The Australian Law Reform Commission’s inquiry into traditional freedoms is set to gain a stronger focus on the protection of property rights after the appointment of Queensland academic Suri Ratnapala to a key role.
His appointment as a parttime member to help with the “freedoms” inquiry comes amid growing debate about the gap in state constitutions that permits the states, but not the federal government, to expropriate private property without compensation.
It coincides with recent protests to the federal and NSW governments over the cancellation last year of coal exploration licences without compensation – a move that destroyed a $40 million investment by Nippon Gas and other Japanese institutional investors in Australian miner Cascade Coal.
American investors in NuCoal Resources, which was stripped of an exploration licence worth $100m, are pressing for a hearing before the International Court of Arbitration under the Australia-US free trade agreement.
Professor Ratnapala, an emeritus professor of public law at the University of Queensland, said he had no wish to pre-empt the commission’s final report, but he viewed secure property rights as one of the essential foundations for a nation’s economic success. “It makes good sense not only from a moral point of view but from an economic point of view,” he said.
While the commission’s inquiry is focused only on federal laws that interfere with traditional rights and freedoms, Professor Ratnapala believed no government – federal or state should be permitted to take private property without compensating the owners “in just terms”.
“It’s something that the state legislatures ought to observe, although they are not compelled by their constitutions to do so.” His concern is not limited to clear-cut cases of expropriation, but extends to less obvious incidents when government rules and regulations reduce the value of private property.
“State legislation can regulate property in such a way that property owners lose market value, and the question is whether regulation reaches the point when it could be considered to be an acquisition by the state.” He said this had been a longstanding problem and judged by the extent of regulation it could be more common than direct expropriations.
The Law Council has told the commission there is a “a significant gap in property rights protection” because the states are immune from the constitutional ban that prevents the federal government taking property other than on just terms.
This raises the question of whether treaties in which the federal government has promised not to expropriate investments by foreign companies could leave the federal government liable if the states take those assets without due process and compensation.
However, Professor Ratnapala believed there could be a mechanism that would enable the federal government to reduce that risk.
“There is a treaty power, and under the external affairs power the commonwealth parliament has the power to enact legislation to implement treaties,” he said. “If that happens and the commonwealth applies the treaty provisions nationally, then there is a strong argument that state parliaments would be bound by that.
“This is the same principle that was established in the Tasmanian Dams case.” Professor Ratnapala’s involvement with the commission is set to come as a relief to farmers, who have long been concerned their property rights have been steadily eroded by environmental rules.
The National Farmers Federation has complained to the commission that farmers are being forced to bear a disproportionate cost burden for environmental rules designed to benefit the entire community. “Where property rights are compulsorily acquired by governments, or where farmers are required to undertake management practices above and beyond their regular duty of care, full and adequate compensation should be provided,” NFF chief executive Simon Talbot told the inquiry.
“Compensation should be determined in a nationally consistent manner, without state-based discrimination.” Mr Talbot described property rights as “the forgotten human right”. In practice, he said the erosion of this right harmed the poor as different levels of government “incrementally take the value of property through laws and regulations without any fair and appropriate compensation”.
“The absence of fair compensation for acquired property rights in state constitutions leaves average Australians dependent on goodwill to have their rights respected by cash-strapped governments.
“The constant increase in environmental regulations are particularly problematic because they often strip the usability of land for productive purposes while leaving the cost of preserving it with the mortgaged property owner.
“Like with most rights, they are rarely dealt a deadly single blow; they are corroded over a long period of time by government seeking to pursue collective, progressive objectives with little regard for individuals.” Professor Ratnapala’s record as a strong defender of property rights is set to infuriate activists already outraged the Australian Law Reform Commission is even examining the adverse impact that environmental regulation has on property rights.
The Australian Network of Environmental Defenders Offices told the commission in February “the attempted use of a human rights argument to demonise environmental law is nonsensical”.
“In our expert opinion as public interest environmental lawyers, there are currently no commonwealth environmental laws that unjustifiably interfere with vested property rights,” the environmental defenders said in their submission.
They said it was not clear to them there was any need for additional principles to test the specific effects of regulation on private property rights.
But if the inclusion of such principles were considered desirable, “we recommend applying a public interest test that includes the well-established principles of ecologically sustainable development to determine whether an environmental law that interferes with vested property rights is justified”, they said.
WTF: Used by permission