Yep, you're close Slides, Its full title is NSW Police, Speedways ( Public Safety) Act or at least it was when I had the teeth gnashing experience dealing with it. I still remember the guy's name I had to deal with.
That being said , we got there and got a track licence after crossing all the Ts and dotting the Is, I guess some of the horrific spectator injuries and deaths in the very early days had a lot to do with it's inception.
I too have had to deal with the difficulties of the act, trying to set up natural terrain motocross events on a friendly farmers paddock in the early seventies. In the end my club and I gave up, thwarted by the red tape involved. I believe the act came into being after a race car went into the crowd at Gnoo Blas circuit at Orange, killing a number of people. The government had been spooked by the crash at Le Mans where 80+ people were killed so when the Gnoo Blass incident and another death at a country dirt track that killed a rider and spectator occurred in the same year (
I think involving Jack Davies, Foss might remember), the government, in a knee jerk reaction introduced the draconian legislation. Although the details are mostly lost in history, it's also one of the reasons that NSW motocross sidecar racing died almost overnight in the early or mid sixties. Amongst other things, the act called for all race circuits to be fully enclosed by a wooden or concrete "safety fence" which in reality protected spectators at the expence of riders/drivers. The enforcement of the act was backed off only in the latter part of the 70's when we got some more sympathetic police licencing seargents. I believe the remnants of the act still exists in highly modified form as a section of the Sport and Recreation Act.
With regards to Tims idea for grass track races on old country race courses, it's a great idea in theory and if it came off I reckon there'd be tons of grass roots support. However I can't see setting it up being an easy task.