Laws that interfere with real property rights

20.96  A range of Commonwealth laws may be characterised as interfering with vested property rights—whether or not this interference may be considered justified.

20.97  The Lands Acquisition Act 1989 (Cth) is the key piece of legislation concerning Commonwealth acquisition of land. With some exceptions, the Commonwealth can only acquire an interest in land^[178] in accordance with the procedures outlined in that Act.^[179] The Act provides a detailed process for Commonwealth acquisitions of land^[180] and protections—including compensatory mechanisms—for people whose interests in land are adversely affected by a compulsory acquisition.^[181] The Lands Acquisition Act was largely based on recommendations in the ALRC’s 1977 report, Lands Acquisition and Compensation.^[182] The Act was designed to modernise Australia’s system of compulsory land acquisition and provide procedures to ensure fairness in decision making, including ‘a mechanism for an individual adversely affected by a decision to compulsorily acquire property to require the acquiring authority to justify publicly the need for, and choice of, their property’.^[183] The ALRC received no submissions that this Act is inconsistent with common law rights.

20.98  A number of Commonwealth laws may be seen as interfering with real property rights. These include:

• environmental laws;

• native title laws; and

• criminal laws.

20.99  Some of these laws may interfere with the right to use real property—for example, environmental laws—whereas others may interfere with the right to exclude others from one’s land—for example, some criminal laws.

Environmental laws

20.100       Environmental laws may be understood as those that include provisions intended ‘to protect the environment [including national heritage] and conserve natural resources in the public interest’.^[184] There are approximately 60 Commonwealth environment-related statutes in force.^[185]

20.101       Commonwealth environmental laws may be seen as interfering with real property rights by authorising, for example:

• the compulsory acquisition of property;

• the regulation of land use, development and activities;^[186]

• restrictions on the sale or lease of real property;^[187]

• actions which adversely affect the ‘enjoyment’ (for example, search and enter powers), or value of real property;^[188] and

• restrictions on the assignment/sale of tradeable resource-use property rights.^[189]

20.102       Many environmental planning statutes that may be considered to interfere with property rights are state—not Commonwealth—Acts.^[190] Particular concerns have been expressed about the actions of state governments,^[191] however state legislation is not the concern of this Inquiry.

20.103       While Finlay observed that state laws lie beyond the scope of this Inquiry, she submitted that Commonwealth laws could not be ‘neatly “carve[d] out”’ and considered alone when discussing the protection of property rights in Australia.^[192] First, she noted that the ‘majority’ of ‘environmental laws that directly impact upon property rights are State laws’. This therefore makes it ‘impossible’ to discuss the protection of property rights in Australia in a ‘practical and meaningful way’ without referring to state law. Secondly, she pointed to the increasing use of intergovernmental arrangements, ‘encouraging the States (often through the use of tied funding) to implement policies that impact upon property rights’.^[193] A related factor is the substantial and growing number of laws which are part of a cooperative scheme, of one form or another, between the Commonwealth and the states (or between the states alone). These cooperative schemes provide for a significant level of consistency and intertwining of Commonwealth and state laws.^[194] Further, the Australian Government has committed to delivering a ‘One-Stop Shop’ for environmental approvals, which would mean that state planning systems would be accredited under national environmental law ‘to create a single environmental assessment and approval process for nationally protected matters’.^[195]

20.104       The Australian Human Rights Commission also identified the need to look at environmental issues in an integrated way:

a comprehensive approach is required to fully explore these issues and enable dialogue between all key stakeholders, including governments (federal, state and territory). It is anticipated that the outcomes of this work could then drive significant reform to law and policy.^[196]

20.105       The EDOs submitted that ‘there are currently no Commonwealth environmental laws that unjustifiably interfere with vested property rights’.^[197] Other stakeholders contested this, raising the EPBC Act and the Water Act.

20.106       Most Commonwealth environmental statutes include an express provision precluding the Commonwealth from compulsorily acquiring property without providing compensation on just terms.^[198] While both the EPBC Act and the Water Act contain such provisions,^[199] nonetheless concerns have been expressed that these two statutes may unjustifiably interfere with property rights.

EPBC Act

Key aspects

20.107       The EPBC Act is the central piece of Commonwealth environmental legislation.^[200] It is the ‘primary environmental impact assessment legislation at the national level’.^[201] The objects of the Act include ‘to provide for the protection of the environment, especially those aspects of the environment that are matters of national environmental significance’ and ‘to promote ecologically sustainable development through the conservation and ecologically sustainable use of natural resources’.^[202] The South Australian Ornithological Association said that the Act and similar legislation was enacted ‘to prevent further degeneration of the natural estate and the further extinction of native species’.^[203]

20.108       The EPBC Act affects a landholder by imposing environmental land use restrictions. The Act is concerned with development—it does not interfere with the existing use of land. Section 43B permits a person to take an ‘action’,^[204] without an approval, if that action constitutes a lawful continuation of a use of the land.^[205] Emeritus Professor David Farrier explained:

The continuation of the existing use right is conceded even where it is compromising nature conservation values. There are not even provisions in the legislation which allow existing uses to be terminated on payment of compensation, unless the land itself is compulsorily purchased.^[206]

20.109       The EPBC Act requires approval of the Minister to change the existing use of the land where the proposed action has, or is likely to have, a ‘significant’ impact on a matter of environmental significance. The concept of ‘significant impact’ is ‘central’ to the Act.^[207]

20.110       For example, a person is prohibited from taking an ‘action’ that has or will have, or is likely to have a significant impact on

• the world heritage values of a declared ‘World Heritage property’—s 12(1);

• the ecological character of a ‘declared Ramsar wetland’—s 16(1);

• a ‘listed threatened species’ that is included in the extinct in the wild, critically endangered, endangered or vulnerable categories—s 18(1)–(4);

• a ‘listed threatened ecological community’ included in the critically endangered or endangered categories—s 18(5)–(6); and

• a ‘listed migratory species’—s 20(1).

20.111       Contraventions of these laws attract civil penalties.

20.112       A person is prohibited from taking an ‘action’ that results or will result in, or is likely to have a significant impact on

• the world heritage values of a declared ‘World Heritage property’—s 15A(1)–(2);

• the ecological character of a ‘declared Ramsar wetland’—s 17B(1)–(2);

• a ‘listed threatened species or a listed threatened ecological community’—s 18A(1)–(2); and

• a ‘listed migratory species’—s 20A(1)–(2).

20.113       Contravention of any of these laws is an offence.

20.114       A person is prohibited from taking an ‘action’ that involves ‘coal seam gas development’ or ‘large coal mining development’ and the action has or will have, or is likely to have a significant impact on a ‘water resource’.^[208]

20.115       In Greentree v Minister for the Environment and Heritage, a farmer was prosecuted for breaching the EPBC Act by clearing, ploughing and sowing the land. The Full Court of the Federal Court upheld the Federal Court’s decision that Greentree had taken an action which had a significant impact on the ecological character of a declared Ramsar wetland, contrary to s 16(1) of the EPBC Act.^[209] The site had been degraded prior to the land clearing, but the Federal Court had found that despite this, there had been native trees and wetland plants on the site, that the site retained important attributes (for example, dead trees and fallen logs had provided ‘a habitat critical to some species of birds’) and that the site ‘had the ability to regenerate relatively quickly’.^[210] The clearing, ploughing and sowing had ‘virtually sterilised’ the site as a wetland.^[211]

20.116       Viewing this as a ‘flagrant’ breach of the EPBC Act, the EDOs submitted that the case ‘highlights both the restricted scope of the Act and the importance of enforcement under environmental legislation’.^[212]

20.117       Justification for the prohibition of these actions—interference with vested property rights—draws primarily on the requirement for an action to have, or be likely to have, a ‘significant’ impact. The Explanatory Memorandum implicitly suggests that this requirement strikes a balance between a landholder’s rights and the public interest. For example, in relation to s 12, the Explanatory Memorandum states that

Not all actions impacting on a world heritage property will have, or are likely to have, a significant impact on the world heritage values of that property. This clause therefore does not regulate all actions affecting a world heritage property.^[213]

20.118       Bates has commented that the question of significance is ‘for subjective determination by the minister’.^[214] Indeed, the EPBC Act places the Environment Minister ‘at the centre of decision-making for matters of national environmental significance’.^[215] The Department of the Environment explained:

There are a variety of assessment processes available under the EPBC Act, depending on the nature and complexity of the action under assessment. At the end of the assessment process, the Minister may choose to reject any action that would have unacceptable impacts and may also attach approval conditions, to avoid, mitigate or offset impacts.^[216]

20.119       While pt 17 div 16 of the EPBC Act provides for judicial review of administrative decisions, the statutory scheme may raise some concerns with respect to due process requirements.^[217]

20.120       The EPBC Act does interfere with a landholder’s right to use land—but only to a limited extent. This Inquiry heard conflicting claims about whether the EPBC Act interferes with a farmer’s ability to clear land.

Concerns about interferences and counter-arguments

20.121       The Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) considered the provisions of the Environment Protection and Biodiversity Conservation Bill 1998 (Cth) but did not express concerns about any impact on property rights.^[218] Nor did it express concerns in this regard about subsequent Bills that sought to amend the EPBC Act by imposing strict liability on certain elements of the offences in ss 15A, 17B, 18A and 20A of the EPBC Act (outlined above);^[219] and which established a new matter of national environmental significance in relation to the significant impacts or likely significant impacts of coal seam gas development and large coal mining development on a water resource (the so-called ‘water trigger’).^[220]

20.122       Since the commencement of the EPBC Act in 2000, there have been a number of reviews of the Act and natural resource management more broadly,^[221] including an independent review of the Act^[222] undertaken pursuant to s 522A.^[223] Two of them are of particular relevance to the matters considered in this Inquiry.^[224]

20.123       In March 2010, the NFF submitted to a Senate Committee Inquiry into native vegetation laws that where the operation of the EPBC Act results in landholders’ property rights being reduced, the Act should require landholders to be compensated.^[225] The Committee did not make a specific recommendation in this regard, but commented:

While the committee does not believe that it is always inappropriate for government to regulate the use or utilisation of private landholdings, there comes a point at which regulation of land may be so comprehensive as to render it of a substantially lower economic value to the landowner. In such circumstances consideration should be given to compensation being provided to the landowner in recognition of this.^[226]

20.124       In this ALRC Inquiry, the NFF again expressed the view that the degree of interference by the EPBC Act with property rightsmay be unjustified.^[227] The NFF’s main argument was that the Act ‘is having a significant financial impact on farmers as a consequence of the limitations it places on property development and land use change’.^[228] It suggested that the land use restrictions were resulting in adverse economic and environmental outcomes by preventing the effective introduction of modern agricultural technology. For example, it suggested that prohibitions on cutting down isolated paddock trees frustrates precision cropping practices, which may: reduce chemical and fertiliser use; prevent run-off into waterways; lower fuel consumption; and mitigate soil loss. In its view, such restrictions ‘substantially limit the continued profitability and viability of farms’.^[229] The NFF submitted that

the direct impact on property values, and uncertainties in the complex operational aspects of the EPBC Act … mean that farmers are denied the ability to plan in the longer term and subsequently derive optimum value from their land assets. Such impacts are unjustified and disproportionate in comparison to the environmental benefit that flows to the landholder.^[230]

20.125       It noted that the compensation provision in s 519 was limited to situations where there had been an ‘acquisition’ and called for legislation to be introduced to provide compensation for a ‘taking’—‘in the sense of a fundamental alteration or interference with the property rights of a landholder’. It submitted that the Senate Committee’s comments in the inquiry into native vegetation laws ‘represent an acknowledgment that compensation may be appropriate in circumstances that do not amount to a direct acquisition of property within the meaning of section 51(xxxi)’. It expressed the view that ‘a “significant impact” does not justify landholders carrying the bulk of the financial burden that necessarily arises in the pursuit of achieving the goals of these measures, which are primarily aimed at protecting a broader public good’.^[231]

20.126       Dr Noeleen McNamara expressed the view that not all environmental constraints imposed by the EPBC Act are equal, considering ‘the restriction or prohibition of land clearing consequent upon the protection of endangered species and ecological communities’ to be the ‘most egregious’ in terms of the economic cost imposed on the landholder.^[232]

20.127       By contrast, the EDOs submitted that the EPBC Act ‘does not unduly encroach on private property rights’. The EDOs and Farrier considered that the EPBC Act would rarely interfere with a farmer’s ability to clear land.^[233] This is because state and territory legislation regulates land clearing—other than in those ‘very rare’ instances where the clearing is likely to have a significant impact on a matter of national environmental significance.^[234] The EDOs considered the ‘significant impact’ requirement to be a ‘high’ threshold and observed that the ‘vast majority’ of development proposals would be assessed at a local or state level only. The EDOs maintained that private landholders wanting to develop their farm or residential lot are ‘largely unaffected’ by the EPBC Act. The EDOs explained that, for the most part, the EPBC Act ‘only regulates high-impact developments (such as mining operations or large infrastructure projects)’ and ‘the majority of these actions are undertaken by large companies on land that has been purchased for the purposes of commercial exploitation’.^[235]

20.128       Both stakeholders observed that the Minister may approve an action which is likely to have a significant impact on a matter of national environmental significance—and the EDOs noted that in ‘almost all cases’ the Minister does.^[236] Farrier noted that when the Minister decides whether or not to approve the taking of the action, and what conditions to attach to an approval, the Minister is required to consider ‘economic and social matters’.^[237] He also submitted that ‘approvals are rarely denied’.^[238] Figures released by the Department of the Environment support these statements. Since 2000, when the EPBC Act commenced, 799 actions have been approved and only 11 have been refused.^[239] The EDOs concluded that

the Act is not prohibitive or particularly restrictive in the way it is applied. Rather—and like most environmental legislation in Australia—it is based on a system of permits and approvals which authorise and mitigate activities with adverse environmental impacts.^[240]

20.129       Further, the EDOs submitted that the EPBC Act confers ‘significant’ benefits on landholders, giving two examples. First, they referred to the fact that pursuant to the Act, the Minister may impose further conditions on mining developments, even though they have already been approved under the relevant state or territory laws. They gave the example of the Gloucester Coal Seam Methane Gas Project and remarked that conditions imposed under the EPBC Act framework ‘may reduce impacts on neighbouring properties or the environment in general, particularly in relation to water resources’.^[241]

20.130       Secondly, the EDOs referred to the addition of the ‘water trigger’ to the matters of national environmental significance. The development of coal seam gas resources in NSW and Queensland has been contentious. Those opposed to coal seam gas development have expressed concerns about conflicts with land use and the impact on the environment (particularly concerns about water resources such as aquifer drawdown and possible contamination).^[242] Concerns have also been expressed about the impacts on water resources from large coal mining development.^[243] In the second reading speech for the relevant Bill to amend the EPBC Act, the then Minister stated

people quite reasonably expect the minister for the environment and water to take into account, by law, the impacts of coal seam gas and large coal mining on water resources. They want to know what I am considering: if there is an irreversible depletion and contamination of our surface and groundwater resources; the impacts on the way critical water systems operate; and the related effects on our ecosystems.^[244]

20.131       The addition of the ‘water trigger’ to the EPBC Act was welcomed by some agricultural representative bodies and by environmental groups.^[245] The EDOs submitted that the EPBC Act was amended to protect ‘a resource used by private landholders, in the knowledge that natural resources are interconnected and their value is shared’.^[246]

Redressing the perceived interference with property rights

20.132       To redress the perceived impacts of environmental legislation, the NFF called for the introduction of legislation to compensate for a ‘taking’—an interference that falls short of an ‘acquisition’. Finlay supported such calls, arguing that individual landholders should be compensated ‘when they are required to “sterilize” their land for environmental purposes’.^[247] However, other stakeholders and commentators did not consider this to be a necessary or viable option. The EDOs reiterated its view that ‘there is little evidence to suggest that the EPBC Act constitutes an undue burden on private landholders’.^[248] Farrier submitted that it

would be a massive departure from existing understandings to say that government cannot control the development of land without compensating the landowner: that there is some kind of right to development for which compensation should be paid if it is removed. This would have significant implications in an urban context.^[249]

20.133       The Australian Property Institute similarly considered that the distinction between an acquisition of property attracting compensation and regulatory activity— such as land use zoning—not attracting compensation to be ‘an established feature of Australian real property’.^[250]

20.134       McNamara considered it unlikely that the Parliament would amend the EPBC Act to provide a compensatory mechanism that could result in large amounts being paid to individual landholders. However, she was of the opinion that other mechanisms—an economic ‘toolkit’—could be used instead:

My suggestion is that the Act or Regulations could incorporate a rebate and subsidy whereby a proprietor affected by EPBC designation would qualify for one or all of the following economic adjustments:

1.        a rebate on local government rates, which could be administered through the State departments of local government.

2.        a rebate, or indeed, abolition, of any land tax liability administered through state treasuries.

3.        a subsidy to enable the purchase of appropriate herbicides and pesticides, administered through the relevant local government.

4.        a subsidy to enable the land owner to institute a program of culling feral pests on the land.

5.        an environmental rebate against the landholder’s income tax.

6.        an interest rate subsidy for Commonwealth development assistance.^[251]

20.135       The Department of the Environment explained that, if it is not possible to avoid impacting property rights, the Australian Government’s preferred approach is to attempt to mitigate the impact by way of an ‘offset’.

Environmental offsets are measures that provide compensation for the residual adverse impacts of an action on the environment, once all reasonable avoidance and mitigation measures have been applied. For example, where the habitat of a threatened species is to be cleared as a result of a proposed action, an appropriate offset could include protecting an equivalent piece of habitat elsewhere, or alternative measures such as revegetation, weed management or feral animal control.

… Using the [EPBC Act environmental offsets] policy, offsets are negotiated with project proponents and then built into the conditions of approval. This gives landowners, developers and government a degree of flexibility in managing impacts identified during the assessment process.^[252]

20.136       Farrier submitted that ‘landowners significantly affected by conservation legislation can frequently take advantage of rural adjustment programmes which provide funding to allow them to exit their industry’, citing the facts in Spencer.^[253] He further commented:

Apart from this, the focus of the current debate in Australia about conservation management on private land has changed radically in recent years and is still in the process of evolving. Funding transfers by government to rural landowners are now increasingly framed as payments for the provision of environmental services not as compensation for lost expectations. This usually involves payments for active management by landowners to advance biodiversity conservation objectives.^[254]

20.137       Such ‘stewardship payments’ send a positive message to landholders, that ‘they have a vital role to play, a role which the community regards as being sufficiently important that it is prepared to pay for it’.^[255]

20.138       The next scheduled independent review of the EPBC Act is to be completed by 2019. The Department of the Environment submitted that that review ‘may provide a suitable opportunity for more detailed consideration of the EPBC Act’s interaction with property rights’.^[256] The ALRC considers that the next review could reassess whether interferences with property rights are proportionate and could explore a range of compensatory mechanisms. This review may also afford an opportunity for consideration of the interrelationship of Commonwealth and state laws, as this ALRC Inquiry heard that Commonwealth and state environmental laws should be considered in an integrated way.^[257] Any review of the EPBC Act could also consider the application of strict and absolute liability in environmental offences.^[258]

Water Act 2007

Key aspects

20.139       Chapter 18 provides background on the legal nature of water rights, including reference to the common law recognition of riparian and groundwater rights and to state and territory legislation which has long provided for water resource management by government and replaced common law rights. While in many cases water rights have been uncoupled from land, they are discussed in this chapter, rather than Chapter 19, because many view rights to water in a non-technical way, as intrinsically related to real property, as it was reflected in the common law.

20.140       The Water Act was informed by, and builds upon, key aspects of the National Water Initiative (NWI),^[259] as well as the Australian Government’s 2007 policy, A National Plan for Water Security.^[260] It is also supported by two other intergovernmental agreements.^[261] The NWI sought to establish clearly defined and tradeable statutory rights in water access entitlements,^[262] thereby facilitating water users with increased security of access to water resources.^[263] The 2007 policy sought to address the ‘over-allocation’ of water in the Murray-Darling Basin by state and territory governments, where ‘more entitlements to water’ had been issued ‘than can be supplied on a sustainable basis’.^[264] The policy sought to reduce the use of water by reducing the allocation and improving the efficiency of the use by funding programs to invest in irrigation infrastructure.^[265]

20.141       The development of the Murray-Darling Basin Plan (Basin Plan) has been described as the ‘central concept’ of the Water Act.^[266] Section 22 of the Water Act outlines mandatory content to be included in the Basin Plan, including the maximum long-term annual average quantities of water that can be taken, on a sustainable basis, from the Basin water resources as a whole and from the water resources of each of the water resource plan areas.^[267] These averages are referred to as sustainable diversion limits (SDLs).^[268] In effect, SDLs limit water resources that can be extracted from the Murray-Darling Basin.^[269] The intention was ‘to ensure that water is taken from Basin water resources on an environmentally sustainable basis rather than based on historical levels of surface water use’.^[270] SDLs will be ‘implemented’ under Basin State legislation.^[271]

20.142       It was expected that the Basin Plan would be in place by 2009.^[272] However, extensive community discussion and debate, including about the SDLs,^[273] led to a later commencement date: 24 November 2012.^[274] The Basin Plan will not be fully implemented until 1 July 2019 when the SDLs take effect.^[275] It is expected that Basin State water resource plans, which give effect to the SDLs, will have been accredited under the Water Act by 1 July 2019. Until then, Basin State water resource plans continue to determine diversion limits.

20.143       The impact of the diversion limits on the individual holders of water access entitlements, such as farmers, is that the amount of water that may be taken may be reduced through the limiting of the allocation made under state and territory plans—once the SDLs come into effect. This involves a risk to individual rights holders: ‘they may simply have less water to use or trade’.^[276]

20.144       However, the Commonwealth has committed to ‘bridge the gap’ between the ‘baseline diversion limits’^[277] and the SDLs.^[278] The Department of Agriculture and Water Resources, which has responsibility for the Water Act, explained:

The purpose of Commonwealth policy is to ensure that there is no effect on the reliability and hence value of any water access entitlements and rights as the result of the Basin Plan. Water recovery programs are undertaken by agreement with willing partners who agree to undertake irrigation infrastructure improvements or to sell entitlements to the Commonwealth.^[279]

20.145       The value of water access entitlements was therefore to be maintained by virtue of the scheme’s effect on the reliability of water access. This is to be achieved through Commonwealth support for improved efficiency in water use and also increasing the environmental pool of water, through consensual purchase of water access entitlements from willing sellers and investment in water-saving irrigation infrastructure. Infrastructure investment is prioritised over buying water access entitlements, and water purchases are capped at 1,500 gigalitres.^[280]

20.146       Notwithstanding that the Commonwealth has committed to achieve the target SDLs in these two ways, s 77 sets out the circumstances where a water entitlement holder may claim a payment from the Commonwealth for a reduction in the diversion limit. Further, the Basin Plan contains ‘additional protective provisions’, known as ‘reasonable excuse provisions’, in the event that a Basin State does not comply with the SDL as a result of circumstances beyond its control.^[281] The Department of Agriculture and Water Resources explained that the effect of the reasonable excuse provisions is that ‘all the water recovery risk associated with meeting the SDLs sits with the Commonwealth’.^[282]

20.147       The Water Act also established the Commonwealth Environmental Water Holder (CEWH) to manage Commonwealth-held environmental water.^[283] There are three ways that the Commonwealth can use this environmental water:

• delivering water to a river or wetland to meet an indentified environmental demand

• leaving water in storage and carrying it over for use in the next water year (referred to as ‘carryover’)

• trading water, that is, selling water and using the proceeds to buy water in another catchment or in a future year.^[284]

Concerns about interferences and counter-arguments

20.148       The Scrutiny of Bills Committee expressed some concerns about the impact on property rights when considering the provisions of the Water Act. Specifically, it expressed concern about provisions relating to entry to premises, without warrant, as it considered that they may trespass unduly on personal rights and liberties.^[285]

20.149       In this Inquiry, the NFF had a different complaint. It submitted that the Water Act has the potential to cause unjustified interferences with property rights. Its two particular concerns were first, that the Act, particularly the Basin Plan, has the potential to erode farmers’ water rights and entitlements without full compensation; and, secondly, that the Basin Plan’s Constraints Management Strategycould potentially result in the flooding of private land.^[286]

20.150       With respect to the first issue, the NFF expressed concern that Commonwealth laws ‘fail to fully ensure that full compensation provisions are in place for any diminution in water access’. It submitted that where such action undertaken by government ‘results in diminution of entitlement reliability, water access entitlement holders should be fully compensable at the market rate’. It called for the Commonwealth to provide just compensation ‘where States fail to do so’.^[287]

20.151       The NFF referred to the litigation in Lee v Commonwealth.^[288] Each landowner in this litigation—Lee and Gropler—operated an irrigated horticultural farm that draws water from the Murray River. These landowners argued that the Water Act had effected an acquisition of property otherwise than on just terms and claimed compensation under s 254 of the Water Act—the statutory just terms provision in that Act.^[289] The Federal Court rejected the claim,^[290] the Full Federal Court dismissed the appeal,^[291] and the application for special leave to the High Court was refused.^[292] The NFF expressed disappointment at the outcome in this litigation, preferring the approach taken by Heydon J, in dissent, in the ICM Case.^[293]

20.152       Before the Federal Court, Lee had argued that, as a result of the CEWH conserving water for environmental use, his entitlement to carryover water—that is, water that could be carried over from one year to the next pursuant to state law—would be reduced and consequently the value of his water entitlements had been reduced.^[294] The Court found that, even if there were rights taken from Lee, there was ‘no acquisition of property from him by any other person’, observing that s 254 is ‘directed to acquisition, not deprivation’.^[295] The Federal Court considered the case in respect of s 254 to be analogous to that in the ICM Case, rather than that in Newcrest.^[296]

20.153       In the ICM Case, French CJ, Gummow and Crennan JJ said:

To acquire the substance of proprietary interests in the mining tenements considered in [Newcrest] is one thing, to cancel licences to extract groundwater is another. The mining tenements were interests carved out of the radical title of the Commonwealth to the land in question, and the radical title was augmented by acquisition of the minerals released from the rights of another party to mine them. As Brennan CJ later explained, the property of the Commonwealth had been enhanced because it was no longer liable to suffer the extraction of minerals from its land in exercise of the rights conferred by the mining tenements held by Newcrest.^[297]

20.154       The NFF submitted that Heydon J’s approach in the ICM Case ‘indicates that there is some support for the proposition that Commonwealth or State Governments may obtain an advantage within the meaning of s 51(xxxi) in some circumstances where water rights are removed for environmental purposes’.^[298] When considering whether there had been a contingent increase in the capacity of NSW to take or grant rights to water, Heydon J stated that the Commonwealth’s arguments assumed that ‘if groundwater resources are to be employed sustainably, the allocations of 2008 will leave no surplus water available to New South Wales or anyone but the aquifer access licensees’.^[299] However,

to the extent that [the Commonwealth’s assumption] turns out to be pessimistic, New South Wales will have gained something it did not have before 2008—a capacity to take more water itself or to issue more rights to others without damaging the goal of sustainability. This capacity, if it turns out that it has been gained, will be a benefit or advantage which New South Wales has acquired within the meaning of s 51(xxxi). And the possibility that that capacity will be gained is a presently existing, direct and identifiable benefit or advantage accruing to New South Wales as a result of the extinguishment of the bore licensee’s rights, even though it may not be proprietary in a conventional sense: it is thus an acquisition of property by New South Wales.^[300]

20.155       The Department of Agriculture and Water Resources stated that claims that the Basin Plan could lead to water rights being eroded without compensation were ‘incorrect’.^[301] Similarly, the EDOs expressed the view that the NFF’s concern about the erosion of rights is not reflective of the statutory scheme.^[302] Both stakeholders referred to a number of the same features of the Water Act.

20.156       First, s 255 of Water Act does not permit the compulsory acquisition of a water access right or an interest in a water access right.^[303] The EDOs noted that farmers who sell their entitlements to the CEWH do so ‘voluntarily’ and presumably ‘following full consideration of the advantages and disadvantages of doing so’.^[304]

20.157       Second, both stakeholders submitted that the Water Act enhances the value of water rights and ensures that water rights cannot be eroded without compensation. The EDOs observed that the ‘decision to unbundle water entitlements from land has created an entirely new asset which has in turn generated additional wealth for many landholders’.^[305] The Department specifically mentioned pt 4 of the Act which concerns Basin water charge and water market rules and chapter 12 of the Basin Plan which outlines trading rules. It submitted that ‘[t]hese arrangements help to enhance the security and value of entitlements’.^[306]

20.158       Third, both stakeholders referred to div 4 of pt 2 of the Act which ‘provides that water access entitlement holders may be eligible for financial payments from the Commonwealth if their water allocations are reduced in certain circumstances’. The EDOs submitted that

the Water Act provides for entitlement holders to be compensated in certain circumstances where allocations are reduced due to the operation of the Basin Plan. These provisions are to be considered in tandem with State laws, which also enable entitlement holders to be compensated (subject to meeting certain criteria) for reductions in allocations.^[307]

20.159       The Department also referred to s 77, noting that it ‘provides an important backstop to the bridging the gap commitment and reasonable excuse provisions by providing that the Commonwealth will make payments to any qualifying water access holders’.^[308] The EDOs additionally submitted that, as water allocations are not fixed, it was ‘impossible’ to argue that increasing the pool of environmental water has a greater detrimental impact on allocations and entitlements than factors such as rainfall, the amount of water in storage, and state allocation policies.^[309]

20.160       Both stakeholders also referred to the Water Amendment Act 2015 (Cth), which limits the volume of water that can be bought from water access entitlement holders by the CEWH to 1,500 gigalitres per year.^[310] The Explanatory Memorandum states that the Bill provides ‘increased assurance to rural and irrigation communities regarding the implementation of the Basin Plan and the commitment to minimise the potential socio-economic impacts of Commonwealth environmental water purchases’.^[311] The EDOs have criticised this legislative change, viewing the purchase of entitlements as ‘the principal—and most effective—means of returning water to the environment’. In its view, this amending Act is ‘underpinned by the assumption that the (entirely voluntary) sale of entitlements to the CEWH has a negative impact on Basin communities’.^[312]

20.161       These two stakeholders viewed the situation differently from the NFF. In sum, the EDOs submitted that there has been ‘a strong desire to protect private interests to the greatest extent possible’ and in its view socio-economic considerations have driven the development and implementation of the Basin Plan and the interpretation given to the Act.^[313] It expressed the opinion that this approach has compromised environmental outcomes.^[314] The Department concluded that the Water Act ‘has had the effect of enhancing the security and value of statutory water entitlements in the Murray-Darling Basin as established under state and territory law’.^[315]

20.162       The NFF argues that a ‘diminution’ of water access entitlements, unaccompanied by compensation ‘at market rates’, is an unjustifiable interference with property rights. However, the judgments in the Lee litigation and information provided by stakeholders—including the Department responsible for the administration of the Water Act—suggest that any diminution of the consumptive pool caused by the Commonwealth under the Water Act will be by consensual purchase of water entitlements and from water savings associated with investments in more efficient infrastructure. Such measures may be seen as addressing any interference with property rights.

20.163       The NFF were also concerned by the potential for land to be flooded pursuant to the Constraints Management Strategy (CMS).^[316] The CMS was finalised by the Murray-Darling Basin Authority in 2013. ‘Constraints’ are ‘rules and structures that influence the volume and timing of regulated water delivery’.^[317] The CMS is concerned with ‘relaxing’ some ‘constraints’^[318]—for example, releasing water that may flood land.

20.164       The NFF called for the ALRC

to explicitly explore the issue that is likely to arise under the Government’s constraint management strategy—whereby private land is deliberately flooded in order to deliver environmental water held by the Commonwealth Environmental Water Holder. The CMS Annual Progress report itself highlights our concerns. As stated in the report ‘there are some hotspots where access, crops, livestock, sheds and pumps can be affected’—ie where private property will be flooded.^[319]

20.165       The NFF expressed concern that the Water Act and the Basin Plan ‘do not seem to explicitly protect rights’ in the case of possible deliberate flooding.^[320] The CMS Annual Progress Report, referred to above, notes that ‘[d]elivering higher flows would in many cases cause some negative effects for landholders’ but that these could be mitigated.^[321] One of the mitigation options identified, and referred to by the NFF in its submission, is ‘[n]egotiated agreements with landholders to create easements that enable regulated water to access the privately owned parts of the floodplain’.^[322]

20.166       The Department submitted that concerns about the CMS permitting deliberate flooding of private land ‘represent a misunderstanding of how the CMS framework will be implemented’. It explained:

the CEWH has said that it has not and will not place water orders that would result in flooding of private land without the consent of the landowner and in any case the CEWH can only place orders. Decisions on the volume of water released from storages are made by the state government agency responsible for managing that storage.^[323]

20.167       The EDOs referred to s 110(2) of the Water Act, which concerns application of state laws to the CEWH and specifically provides that s 110 does not authorise the environmental watering of land without the land owner’s consent.^[324] It also referred to the CEWH’s website which states that the CEWH seeks to obtain consent by negotiation if potentially unacceptable impacts on private property are identified. The website notes that ‘[i]n many situations landholders support watering events because the outcomes are mutually beneficial, such as by creating environmental benefits while also supporting the productivity of floodplain pastures’.^[325]

20.168       The ALRC is of the view that the operation of the Water Act does not appear to amount to an unjustifiable interference with property rights in this respect.

Redressing the perceived interference with property rights

20.169       As explained in Chapter 18, the common law regime of water rights has been replaced in Australia by statutory water access licences or rights. The current scheme as a whole has an impact—but one that is being managed.

20.170       A number of stakeholders considered that the Water Act does not need to be reviewed to ensure that it does not unjustifiably interfere with rights pertaining to real property.^[326] An independent review of the Water Act was completed in late 2014,^[327] pursuant to s 253. This review included significant consultation with stakeholders, including all states and territories, and ‘addressed impacts on private property and entitlement holders’.^[328] The Australian Government accepted all recommendations made in this review. On 3 December 2015, a Bill was introduced to Parliament to amend the Water Act to implement the Government’s response to the recommendations.^[329]

20.171       The EDOs submitted that an additional review is ‘unnecessary as it would duplicate existing statutory and non-statutory review processes which tend to emphasise socio-economic assessment’.^[330] The Department emphasised the need for stakeholders to have stability and certainty:

The Basin Plan is currently being implemented in anticipation of the SDLs taking effect in 2019. During this time it is vital for the Murray-Darling Basin’s communities and industries that there is certainty as to the function and effects of the Water Act and Basin Plan.^[331]

20.172       The independent review had heard a similar appeal, noting that some stakeholders had stated that, ‘after such a long period of significant policy change, communities and businesses need stability and certainty, and consider that effort should now be directed to implementing agreed reforms’.^[332]

20.173       The ALRC dos not suggest a further review be conducted at this time. However, the ALRC notes that the Water Act does not provide for periodic review, as is the case with the EPBC Act. It may be appropriate for the Water Act to be reviewed periodically.^[333]

20.174       The ALRC also notes that the terminology accompanying the scheme is new and some apprehensions about the scheme may reflect difficulties in understanding the full effect of the scheme. A clear explanation of the new terms may assist stakeholders to appreciate the positive changes that are intended by the scheme.

Native title laws

20.175       As discussed in Chapter 18, native title is not a common law tenure but rather has its source in the traditional laws and customs of the relevant Aboriginal and Torres Strait Islander peoples. The case of Mabo v Queensland [No 2] is significant because it was the first time that native title was recognised under common law in Australia.^[334] The content of native title rights and interests is defined by traditional laws and customs. This means that native title rights and interests ‘may not, and often will not, correspond with rights and interests in land familiar to the Anglo-Australian property lawyer’.^[335] It also means that, as Gummow J noted in Wik Peoples v Queensland, the ‘content of native title, its nature and incidents, will vary from one case to another’.^[336]

20.176       The Native Title Act 1993 (Cth) (Native Title Act) established a regime to facilitate the common law’s recognition of native title by providing a claims process for the determination of native title. As the ALRC has previously observed, the Act ‘provides the framework in which the facts in the other normative system—Aboriginal and Torres Strait Islander law and custom—must be proved’.^[337] The Act does not create new rights and interests in land. Instead,

the native title rights and interests to which the Native Title Act refers are rights and interests finding their origin in pre-sovereignty law and custom, not rights or interests which are a creature of that Act.^[338]

20.177       As native title concerns rights in relation to land and waters, it is considered here. In this Inquiry, the ALRC received three submissions discussing native title in a broad sense.^[339]

20.178       For native title rights and interests to be recognised by Australian law, the Aboriginal and Torres Strait Islander peoples’ rights and interests must be possessed under laws and customs with origins in the period prior to the Crown’s assertion of sovereignty.^[340] Between settlement and the decision in Mabo [No 2] there was much disruption of the relationship that Aboriginal and Torres Strait Islander peoples had with their traditional lands and waters. As a result of this disruption, for many Aboriginal and Torres Strait Islander peoples, providing evidence of continuity with pre-sovereign rights and interests is very difficult.^[341] The ALRC considered some of these issues in its 2015 report, Connection to Country: Review of the Native Title Act 1993 (Cth). This report made 30 recommendations, including about how the existence of native title rights and interests is established.^[342]

20.179       In addition to difficulties associated with proof, native title may be ‘extinguished’ by acts of the executive pursuant to legislative authority, or grants of rights to third parties, that are inconsistent with the claimed native title rights and interests.^[343] The grant of freehold title has been held to be ‘wholly inconsistent with the existence thereafter of any right of native title’.^[344]

20.180       The Native Title Act provides a statutory regime for managing issues of extinguishment.^[345] Extinguishment of native title constitutes the highest example of interference with Aboriginal and Torres Strait Islander peoples’ traditional rights and interests in land and waters. As noted in Chapter 18, the Crown’s power to extinguish native title is not in question (as is also the case with respect to titles resting in Crown grants).

20.181       Given the limitations of native title under the Native Title Act, other options to facilitate ‘land justice’ and economic development for Aboriginal and Torres Strait Islander peoples have been suggested and, in some cases, developed. For example, progress is being made via settlements that encompass land, economic development and compensation for dispossession.^[346] In 2015, the Australian Human Rights Commission has had a significant role in discussions about the economic development of land held by Aboriginal and Torres Strait Islander peoples.^[347]

Criminal laws

20.182       A number of Commonwealth criminal law provisions may interfere with property rights. Some are considered in Chapter 19, dealing with personal property.

20.183       A small number of criminal offences may be characterised as interfering with a person’s interests in real property. For example:

• Crimes Act 1914 (Cth) s 3ZB empowers a police constable to enter premises to arrest an offender if the constable has a warrant for that person’s arrest and has a reasonable belief that the person is on the premises; and

• Criminal Code (Cth) s 105.22 allows the police to enter premises if a preventative detention order is in force against a person and the police have a reasonable belief that the person is in the premises.^[348]

20.184       Other Commonwealth statutes also contain offence provisions for preventing entry to land where an officer or other specified person is empowered to enter.^[349]

Search warrants to enter premises

20.185       While entry powers for law enforcement authorise what would otherwise be a trespass, they may be considered, broadly conceived, as an interference with real property.

20.186       At common law, whenever a police officer has the right to arrest, with a warrant, they may enter private premises without the occupier’s permission in order to execute the warrant.^[350] Police powers to enter and search private premises through the issue of search warrants are, however, a relatively modern phenomenon. Historically, courts were not empowered to issue search warrants on private property, unless in relation to the search and seizure of stolen goods.^[351]

20.187       Where legislation has been passed to derogate from the principle of a person’s right to undisturbed enjoyment of their premises, the legislation is to be construed so as not to derogate from the common law right without express words or necessary implication.^[352] This is underscored by the principle that there is no common law right for law enforcement to enter private property without a warrant.^[353]

20.188       By way of example, s 3ZB of the Crimes Act was introduced through the Crimes (Search Warrants and Powers of Arrest) Amendment Act 1994 (Cth) which amended the Crimes Act 1914 (Cth). When introducing the Crimes (Search Warrants and Powers of Arrest) Amendment Bill1994 (Cth) to the House of Representatives, the then Minister for Justice explained that the purpose of the Bill was to implement the recommendations of the Review of Commonwealth Criminal Law, in order

to make much needed reforms of the law relating to search, arrest and related matters for the investigation of most Commonwealth offences. These areas of the law have been the subject of careful examination by the Australian Law Reform Commission in its report entitled Criminal Investigation, and more recently by the Review of Commonwealth Criminal Law established by Mr Bowen as Attorney-General and chaired by the Rt Hon Sir Harry Gibbs. The bill closely follows the recommendations made by the Review of Commonwealth Criminal Law in its fourth and fifth interim reports.^[354]

20.189       In the ALRC’s 1975 Criminal Investigation report, the ALRC wrote that

A power to enter should be available, first, in order to arrest a person named in a warrant of arrest and reasonably believed to be on the premises, and, secondly, where no warrant exists, to accomplish the lawful arrest of a person reasonably believed to have committed a serious offence and reasonably believed to be on the premises.^[355]

20.190       In light of this commentary, s 3ZB appears to be uncontroversial.^[356]