Courts Refuse to Protect Private Property Rights

Last week, the Federal Court confirmed that property rights in Australia are held at the whim of governments.  The Court was hearing an appeal in the Peter Spencer case.

This is an issue I covered on several previous occasions, for example hereherehere and here.

In a nutshell, Peter Spencer was a NSW farmer whose land was devalued from a worth of $9 million to $2 million by the regulatory actions of the NSW government which progressively reduced what he might do on the land.  In the end, the NSW government offered to buy his land for the $2 million – its devalued worth stemming from its regulatory actions – but Mr Spencer rejected this.  The government’s actions were unquestionably “takings” of Mr Spencer’s property rights.  But, according to the original judgement, he was due no compensation and the offer by the NSW government was therefore generous!

The whole case has far reaching ramifications.  Many of those 19th Century jurists discussing the establishment of the Australian Constitution were of the view that property rights were so enshrined in the common law that no explicit provisions, akin to the US Bill of Rights, were necessary to attest to this.  Provisions against uncompensated takings of property are not in state law but the Commonwealth constitution had Article 51 (XXIII) saying the Commonwealth could not take property without offering “just terms” to its owners.

Mr Spencer’s strategy was to seek compensation from the Commonwealth on the grounds that the actions by the NSW Government were taken at the behest of the Commonwealth, which sought to prevent land clearing in order to suppress the emissions of greenhouse gases.  This allowed Australia to meet the terms of the 1997 Kyoto Protocol (which was ratified with Kevin Rudd in 2007 but which the Coalition Government had signed and were seeking to meet).

Under the Kyoto Protocol Australia agreed to limit its emissions of greenhouse gas to an eight per cent increase by 2012.  Land clearing restrictions reduced Australian emissions by 110 million tonnes of carbon dioxide equivalent (about a fifth of total emissions), without which Australian emissions in 2012 would have seen a 21 per cent increase.

Some other governments (notably Japan and Canada) failed to meet their own commitments and gained some international opprobrium as a result.  The Canadian government had been urged to follow the Australian example of preventing land clearing to meet its obligations but determined that such measures would be unconscionable.

In seeking to use the Commonwealth Constitution as a route to “just terms” compensation, Mr Spencer presented evidence showing that Premiers Beattie and Carr had proudly proclaiming how their actions in preventing land clearances had enabled the meeting of the Kyoto commitments.  He also maintained that Dr David Kemp, as the Commonwealth Environment Minister, withheld money from NSW until it became more aggressive in stopping the land clearing that was essential if the Kyoto commitments were to be met.  Dr Kemp acknowledged he had communicated such matters to the NSW Government.

The original federal court decision which was upheld by the appeals court was that the takings by the NSW government were not related to the Commonwealth’s wishes and the judge noted that such (uncompensated) takings had been underway since at least 1972.

While the case is not major of itself, it applies widely across Australia and Barnaby Joyce suggested that the expropriation of farmers for the carbon sequestration alone had cost them $200 billion. This figure (which was not contested in the Parliament) was arrived at by comparing land values where regulation prevented productive use, to values of land that was unaffected.

So there we have it.  Although benefitting in accolades from the domestic and international community for meeting its Kyoto commitments, the Commonwealth was found not to have been sufficiently collusive with the property seizures of a state government for it to be held liable for compensation.

But the wider issue is the apparent untrammelled right of state governments to seize private property through regulatory measures without compensation.  A fundamental role of the government to protect private property rights has been seen since John Locke as  crucial to modern civilisation.

Nobody, until the onset of socialist parties, would have envisaged that democratic constitutions would have allowed the governments themselves to have been the instigators of property theft.  Now the highest courts of law justify it.