Providing compensation for a few is not an effective way to manage land

There is a revolution going on in the management of Australia’s natural resources, especially land and water. And it’s about time. After decades of mismanagement a consensus has emerged that we need to look after our most valuable assets in a much more sustainable way.

There’s one vexed issue, however, that sparks massive disagreement. It pits farmers against conservationists, and communities against governments. It’s the issue of compensation.

Compensation lies at the heart of recent water reforms and approaches to regulating native vegetation. Proposals by the NSW Government to grant water licences in perpetuity will institutionalise monetary compensation by giving farmers a right they currently do not have. The Productivity Commission is soon due to hand down its final report into the impacts of regulations regarding native vegetation and biodiversity, with many submissions focussing on compensation. Farmers want to be compensated for what they see as a loss of their rights and increased regulation and interference with their farming activities. But there is a world of difference between legal rights and "rights" that are assumed because "it’s always been this way".

To lawyers, the position is clear and settled. Compensation is only payable when the government acquires property - such as land, a licence or a permit. Acquisition in a legal sense has two forms. First, when governments buy properties outright so they can undertake infrastructure projects, such as freeways and airports.

Second, compensation may be payable when the government “sterilises” a right. For example, the declaration of a national park might extinguish existing mining leases. Put another way, the law has not (with rare exception) recognised the right to compensation where governments merely regulate or otherwise change people’s rights. The Australian Constitution, state and territory legislation and High Court judgements all reflect this position.

The world does not, of course, begin and end with the law. Farmers recognise the legal position but argue beyond this. They say that the law can always be changed where moral and political considerations apply. This is inarguable and there are some examples where governments have compensated people where changes in public policy have been rapid or fall especially harshly on some stakeholders. Lawyers and conservationists who refute this risk are taking a narrow and legalistic approach to an important social issue.

Nevertheless, there are good reasons to maintain the present approach taken at law and to look beyond compensation to address these social needs.

Governments need to be able to regulate for the public good. We all agree that sweatshops are bad, truck drivers should not be allowed to drive at 140kph through the night or, more mundanely, that people cannot build condominiums in Marrickville without permission. It is inconceivable that such people or industries would demand compensation where their “bottom line” is affected by regulation.

Yet this is precisely what farmers are arguing for. Compensation in such circumstances risks an undesirable precedent such that governments would be loathe to act for the public good for fear of the financial implications.

Compensation is also an inefficient approach that solves little. It is a one-off payment that carries no ongoing obligations to the land. And land-holders who don’t have water "rights" are asking why they won’t be getting a share of any new money devoted to improving management of land and water resources.

Monies available to redress social dislocation and improve the environment should seek to go as far as possible. Financial assistance in the form of structural-adjustment packages, together with incentives for the performance of certain duties of care to our precious land and water, offer more promise to farmers, the community and the environment.

Structural-adjustment packages have a broader focus than compensation, targeting communities, employees and industries, with additional help for those who wish to move off the land. Compensation, on the other hand, goes to landholders alone and is much less likely to be devoted to improving the long-term management of land and water resources.

There are a range of financial incentives - property agreements and covenants, grants for restorative works, competitive auctions, tax and rate relief and trading schemes – that provide an ongoing commitment to the protection of the environment.

Everyone wants certainty but any change to the legal approach to compensation in Australia will not provide such certainty. Rather, in all likelihood, it will lead to Australia seeing the kinds of acrimonious, divisive and ideologically-driven public debates being experienced in the USA.

Money for the land, yes; compensation, no. A fine distinction but one that has vast implications for farming communities and the conservation of our land.