta Beef Producers, said the bill introduces "logical" changes to the system.

"It is more just making it market-based and making it a realistic, modern system, instead of one that was stuck in old rates that hadn't changed in 25 years," he said. "Now it is a system that will respond to markets. When markets go up, the leases will cost more."

The government has acknowledged there were concerns the province was not receiving enough money under the leasing agreements. Stakeholder groups were also worried other jurisdictions, such as the United States, may view low leasing fees as a government subsidy, which could negatively impact trade.

There are about 6,500 grazing leases in Alberta, covering more than six million acres of public land.

System ripe for abuse, 2015 audit found

Grazing leases, and the money the government collects from them, came under intense public scrutiny in July 2015.

In a scathing report, former auditor general Merwan Saher found Alberta's grazing lease program was so poorly implemented it allowed leaseholders to personally profit from charging industrial companies for access to public land.

"Certain leaseholders receive surface access compensation fees in excess of the actual rent they pay to the province for grazing livestock on public land and the costs incurred from allowing industrial access to their leased land," Saher's report stated.

For example, Saher found that in 2013, one of Alberta's largest grazing associations paid the province $68,875 in rent for its leases, but received more than five times that amount — nearly $350,000 — from industry operators.

The government did not even know how many grazing leases had industrial sites on them, or how much money the leaseholders received in exchange for allowing industrial operators, such as oil-and-gas companies, to access them.

Environment and Parks, therefore, "had no way to confirm whether the fees paid to leaseholders simply cover the costs as intended or are greater than the actual costs incurred, providing a personal financial benefit for the leaseholder," the report concluded.

Using available data, Saher estimated the province was forgoing $25 million in access fees leaseholders received from industrial companies in exchange for access to the public land.

The proposed legislation would not address those criticisms from the auditor general.

"The intent of this legislation is not to address those issues," Nixon said.

He later told reporters the government has no current plans to introduce legislation that would do so.