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Land management and asset security

By Ian Donges - posted Saturday, 15 December 2001


FLEXIBILITY – modification or alteration to account for recognised constraints on the availability of water resources;

EXCLUSIVITY – an entity holds the water property right exclusively so that it can be traded in a market place;

QUALITY OF TITLE – secured to the extent that removal or impairment is compensated and the rights are adequately registered to facilitate financing and transfer;

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TRANSFERABILITY – easy transfer of water property rights on a permanent or temporary basis; and

DIVISIBILITY – capable of being shared or subdivided.

Importantly, these characteristics are not mutually exclusive. They must all be present for a true property right to be acknowledged and no alteration to one characteristic ought to be able to erode any of the other five.

It is now becoming obvious that one of the key steps in the COAG Agreement was the establishment of property rights, with respect to water once water was separated from land title. This has not been carried out in all states, with the resulting situation that in financial negotiations, the level of security previously enjoyed has been seriously eroded.

Well-defined long-term water property rights – involving clear specification of entitlements in terms of ownership, volume, reliability, transferability, and if appropriate, quality – are a prerequisite for all of these initiatives.

The current practice of state governments clawing back over-allocated water licences, with no financial compensation, is at odds with regional communities’ need for certainty in their infrastructure investments. Clawback without compensation actually threatens environmental outcomes due to the contention over equity, grid locking decision-making processes.

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In Australia, state and territory Governments historically owned the rights to all ground and surface water. Governments then used licenses, permits and agreements to share the resource between water users. However, these entitlements have often not been issued as part of a comprehensive resource management system.

Until recently, water entitlements were tied to a particular piece of land, water storage or irrigation scheme, limiting their ability to be traded and giving them no legal status independent of the land or infrastructure to which they were tied. All states and territories now have legislative frameworks in place that separates "water property rights" from land and title.

However the frameworks are not consistent and often do not allow farmers and their financiers to form a reasonable expectation about the tenure and the security that the entitlement will deliver over time. This has seen a significant reduction in asset security, and needs to be addressed as the water reform is finalised.

The National Farmers’ Federation is seeking Australia-wide recognition of and respect for secure water property rights. In establishing these rights, water users must get the maximum degree of security about the nature of the property right, so that they are able to form a reasonable expectation of the benefits provided by the right. And compensation must be paid where the value or security of water rights is eroded by government actions in order to attain ‘public good’ outcomes.

NFF is pleased that the Coalition has committed to the definition of property rights and to the early re-convening of COAG. Australian farmers look forward to working closely with the re-elected Government to ensure that all farmers are compensated if their right to farm is eroded or removed.

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About the Author

Ian Donges is President of the National Farmers’ Federation.

Related Links
Department of Agriculture, Fisheries and Forestry
Department of the Environment and Heritage
Environmental Protection and Biodiversity Conservation Act
National Farmers' Federation
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