Tuesday, September 27, 2005

Private property?

I was in the Australian capital of Canberra last week and got to thinking about the implications of their approach to land ownership for compulsory acquisition ('eminent domain' as it is called in the US, an issue which has been in the news there lately).

All land in the Australian Capital Territory is owned by the Federal Government and is only available for private uses (including housing) on 99 year leases. This decision was made when Canberra was first established in the early 1900's, partly reflecting the prevailing socialist Utopian philosophies of the time and partly for the practical reason that you don't want to sell land freehold thereby making it harder to acquire it back over the next seventy five years as you build your capital city from scratch (the place was literally nothing but a sheep farm).

Actually this is an object lesson for those who believe in the prescience of government planners. Canberra is the most planned city in the world. If government planners always get it right, then they could have just come up with a plan to begin with, stuck to it and this would never have been a problem, would it?

As you can see from this Bill, in 1997 the Government found it necessary to extend leases from 99 years to 999 years. Why? Well, by that time some of the older suburbs in Canberra had been settled for nearly 75 years and these home owners were finding it difficult to sell their houses because prospective buyers couldn't get 30 year mortgages on properties with less than that period remaining on their leases.

Now lawyers may be able to argue until the cows come home about the differences between freehold and a 999 year lease, but I can guarantee you that in the mind of any average person, and especially someone who owns a home sitting on that land, they are indistinguishable. And that means politically they are indistinguishable. The political reaction to any compulsory acquisition will be absolutely the same regardless of whether the land is held freehold or leasehold. If there is enough political backlash the government will back off and if there isn't they will go ahead, whatever the legal, economic and social merits of their plans.

Nevertheless, I find that there's something disturbingly socialist and totalitarian about a place where you can't own land.

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