Over the last few days, the federal Opposition has announced new greenhouse emission reduction policies, which includes a Commonwealth Government ‘trigger’ mechanism which would enable the Commonwealth to over-ride decisions by State Governments in relation to native vegetation management. In particular, if implemented this would mean that in the event the Commonwealth considered that state legislation was too lenient, it could override that legislation and impose stricter controls. While the proposal might fill landholders with horror, it might also trigger a long-awaited move to implement mandatory compensation payments to farmers for the public good carbon sequestration services associated with the retention of trees on farms.

To understand why this proposal might trigger long-awaited recognition that the retention of trees on farmland imposes a private cost on landholders to bring about a public benefit, it is necessary to remember some of the history associated with policies associated with native vegetation management in Australia, and also to understand a little about the respective constitutions of the state and Australian governments.

Native vegetation controls have progressively been implemented by state governments at the behest of their ‘green’ constituencies, with a variety of different justifications offered over time. The earliest justifications offered in NSW for native vegetation controls were to prevent soil erosion, land degradation and dryland salinity, even though the former two of these were already managed under the Soil Conservation Act, and the latter has never been an issue in the drier western regions of the state, where most so-called land clearing was occurring (and most farmers fervently wished they had a rising soil water table!) More recently, the primary justification has been for biodiversity conservation, which is undoubtedly a public good that should be paid for by the entire community, rather than current policies which impose the entire cost on landholders.

When farmers in NSW in 1995 threatened to take legal action to seek compensation for the removal of landholder’s rights to manage their land, the then NSW Premier Bob Carr gleefully provided them with copies of legal advice which concluded that, because state government constitutions do not contain a clause protecting property owners from having their property rights compulsorily acquired by the state government, a legal case seeking compensation would fail. This is in contrast to the Australian constitution, which does have a property rights protection clause (Section 51(31)) which prevents the Commonwealth Government from compulsorily acquiring private property without paying full compensation.

In 1997, the Australian Government was heavily engaged in negotiating Australia’s position in relation to the Kyoto Protocol, which was the legally enforceable international agreement established under the United Nations Framework Convention on Climate Change. Under the Protocol, the best position Australia was able to negotiate was to limit Australia’s average national greenhouse emissions over the period from to 2008-2012 to 108% of 1990 emissions. In agreeing to that emission constraint, Australia also managed to incorporate Article 3.7 (the “Australia Clause”) into the protocol.

This clause meant Australia could include in its 1990 baseline inventory the emissions estimated to arise from clearing of native vegetation in that year (roughly 80 million tonnes of greenhouse emissions). Including these emissions in the 1990 baseline inventory meant it would be much easier for Australia to achieve its 2008-2012 target. There was reportedly much consternation around Federal Cabinet about whether Australia should sign up to the Kyoto Protocol, and it was only when some scientists provided their advice about the likely effect of the native vegetation clearing bans in NSW (and proposed bans in Queensland) on Australia’s emissions inventory that Cabinet agreed to the signing of the Protocol.

Farmers groups in NSW and Queensland sought legal advice about a claim for compensation for landholders whose property rights (and value) had been significantly impacted by land clearing bans. Generally, the advice pointed out that if the bans were implemented by state governments, then there was no likely legal case for compensation, due to the lack of property rights protection clauses in state constitutions.

In order for a case to be successful, the advice was generally that it would require evidence that the action resulting in the damage to landholders property rights was taken by the Australian Government. If the Commonwealth Government could be proved to have forced the states to implement the land clearing bans in order to achieve Australia’s emission reduction targets, then the potential existed for a successful compensation case to be lodged on the basis that the Australian Government had contravened Section 51(31) of the Australian constitution.

A legal case to test this was launched by Peter Spencer, and was initially dismissed in the Federal Court, although a subsequent High Court decision forced its reconsideration by the full bench of the Federal Court in 2015. Ultimately the claim for compensation was dismissed, with a major factor appearing to be that there was no ‘smoking gun’ linking the actions by the states to Commonwealth Government law or regulation. In other words, while the Australian Government was a major beneficiary of the greenhouse emission benefits arising from the state government bans on land clearing, it could not be proved that the states had acted at the direction or requirement of the Australian Government, therefore the property right protection in the Australian constitution did not apply. This is despite the fact that the sole reason Australia was able to meet its Kyoto Protocol target was the reduction in land clearing emissions.

Against this background, the proposal to create a Commonwealth Government ‘trigger’ mechanism, that would enable the Australian Government to override state government native vegetation controls in the event that state governments were considered too lax in their regulation of land clearing would create a very clear pathway for landholders to seek compensation under section 51(31) of the Australian constitution.

There is not much doubt in the statement made by the Opposition about the intent of the proposed legislation, as the following quote highlights.

Labor will legislate to include a Climate Trigger in federal legislation to allow the Commonwealth to regulate broad-scale land clearing across the nation. This will ensure proper and rigorous investigation of broad-scale land clearing impact on Australia’s ability to meet its agreed climate change commitment to keeping global warming well below 2 degrees Celsius.

So perhaps, rather than being horrified at the proposal, it might (if enacted) finally provide affected landholders with an opportunity to claim full compensation for the public good benefits they have, and are continuing to provide for the community. The proposal may also tempt State governments to remove native vegetation restrictions, in the knowledge that activation of the Commonwealth native vegetation trigger would likely result in that government being required to pay full compensation to landholders, removing any obligation from State Governments! No doubt lawyers are licking their lips in anticipation!