Around 400 BC a Chinese philosopher by the name of Mencius said “People can have a long term life plan only if they know their private property is secure.” 2400 years later these wise words still ring true for farming families across Australia as they struggle towards the next generation of farm ownership.
Unfortunately, there has been a substantial decline in support for the security of private property rights by courts and governments over the last 50 years. More and more we are seeing the modern issue of governments assuming rights over a property, while leaving the title with the owner.
Whether it is in relation to rights surrounding carbon credits, water, wetland management or land clearing, governments in Australia have begun to slowly walk away from their fundamental responsibility of protecting rural property rights, selling out farmers by imposing land use restrictions with no compensation in an attempt to buy environmental votes in the city on the cheap.
In Australia the law no longer protects farmers’ private property from greedy governments that cannot resist imposing more and more restrictions, encumbrances and limitations on how farm land can be used without accepting that it should come at a cost to the state.
This is at odds with common law, the judicial precedent that is the basis of ‘the law of the land’. Our laws through historical precedent have in fact allowed past kings and queens and the modern state to override private property rights so long as any deprivation was not arbitrary and only where reasonable compensation was given.
This story is about the struggle between the old way of doing things underwritten by legal terms we have all heard before ‘common law’ and ‘just terms’; and terms such as ‘injurious affection’ and ‘eminent domain’ which you can guess are not ones you want to hear coming from your lawyer when faced with a land dispute with the government.
In Australia there is now a wide suite of laws that impact how farmers can farm their land. Many of these laws are linked to environmental outcomes that governments want to achieve. While the laws might not appropriate land outright, they often include intrusive restrictions on land usage with no compensation for the ‘injurious affection’ as it is legally termed. That expression refers to acts of government that do not directly or formally touch the property in question, but which nevertheless damage its value and enjoyment.
These acts are often kicked off by the federal Minister for the Environment or the Foreign Minister jetting around the world signing up to international agreements with such democratic bodies as the United Nations without having to worry about coming back and explaining to the taxpayer the cost of their international virtual signalling.
This is because the responsibility for reducing land clearing, protecting endangered species or wetlands ultimately falls on the states as the level of government with responsibility for land usage. While the commonwealth has the power to sign treaties, it turns and leans on the state governments to comply with the promised outcome.
It’s a power play that is ultimately achieved behind closed doors when the Federal Treasurer tells the State Treasurers how things work as they beg for cash every year in Canberra. The conversation goes something like this “No honey no money, either you save the wattle gums or there will be no commonwealth money for your new metro railway line.”
The state government then falls over in its rush to claim credit for saving the wattle trees, the federal honey flows, the empty train runs and the poor farmer gets a visit from some enthusiastic Murdoch environmental graduate who has the job of mapping the new wetlands for the department of lands. All that’s left to do is for the farmer to push the sheep out, lock the gate and go on paying the rates.
When the farmers contact their local state MP, they get told it’s all the commonwealth’s fault and when they angrily front the commonwealth MP they are told it’s a state responsibility. It’s all glory and no responsibility at both levels of government as the law says there has been no land ‘acquisition’ because the High Court has noted that ‘the extinguishment, modification or deprivation of rights in relation to property does not of itself constitute an acquisition of property’.
For there to be an “acquisition of property”, there must be an outright conveyance of property that formally places the title in its own name. Thus Government intervention in the name of the environment, heritage values and so on is done on the cheap. The intervention is often election-driven and means that the value of property can be destroyed or greatly diminished without compensation so long as title or possession has, according to the law, not been taken. It’s a case of ‘move on nothing to see here!’ Except for the farmer, for whom everything has changed.
Farmers in Australia are being forced to disproportionately carry the regulatory cost burden of achieving beneficial environmental outcomes because inevitably, these outcomes involve limiting the range of activities that can be undertaken on private agricultural land.
But we are not seeing compensatory offsets in the form of reduced rates or taxes, or the payment of environmental bounties. Instead land owners are left with the full cost of the owning of land that is reduced in productivity.
Meanwhile in the big city modern politics seems to require that compensation is provided for anybody who is likely to be left even slightly worse off by a change in government policy. In this context, why should providing compensation for the significant restriction of property rights be viewed any differently?
At the moment, we are simply forcing the private land owner to bear this cost, rather than the community who wishes to see the particular parcel of land being protected. The moral case for sharing these costs is obvious. If the community believes that it is important to impose particular environmental restrictions on a particular parcel of land, then the community should be willing to bear this cost.
As a result of these land use restrictions, many farmers are increasingly uncertain about their future and their rights as landholders. Successive governments have done little to allay concerns. Property rights of farmers must be respected in relation to government decisions affecting land and water entitlements to give them confidence to invest and run a farm business.
Full and adequate compensation must be provided where property rights are compulsorily acquired by governments or where farmers are required to undertake management practices above and beyond their duty of care. The implications of these impacts on property rights has significant economic consequences for Australian farmers, particularly in the area of farm business financing. This is because property values decrease as the productive capacity of farm land is lowered.
So we are faced with two solutions. One being constitutional change to lock in ‘just terms’ compensation to any form of encumbrance on private property that diminishes its economic value. The other option – far simpler and more affordable – is for state governments to simply lease land on which they want to place economic restrictions.
If the state had to pay double the going lease rates for farm land locked up as an environmentally protected area, then at least the farmer would have a return to cover borrowing costs and the state would have effective control and responsibility. Not to mention a financial obligation to carefully select high value environmental areas and not cover the map in green with no thought to the ultimate costs. At least this way farmers can have a long term life plan as they know their property will be secure.
