Tuesday, 18 December 2012

Just Terms Compensation and Foreign Investment

In a recent Senate Enquiry into the effects of the Vegetation Management Acts, farmers and graziers sought Just Terms compensation for any new law, restriction or activity on their property that restricted their production or potential production.

Although historically never offered, it was felt that compensation should include the loss of market value of the land as well as annualised value of the loss of production $’s from that land over a reasonable term say 10 years as well as the devaluation of any capital infrastructure that was previously required to support the production from that land. ie: water improvements, fencing, stock yards, employee quarters. For example yards may have been constructed to handle 500 head but now only required to handle 300 head; fencing and waters were constructed to serve the land and are no longer required; the property may not longer need to employ as many workers.

Failing any adequate “Just Terms” compensation it was felt that the only effective outcome would be for whoever places a blot (encumbrance) on a property then they should buy it (not just offer compensation) and the purchase price should include a premium above market value to allow for re-location.

We are now seeing this type of outcome as mining companies purchase properties over which they have leases and the prices they are paying are in excess of reasonable market value within the rural industry.

The flip side to this is the subsequent loss of prime farming land to mining and the difficulty for the displaced farmer in finding a suitable replacement property.

The other disturbing outcome is the purchase of farming country by mining companies that are foreign owned. Recently a Chinese mining company purchased 43 properties in the Liverpool Plains area, near Gunnedah in NSW at individual values that came under the criteria for approval by the Foreign Investment Review Board (FIRB).

1 comment:

  1. It would appear that fair and just terms compensation as discussed above may be hard to realise given that fact that most state governments are insolvent (or should be) and that the Federal Government has already run up such a large deficit that has to be paid back. The governments will also rely on the fact that there have been some previous negotiations, whether inclusive or non inclusive of landholders, that may have included some state farm and national farmer organisations where figures have been suggested and possibly acknowledged that will give precedent o setting compensation at a level that is in reality much less than fair and just.

    In this circumstance it would seem that the best resolution is to repeal the vegetation management laws and return the previous production rights to the landholders.

    Compensation can then be assessed only on the losses suffered due to the laws since the date they were enacted to date of repeal only.

    This would certainly be a much lesser sum, and impost on Governments, than having to pay for community benefit on productive land into the future.


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