Last week's High Court decision in the Arnold case reveals major problems with Australia's structure of government when it comes to the Murray-Darling basin. The case also suggests Peter Spencer has reached the end of the road in his attempt to be compensated for land-use restrictions on his property.
The Arnold case arose when farmers in the Lower Murray region sought compensation for forced reductions in their use of water. This was brought about by a NSW law that replaced their groundwater bore licences with aquifer access licences with up to 70 per cent less entitlement to groundwater.
Australia's constitution says a person must receive ''just terms'' when their property is acquired under federal law. No such guarantee exists under state law. NSW can pass a law to compulsorily acquire a person's property without having to pay a cent in return. Given this, it was not surprising the farmers in Arnold lost their case.
States often pass such laws. While it is rare for them to provide no compensation, the payments can be inadequate. This can lead to disbelief and anger. Australians assume if a government takes their property, they will be fully compensated. When this does not occur, people question whether there is something wrong with our democracy. They are right to do so.
Spencer is one such person. The land-use restrictions placed on his property led him to undertake a hunger strike, and he continues to fight against what he sees as an unjust outcome. He took his case all the way to the High Court, where it has sat pending the outcome of the Arnold case.
Arnold has been resolved without giving hope to Spencer's legal argument. The effect is that his repeated cries that he has been subjected to unconstitutional action have been shown to be wrong.
Spencer may not have a case, but he still has a point. It may be constitutionally valid for NSW to acquire property without compensation, but it should not be. It is offensive in a modern democracy like Australia that the states can acquire property without redress. This should be fixed.
The problems revealed by Arnold do not stop with property rights. The case also highlights the inadequacies of the constitution when it comes to river water. Water was a deal breaker in the move to federation in the 1890s. As one commentator said, without a settlement on water ''there could have been no constitution and no federation''. When it came to the Murray-Darling, Victoria sought water for its irrigators, while South Australia wanted sufficient flows to protect its river trade, which shipped goods upstream and returned with wool.
These colonial interests drove the constitutional settlement. The constitution gives Federal Parliament the power to make laws protecting the river trade, but says such laws shall not ''abridge the right of a state or of the residents therein to the reasonable use of the waters of rivers for conservation or irrigation''.
This is all the constitution says on water use, with everything else left to agreement. When agreement cannot be reached, we are left in a mess. Disputes must be resolved within a framework designed to balance the needs of irrigators and riverboats - which became obsolete as early as World War I due to the growth of railways. Despite this, litigation is on the rise. Not only have farmers turned to the constitution seeking compensation, but South Australia has begun an action against Victoria to have its water trading limits struck down.
Litigation can be a necessary means of resolving disputes, but offers little to better manage our water. Existing problems can be made worse by the inevitable by-products of litigation - long delays and great expense - as well as having outcomes driven by a constitution drafted in the 19th century.
Since 1901 the constitution has had the potential to play a decisive role in the management of Australian rivers. It seems now that this potential will increasingly be realised. In the absence of a new constitutional settlement that recognises Australia's modern water problems, this holds grave risks.
Instead of having water regulation determined by balancing business, environmental and other legitimate concerns, the claims of the parties will be mediated through an out-of-date constitution and the technicalities of Australia's federal system.
George Williams is the Anthony Mason professor of law at the University of NSW.
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