Cuius est solum, ejus est usque ad caelum et ad inferos:
Latin: whoever owns the soil, it is theirs up to the sky and down to the depths.
Various governments undermine the value of property by regulation taking away rights. Those rights are often not “on title” such as the right to clear vegetation and take water. The removal of those rights needs to be redressed more equitably and compensation provided. Incentives are one mechanism that can help redress that balance. This paper examines the nature of property rights, considers the need for change and considers the requirements and opportunities for dealing with unbundled property rights.
2 Nature of Property Rights
A very broad consideration of property rights has been adopted beyond those rights that typically deal with land tenure and dealing with interests in land. Many people consider the suite of rights that a property owner has includes rights in relation to ongoing management of land and the use of land. It is evident that the expression “property rights” used by many people is not restricted to matters dealt with under the Land Title Act 1994 (freehold land) or Land Act 1994 (Crown leasehold land). Water licence issues and vegetation management restrictions impact on management practices on-farm and the receiving environment and significantly affect property rights in the broader context.
This perception of property rights is founded in the history of our property rights. “At common law there are very few restrictions imposed on a landowner regarding the right to use her or his land. Provided the landowner does not cause a nuisance or damage to others, the landowner is generally free to carry out any lawful activity on her or his land and use the land for whatever purpose he or she desires. In modern times, however, governments of all levels have passed laws which restrict or regulate the activities and uses that may be carried out on privately owned land.”
When considering property rights it is necessary to articulate the distinction between personal rights which may lead to property rights and existing property rights. Many pieces of legislation provide an opportunity for a person to make an application in relation to the use of land. That is a personal right. If the application is approved a decision may create new or modified property rights. The decision to approve an application, either with or without conditions, will have an impact on existing property rights. Existing property rights are those rights which are not restricted by regulation and do not require any application by the owner of the land.
It is also necessary to understand the legal concept of radical title and beneficial title. Radical title was explained by Justice Brennan in the Mabo decision as “the distinction between the Crown’s title to a colony and the Crown’s ownership of land in the colony. This ownership of the country is radically different from ownership of the land: the former can belong only to a sovereign, the latter to anyone”.
Radical title, therefore underlies all other land holdings. It give governments the ability to compulsorily acquire land for the benefit of the people.
Beneficial title is that bundle of rights that are enjoyed through ownership of land however constructed.
The pendulum appears to be vacillating between recognition of the relationship between ownership of land and rights dealt with under legislation.
In Queensland, restrictive covenants can now be registered upon title as can agreements in relation to a profit-a prende. The Environmental Protection Act was amended to reflect aspects of licensing that relate to the land and those aspects which are personal and relate to the operator. Agreements under the Nature Conservation Act may be given an administrative note for title, as can be Indigenous Land Use Agreements under the Native Title Act (Cth)??. Conditions of a planning approval under the Integrated Planning Act attach to the land and bind successors in title.
The relationship between the bundle of rights that is often considered incidence of normal ownership of land is changing and the stripping away of those rights whilst still occurring in some instances is in other instances being brought back to a clearer relationship with ownership of the land.
The use of market-based incentives to deal with those parts of the bundle of rights that had been stripped away from land title is increasing. The previous Commonwealth government funded a $5 million pilot program scheme.
“Australian government’s fixation on competition policy as a means of environmental management continues with the announcement of $5 million of State and Federal money to be spent on 10 market focus natural resource management projects. The projects, the first round of the National Market-based Instruments (MBI) Pilot Program, were announced by David Kemp, Federal Minister for Environment and Heritage, who said they will ‘investigate ways to use innovative financial arrangements to encourage better land and water management and reduce solemnity in irrigation based agriculture’.
The consideration of the restraints and opportunities of market-based incentives is indicative of opportunities for dealing with the bundle of property rights unbundled from the early tenure and rights described by Carmel MacDonald, Les McCrimmon & Anne Wallace.
It is important to understand when considering “unbundled property rights” that they are not fixed in time. Unbundled property rights may be subject to revocation, suspension and review and the conditions attaching to those rights may be amended. This is so despite the fact that some unbundled property rights attach to title and bind successors in title. Appendix 1 identifies these property rights.
Those unbundled property rights, or rights, obligations and restrictions, particularly for environmental outcomes such as vegetation protection, carbon sequestration, water flows, water quality, and biodiversity often strip away the ability to use land. They warrant special attention.
They are more recently the subject of market-based incentives and consideration of market-based incentives has been useful in giving consideration to the analysis of property rights and the impact on farm operations.
On 28 March 2008 and the Premier, the Honourable Anna Bligh, and the Minister for Sustainability, Climate Change and Innovation, the Honourable Andrew McNamara announced the creation of an innovative Australian first green fund, Eco-fund. The fund is to work in two ways:
“First there is a current need for developments to avoid or minimise environmental impacts. This requirement will remain, however increasingly some environmental impacts are unavoidable, particularly with major infrastructure works. In such cases proponents of these developments will now be able to approach the new Eco-Fund Queensland. This is only after all other measures to avoid and mitigate impacts have been taken. Then the remaining impacts can be offset by a financial contribution to the Fund.
Eco-Fund Queensland will then professionally identify and secure an appropriate offset on their behalf – many of which will make their way into national parks and protected area estates.
Secondly, government, industry, and in time, interstate and overseas entities will be able to approach Eco-Fund Queensland in order to offset their greenhouse emissions.
The funds these organisations contribute will be used to secure a credited carbon offset within the State. Eco-Fund will also manage the Government’s carbon offset plans.
Eco-fund will be up and running by January 1 next year, and between now and then we will finalise the governance arrangements”.
3 The Need for Change
“In 1992 the major Australian business associations argued that Australia’s regulatory system required a major overhaul if the nation was to compete successfully in world markets and attract overseas investment. It suggested that the regulatory system was unnecessarily complex, generated delays, inconsistencies and additional costs for business investment, as well as inhibiting risk-taking and enterprise.”
In order to achieve increased opportunity in outback Australia, where the financial viability is marginal, it will be necessary to address those issues of complexity, delay, inconsistency, cost and risk associated with property management.
Present systems do not meet those standards. The law is overly complex. Unbundled property rights are subject to overlapping and sometimes contradictory laws. There is often significant misinformation in relation to legal rights.
Unbundled property rights have been separated from the land title system through numerous legislative enactments over time. A current trend in the legislation appears to be to, at least in part, reunite those property rights with land by requiring administrative notations on title or specifying that property rights attach to the land and bind successors in title. There is a need to reunite unbundled property rights with title to facilitate a fair treatment of the bush when rights are taken away.
The former Federal government proposed the use of market-based incentives to achieve multiple use opportunities involving ongoing land use and environmental protection.
“Australian Government’s fixation on competition policy as a means of environmental management continues with the announcement of $5 million of State and Federal money to be spent on 10 market-focused natural resource management projects. The projects, the first round of the National Instruments (MBI) Pilots Program, were announced by David Kemp, Federal Minister for environment and Heritage, who said they will “investigate ways to use innovative financial arrangements to encourage better land and water management and reduce salinity in irrigation based agriculture”.
“The growing enthusiasm for market creation schemes seems to be supported by two factors. First, a realisation that governments have limited resources to address environmental problems. Second, they hope that market creation will minimise the social dislocation associated with resolving environmental problems. In particular, market creation may provide new revenue streams for landholders that enable them to both change land use practices and retain a viable business.”
Our ageing population will likely lead to a reduced tax base and an increased healthcare bill. The expendable funds available to government for proper environmental management are therefore likely to reduce.
“Market-based incentives allow an equitable distribution of the burden of protection of the natural environment. If the community, through government, says that a particular piece of land is too valuable for agricultural use, development or purposes other than protection of the natural environment then the burden of the protection should not fall solely on the individual landholder. The community, through government, should provide for the mechanisms to encourage the landowner to manage that land in a way that the community wants.”
Not only is there a need for change but there is a recognition by various levels of government throughout Australia that different mechanisms must be made available to more fairly deal with impacts of environmental protection on farm management.
4 Requirements for Dealing with Unbundled Property Rights
Whenever consideration is given to incentives to equitably adjust rights being taken from landowners the parties considering those opportunities should consider property rights, including unbundled rights, in the context of risk management of their investment in relation to land.
Dr Alan Moran considered the importance of property rights in relation to water and identified factors that were important. He states:-
“Perhaps with these factors in mind, water property rights have formed a major feature of national competition policy. The Agriculture and Resource Management Council of Australia and New Zealand (ARMCANZ) has argued that water entitlements be clearly specified in terms of:
1. rights and conditions of ownership tenure;
2. share of natural resource being allocated (including probability of occurrence);
3. details of agreed standards of any commercial services to be delivered;
4. constraints to and rules on transferability; and
5. constraints to restore use or access.
ARMCAANZ also suggested that an effective market requires rights that are:
6. limited in extent or availability;
7. well specified and understood by the market;
8. exclusive so that benefits and costs associated with the rights are attributed to the right holders;
9. enforceable and enforced by appropriate legal systems; and
lands acquisition act 1998 10. transferable and divisible within defined limitations.”
In a broader context of property rights Lyons, Davies & Cottrell identified 9 objectives of property rights and markets as follows:
“1. To ensure all property rights are clearly defined, secure in law and practice.
2. To support the operation of markets in the various property rights.
3. To ensure that transactions and trading in property rights can be carried out.
4. To provide legally correct composite/integrated information on all property rights that apply to, or affect any area of land.
5. To enable property right to be used as a source of capital/credit and economic development.
6. To support government revenue raising/taxation based on land.
7. To contribute to social stability.
8. To contribute to natural resource and environmental sustainability.
9. To operate effectively and efficiently, with a service philosophy, with public confidence and stringent accountability.”
The report also indicated:
“The major functions that deal with property rights are:-
a policy and legal basis;
the determination of property rights, legal declaration, guidelines;
application processing for dealing, permits/licences etc;
the provision of information;
appeal processes; and the
viable and orderly market trading.”
Recent analyses of market-based incentives are informative in considering how to deal with the bundle of rights that are being detached from property. I have listed some of the critical matters that must be addressed for market-based incentives to apply and these criteria in a large way address the broader concept of risk management for those unbundled property rights.
Murtough, Aretino & Matysek, in their paper, described seven characteristics that they have identified through their studies as being desirable characteristics for creating markets for ecosystem services. Those seven characteristics are repeated below as they will have direct application in relation to providing opportunities for dealing with the bundle of rights that form part of property rights:
“1. Clearly defined Nature and extent of the property right is unambiguous.
2. Verifiable Use of the property right can be measured at reasonable cost.
3. Enforceable Ownership of the property right can be enforced at reasonable cost.
4. Valuable There are parties who are willing to purchase the property right.
5. Transferable Ownership of the property right can be transferred to another party at reasonable cost.
6. Low scientific uncertainty Use of the property right has a clear relationship with ecosystem services.
7. Low sovereign risk Future government decisions are likely to significantly reduce the property right’s value.”
Whilst point 6 has limited application, the remainder of the points are likely to be critical to provide the security for property rights.
Mark Sheahan in his report identified 10 essential elements of a mitigation banking system, a type of market-based incentive. These are:
“1. Legislation and regulation
2. Data inventory, habitat classification, and planning
3. Permitting, and the requirement for mitigation
4. Valuing debits at the impact site
5. Valuing credits at the bank site
6. Long-term land management of the bank site
7. Securing the conservation status of the bank site
8. Developing an agreement between all parties
9. Establishing systems for credit sale
10. Monitoring and compliance.”
Two other factors that need to be specifically considered in the context of market-based incentives are the relationship with “international, national, State, regional and local significance. This raises an issue of nexus in the divisibility of property rights from a given parcel of land. Also there is a need to consider the structure of proper environmental governance and the cost to government.
In addition to looking at those matters that have been considered essential elements of a market-based incentives system it is useful to consider those factors which have caused the failure of market-based incentives systems. Scott, Kaine, Stringer & Anderson identified the following five major issues that caused failure of market-based incentives:
Lack of information
No property rights
These considerations have been tabulated in Appendix 2 and a summary column covering all of the factors that are essential has been created merging the concepts of the various authors who have used different expressions to refer to similar if not the same matters.
Flowing out of that table the following factors have been identified as factors that need to be addressed to enable multiple use opportunities to occur in the most favourable circumstances. Obviously there will be circumstances where some only of the factors have application and equitable adjustment of property rights may occur despite suboptimal circumstances.
Those factors are:
1. Clearly defined nature and extent of the property rights;
2. Ability to deal with the property rights;
3. Market attributes must be clear and certain;
4. Information about the market must be clear and accessible;
5. Government policy must support the market;
6. There must be a low sovereign risk to the value of property rights;
7. There must be ongoing monitoring and compliance checks;
8. Governments factors have to be cost-effective;
9. International, national, State, Territory, regional and local significance must be considered; and
10. Property rights should contribute to social stability.
Each of these factors are considered in the risk management analysis for property rights.
5 Clearly defined nature and extent of the property rights
There are several common themes that have been considered including the requirement to clearly express the rights and conditions, exclusivity of the tenure of the ownership and to ensure the rights and conditions are enforceable at law.
5.1 Clearly Expressed Rights and Conditions
It would be wrong to say that the nature and extent of property rights are clearly expressed as are the conditions which apply.
The majority of the confusion in relation to property rights is caused by the dissection of the unbundled property rights. The rights obligations and restrictions that have by successive regulation been dissected leave professionals dealing with interests in land and lay people wondering what they can and cannot do on their land.
Confusion occurs in relation to the different laws relating to the ownership of and dealing with freehold and leasehold land. The laws lead to confusion and lack of clarity and add little to certainty.
The need for a division between Crown lands and freehold land appears obsolete in this century. A lease of Crown land is subject to terms and conditions that would relate to the beneficial title of the land. There is no reason why a lease with those terms and provisions taken from current legislation could not apply as a lease from the Crown of freehold land.
One difference that has blurred overtime is that leases were historically granted for the purpose of advancing the Australian community. Leases were granted to open up areas and promote the economy of the colony. Today, however, a grant of a lease from the Crown is much more like a commercial transaction with the requirement for the Crown to obtain an appropriate return from its assets. Certainly there will be instances were a Crown lease will be for a public benefit or good. Again there is no reason why the terms and conditions of a lease could not be provided under a freehold title system.
It would be very simple for provisions to deal with the separation of the radical and beneficial title to land so that the radical title is always maintained by the Crown.
Laws relating to freehold title recognise the ability of groups of people to hold land, recognise the ability of corporations to hold land, recognise different ways of holding land and recognise different interests in land.
Unbundled Property Rights
Fundamentally, town planning use rights, rights in relation to wildlife and vegetation, rights in relation to water and rights in relation to cultural heritage need to be clearly expressed and part of the land titling system.
If land cannot be farmed because vegetation cannot be removed then that should be expressed clearly and simply on the title to the land. If water cannot be drawn from a creek running through or along the boundary of land then that should be clearly expressed on the title to the land. If a person cannot knockdown and remove a house from their land because of heritage issues then that should also be clearly expressed upon the title to the land. If an approval has been obtained and it permits an activity that is fundamental to the enjoyment of the land it should be part of the title. These issues go fundamentally to the beneficial title to the land. A purchaser and all other parties that have an interest in the value of the land should have easy access to this information as a matter of course in transactions.
The immediate impact on financiers seeking to finance the purchase of land or fund use opportunities on the land needs no detailed analysis. The financier cannot be assured that they will be able to recoup from the security of the land the value of the advance.
A farmer in deciding whether to acquire a further parcel of land will need to know whether he can clear vegetation on the land, and if so what vegetation, and whether he can draw water to irrigate the land and if so how much and how frequently. Access to water may determine whether annual crops are grown or whether long term crops such as fruit bearing trees are grown. These issues will be fundamental to all parties interested in that transaction and many parties on the periphery of that transaction.
If a farmer has a permit to take wildlife to stop wildlife reducing a crop, for example, galahs eating sunflower seeds and significantly reducing yield, then the permit is a matter that goes to the value of the land.
A developer needs to know what town planning uses are likely to occur on land. The information should include whether the land has relevant infrastructure available to it.
The examples are simple and practical and show why rights opportunities and restrictions should form part of the land titling system.
One of the major restrictions to maintaining property rights evident from an analysis of the legislation in Queensland is the omission of rights obligations and restrictions (unbundled property rights) from the land titling system.
The unbundled property rights relate to land and are not clearly recognised as an interest in land. Many of the approvals, when “final”, should be an interest in land. At best there are examples of a trend, more evident in Queensland, for unbundled property rights obtained through an approvals process to bind successors in title and attach to the land. However, those rights cannot be described as “clearly defined”. Quite the opposite, many of these rights are unknown at the time of transactions being entered into. Many of the restrictions are imposed by regulation subsequent to transactions occurring. The incidence of prosecutions for breaches in relation to rights, obligations or restrictions are increasing as are the penalties as public awareness of the importance of those rights obligations or restrictions increases.
Many of the rights, obligations and restrictions are subject to review and change in accordance with plans, whether planning schemes, water management plans, vegetation management plans, cultural heritage mapping, or other plans. Many of these plans are periodically prepared by government and go through public consultation in which members of the public, including the owner of the land, but not limited to the owner of the land, can make submissions in relation to the impact. The plans once changed may remove “existing rights” or they may maintain existing rights but limit their future modification or expansion and thereby ensure the phasing out over time of the rights.
Some rights may be removed upon conviction for an offence relating to the subject matter of the right, obligation or restriction. Conviction of an offence may lead to the imposition of further conditions.
Approvals under the Commonwealth’s Environment Protection and Biodiversity Conservation Act may be taken away if the circumstances have changed because of further information not known to the decision maker at the time of making a decision.
These rights that have been unbundled from the land titling system lack certainty.
Rights in relation to the ability to sell, mortgage, grant an easement, lease and the like are generally understood in relation to freehold land and leasehold land. The majority of commercial lawyers in Queensland would be involved in transactions of this nature on a daily basis. Those lawyers would understand how interests in land can be held and how they can be dealt with and the nature and extent of those rights are clearly defined.
5.2 Exclusivity of Tenure and Ownership
There are numerous ways in which a person can hold an interest in land including as joint tenants, tenants in common or in trust.
Leasehold lands and freehold lands are typically held by individuals who or corporations which have the ability to enter into transactions relatively simply because their ownership of the interest is exclusive and not to a community at large.
Aboriginal interests in land, reserves and permits such as stock route permits do not provide an exclusivity of tenure and ownership. Those interests which can be dealt with require several parties to all agree a course of action. Those parties may be the various members of the community in relation to an Aboriginal interest in land or members of a community group involved in a trust of a reserve as well as the relevant government agency/agencies administering the reserve. These types of ownership lack one of the features that are considered beneficial for a clearly defined property right.
5.3 Legally Enforceable
Many of the unbundled property rights provide opportunities for a review of decisions in relation to the exercise of a personal right to make an application that may or may not translate to a property right, and the withdrawal of a property right.
An example of a review of the decision in relation to the withdrawal of a property right can be seen in the compensation provisions under the Integrated Planning Act 1997 in Queensland. Those provisions provide for a review of the Council decision in relation to a claim for compensation to the Planning and Environment Court.
Each of the rights of appeal and the criteria of assessment vary between agencies administering different legislation. There is a high degree of variability in relation to the ability to legally enforce unbundled property rights.
There is far greater certainty and capacity to enforce ownership of land title issues through freehold and leasehold interests. One of the major benefits of the Torrens’ land titling system has been the security given to individual’s interests in land. The Torrens’ system has received international recognition.
6 Ability to deal with the property rights
The ability to deal with property rights encompasses numerous factors including rules on dealings including divisibility of rights within defined limitations, reasonable cost, stringent accountability and public knowledge and confidence in the system.
6.1 Freehold and Leasehold Land
These characteristics are epitomised in the freehold and leasehold land transaction systems in Queensland.
The ability to deal with freehold lands is clearly expressed in Queensland. A series of transactions which can occur are listed. Interests in part of a beneficial title to a lot may be created and transferred or dealt with independently of the balance. The land dealing system is commonly used. The majority of commercial lawyers are able to transact a dealing with freehold and leasehold title. The basic conveyance of an interest in freehold title is subject to “do-it-yourself” kits and is not beyond the scope of many individuals. Other transactions will typically require the assistance of a lawyer. The cost of transactions has been greatly reduced in recent years. Members of the public expect and in the vast majority of cases receive what they bargain for in a secure system. There is confidence by members of the public in the security of the system.
6.2 Aboriginal Land
By contrast the communal nature of aboriginal interests in land have frozen in time the ability of Aboriginal communities to obtain economic benefits from their ownership of beneficial title. As previously indicated native title is generally inalienable because there were no concepts of the ability to sell land or an interest in land. Native title rights are protected from debt recovery proceedings and may only be impaired in accordance with the future act regime.
Aboriginal communities cannot use their land as security to obtain funds. They cannot enter into joint-venture agreements with commercial entities providing an interest in land to a joint-venture partner. They are denied the opportunity to risk their asset to advance their community. Significantly, this impediment is likely to mean that opportunities in Aboriginal communities are more likely to be based upon grant/government funded or philanthropic monies as well as “in kind” contribution.
Whilst there are rules on dealing with aboriginal interests in land they are typically restrictions on dealing and do not allow for the divisibility of the rights. There are significant costs in relation to the confirmation of existing rights and whilst there may be stringent accountability public knowledge and confidence in the system varies significantly.
6.3 Unbundled Property Rights
The position with respect to unbundled property rights is severely restricted.
Dealings with unbundled property rights about vegetation are plagued with multiple sets of rules whereby one set of rules may allow for an action to occur whilst another set of rules from a different level of government or within the same level of government may prohibit the same action. Appendix 3 Summary of Vegetation Management Laws in Queensland identifies 19 pieces of legislation each providing separate rules impacting upon the ability to deal with vegetation on a property.
Where the ability to clear vegetation amounts to a right, in other words it is not constrained by any regulation, there is no identification of that fact on the land title. Because of the multiplicity of law there is limited public confidence or knowledge as to the right to clear vegetation. Traditional land dealings such as profit a prendre which allow for registrations of an interest on title such as the right to cut trees from a copes of trees are not commonly used and would not secure a right to harvest in circumstances where another law requires a permit or otherwise prohibits the clearing of the vegetation. The registration of a profit a prendre whilst not common is not overly complex and not overly costly. However, with the increasing legislative regulation and number of plans that can impact upon the ability to deal with vegetation there is little public confidence and little certainty that the registration of those interests will protect the right.
Those rules that relate to the personal right (not a property right) to gain the ability to clear provide variously for records to be kept in relation to those requirements/approvals. Some will not be identifiable from any usual searches dealing with title but others such as an approval or a map of assessable vegetation under the Vegetation Management Act 1999 (Queensland) are shown on title to land. The criteria and scientific evidence behind the assessment of the personal right to seek an approval varies as do the rights in relation to appealing those decisions. There is limited public knowledge and limited confidence in the system.
The ability to deal with native and feral animals is typically constrained by permits in Queensland under the Nature Conservation Act 1992.
The ability to take animals as of right is normally constrained by categories of protected animals. Protected animals typically may not be taken without permit. The Commonwealth Environment Protection and Biodiversity and Conservation Act also constrains the ability to take wildlife that is on the Commonwealth list of protected species.
Whilst permit conditions may relate to specific parcels of land there is nothing in the legislation which suggests the ability to record on title “dealing” with animals. The permits are personal. One of the obvious difficulties in recording that ability on title to land is that many animals have a range which will extend beyond the boundaries of any particular parcel of land. However, this should not be insurmountable. Showing the ability to take animals as part of the beneficial title would be consistent with the High Court’s decision in Yanner v Eaton where rights to take animals were considered part of the beneficial title to land.
Rights in relation to obtaining a permit to take animals, the assessment criteria and the ability to appeal decisions, are varied and generally unknown by members of the public. They are also subject to change with changing legislation and other instruments such as plans given power through legislation.
Permits are generally not transferable consistent with their treatment as a personal right.
Critical habitat is protected for both plant and animal species through various legal mechanisms. The impact of the protection of the critical habitat is to prevent the ability to deal with components of the beneficial title.
Conservation plans under the Nature Conservation Act 1992 may override planning schemes in prohibiting uses of land that were otherwise permissible. Compensation is provided for the injurious affection of the land and gives some security to dealing with land.
This legislation provides opportunities for co-operative management agreements that may give effect to various plans and provide for proper environmental management. In some circumstances those agreements may be given an administrative note on title.
These plans may be able to provide opportunities in some circumstances and in other circumstances will be restricting potential dealings in land.
Even with those limited circumstances where rights are shown on title to land that does not prevent other legislation from the same or other levels of government preventing the clearing from occurring. The right that is given is in relation to a particular piece of legislation and no other.
Existing rights in relation to water in Queensland are rights that either attach to adjoining properties for domestic purposes and stock or relate to activities that occur from time to time such as camping and traveling stock. In relation to those rights there is no ability to deal with them.
In Queensland there are personal rights for individuals to make application to obtain permits or licences to take water. There are criteria that must be applied in assessing those applications to determine whether to grant or refuse an application. The dealings that the legislation permits in relation to those licences are predominantly limited to transferring a licence to a subsequent purchaser of an interest in land, modifying or amending the licence or surrendering it.
Under land and water management plans and resource operations plans in Queensland there is capacity for dealings with unallocated water. Those plans must be adopted and processes followed to allow those transactions to occur.
Because a large number of the changes to water law in Queensland is relatively recent there is a considerable learning curve in relation to how to deal with rights and interests in relation to water. It cannot be said that public knowledge in relation to the process is good at this time and it also cannot be said that there is a clear identification of the rules relating to the dealing with water.
Town Planning Use
Existing use rights are protected in Queensland. Those rights are not personal but remain with the owner of the land from time to time.
Personal rights to make applications and gain approvals can lead to new rights being created in relation to land. Those permits that are issued attach to the land and bind successors in title.
There is limited ability to deal with development rights under planning legislation. Without express statutory provisions some planning schemes have included market-based incentives in their planning schemes to allow dealings with use rights. Certainly without legislative assistance there will be no opportunity to trade market-based incentives from one local government area to another. This is of critical importance to the commercialisation of the protection of environment in outback communities. People visiting those outback communities to, for example, consider the beauty of the natural environment may be accommodated in town centres and provide no return to those with the stewardship of that land. When a development application is made in the town centre for tourist accommodation it would be equitable for the developer of that tourist accommodation to be required to pay towards the environmental services that are being provided by others which enable a return to be gained out of the tourist accommodation.
Typically, there is limited public knowledge about market-based incentives, the rights are perceived as ill-defined because of a lack of direct statutory support and there is little confidence in the ability of the system to deliver on market-based incentives without that statutory support. Despite this, they have been used and the transaction costs in relation to them have been minimal. Ad valorem stamp duty and capital gains tax have been assessed on transferable development rights.
The Queensland Heritage Act applies to those items of Queensland’s cultural heritage that are referred to in the act including both Aboriginal cultural heritage and Western cultural heritage. The legislation substantially places restrictions on the ability to deal with sites where cultural heritage exists. Actions that would cause damage to objects of cultural heritage significance are regulated.
Apart from the exemptions relating to minor works, the exemption in relation to heritage agreements is of relevance. A heritage agreement may gain the owner of a site the ability to deal with that site in accordance with the agreement in a manner that would otherwise be unlawful. This would appear to be the limited extent to which a dealing can occur in relation to a heritage registered site in Queensland.
Without the ability to deal with the beneficial title either in its entirety or segregated the existing land titling system is not delivering the services that both the community and industry are seeking in relation to unbundled property rights.
7 Market Attributes
For the market to work properly there must be an appropriate allocation of the unbundled property rights, there must be a limit in the extent and availability of the right, it must be capable of orderly trading and should contribute to the natural resources and environmental sustainability.
There should be parties who are willing to purchase the property right. This may require the creation of the markets through legislation. If clean water is readily available there can be no market for the purchase of clean water as everyone has it. To create a market to maintain clean water or place a value on clean water legislation needs to identify the circumstances in which water can be taken and regulate the flow of that water. Once regulated, by for example charging for water consumption above a certain quantity, there is an ability to create a market in which unused water supply can be sold to water consumptive users. Legislation can equitably and fairly distribute the unbundled property rights and can manipulate that distribution to facilitate the creation of markets.
The use of the property right should be capable of measurement at a reasonable cost. Using the analogy of the water market there will be no ability to sell unused water if there is no mechanism to calculate the consumption of water to determine what is unused. The calculation forms the basis upon which trading can occur. Systems can be and have been established elsewhere which provide for an appropriate trading of rights to unused water.
There should be a clear relationship between the ecosystem services provided by unbundled property rights to be protected and the use of the property.
8. Information about the market must be clear and accessible
At the National Summit on Improving the Administration of Land and Property Rights and Restrictions held in Brisbane on 16 November 2004 speakers and attendees from banking and finance, insurance, agriculture, land development and government administrators resolved that a communique be drafted and presented prior to the close of the meeting. This occurred and is set out in full at Appendix 4. In brief the communique recognised the need to have rights obligations and restrictions affecting land and property in Australia on title as part of a national titling system. The communique also provided actions to allow the prioritisation and implementation of those suggestions.
If the market is not understood social and economic consequences could be counter-productive. To avoid this occurring there is a need to fully inform those in the market and those considering entering the market about the market. A consequence of the failure to fully inform people is a lack of confidence and the fear of dealing in the market.
There is a great deal of fear in relation to property rights.
Owners fear that government will try to unfairly remove property rights, and where compensation is offered it will not equal the loss of rights.
Industry fears that legislation will prevent particular use opportunities that they are interested in out of the set of unbundled property rights.
Industries like the grazing industry fear over-regulation, impractical operational requirements and loss of economic return.
Aboriginal people fear loss of their traditional rights and culture.
Local government fears loss of autonomy with State government and Commonwealth government intervention, increased demands on its resources without any financial assistance, having to implement initiatives in its planning schemes and face the political consequences and the overriding of its planning scheme.
State government agencies fear the incursion into their domain of responsibility from the Commonwealth.
Conservation groups fear. the rape and pillage of the environment caused by deals and lack of government courage in decision making.
Public Interest Groups fear. loss of enjoyment of their area.
Commonwealth agencies fear the rejection of their overtures to accredit processes.
Delay, excessive bureaucratic requirements, costly studies that are of little effect, excessive application fees, conflict between competing government agencies, poor planning consequences lead to economic loss.
Without concise and accurate information that is easily accessible in relation to property rights parties considering whether to risk their own property, money or “in kind” contribution to achieve a multiple use opportunity will not be able to make a calculated determination. If left to speculate then prudence would suggest that a worst case scenario option must be part of the consideration. That is not conducive to encouraging parties to enter into multiple use opportunities. “Fear” will likely prevail and multiple use opportunities are not likely to occur.
Establishing the markets is not sufficient to their acceptance. It is essential that the potential participants in the market are fully and easily informed of the market.
9 Government policy must support the market
The application of government policy in relation to property rights has had significant influence. Some policy became reflected in changes to existing legislation or the creation of legislation and became law. Other policy was applied without legislative support as though it were law. Some laws were misinterpreted to apply changed government policy. In many instances individual rights are not determined in accordance with the law and many individuals accept for various reasons including lack of resources, like of finances, lack of knowledge and lack of time the decisions of government without challenge. These decisions become entrenched and become “lore”.
For example, in Queensland many farmers considered that a lease from the Crown provided a right for the continuation of a lease upon the expiration of its term. Government policy had generally been to allow for the renewal of a lease upon its expiration. The strength of this presumption extended to valuations in the Land Court.
“The area which will be granted to a grazing selector as a priority right of selection on the expiry of his existing lease rests entirely in the discretion of the Governor in Council.
In Queensland, it has become the practice of the Crown, in the case of these Southwest sheep Holdings not suited for general cultivation, to renew the lease over the whole area if the holding is not regarded as more than a reasonable living area. Thus small leasehold areas have an assured tenure.”
However, the financial institutions when lending in relation to leasehold land clearly recognised the difference between freehold tenure and leasehold tenure.
In north Queensland a large pastoral station that was subject to a long-term lease has not been renewed because of significant environmental values. The owners went to court to try to protect their perceived rights but the court recognised the underlying terms of the lease and the legislation and held that the Crown did not have to renew.
Government policy is needed to embrace the potential for market-based incentives to allow for unbundled property rights to be reflected on title. That policy can then be reflected in legislative amendment.
Without government support many opportunities for multiple use in outback Australia will not eventuate.
10 There must be a low sovereign risk to the value of property rights
Sovereign risk to property rights is reflected in the ability of government to change the mechanisms that regulate in particular the unbundled property rights without due recompense to those owners who have been affected. Compensation is a central factor in sovereign risk as is the rate of change and extent of change.
10.1 Continuous Change
“In Queensland at least 188 separate pieces of legislation that define land related Property Rights or impact on the administration/management while Federal legislation (about another 19 acts) could also have an important impact. There are 24 major pieces of legislation affecting Property Rights in Queensland. However it is in the detail in the other 164 pieces of legislation, the myriad of Regulations under the various Acts, and the range of “Directions” issued by “registering” Authorities and the like, that contain most of the fine details, exceptions et cetera. The current system is enormously complex, is increasing in complexity, and this trend is likely to continue. No one (not even the experts) understands the system(s) completely and can easily identify with any degree of certainty, the Property Rights affecting areas of land. Mr & Mrs Average probably have little idea of the Property Rights that can and do “sit above” their land parcel, control its use, and affect the value and resale.”
There has been recognition in the policy of government at all three levels that the need to regulate to protect aspects of the natural environment, economic well-being of a community and the social well-being of the community. This recognition has been expressed in numerous pieces of legislation which adopts within its objects the principles of ecologically sustainable development.
At Commonwealth level the Environment Protection and Biodiversity Conservation Act 1999 seeking to address matters of national environmental significance is the major plank of reform in relation to environmental protection. At a State level the recent amendments to the Vegetation Management Act 1999 rolling in provisions in relation to the leasehold and freehold land and restricting the ability to clear land is also indicative of this trend.
The inclusion in legislation of a “duty of care” in relation to land ownership is another clear example of this trend.
There has been recognition within government that there is a need for greater efficiency and effectiveness in delivery of outcomes relating to sustainability. An example of this need has been the establishment of the market-based incentives pilot program by the Commonwealth Government seeking to efficiently achieve outcomes for sustainable land practice and environmental benefits through the market rather than command and control regulation.
The spiralling change which affects the bundle of rights available to landowners in relation to their interests in land is likely to continue. Interpretations by courts in relation to particular sections of legislation will lead to an understanding of law as distinct from decisions being guided by “lore”. Legislators will then seek to modify the law to conform with their intent and desire and further changes will occur.
In attempting to achieve multiple use opportunities proponents of those opportunities will be faced with a need to consider not only the existing legislation but future trends. This lack of certainty makes difficult investment of time, effort and resources particularly where the return requires a long lead time.
The role of information technology cannot be underestimated in the explosion of opportunities and change and has been a major driver.
The rate of change and the continuance of change is a serious impediment to long-term investment in multiple use opportunities in outback Australia.
Section 51 of the Commonwealth Constitution requires that land acquisitions by the Commonwealth shall be on “just terms”. Just terms implies for inadequate compensation, recourse to a tribunal or court not related to a party to determine compensation and the opportunity to be heard at the tribunal or court.
This requirement is contained in the Lands Acquisition Act 1989 (Commonwealth).
Whilst there is no constitutional requirement for just taking in Queensland, the Queensland government has enacted the Acquisition of Land Act 1967. This legislation deals with the taking of an interest in land and requires government to provide compensation in respect of that interest.
Compensation is payable in many other limited circumstances in other pieces of legislation. The reference should be made to those individual pieces of legislation in relation to claims in relation to unbundled property rights.
In Queensland the ability to claim compensation for injuries affection as a result of the change to a town planning scheme warrants special mention. Queensland is one of the last states of Australia to provide for compensation in those circumstances. More recently there appears to be a watering down of the ability to make that claim.
By segregating the unbundled property rights from the beneficial title the principal pieces of legislation dealing with just taking interest in land do not cover those unbundled property right interests that are being regulated under the Acquisition of Land Act.
In Queensland the impact of that lack of constitutional protection is evident in the recent changes to vegetation management laws removing the ability of farmers to clear vegetation on their farms.
11 There must be ongoing monitoring and compliance checks
Where property rights are created and the ability to trade is provided so that the government can achieve a more equitable balancing of environmental and social outcomes for communities it is incumbent upon them to ensure that their policies and legislation deliver the outcomes required.
There would be little point in providing a market-based incentive that funds an outback community for it to manage a particularly sensitive habitat in accordance with an appropriate management plan if the monies were not expended in the management of that ecosystem service.
The monitoring of the impacts of market-based incentives on the environmental or social good that they are to achieve is imperative for the ongoing justification of the market.