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Tuesday, 4 December 1973
Page: 4218

Mr WILSON (Sturt) - I rise to take part in this debate because I wish to direct the House's attention to one particular aspect of the Bill. In his second reading speech the Minister for Services and Property (Mr Daly) said:

The principal Act provides for payment of interest on compensation for compulsory acquisitions at 3 per cent per annum for periods up to 2 years and thereafter at 4.3 per cent per annum. These rates have remained unchanged since 1935 and are quite unrealistic and must be changed. The rates should be more in keeping with the market in order to do justice to dispossessed owners.

I would agree with the sentiment expressed by the Minister that there is an urgent and long overdue need to update the amount of interest payable to people whose land was acquired and to whom the compensation was not paid for some time following the acquisition. That it was not done previously does not lessen in any way the urgency for attention to this matter now. In fact it rather increases it, and I think it is a good thing that the legislation is being altered in this way.

I put to the House that I do not think, in view of the changed circumstances, the Minister has gone far enough, and I want to ask him to review again the concept of interest paid on compensation, to look into the question to see the extent to which the interest paid is in fact part of the compensation. Under the principal Act the Commonwealth can acquire land for a variety of purposes. It can acquire land in the States because it needs it for one of the purposes of the Australian Government, one of its departments, or in the exercise of the powers that are conferred upon it under the Constitution. It can acquire land in the Territories because there it has plenary powers, or it can acquire land on behalf of Commonwealth Government authorities.

So far as the acquisition of land in the States is concerned, the Commonwealth is bound under the Constitution to exercise those powers of acquisition in accordance with section 51 placitum (xxxi) of the Constitution. That placitum requires the Commonwealth in the acquisition of property to acquire it on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws. It has been held by the courts of the land, and in particular by the High Court of Australia, that in general terms the existing legislation relating to the acquisition of land complies with that requirement. In fact there was a case before the court in which it was held that in the circumstances then under review it was not obligatory upon the court to take account of changing values of money.

I draw to the attention of the House the fact that circumstances have changed considerably since then and today a practice is developing whereby governments, both Australian and State and local government authorities, do their forward planning in a way which indicates to the public and to the landowners the long term intention to acquire land. Sometimes the procedures are commenced. Sometimes the value placed on the land is determined by the date of announcement of intention to acquire rather than the institution of the acquisition proceedings. Rut whatever procedure is adopted, because of this forward planning which is in the interests of the community, it sometimes means that a landowner, a large landowner or a small landowner, can find his investment in that land locked in to a price set at an early historic date with the acquisition money attracting compensation at a mean level of interest. The rate of interest that has been paid and is paid under the present legislation is, in my submission, mean. I do not believe that the proposal before the House can be described as generous, particularly in those cases where the compensation is locked in over a long period of time. The interest on the compensation now proposed to be paid is as mean as it was under the previous legislation. The reason for this is that in an inflationary economy where the value of money is declining rapidly, to lock the landowner's investment into a claim for compensation and for that money to be locked in for two, three, four, five or six years is to work an injustice on the landowner.

I am not talking, as I said earlier, about the lives of the landowners only. I am concerned about the citizen who, in good faith, buys a house in a street in a residential area and who finds that suddenly, due to the changed development in surrounding areas, formerly quiet street becomes a main thoroughfare and a government authority then decides that the street should be widened. Announcements are then made that the land will be acquired or that portion of the land will be acquired. The land owner is inhibited in respect of what he can do with the land because, of the notice of acquisition or the commencement of acquisition proceedings. lt is not unknown for authorities sometimes to adopt a rather cheese-paring and mean approach to the compensation that they offer. The small landowner is then in a position of having to decide whether to take a low offer of compensation now or to fight it out in the hope that he will achieve justice under the constitutioncompensation on just terms - only to find that the loss in real value in the compensation that is then paid to him more than outweighs the gain that he might have made in getting a higher compensation. This hardship operates particularly as a consequence of the earlier High Court decision which, in the circumstances of the particular case before the High Court, indicated that the legislation did not require of the assessing body the inclusion in any determination of compensation a figure to take account of inflation within the economy.

I think there are several ways in which this problem can be overcome. One method which is adopted by some of the States is to give to the landowner immediately upon announcement of intention to acquire or the commencement of acquisition proceedings the right to calf on the acquiring authority to pay up to 80 per cent of its offer price without prejudice to the landowner's right to negotiate or to appeal to the courts for determination of the compensation value of the land. As a consequence of that procedure the loss suffered by the landowner due to the inflationary pressures on the currency is limited to 20 per cent of the land value plus any addition that he is able to achieve by satisfying the court that the original offer was at an unfairly low level.

The other alternative is for the Government to adopt the sort of formula which is now being advanced in relation to the operation of land commissions, -where in determining the value of land the date on which the land is to be acquired is fixed and it is stated that no value is to be added as a consequence of the Government decision to develop an area for urban use or for any other use. In this way the landowner does not get windfall gains. No one can argue the proposition that the landowner should not get windfall gains. But he should not because of delays, procrastination and meanness of approach on the part of the acquiring authority then suffer by virtue of the fact that the proper value offered at the time the land was to be valued under the legislation was not paid for a long period of time. The way in which it is proposed by many to overcome this difficulty is to have an inflation factor added to the compensation.

In view of the many statements by the Minister for Urban and Regional Development (Mr Uren) on this matter I express my surprise that this concept has not been introduced into this legislation because there is a tendency for acquisitions to take longer, for the process of negotiation and the process of formal acquisitions through the issue of proceedings where negotiations cannot reach a conclusion to take much longer. Yet all that the Minister for Services and Property can propose is a clause which gives to the deprived landowner interest at the short term bond rate if the acquisition proceedings take three years or the long term bond rate if they take three or more years. Even in this proposal there is room for manipulation. Governments can anticipate movements in the bond rate. For example, a government could have anticipated that it was going to lift the bond rate, as it did on the last issue of bonds. It could have saved itself money at the expense of a dispossessed landowner by serving notice of intention to acquire a month or so before the increase in the bond rate. The rate that would then apply to that particular acquisition would be the rate applicable in the immediately preceding long term bond issue.

So I would urge upon the Minister that he and the Minister for Urban and Regional Development get together and try to determine what is to be their policy with regard to preserving the real value of the interest of the owner whose land is to be acquired. All I ask is that the acquisitions be on the basis of the criteria within the Constitution and that in placing acquisitions upon that criteria account be taken for the time dimension. Payment in 5 -years time for land valued at today's date is not compensation in just terms. If an inflation factor is to be added, let that inflation factor be a real and genuine one.

I am concerned that the Minister for Urban and Regional Development does not seem to be terribly clear as to the formula that he would use. Sometimes he talks of an inflation factor and gives to members of this Parliament the impression that his concern is to preserve the real value against the broad yardstick of inflation across the whole economy. Then he will suddenly talk about fixing land price in terms of rural land values. If you are acquiring rural land today and fixing the rural land price it is probably fair to say that the rural land price is the appropriate price. But is it fair then to lock the owner's investment into the rural land investment when it is known by all that there is no area in the economy which fluctuates more as a consequence of conditions outside Australia's control than rural land prices? It would seem to me that it is unreasonable for the small farmlet owner on the perimeter of a city to have his investment locked in for a period of 10 years to rural land values which can fluctuate upwards and downwards in accordance with world commodity prices and have no regard to the general level of inflation. I am not urging that the small farmlet owner be paid anything more than just terms. He should not gain from the windfall of the development of his land or the land around that land. But he should not have his investment locked in to Government bonds at an historically low rate of interest any more than he should have his investment locked in to rural land prices when it may be his wish, knowing that the land is to be acquired, to take his money out and invest it in some other way or spend it on some other item.

I would urge the Minister to look into the first alternative to which I referred- that is to enable those who are given notice of an intention to acquire or actual notice of acquisition to have the right to take out a substantial proportion of the value of the land as assessed by the Government or the acquiring authority. It could be argued by the Minister that this affects only Commonwealth Territories and land acquired by the Commonwealth for Commonwealth departmental purposes. But next Saturday the Government will ask the people to confer upon the Australian Government wide powers over prices. If one listens to the speeches of the Minister for Urban and Regional Development and notes his concern - which is shared by all - regarding the escalation of urban land prices one can see that that Minister would use the prices power to confer upon the Australian Parliament power to acquire land in the States. He has spoken of an Australian lands commission and, with power over prices and positing the legislation upon the basis that land would be acquired for the purpose of stabilising land prices, we would suddenly find that this Commonwealth acquisition legislation would have a far wider effect upon the average citizen, the average householder and the average small allotment holder. Those people deserve to be paid compensation for their land on just terms. If the people are to be so mistaken in their view as to fall for the emotional argument and grant prices powers, and if those powers are to be used to stabilise land prices, those who own land which is acquired deserve justice under the Australian Constitution. It is an omission on the part of the Minister not to recognise the need to confer just terms when he seeks to bring in quite far-reaching amendments to the legislation.

We talk a lot about the stabilisation of land prices. I represent an area in which people are very concerned to ensure that land prices are kept within the means of the average citizen. They want land not for land's sake; they want land because they want to be able to build their home on that land, or they want to be able to buy land on which a home is already erected. They are concerned to And that a government that professed to be a low-interest rate Government has become a high-interest rate Government, with the result that their mortgage payments have increased. They are concerned to find that they have a Government which talked about bridging the deposit gap but which then abolished the home savings .grants scheme which gave to the young prospective home owner the opportunity of bridging that deposit gap. They are concerned to find that the Government has taken away from prospective home owners the lax concession on the rates which they pay on allotment land they own, yet the Government confers that concession upon them after they have built a house. These people want assistance when they are trying to bridge the deposit gap in order to build a home. We talk about stabilisation of land prices on the one hand, yet on the other hand the Government is making the deposit gap yawn in front of prospective home owners.

Mr DEPUTY SPEAKER (Mr Armitage)Order!The honourable member's time has expired.

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